Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

SYNTHESIS ENERGY SYSTEMS, INC.

2015 long term INCENTIVE PLAN

(Effective September 16, 2015)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

table of contents

 

 

SECTION 1 ESTABLISHMENT; PURPOSE AND TERM OF PLAN 1 1.1 Establishment 1 1.2
Purpose 1 1.3 Term of Plan 1 SECTION 2 DEFINITIONS AND CONSTRUCTION 1 2.1
Definitions 1 2.2 Construction 7 SECTION 3 ADMINISTRATION 7 3.1 Administration
by the Committee 7 3.2 Authority of Officers 8 3.3 Powers of the Committee 8 3.4
Administration with Respect to Insiders 9 3.5 Indemnification 10 SECTION 4
SHARES SUBJECT TO PLAN 10 4.1 Maximum Number of Shares Issuable 10 4.2
Adjustments for Changes in Capital Structure 12 SECTION 5 ELIGIBILITY AND AWARD
LIMITATIONS 12 5.1 Persons Eligible for Awards 12 5.2 Award Agreements 12 5.3
Award Grant Restrictions 13 5.4 Fair Market Value Limitations for Incentive
Stock Options 13 5.5 Repurchase Rights, Right of First Refusal and Other
Restrictions on Stock 14 SECTION 6 TERMS AND CONDITIONS OF OPTIONS 14 6.1
Exercise Price 14 6.2 Exercisability, Vesting and Term of Options 14 6.3 Payment
of Exercise Price 15 SECTION 7 RESTRICTED STOCK 16 7.1 Award of Restricted Stock
16 7.2 Restrictions 17 7.3 Delivery of Shares of Common Stock 18 SECTION 8 OTHER
STOCK-BASED, PERFORMANCE AWARDS AND DIVIDENDS, OR DIVIDEND EQUIVALENTS 18 8.1
Grant of Other Stock-Based and Performance Awards 18 8.2 Other Stock-Based Award
and Performance Awards Terms 18 8.3 Dividends or Dividend Equivalents. 21 8.4
Elections and Limitations for Director Awards. 21 SECTION 9 EFFECT OF
TERMINATION OF SERVICE 22 9.1 Option Exercisability and Award Vesting 22 9.2
Extension of Option if Exercise Prevented by Law 23

 

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9.3 Extension if Participant Subject to Section 16(b) 23 SECTION 10 WITHHOLDING
TAXES 24 10.1 Tax Withholding 24 10.2 Share Withholding 24 10.3 Incentive Stock
Options 24 SECTION 11 PROVISION OF INFORMATION 24 SECTION 12 COMPLIANCE WITH
SECURITIES LAW,  OTHER APPLICABLE LAWS AND COMPANY POLICIES 25 SECTION 13
NONTRANSFERABILITY OF AWARDS AND STOCK 26 SECTION 14 NONCOMPETITIVE ACTIONS 26
SECTION 15 TERMINATION OR AMENDMENT OF PLAN 26 SECTION 16 STOCKHOLDER APPROVAL
27 SECTION 17 NO GUARANTEE OF TAX CONSEQUENCES 27 SECTION 18 SEVERABILITY 27
SECTION 19 GOVERNING LAW 28 SECTION 20 SUCCESSORS 28 SECTION 21 RIGHTS AS A
STOCKHOLDER 28 SECTION 22 NO SPECIAL EMPLOYMENT OR SERVICE RIGHTS 28 SECTION 23
REORGANIZATION OF COMPANY 28 SECTION 24 CODE SECTION 409A 29 SECTION 25
ADJUSTMENTS UPON A CHANGE IN CONTROL 30

 

 

 

 

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SYNTHESIS ENERGY SYSTEMS, INC.
2015 long term INCENTIVE PLAN

 

 

SECTION 1

ESTABLISHMENT; PURPOSE AND TERM OF PLAN

 

1.1Establishment

 

The Synthesis Energy Systems, Inc. 2015 Long Term Incentive Plan (the “Plan”) is
hereby established and adopted by the Board effective as of September 16, 2015
(the “Effective Date”).

 

1.2Purpose

 

The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing an incentive to attract, retain and reward persons
performing services for the Company and by motivating such persons to contribute
to the growth and profitability of the Company.

 

1.3Term of Plan

 

The Plan shall continue in effect until the earlier of its termination by the
Board or the date on which all of the shares of Stock available for issuance
under the Plan have been issued and all restrictions on such shares of Stock
under the terms of the Plan and the agreements evidencing Awards granted under
the Plan have lapsed. However, all Awards shall be granted on or before the date
which is ten (10) years from Effective Date. If the Plan is approved by the
Company’s Stockholders on or within twelve (12) months of the Effective Date, no
future awards will be granted under the Company’s Amended and Restated 2005
Long-Term Incentive Plan, as amended (“2005 Plan”), but all outstanding awards
under the 2005 Plan shall continue under the 2005 Plan until they expire
according to their terms.

 

SECTION 2

DEFINITIONS AND CONSTRUCTION

 

2.1Definitions

 

Whenever used herein, the following terms shall have their respective meanings
set forth below:

 

(a)                “Affiliate” means, with respect to any Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, another Person.
The term “control” includes, without limitation, the possession, directly or
indirectly, of the power to direct the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
With respect to any Award that is deferred compensation subject to Code Section
409A, for the purposes of applying Code Section 409A to such Award the term
Affiliate shall mean all Persons with whom the Participant’s employer would be
considered a single employer under Code Section 414(b) or 414(c) as defined and
modified in Code Section 409 as determined by the Committee. Notwithstanding the
foregoing, with respect to Nonstatutory Stock Options and Stock Appreciation
Rights, if necessary for such Awards to be exempt from Code Section 409A, as
determined by the Committee, for purposes of grants of such Awards, Affiliate
shall only include an entity if the Stock would constitute “service recipient
stock” within the meaning of Code Section 409A.

 

 

(b)               “Award” means a grant of an Option, Restricted Stock, Other
Stock-Based Award, including without limitation, Stock Appreciation Rights,
Performance Awards, Dividends, Dividend Equivalents or Director Awards to a
Participant under this Plan.

 

(c)                “Award Agreement” means a written agreement between the
Company and a Participant setting forth the terms, conditions and restrictions
of the Award granted to the Participant and any shares of Stock acquired upon
the exercise thereof. The Award Agreement consists of the Award Agreement and
the Notice of Grant of an Award incorporated therein by reference, or such other
form or forms as the Committee may approve from time to time.

 

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

 

(e)                “Cashless Exercise” has the meaning set forth in Section
6.3(a) hereto.

 

(f)                A “Change in Control” means any of the following events
occurring with respect to the Company:

 

(i)                 any “person” (as defined in section 3(a)(9) of the Exchange
Act, and as such term is modified in sections 13(d) and 14(d) of the Exchange
Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the Company representing
50% or more of the combined voting power of the Company’s then outstanding
securities, provided however, that excluded are the following: (1) the Company
or any of its subsidiaries, (2) a trustee or any fiduciary holding securities
under any Compensation Plan (as defined below), (3) an underwriter temporarily
holding securities pursuant to an offering of such securities, (4) a corporation
owned, directly or indirectly, by stockholders of the Company in substantially
the same proportions as their ownership of the Company (for the purposes of this
paragraph, “Compensation Plan” shall mean any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the Company
or any subsidiary of the Company, for its employees generally or any specific
group of employees, or to which the Company or any subsidiary of the Company
contributes, and which includes, by way of example and not limitation, any
incentive plan, bonus plan, 401(k) plan, pension plan, savings plan, equity or
cash incentive plan, phantom stock plan, stock appreciation right plan, stock
option plan, restricted stock award plan, retirement plan, deferred compensation
plan, or supplemental benefit arrangement);

 

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(ii)               during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause (i),
(iii) or (iv) of this definition whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least a
majority of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;

 

(iii)             the consummation of a merger or consolidation of the Company
with any other corporation or entity, other than (A) 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), in combination with the ownership of any trustee or other fiduciary
holder of securities under a Compensation Plan, at least 50% of the combined
voting power of the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 50% of the combined
voting power of the Company’s then outstanding securities;

 

(iv)             the consummation of a plan of complete liquidation of the
Company or a sale or disposition by the Company of all or substantially all of
the Company’s assets; or

 

(v)               an ownership change of more than 50% of the outstanding shares
of Stock..

 

(g)               “Code” means the Internal Revenue Code of 1986, as amended,
and any applicable notices, rulings and regulations promulgated thereunder.

 

(h)               “Committee” means the Board or, if so appointed by the Board,
the compensation committee of the Board or any other committee duly appointed by
the Board to administer the Plan, which such committee may be one or more
persons; provided however, that during any period the Company is a “Publicly
Held Corporation” within the meaning of Code Section 162(m) or applicable
securities laws the Committee shall consist of not less than two directors of
the Board who fulfill the “outside director” requirements of Code Section 162(m)
and who are non-employee directors under the Rule 16b-3.

 

(i)                 “Company” means Synthesis Energy Systems, Inc., a Delaware
corporation, or any successor corporation thereto.

 

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(j)                 “Consultant” means an individual who is a natural person
engaged to provide consulting or advisory services (other than as an Employee or
a Director) to the Company or its Affiliates, provided that the identity of such
individual, the nature of such services or the entity to which such services are
provided are not in connection with the offer or sale of securities in a capital
raising transaction, and do not directly or indirectly promote or maintain a
market for the Company’s securities or would not preclude the Company from
offering or selling securities to such individual pursuant to the Plan in
reliance on either the exemption from registration provided under the Securities
Act or, if the Company is required to file reports pursuant to Section 13 or
15(d) of the Exchange Act, registration on a Form S-8 Registration Statement
under the Securities Act.

 

(k)               “Director” means a member of the Board who is not, at the time
of grant of an Award, an Employee of the Company or any Company Affiliate,
parent of the Company or a Subsidiary (within the meaning of 16b-3 under the
Exchange Act) and who is certified by the Board as an independent director;
provided, however, that a person who is a control person or director of an
entity that is the beneficial owner of twenty-five percent (25%) or more of
outstanding shares of the Company shall not be deemed to be a “non-employee”
director.

 

(l)                 “Disability” is as such term is defined in the Participant’s
Award Agreement.

 

(m)             “Dividends and Dividend Equivalents” means an Award as specified
in Section 8.3.

 

(n)               “Effective Date” has the meaning set forth in Section 1.1
hereto.

 

(o)               “Employee” means any individual treated as an employee
(including a Director who is also treated as an employee) of the Company on the
records of the Company or of any of the Company’s Affiliates on the records of
such Affiliate and, with respect to any Incentive Stock Option granted to such
individual, who is an employee of the Company or a parent or a Subsidiary of the
Company for purposes of Sections 422, 424 and 3401(c) of the Code; provided,
however, that neither service as a Director nor payment of a director’s fee
shall be sufficient to constitute employment for purposes of the Plan. The
Company shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and the
effective date of such individual’s employment or termination of employment, as
the case may be. For purposes of an individual’s rights, if any, under the Plan
as of the time of the Company’s determination, all such determinations by the
Company shall be final, binding and conclusive, notwithstanding that the
Company, the Board, the Committee or any court of law or governmental agency
subsequently makes a contrary determination.

 

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

 

(q)               “Fair Market Value” means, as of any date, the value of a
share of Stock or other property as determined by the Committee, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:

 

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(i)                 If, on such date, the Stock is listed or traded on a
national or regional securities exchange or market system, constituting the
primary market for the Stock, the Fair Market Value of a share of Stock shall be
the average of the highest and lowest sales price of a share of Stock (or the
mean of the closing bid and asked prices of a share of Stock if the Stock is so
quoted instead) on the determination date (or, if no sales occur on such date,
on the last preceding date on which such sales of Stock are so reported) as
quoted on such exchange or market system and as reported in The Wall Street
Journal, pink sheets or such other source as the Committee deems reliable.

 

(ii)               If, on such date, the Stock is not listed or traded on a
national or regional securities exchange or market system, the Fair Market Value
of a share of Stock shall be as determined by the Committee in its discretion
using a reasonable method exercised in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse, and
if it is determined by the Committee to be applicable, in any other manner
permitted in accordance with Code Section 409A and the notices, rulings and
regulations thereunder, or 422(b) and the notices, rulings and regulations
thereunder, if applicable.

 

(r)                 “Incentive Stock Option” means an Option intended to be (as
set forth in the Award Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.

 

(s)                “Insider” means an Officer, a Director or other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

 

(t)                 “New Shares” has the meaning set forth in Section 4.2
hereto.

 

(u)               “Nonstatutory Stock Option” means an Option not intended to be
(as set forth in the Award Agreement) or which does not qualify as an Incentive
Stock Option.

 

(v)               “Notice of Grant of an Award” means the Notice of Grant of an
Award executed by the Company and the Participant on the date of the grant of
the Award.

 

(w)             “Officer” means any person designated by the Board as an officer
of the Company.

 

(x)               “Option” means a right to purchase Stock pursuant to the terms
and conditions of the Plan. An Option may be either an Incentive Stock Option or
a Nonstatutory Stock Option.

 

(y)               “Option Expiration Date” has the meaning set forth in Section
9.1(a) hereto.

 

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(z)                “Other Stock-Based Awards” means Awards described in Section
8 and shall include, without limitation, Stock Appreciation Rights.

 

(aa)            “Participant” means a person who has been granted one or more
Awards hereunder.

 

(bb)           “Performance Awards” means Awards described in Section 8.

 

(cc)            “Permitted Transferee” has the meaning provided such term in
Section 13.

 

(dd)          “Person” means any individual or other natural person,
partnership, corporation, limited liability company, group, trust or other legal
entity.

 

(ee)            “Plan” has the meaning set forth in Section 1.1 hereto.

 

(ff)             “Publicly Held Corporation” has the meaning of such term in
Section 4.2.

 

(gg)           “Restricted Stock” means an Award granted to a Participant
pursuant to Section 7 hereof.

 

(hh)           “Restriction Period” means the period of time determined by the
Committee and set forth in the Award Agreement during which the transfer of
Restricted Stock by the Participant is restricted.

 

(ii)               “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.

 

(jj)               “Securities Act” means the Securities Act of 1933, as
amended.

 

(kk)           “Section 409A Plan” has the meaning described in Section 24.

 

(ll)               “Service” means a Participant’s employment or Service with
the Company or any of its Affiliates, whether in the capacity of an Employee, a
Director or a Consultant. A Participant’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders Service to the Company or Affiliate (or in the case of an Incentive
Stock Option the parent or Subsidiary of the Company) or a change in the Company
or Affiliate (or in the case of an Incentive Stock Option the parent or
Subsidiary of the Company) for which the Participant renders such Service,
provided that there is no interruption or termination of the Participant’s
Service. Furthermore, a Participant’s Service with the Company or an Affiliate
(or in the case of an Incentive Stock Option the parent or Subsidiary of the
Company) shall not be deemed to have terminated if the Participant takes any
military leave, temporary illness leave, authorized vacation or other bona fide
leave of absence; provided, however, that if any such leave exceeds three (3)
months, the Participant’s Service shall be deemed to have terminated unless the
Participant’s right to return to Service with the Company is provided by either
statute or contract. Notwithstanding the foregoing, unless otherwise designated
by the Company or provided by statute or contract, a leave of absence shall not
be treated as Service. The Participant’s Service shall be deemed to have
terminated either upon an actual termination of Service or upon the company for
which the Participant performs Service ceasing to be the Company or an Affiliate
(or in the case of an Incentive Stock Option the parent or Subsidiary of the
Company). Subject to the foregoing, the Company, in its discretion, shall
determine whether the Participant’s Service has terminated and the effective
date of such termination. Notwithstanding the foregoing, with respect to any
Award that is subject to 409A, separation from Service shall be determined by
the Committee under the applicable rules of Code Section 409A.

 

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(mm)       “Stock” means the common stock of the Company, par value $0.01 per
share, as adjusted from time to time in accordance with Section 4.2 hereto.

 

(nn)           “Stock Appreciation Right” or “SAR” means a stock-based right
granted under Section 8.1.

 

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

 

(pp)           “Substitute Awards” has the meaning in Section 4.1.

 

(qq)           “Ten Percent Owner Participant” means a Participant who, at the
time an Option is granted to the Participant, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or parent or Subsidiary within the meaning of Section 422(b)(6) of
the Code.

 

(rr)              “Term” has the meaning described in Section 15.

 

2.2Construction

 

Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular. Words of the masculine gender shall
include the feminine and neuter, and vice versa. Use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise. Section
headings as used herein are inserted solely for convenience and reference and do
not constitute any part of the interpretation or construction of the Plan.

 

SECTION 3

ADMINISTRATION

 

3.1Administration by the Committee

 

The Plan shall be administered by the Committee. All questions of interpretation
of the Plan, construction of its terms, or of any Award shall be determined by
the Committee, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Award.

 

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3.2Authority of Officers

 

Any Officer shall have the authority to act on behalf of the Company with
respect to any matter, right, obligation, determination or election which is the
responsibility of or which is allocated to the Company herein, provided the
Officer has apparent authority with respect to such matter, right, obligation,
determination or election.

 

3.3Powers of the Committee

 

In addition to any other powers set forth in the Plan and subject to the
provisions of the Plan, the Committee shall have the full and final power and
authority, in its discretion:

 

(a)                to determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of shares of Stock to be subject
to each Award;

 

(b)               to designate Awards as Restricted Stock or Options or Other
Stock-Based Awards or Performance Awards or Dividends or Dividend Equivalents,
and to designate Options as Incentive Stock Options or Nonstatutory Stock
Options;

 

(c)                to determine the Fair Market Value of shares of Stock or
other property;

 

(d)               to determine the terms, conditions and restrictions applicable
to each Award (which need not be identical) and any shares of Stock acquired
upon the exercise and/or vesting thereof, including, without limitation, (i) the
exercise price of the Option or Stock Appreciation Right, (ii) the method of
payment for shares of Stock purchased upon the exercise and/or vesting of an
Award, (iii) the method for satisfaction of any tax withholding obligation
arising in connection with the Award or such shares of Stock, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions, including but not limited to performance goals, of the
exercisability of the Award or the vesting of any shares of Stock, (v) the time
of the expiration of the Award, (vi) the effect of the Participant’s termination
of Service with the Company on any of the foregoing, (vii) the provision for
electronic delivery of Awards and/or book entry, and (viii) all other terms,
conditions and restrictions applicable to the Award or such shares of Stock not
inconsistent with the terms of the Plan;

 

(e)                to approve one or more forms of the Award Agreement;

 

(f)                to amend, modify, extend, cancel, or renew any Award, or to
waive any restrictions or conditions applicable to any Award or any shares
acquired upon the exercise thereof; provided, however, that no such amendment,
modification, extension or cancellation shall materially adversely affect a
Participant’s Award without a Participant’s consent;

 

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(g)               to accelerate, continue, extend or defer the exercisability
and/or vesting of any Award, including with respect to the period following a
Participant’s termination of Service with the Company;

 

(h)               to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Committee deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Awards;

 

(i)                 to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award Agreement and to make all other
determinations and take such other actions with respect to the Plan or any Award
as the Committee may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law; and

 

(j)                 notwithstanding the foregoing, except as provided in
Sections 4.1, 4.2 and Section 25, the terms of an outstanding Award may not be
amended by the Committee, without approval of the Company’s stockholders, to:
(i) reduce the exercise price of an outstanding Option or to reduce the exercise
price of an outstanding Stock Appreciation Right, (ii) cancel an outstanding
Option or outstanding Stock Appreciation Right in exchange for other Options or
Stock Appreciation Rights with an exercise price that is less than the exercise
price of the cancelled Option or the cancelled Stock Appreciation Right, as
applicable, or (iii) cancel an outstanding Option with an exercise price that is
greater than the Fair Market Value of a share of Stock on the date of
cancellation or cancel an outstanding Stock Appreciation Right with an exercise
price that is greater than the Fair Market Value of a share of Stock on the date
of cancellation in exchange for cash or another Award. In addition, no Option
reloading will be permitted.

 

3.4Administration with Respect to Insiders

 

With respect to participation by Insiders in the Plan, at any time that any
class of equity security of the Company is registered pursuant to Section 12 of
the Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3 and all other applicable laws, including any
required blackout periods. At any time the Company is required to comply with
Securities Regulation BTR, all transactions under this Plan respecting the
Company’s securities shall comply with Securities Regulation BTR and the
Company’s insider trading policies, as revised from time to time, or such other
similar Company policies, including but not limited to policies relating to
blackout periods. Any ambiguities or inconsistencies in the construction of an
Award shall be interpreted to give effect to such limitation. To the extent any
provision of the Plan or Award Agreement or action by the Committee or Company
fails to so comply, such provision or action shall be deemed null and void to
the extent permitted by law and deemed advisable by the Committee in its
discretion.

 

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3.5Indemnification

 

EACH PERSON WHO IS OR WAS A MEMBER OF THE BOARD OR THE COMMITTEE SHALL BE
INDEMNIFIED BY THE COMPANY AGAINST AND FROM ANY DAMAGE, LOSS, LIABILITY, COST
AND EXPENSE THAT MAY BE IMPOSED UPON OR REASONABLY INCURRED BY HIM IN CONNECTION
WITH OR RESULTING FROM ANY CLAIM, ACTION, SUIT, OR PROCEEDING TO WHICH HE MAY BE
A PARTY OR IN WHICH HE MAY BE INVOLVED BY REASON OF ANY ACTION TAKEN OR FAILURE
TO ACT UNDER THE PLAN (INCLUDING SUCH INDEMNIFICATION FOR A PERSON’S OWN, SOLE,
CONCURRENT OR JOINT NEGLIGENCE OR STRICT LIABILITY), EXCEPT FOR ANY SUCH ACT OR
OMISSION CONSTITUTING WILLFUL OR INTENTIONAL MISCONDUCT, FRAUD OR GROSS
NEGLIGENCE. SUCH PERSON SHALL BE INDEMNIFIED BY THE COMPANY FOR ALL AMOUNTS PAID
BY HIM IN SETTLEMENT THEREOF, WITH THE COMPANY’S APPROVAL, OR PAID BY HIM IN
SATISFACTION OF ANY JUDGMENT IN ANY SUCH ACTION, SUIT, OR PROCEEDING AGAINST
HIM, PROVIDED HE SHALL GIVE THE COMPANY AN OPPORTUNITY, AT ITS OWN EXPENSE, TO
HANDLE AND DEFEND THE SAME BEFORE HE UNDERTAKES TO HANDLE AND DEFEND IT ON HIS
OWN BEHALF. THE FOREGOING RIGHT OF INDEMNIFICATION SHALL NOT BE EXCLUSIVE OF ANY
OTHER RIGHTS OF INDEMNIFICATION TO WHICH SUCH PERSONS MAY BE ENTITLED UNDER THE
COMPANY’S ARTICLES OF INCORPORATION OR BYLAWS, AS A MATTER OF LAW, OR OTHERWISE,
OR ANY POWER THAT THE COMPANY MAY HAVE TO INDEMNIFY THEM OR HOLD THEM HARMLESS.

 

SECTION 4

SHARES SUBJECT TO PLAN

 

4.1Maximum Number of Shares Issuable

 

Subject to adjustment as provided in Section 4.2 and Section 25, the maximum
aggregate number of shares of Stock that may be issued with respect to Awards
under the Plan shall be nine million (9,000,000) and shall consist of authorized
but unissued or reacquired shares of Stock or any combination thereof. The
maximum aggregate number of such shares of Stock authorized for issuance in the
foregoing sentence that may be issued as Incentive Stock Options shall be nine
million (9,000,000) shares of Stock. Shares of Stock of an outstanding Award
that for any reason expire or are terminated, forfeited or canceled shall again
be available for issuance under the Plan; provided, however, that amounts
withheld for taxes or are withheld for the purchase price for Options or SARs
shall not again be available for issuance under the Plan. Awards that by their
terms are to be settled solely in cash shall not be counted against the number
of shares of Stock available for the issuance of Awards under the Plan. Shares
of stock issued under Awards granted in assumption, substitution or exchange for
previously granted Awards of a company acquired by the Company (“Substitute
Awards”) do not reduce the shares of Stock available under the Plan and
available shares under a stockholder approved plan of an acquired company (as
appropriately adjusted to reflect the transaction) may be used for Awards under
the Plan and do not reduce the Plan’s share reserve as provided herein (subject
to New York Stock Exchange listing requirements, as long as the Stock is listed
on this exchange or the applicable other exchange requirements on which the
Stock is listed).

 

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Subject to the maximum number of shares of Stock available for Awards under the
Plan as provided in the preceding paragraph of this Section 4.1, during any
period that the Company is a “Publicly Held Corporation” within the meaning of
Code Section 162(m) the following rules shall apply to grants of Awards that are
intended to meet the performance-based exception under Code Section 162(m):

 

(a)                Subject to adjustment as provided in Section 4.2 and Section
25, the maximum aggregate number of shares of Stock that may be subject to
Options and Stock Appreciation Rights with respect to Awards granted in any
calendar year to any Participant shall be seven million five hundred thousand
(7,500,000) shares of Stock, and the exercise price per share of Stock for an
Option or Stock Appreciation Right shall be equal to at least the Fair Market
Value per share of Stock on the grant date of the Award. If such an Award may be
settled in cash as permitted under the terms of the Award, the number of shares
of Stock for the cash amount shall be counted toward the individual share limit
provided in this subsection (a) calculated as of the date of grant.

 

(b)               Subject to adjustment as provided in Section 4.2 and Section
25, the maximum aggregate number of shares of Stock subject to Awards, other
than Options and Stock Appreciation Rights, that may be settled in Stock
including, without limitation, Restricted Stock or any Other Stock-Based Award
with respect to Awards granted in any calendar year to any Participant shall be
seven million five hundred thousand (7,500,000). If such an Award is to be
settled in cash rather than Stock pursuant to its terms, the number of shares of
Stock that could be issued for the cash amount shall be counted toward the
individual share limit in this subsection (b) calculated as of the date of
grant.

 

(c)                Subject to adjustment as permitted under Section 4.2 or
Section 25, the maximum aggregate cash subject to Awards, including, without
limitation, Performance Awards intended to meet the performance-based exception
under Code Section 162(m) to be settled solely in cash with respect to Awards
granted in any calendar year that may be made to any Participant shall be five
million dollars ($5,000,000) calculated as of the date of grant.

 

(d)               With respect to any Option or Stock Appreciation Right granted
to a Participant that is canceled or repriced, the number of shares of Stock
subject to such Option or Stock Appreciation Right shall continue to count
against the maximum number of shares of Stock that may be the subject of Options
or Stock Appreciation Right granted to such Participant hereunder but only to
the extent such is required in accordance with Section 162(m) of the Code.

 

(e)                The limitations of subsections (a), (b), (c) and (d) above
shall be construed and administered so as to comply with the performance-based
exception in Code Section 162(m) and shall only apply to the extent required to
meet the performance-based exception under Code Section 162(m) for Awards
intended by the Committee to meet the performance-based exception under Code
Section 162(m).

 

 11 

 

4.2Adjustments for Changes in Capital Structure

 

In the event of any stock dividend or extraordinary cash dividend, stock split,
reverse stock split, recapitalization, combination, reclassification or similar
change in the capital structure of the Company, appropriate adjustments shall be
made in the number and class of shares of Stock subject to the Plan and to any
outstanding Awards, and in the exercise price per share of any outstanding
Awards and with respect to Options, if applicable, in accordance with Code
Sections 424 and 409A. If a majority of the shares of Stock, which are of the
same class as the shares of Stock that are subject to outstanding Awards, are
exchanged for, converted into, or otherwise become (whether or not pursuant to a
change in control) shares of another company (the “New Shares”), the Committee
may, in its sole discretion, unilaterally amend the outstanding Awards to
provide that such Awards are exercisable for New Shares. In the event of any
such amendment, the number of shares subject to, and the exercise price per
share of, the outstanding Awards shall be adjusted in a fair and equitable
manner as determined by the Committee, in its discretion, and with respect to
Options in accordance with Code Sections 424 and 409A and the regulations
thereunder. Notwithstanding the foregoing, any fractional share resulting from
an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest
whole number, and in no event may the exercise price of any Award be decreased
to an amount less than the par value, if any, of the stock subject to the Award.
The adjustments determined by the Committee pursuant to this Section 4.2 shall
be final, binding and conclusive.

 

SECTION 5

ELIGIBILITY AND AWARD LIMITATIONS

 

5.1Persons Eligible for Awards

 

Awards may be granted only to Employees, Consultants, and Directors. For
purposes of the foregoing sentence, “Employees,” “Consultants,” and “Directors”
shall include prospective Employees, prospective Consultants and prospective
Directors to whom Awards are granted in connection with written offers of
employment or other service relationships with the Company subject to their
actual commencement of Service. Eligible Persons may be granted more than one
(1) Award. Eligibility in accordance with this Section shall not entitle any
Person to be granted an Award, or, having been granted an Award, to be granted
an additional Award.

 

5.2Award Agreements

 

Each Participant to whom an Award is granted shall be required to enter into an
Award Agreement with the Company, in such a form as is provided by the
Committee. The Award Agreement shall contain specific terms as determined by the
Committee, in its discretion, with respect to the Participant’s particular
Award. Such terms need not be uniform among all Participants or any similarly
situated Participants. The Award Agreement may include, without limitation,
vesting, forfeiture and other provisions specific to the particular
Participant’s Award, as well as, for example, provisions to the effect that the
Participant (i) shall not disclose any confidential information acquired during
employment with the Company or while providing service to the Company, (ii)
shall abide by all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee, (iii) shall not interfere with
the employment or other Service of any Employee or service provider of the
Company, (iv) shall not compete with the Company or become involved in a
conflict of interest with the interests of the Company, (v) shall forfeit an
Award if terminated for Cause, (vi) shall not be permitted to make an election
under Section 83(b) of the Code when applicable, (vii) shall be subject to
transfer restrictions respecting the Award or Stock, (viii) shall be subject to
any other agreement between the Participant and the Company regarding shares of
Stock that may be acquired under an Award including, without limitation, an
agreement restricting the transferability of the Award or shares of Stock by
Participant or any other restrictions or requirements of any stockholders’
agreement that is in effect from time to time, and (ix) any provisions or
definitions the Committee deems necessary or desirable to comply with Code
Section 409A. An Award Agreement shall include such terms and conditions as are
determined by the Committee, in its discretion, to be appropriate with respect
to any individual Participant.

 

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5.3Award Grant Restrictions

 

Any person who is not an Employee on the effective date of the grant of an Award
to such person may be granted only a Nonstatutory Stock Option, Restricted Stock
or Other Stock-Based Award. An Incentive Stock Option Award granted to an
Employee of the Company, or its parent or Subsidiary as defined in Code Section
424(f), or to a prospective Employee of the Company, or its parent or its
Subsidiary as defined in Code Section 424(f) upon the condition that such person
become an Employee shall be deemed granted effective on the date such person
commences service as an Employee with the Company, with an exercise price
determined as of such date in accordance with Section 6.1.

 

5.4Fair Market Value Limitations for Incentive Stock Options

 

To the extent that Options designated as Incentive Stock Options (granted under
all stock option plans of the Company or parent or Subsidiary as defined in Code
Section 422, including the Plan) become exercisable by a Participant for the
first time during any calendar year for Stock having an aggregate Fair Market
Value greater than one hundred thousand dollars ($100,000), the portion of such
options which exceeds such amount shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5.4, Options designated as Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of Stock shall be determined as of the time the Option
with respect to such Stock is granted. If the Code is amended to provide for a
different limitation from that set forth in this Section 5.4, such different
limitation shall be deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such amendment to the Code.
If an Option is treated as an Incentive Stock Option in part and as a
Nonstatutory Stock Option in part by reason of the limitation set forth in this
Section 5.4, the Company at the request of the Participant may designate which
portion of such Option the Participant is exercising. In the absence of such
designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Separate certificates representing
each such portion shall be issued upon the exercise of the Option.

 

 13 

 

5.5Repurchase Rights, Right of First Refusal and Other Restrictions on Stock

 

Shares of Stock under the Plan may be subject to a right of first refusal, one
or more repurchase options, or other conditions and restrictions pursuant to a
contract entered into by the Company and its stockholders or otherwise as
determined by the Committee or as provided in the Award Agreement, in the
Committee’s discretion. The Company shall have the right to assign at any time
any repurchase right it may have, whether or not such right is then exercisable,
to one or more persons as may be selected by the Company. Upon request by the
Company, each Participant shall execute any agreement, including but not limited
to, the Award Agreement evidencing such transfer restrictions prior to the
receipt of shares of Stock hereunder and shall promptly present to the Company
any and all certificates representing shares of Stock acquired hereunder for the
placement on such certificates of appropriate legends evidencing any such
transfer restrictions.

 

SECTION 6

TERMS AND CONDITIONS OF OPTIONS

 

Options shall be evidenced by Award Agreements specifying the number of shares
of Stock covered thereby, in such form as the Committee shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by an Award Agreement. Award Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

 

6.1Exercise Price

 

The exercise price for each Option shall be established in the discretion of the
Committee; provided, however, that (a) subject to adjustments permitted under
the Plan under Section 4.2 and Section 25, and other than with respect to
Substitute Awards, the exercise price per share for an Option shall be not less
than the Fair Market Value of a share of Stock on the effective date of grant of
the Option, (b) no Incentive Stock Option granted to a Ten Percent Owner
Participant shall have an exercise price per share of Stock less than one
hundred ten percent (110%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Sections 424 and
409A of the Code.

 

6.2Exercisability, Vesting and Term of Options

 

(a)                Exercisability. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such Option; provided, however,
that (i) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option provided that an Option, that
is not an Incentive Stock Option, may be exercised for the thirty (30)-day
period after the expiration of a limitation on the Participant’s ability to
exercise due to Section 16-b(3), the Company’s insider trading policy or other
applicable law which may extend beyond the ten (10)-year term for this limited
purpose, (ii) no Incentive Stock Option granted to a Ten Percent Owner
Participant shall be exercisable after the expiration of five (5) years after
the effective date of grant of such Option, and (iii) no Option granted to a
prospective Employee, prospective Consultant or prospective Director may become
exercisable prior to the date on which such person commences Service with the
Company. Subject to the foregoing, unless otherwise specified by the Committee
in the grant of an Option, any Option granted hereunder shall terminate ten (10)
years after the effective date of grant of the Option, unless earlier terminated
in accordance with its provisions.

 

 14 

 

(b)               Vesting. The Committee shall specify the vesting schedule, if
any, in the applicable Award Agreement.

 

(c)                Incentive Stock Options. Unless otherwise provided in the
Option Agreement with respect to death or Disability of the Participant, the
Incentive Stock Options may only be exercised within six (6) months after the
Participant’s termination of Service.

 

6.3Payment of Exercise Price

 

(a)                Forms of Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made in cash, by check or cash
equivalent or upon approval by the Committee in its sole discretion by any of
the following (i) subject to Section 6.3(b)(i) below, by tender to the Company,
or attestation to the ownership, of shares of Stock owned by the Participant
having a Fair Market Value not less than the exercise price; (ii) subject to the
Company’s rights set forth in Section 6.3(b)(ii) below, by causing the Company
to withhold from the shares of Stock issuable upon the exercise of the Option
the number of whole shares of Stock having a Fair Market Value, as determined by
the Company, not less than the exercise price (a “Cashless Exercise”); (iii) by
such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law; or (iv) by any combination of cash or
any of the foregoing or any combination of (i-iii) thereof. The Committee may at
any time or from time to time grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.

 

 15 

 

(b)               Limitations on Forms of Consideration.

 

(i)                 Tender of Stock. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company, or attestation to the ownership,
of shares of Stock to the extent such tender or attestation would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.

 

(ii)               Cashless Exercise. The Company reserves, at any and all
times, the right, in the Company’s sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise in order to comply with applicable law.

 

SECTION 7

RESTRICTED STOCK

 

7.1Award of Restricted Stock

 

(a)                Grant. In consideration of the performance of employment or
Service by any Participant who is an Employee, Consultant or Director, Stock may
be awarded under the Plan by the Committee as Restricted Stock with such
restrictions during the Restriction Period as the Committee may designate in its
discretion, any of which restrictions may differ with respect to each particular
Participant. Restricted Stock may also be awarded as an Other Stock-Based Award
subject to performance goals under Section 8.2. Restricted Stock shall be
awarded for no additional consideration or such additional consideration as the
Committee may determine, which consideration may be equal to or more than the
Fair Market Value of the shares of Restricted Stock on the grant date. The terms
and conditions of each grant of Restricted Stock shall be evidenced by an Award
Agreement.

 

(b)               Immediate Transfer Without Immediate Delivery of Restricted
Stock. Unless otherwise specified in the Participant’s Award Agreement, each
Restricted Stock Award shall constitute an immediate transfer of the record and
beneficial ownership of the shares of Restricted Stock to the Participant in
consideration of the performance of Services as an Employee, Consultant or
Director, as applicable, entitling such Participant to all voting, dividends and
other ownership rights in such shares of Stock.

 

As specified in the Award Agreement, a Restricted Stock Award may limit the
Participant’s dividend and voting rights during the Restriction Period in which
the shares of Restricted Stock are subject to a “substantial risk of forfeiture”
(within the meaning given to such term under Code Section 83) and restrictions
on transfer. In the Award Agreement, the Committee may apply any restrictions to
the dividends that the Committee deems appropriate.

 

Shares awarded pursuant to a grant of Restricted Stock may be issued in the name
of the Participant and held, together with a stock power endorsed in blank, by
the Committee or Company (or their delegates) or in trust or in escrow pursuant
to an agreement satisfactory to the Committee, or by book entry or otherwise as
determined by the Committee, until such time as the restrictions on transfer
have expired. All such terms and conditions shall be set forth in the particular
Participant’s Award Agreement. The Company or Committee (or their delegates)
shall issue to the Participant a receipt evidencing the certificates held by it
which are registered in the name of the Participant.

 

 16 

 

7.2Restrictions

 

(a)                Forfeiture of Restricted Stock. Restricted Stock awarded to a
Participant may be subject to the following restrictions until the expiration of
the Restriction Period: (i) a restriction that constitutes a “substantial risk
of forfeiture” (as defined in Code Section 83), or a restriction on
transferability; (ii) unless otherwise specified by the Committee in the Award
Agreement, the Restricted Stock that is subject to restrictions which are not
satisfied shall be forfeited and all rights of the Participant to such Stock
shall terminate; and (iii) any other restrictions that the Committee determines
in advance are appropriate, including, without limitation, rights of repurchase
or first refusal in the Company or provisions subjecting the Restricted Stock to
a continuing substantial risk of forfeiture in the hands of any transferee. Any
such restrictions shall be set forth in the particular Participant’s Award
Agreement.

 

(b)               Issuance of Certificates. Reasonably promptly after the date
of grant with respect to shares of Restricted Stock, the Company shall take the
actions as it determines necessary in its sole discretion to cause the Stock to
be issued subject to the forfeiture provisions and other requirements as the
Committee determines necessary, including, without limitation, issuing a Stock
certificate, registered in the name of the Participant to whom such shares of
Restricted Stock were granted, evidencing such shares; provided, however, that
the Company shall not cause to be issued such a Stock certificate unless it has
received a Stock power duly endorsed in blank with respect to such shares of
Restricted Stock. Each such stock certificate shall bear the following legend or
any other legend approved by the Company:

 

The transferability of this certificate and the shares of stock represented
hereby are subject to the restrictions, terms and conditions (including
forfeiture and restrictions against transfer) contained in the Synthesis Energy
Systems, Inc. 2015 Long Term Incentive Plan and an Award Agreement entered into
between the registered owner of such shares and Synthesis Energy Systems, Inc. A
copy of the Plan and Award Agreement are on file in the corporate offices of
Synthesis Energy Systems, Inc.

 

Such legend shall not be removed from the certificate evidencing such shares of
Restricted Stock until such shares vest pursuant to the terms of the Award
Agreement.

 

(c)                Vesting. The Award Agreement shall specify the vesting
schedule.

 

(d)               Removal of Restrictions. The Committee, in its discretion,
shall have the authority to remove any or all of the restrictions on the
Restricted Stock if it determines that, by reason of a change in applicable law
or another change in circumstance arising after the grant date of the Restricted
Stock, such action is appropriate.

 

 17 

 

7.3Delivery of Shares of Common Stock

 

Subject to withholding taxes under Section 10 and to the terms of the Award
Agreement, a Stock certificate evidencing the shares of Restricted Stock with
respect to which the restrictions in the Award Agreement have been satisfied
shall be delivered to the Participant or other appropriate recipient free of
such restrictions. Such delivery shall be affected for all purposes when the
Company shall have deposited such certificate in the United States mail,
addressed to the Participant or other appropriate recipient.

 

SECTION 8

OTHER STOCK-BASED, PERFORMANCE AWARDS AND DIVIDENDS, OR DIVIDEND EQUIVALENTS

 

8.1Grant of Other Stock-Based and Performance Awards

 

Other Stock-Based Awards may be awarded by the Committee to selected
Participants that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, shares of Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Performance Awards may be granted by the Committee in its sole
discretion awarding cash or Stock (including Restricted Stock) or a combination
thereof based upon the achievement of goals as determined by the Committee.
Types of Other Stock-Based Awards or Performance Awards include, without
limitation, purchase rights, phantom stock, Stock Appreciation Rights,
restricted units, performance units, Restricted Stock or Stock subject to
performance goals, shares of Stock awarded that are not subject to any
restrictions or conditions, convertible or exchangeable debentures related to
the Stock, other rights convertible into shares of Stock, Awards valued by
reference to the value of Stock or the performance of the Company or a specified
Subsidiary, Affiliate division or department, Awards based upon performance
goals established by the Committee and settlement in cancellation of rights of
any person with a vested interest in any other plan, fund, program or
arrangement that is or was sponsored, maintained or participated in by the
Company or any Subsidiary. Stock Appreciation Rights will be subject to the same
terms respecting Nonstatutory Stock Options as provided in Sections 6.2 and 6.3
hereof unless otherwise provided in the Award Agreement. Other Stock-Based
Awards may be awarded either alone or in addition to or in tandem with any other
Awards. Other Stock Based Awards and Performance Awards may be paid in Stock,
cash or a combination thereof.

 

8.2Other Stock-Based Award and Performance Awards Terms

 

(a)                Written Agreement. The terms and conditions of each grant of
an Other Stock-Based Award or Performance Award shall be evidenced by an Award
Agreement.

 

(b)               Purchase Price. To the extent that a Stock Appreciation Right
is intended to be exempt from Code Section 409A or if the Company is a Publicly
Held Corporation and the Stock Appreciation Right is intended to meet the
performance-based exception in Code Section 162(m), the exercise price per share
of Stock shall not be less than one hundred percent (100%) of Fair Market Value
of a share of Stock on the date of the grant of the Stock Appreciation Right and
shall otherwise comply with Code Section 409A and/or Code Section 162(m).

 

 18 

 

(c)                Performance Goals and Other Terms. In its discretion, the
Committee may specify such criteria, periods or performance goals for vesting in
Other Stock-Based Awards or Performance Awards and payment thereof to the
Participant as it shall determine; and the extent to which such criteria,
periods or goals have been met shall be determined by the Committee. All terms
and conditions of Other Stock-Based Awards and Performance Awards shall be
determined by the Committee and set forth in the Award Agreement.

 

If any Other Stock-Based Award or Performance Award is intended by the Committee
to meet the performance-based exception in Code Section 162(m), the following
shall apply:

 

(i)                 Performance Period. The Committee shall establish a
performance period which shall be a period of time, as may be determined in the
discretion of the Committee and set out in the Award Agreement, over which
performance is measured for the purpose of determining a Participant’s right to
and the payment value of an Other Stock-Based Award or Performance Award in
accordance with Code Section 162(m). For each performance period, the Committee
shall establish the number of Other Stock-Based Awards or Performance Awards and
their contingent values which may vary depending on the degree to which
performance criteria established by the Committee are met and shall establish
the Awards and performance criteria within the time period required under Code
Section 162(m) if such Awards are intended to meet the performance-based
exception under Code Section 162(m).

 

(ii)               Performance Criteria. The Committee may establish performance
goals applicable to Other Stock-Based Awards or Performance Awards based upon
performance criteria specified in item (iii) below in one or more of the
following categories: (x) performance of the Company as a whole and/or any
Company Affiliate, (y) performance of a segment of the Company’s or its
Affiliates’ business, business unit or division, and (z) individual performance.
Performance criteria for the Company shall relate to the achievement of
predetermined financial, operational or strategic objectives for the Company, as
a whole and/or a Company Affiliate, and performance criteria for a segment of
the Company’s business or business unit or division shall relate to the
achievement of financial, operational or strategic objectives of the segment for
which the Participant is accountable. The performance criteria in Section 8.2
(c)(iii) may be used on an absolute or relative basis to measure the performance
of the Company as a whole and/or a Company Affiliate or any business unit,
division or segment of the Company and/or an Affiliate or any combination
thereof as determined by the Committee or as compared to the performance of a
group of comparable companies or published or special index or as compared to
various stock market indices as the Committee may determine appropriate in its
sole discretion.

 

 19 

 

(iii)             Performance criteria shall include any of the following (alone
or in any combination): pre-tax or after tax profit levels, earnings per share,
earnings before interest and taxes, earnings before interest, taxes,
depreciation and amortization, gross profit or gross profit growth, net
operating profits before or after tax, and net income; share price, including,
without limitation, growth measures and total stockholder return; return on
assets, equity, capital or investment; return on capital; cash flow and cash
flow return on investment; economic value added and economic profit; growth in
earnings per share; stock price performance, sales, costs, gross revenue, net
revenue or revenue growth, margins, production volumes or reserves added (and
any of the foregoing as compared to a peer group as established by the Committee
in its discretion); improvement in capital structure, levels of operating
efficiency or expense, maintenance expense, productivity ratios, economic value
or other added value, working capital targets, enterprise value, safety records;
completion of acquisitions or business expansion or measures of customer
satisfaction and customer service as determined from time to time including the
relative improvement therein. Individual performance criteria shall relate to a
Participant’s overall performance, taking into account, among other measures of
performance, the attainment of individual goals and objectives. The performance
goals may differ among Participants and shall be established in accordance with
Code Section 162(m). To the extent permitted under Code Section 162(m) with
respect to Awards intended to meet the performance-based exception under Code
Section 162(m), the Committee is authorized at any time during the first ninety
(90) days of a performance period (or, if longer or shorter, within the maximum
period allowed under Section 162(m) of the Code), or at any time thereafter (but
only to the extent the exercise of such authority after such period would not
cause the Awards granted to any Participant for the performance period to fail
to qualify as “performance-based compensation” under Section 162(m) of the
Code), in its sole and absolute discretion, to adjust or modify the calculation
of a performance goal for such performance period to the extent permitted under
Section 162(m) of the Code in order to prevent the dilution or enlargement of
the rights of Participants based on the following events: asset write-downs;
litigation or claim judgments or settlements; the effect of changes in tax laws,
accounting principles, or other laws or regulatory rules affecting reported
results; any reorganization and restructuring programs; extraordinary, unusual
or infrequently occurring items as described in Accounting Principles Board
Opinion No. 30 (or any successor or pronouncement thereto) and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to stockholders for the
applicable year; acquisitions or divestitures; any other specific unusual or
nonrecurring events, or objectively determinable category thereof; and a change
in the Company’s fiscal year. The Committee may also specify the application of
any of the foregoing in the Award if necessary to comply with Code Section
162(m).

 

 20 

 

(iv)             Modification. If the Committee determines, in its discretion
exercised in good faith, that the established performance measures or objectives
are no longer suitable to the Company’s objectives because of a change in the
Company’s business, operations, corporate structure, capital structure, or other
conditions the Committee deems to be appropriate, the Committee may modify the
performance measures and objectives to the extent it considers such modification
to be necessary, provided, however, that with respect to Awards intended to
qualify for the performance-based exception of Code Section 162(m), the
Committee shall not permit any such modification that would cause the Awards to
fail to qualify for the performance-based exception.

 

(v)               Compliance with Code Section 162(m). With respect to Awards
intended to meet the performance-based exception of Code Section 162(m), the
Committee shall administer the Awards and take all action that it determines are
necessary, including but not limited to certifying that performance goals have
been met, so that Awards intended to meet the performance-based exception comply
with Code Section 162(m).

 

(d)               Payment. Other Stock-Based Awards or Performance Awards may be
paid in shares of Stock, cash or other consideration or a combination thereof
related to such shares, in a single payment or in installments on such dates as
determined by the Committee, all as specified in the Award Agreement.

 

8.3Dividends or Dividend Equivalents.

 

Except with respect to dividends on Restricted Stock (unless the Award Agreement
for the Restricted Stock eliminates dividend rights), the Participant shall not
be entitled to receive, currently or on a deferred basis, dividends or dividend
equivalents with respect to the number of shares of Stock covered by the Award
unless (and to the extent) otherwise as determined by the Committee and set
forth in a separate Award Agreement. The Committee in the Award Agreement may
provide such terms and conditions for the Award of Dividends or Dividend
Equivalents as it shall determine in its discretion. The Committee may also
provide in such Award Agreement that the amounts of any Dividends or Dividend
Equivalent shall be deemed to have been reinvested in additional shares of
Stock. In addition, with respect to any Performance Award, whether or not
intended to meet the performance-based exception under Code Section 162(m), any
Dividends or Dividend Equivalents granted with respect to such Award, including
a Restricted Stock Award, shall be subject to achieving the same performance
goals as the underlying Performance Award. Notwithstanding the foregoing, no
grant of a Dividend or Dividend Equivalent may be granted with respect to an
Option or SAR.

 

8.4Elections and Limitations for Director Awards.

 

(a)                Elections. On the last day of each calendar quarter (each
such date, an “Election Date”), a Director may elect to receive a percentage
(the percentage so elected being the “Elected Percentage”) of the Director’s
fees (including both Board and Board committee annual retainer fees, if any, and
Board or Board committee meeting and per diem fees) the Company otherwise would
pay in cash to the Director for his or her service as a Director during the
quarterly period immediately following such Election Date (the “Service Period”)
in Stock. The number of shares of Stock, as the case may be, paid or credited to
a Director during the Service Period shall be determined on the first day of the
month immediately following the Service Period by multiplying the amount of the
Director’s fees for such Service Period by his or her Elected Percentage and
dividing that result by the Fair Market Value per share of Stock on such date,
with the result rounded down to the nearest whole number. Any election made by a
Director pursuant to this paragraph must take the form of a written document
signed by the Director and filed with the secretary of the Company and designate
the Elected Percentage of the cash fees the Director elects to forego in the
next Service Period in exchange for Stock.

 

 21 

 

(b)               Limitations. Subject to adjustments pursuant to Sections 4.2
and 25, the amount of an Award granted to each Director in a calendar year shall
not exceed one hundred eighty thousand dollars ($180,000) in value of the
aggregate of Stock and cash Awards; provided, however, that in the case of a
chair of a committee of the Board, such maximum may be increased by up to an
additional fifteen thousand dollars ($15,000) in the aggregate; and provided,
further that in the case of the non-executive chairman of the Board, such
maximum may be increased by up to an additional eighty thousand dollars
($80,000) in the aggregate.

 

SECTION 9

EFFECT OF TERMINATION OF SERVICE

 

9.1Exercisability and Award Vesting

 

Subject to earlier termination of the Option or other Award as otherwise
provided herein and unless otherwise provided by the Committee in the Award
Agreement, an Award and Option shall be vested and an Option shall be
exercisable after a Participant’s termination of Service only during the
applicable time period determined in accordance with this Section 9.1 and
thereafter shall terminate:

 

(a)                Disability or Death. If the Participant’s Service terminates
because of the Disability or death of the Participant, the unvested portion of
any Award shall be forfeited and terminated and the vested portion of an Option
may be exercised by the Participant or the applicable of his guardian or legal
representative or estate for a period of six (6) months after the date on which
the Participant’s Service terminated due to Disability or one (1) year after the
date on which the Participant’s Service terminated due to death, respectively,
but in any event no later than the date of expiration of the Option’s term,
which in no event shall exceed ten (10) years from the date of grant, as set
forth in the Award Agreement evidencing such Option, except as provided in
Section 6.2(a)(i) for a Nonstatutory Stock Option or SAR (the “Option Expiration
Date”).

 

(b)               Change in Control.

 

Notwithstanding any contrary provision in the Plan, in the event of a Change in
Control, the vesting of any unvested Awards shall not be accelerated, and such
Awards shall not become fully exercisable, except upon the occurrence of a
trigger event following such Change in Control expressly provided in the
Participant’s Award Agreement. If a Participant is a “disqualified individual”
(as defined in Section 280G of the Code) and the accelerated vesting of an
Incentive Award and/or the termination of the restricted period occurs with
respect to a Change in Control, together with any other payments which the
Participant has the right to receive from the Company, whether or not under this
Plan, would constitute a “parachute payment” (as defined in Section 280G of the
Code), then such accelerated vesting and/or termination of the restricted period
provided under the paragraph above shall be reduced to the extent necessary
(beginning with Options) so that the present value thereof (as determined for
parachute purposes) to the Participant will be $l.00 less than three times the
Participant’s “base amount” (as defined in Section 280G of the Code), but only
if such reduction produces a better net after-tax position to the Participant.
Such determinations shall be made by the Company in good faith.

 

 22 

 

Notwithstanding any other provision of the Plan, unless otherwise expressly
provided in the Award Agreement, the provisions of this Section 9.1(b) may not
be terminated, amended, or modified to adversely affect any Award theretofore
granted under the Plan without the prior written consent of the Participant with
respect to his outstanding Awards subject, however, to the last paragraph of
this Section 9.1(b).

 

(c)                Termination for Cause. The effect of a Termination for Cause
shall be specified in the Award Agreement.

 

(d)               Other Termination of Service. If the Participant’s Service
with the Company terminates for any reason, except Disability, death,
termination after a Change in Control, or Cause, any Award or Option, to the
extent unvested shall be forfeited by the Participant on the date on which the
Participant’s Service is terminated, and any vested Option may be exercised by
the Participant at any time prior to the expiration of six (6) months after the
date on which the Participant’s Service terminated, but in any event no later
than the Option Expiration Date.

 

9.2Extension of Option if Exercise Prevented by Law

 

Notwithstanding the foregoing, other than termination for Cause, if the exercise
of an Option within the applicable time periods set forth in Section 9.1 is
prevented by the provisions of Section 12 below, the Option shall remain
exercisable until thirty (30) days (or such longer period of time as determined
by the Committee, in its discretion) after the date the Participant is notified
by the Company that the Option is exercisable, but in any event no later than
the Option Expiration Date subject to the limited extension as provided in
Section 6.2(a)(i).

 

9.3Extension if Participant Subject to Section 16(b)

 

Notwithstanding the foregoing, other than termination for Cause, if a sale
within the applicable time periods set forth in Section 9.1 of shares of Stock
acquired upon the exercise of the Option would subject the Participant to
liability under Section 16(b) of the Exchange Act, the Option (if exercisable)
shall remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Participant would no
longer be subject to such liability, (ii) six (6) months after the Participant’s
termination of Service, or (iii) the Option Expiration Date subject to the
limited extension as provided in Section 6.2(a)(i).

 

 23 

SECTION 10

WITHHOLDING TAXES

 

10.1Tax Withholding

 

All Awards are subject to, and the Company shall 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, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan or an Award hereunder and all Awards are subject
to the Company’s right hereunder.

 

10.2Share Withholding

 

With respect to tax withholding required upon the exercise of Options, upon the
lapse of restrictions on Restricted Stock, or upon any other taxable event
arising as a result of any Awards, the Committee in its discretion, may elect to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold shares of Stock having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction (or such higher amount if consistent with the equity treatment
of the Award under the applicable accounting rules). All such elections shall be
subject to any restrictions or limitations that the Committee, in its
discretion, deems appropriate. Any fraction of a share of Stock required to
satisfy such obligation shall be disregarded and the amount due shall instead be
paid in cash by the Participant.

 

10.3Incentive Stock Options

 

With respect to shares of Stock received by a Participant pursuant to the
exercise of an Incentive Stock Option, if such Participant disposes of any such
shares within (i) two (2) years from the date of grant of such Option or (ii)
one (1) year after the transfer of such shares to the Participant, the Company
shall have the right to withhold from any salary, wages or other compensation
payable by the Company to the Participant an amount sufficient to satisfy
federal, state and local tax withholding requirements attributable to such
disqualifying disposition.

 

SECTION 11

PROVISION OF INFORMATION

 

Each Participant shall be given access to information concerning the Company
equivalent to that information generally made available to the Company’s common
stockholders.

 

 24 

SECTION 12

COMPLIANCE WITH SECURITIES LAW,
OTHER APPLICABLE LAWS AND COMPANY POLICIES

 

The Plan, Award Agreements, the grant of Awards and the issuance of shares of
Stock shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to securities and all other
applicable laws, regulations and requirements of any stock exchange or market
system upon which the stock is listed or traded. Options may not be exercised
and Stock may not be issued if the issuance of shares of Stock would constitute
a violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. In addition, no Option may be exercised
and no shares of Stock may be issued unless (a) a registration statement under
the Securities Act shall at the time be in effect with respect to the shares
issuable or (b) in the opinion of legal counsel to the Company, the shares
issuable may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. If the shares of Stock
issuable pursuant to an Award are not registered under the Securities Act, the
Company may imprint on the certificate for such shares the following legend or
any other legend which legal counsel for the Company considers necessary or
advisable to comply with the Securities Act:

 

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY
THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED FOR
SUCH SALE OR TRANSFER.

 

The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to the exercise of any Option or the issuance of shares of Stock, the
Company may require the Participant to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

 

Unless otherwise specifically provided in an Award Agreement, all Awards and all
shares of stock issued and any payments are subject to the Company’s clawback
policies adopted by the Company at any time and as amended from time to time.

 

 25 

SECTION 13

NONTRANSFERABILITY OF AWARDS AND STOCK

 

During the lifetime of the Participant, an Award shall be exercisable only by
the Participant or the Participant’s guardian or legal representative. Subject
to the following paragraph, an Award may be assignable or transferable by the
Participant only by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in Section 414(p) of the
Code, and only if it is so specified in the Award Agreement; provided, however,
that an Incentive Stock Option may only be assignable or transferable by will or
by the laws of descent and distribution. Notwithstanding the foregoing, to the
extent permitted by the Committee in the Award Agreement, and in accordance with
applicable law, in its discretion, and set forth in the Award Agreement
evidencing such Option, a Nonstatutory Stock Option shall be assignable or
transferable subject to the applicable limitations, if any, under the Securities
Act, and the General Instructions to Form S-8 Registration Statement under the
Securities Act. However, the transferee or transferees must be any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, in each case with respect to the Participant, any person sharing
the Participant’s household (other than a tenant or employee of the Company), a
trust in which these persons have more than fifty percent (50%) of the
beneficial interest, a foundation in which these persons (or the Participant)
control the management of assets, or any other entity in which these persons (or
the Participant) own more than fifty percent (50%) of the voting interests
(collectively, “Permitted Transferees”); provided further that, (a) there may be
no consideration for any such transfer and (b) subsequent transfers of Options
transferred as provided above shall be prohibited except subsequent transfers
back to the original holder of the Option and transfers to other Permitted
Transferees of the original holder.

 

SECTION 14

NONCOMPETITIVE ACTIONS

 

The Committee may provide in an Award Agreement a requirement to enter into a
noncompetition agreement in connection with the Award or the effect of a
violation of a noncompetition agreement on an Award.

 

SECTION 15

TERMINATION OR AMENDMENT OF PLAN

 

The Committee may terminate or amend the Plan at any time. However, no grant of
Awards shall be made after the tenth (10th) anniversary of the Effective Date
(the “Term”). Subject to changes in applicable law, regulations or rules that
would permit otherwise, without the approval of the Company’s stockholders
within the time required, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section 4.2 and Section 25), (b) no change in the
class of persons eligible to receive Awards or purchase Stock under the Plan or
to extend the Term of the Plan, (c) no repricing of an Option or SAR or other
amendment as provided in Section 3.3(j) (except by operation of Sections 4.2 or
25 hereof) and (d) no other amendment of the Plan that would require approval of
the Company’s stockholders under any applicable law, regulation or rule or the
stock exchange or market system on which the Stock is traded. No termination or
amendment of the Plan shall affect any then outstanding Award unless expressly
provided by the Committee or otherwise provided in the Plan. In any event, no
termination or amendment of the Plan may materially adversely affect any then
outstanding Award without the consent of the Participant, unless such
termination or amendment is required to enable an Award designated as an
Incentive Stock Option to qualify as an Incentive Stock Option or is necessary
to comply with any applicable law, regulation or rule, including Code Section
409A or as otherwise permitted under the Plan, including upon a Change in
Control.

 

 26 

SECTION 16

STOCKHOLDER APPROVAL

 

The Plan is adopted by the Board as of the Effective Date and shall be approved
by the stockholders of the Company on or within twelve (12) months of the date
of adoption thereof by the Board. Any Awards granted under the Plan prior to
such stockholder approval shall not vest or otherwise become payable or
exercisable until such stockholder approval is obtained and if an Award does
vest or become payable or exercisable due to an acceleration event or alternate
payment event prior to such stockholder approval such Award and any payment
related thereto shall be forfeited if such stockholder approval is not obtained.
In addition, Options or performance-based compensation under Section 8.2 granted
prior to stockholder approval of the Plan or in excess of the Stock previously
approved by the stockholders shall become exercisable and otherwise shall not be
paid no earlier than the date of stockholder approval of the Plan or stockholder
approval of such increase in the Stock, as the case may be.

 

SECTION 17

NO GUARANTEE OF TAX CONSEQUENCES

 

Neither the Company, the Board nor the Committee makes any commitment or
guarantee that any federal, state or local tax treatment will apply or be
available to any person participating or eligible to participate hereunder.

 

SECTION 18

SEVERABILITY

 

In the event that any provision of this Plan shall be held illegal, invalid or
unenforceable for any reason, such provision shall be fully severable, but shall
not affect the remaining provisions of the Plan, and the Plan shall be construed
and enforced as if the illegal, invalid, or unenforceable provision was not
included herein.

 

 27 

SECTION 19

GOVERNING LAW

 

The Plan and Awards shall be interpreted, construed and constructed in
accordance with the laws of the State of Delaware without regard to its
conflicts of law provisions, except as may be superseded by applicable laws of
the United States.

 

SECTION 20

SUCCESSORS

 

All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

 

SECTION 21

RIGHTS AS A STOCKHOLDER

 

The holder of an Award shall have no rights as a stockholder with respect to any
shares of Stock covered by the Award until the date of issue of a stock
certificate to him or her for such shares. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for dividends or other rights
for which the record date is prior to the date such stock certificate is issued.

 

SECTION 22

NO SPECIAL EMPLOYMENT OR SERVICE RIGHTS

 

Nothing contained in the Plan or Award Agreement shall confer upon any
Participant receiving a grant of any Award any right with respect to the
continuation of his or her Service with the Company (or any Affiliate) or
interfere in any way with the right of the Company (or Affiliate), subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such Service or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of any Award.

 

SECTION 23

REORGANIZATION OF COMPANY

 

The existence of an Award shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in Company’s capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the shares of Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

 28 

SECTION 24

CODE SECTION 409A

 

To the extent that any Award is deferred compensation subject to Code Section
409A, the Award Agreement shall comply with the requirements of Code
Section 409A including, without limitation, to the extent required using
applicable definitions from Code Section 409A, and to the extent required by
Code Section 409A, using a more restrictive definition of Change in Control to
comply with Code Section 409A or a more restrictive definition of Disability as
provided in Code Section 409A. To the extent an Award is deferred compensation
subject to Code Section 409A, the Award shall specify a time and form of payment
schedule. In addition if any Award constitutes deferred compensation under
Section 409A of the Code (a “Section 409A Plan”), then the Award shall be
subject to the following requirements, if and to the extent required to comply
with Code Section 409A, and as determined by the Committee and specified in the
Award Agreement:

 

(a)                Payments under the Section 409A Plan may not be made earlier
than (i) the Participant’s separation from service, (ii) the date of the
Participant’s Disability, (iii) the Participant’s death, (iv) a specified time
(or pursuant to a fixed schedule) specified in the Award Notice at the date of
the deferral of such compensation, (v) a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the
assets of the Company, or (vi) the occurrence of an unforeseeable emergency;

 

(b)               The time or schedule for any payment of the deferred
compensation may not be accelerated, except to the extent provided in applicable
Treasury Regulations or other applicable guidance issued by the Internal Revenue
Service; and

 

(c)                elections with respect to the deferral of such compensation
or the time and form of distribution of such deferred compensation shall comply
with the requirements of Section 409A(a)(4) of the Code.

 

With respect to any Award that is subject to Code Section 409A, in the case of
any Participant who is specified employee, a distribution on account of a
separation from service may not be made before the date which is six (6) months
after the date of the Participant’s separation from service (or, if earlier, the
date of the Participant’s death). For purposes of the foregoing, the terms
“separation from service” and “specified employee”, all shall be defined in the
same manner as those terms are defined for purposes of Section 409A of the Code,
and the limitations set forth herein shall be applied in such manner (and only
to the extent) as shall be necessary to comply with any requirements of Section
409A of the Code that are applicable to the Award as determined by the
Committee. If an Award is subject to Code Section 409A, as determined by the
Committee, the Committee may interpret or amend any Award to comply with Code
Section 409A without a Participant’s consent even if such amendment would have
an adverse effect on a Participant’s Award. With respect to an Award that is
subject to Code Section 409A, the Board may amend or interpret the Plan as it
deems necessary to comply with Section 409A, including, without limitation,
limiting the Committee’s or Company’s discretion with respect to an Award that
constitutes deferred compensation to the extent it would violate Code Section
409A, and no Participant consent shall be required even if such an amendment
would have an adverse effect on a Participant’s Award. Notwithstanding the
foregoing, none of the Company, the Committee, any Company Affiliate or their
directors, members, officers, employees or agents of any of the foregoing
guarantee or are responsible for the tax consequences to a Participant for an
Award including, without limitation, an excise tax under Code Section 409A.

 

 29 

SECTION 25

ADJUSTMENTS UPON A CHANGE IN CONTROL

 

If a Change in Control occurs, except a Change in Control solely on account of
Section 2.1(f)(ii), then the Committee, at its sole discretion, shall have the
power and right to (but subject to any accelerated vesting specified in an Award
Agreement):

 

(a)                cancel, effective immediately prior to the occurrence of the
Change in Control, each outstanding Award (whether or not then exercisable)
(including the cancellation of any Options not in the money for which the
exercise price is greater than the consideration to be received), and with
respect to Options and SARs that currently have an exercise price less than the
consideration to be received immediately prior to the Change in Control, pay to
the Participant an amount in cash equal to the excess of (i) the value, as
determined by the Committee, of the property (including cash) received by the
holders of Stock as a result of such Change in Control over (ii) the exercise
price of such Award, if any; provided, however, this subsection shall be
inapplicable to an Award granted within six (6) months before the occurrence of
the Change in Control but only if the Participant is an Insider and such
disposition is not exempt under Rule 16b-3 (or other rules preventing liability
of the Insider under Section 16(b) of the Exchange Act) and, in that event, the
provisions hereof shall be applicable to such Award after the expiration of six
(6) months from the date of grant; or

 

(b)               provide for the exchange or substitution of each Award
outstanding immediately prior to such Change in Control (whether or not then
exercisable) for another award with respect to the Stock or other property for
which such Award is exchangeable and, incident thereto, make an equitable
adjustment as determined by the Committee, in its discretion, in the exercise
price of the Award, if any, or in the number of shares of Stock or amount of
property (including cash) subject to the Award; or

 

(c)                provide for assumption of the Plan and such outstanding
Awards by the surviving entity or its parent.

 

The Committee, in its discretion, shall have the authority to take whatever
action it deems to be necessary or appropriate to effectuate the provisions of
this Section 25.

 

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 30 

 

IN WITNESS WHEREOF, the undersigned Officer of the Company certifies that the
foregoing sets forth the Synthesis Energy Systems, Inc. 2015 Long Term Incentive
Plan as duly adopted by the Board.

 

  SYNTHESIS ENERGY SYSTEMS, INC.                   By: /s/ Robert Rigdon    
Name: Robert Rigdon     Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Synthesis Energy Systems, Inc. 2015 Long Term Incentive Plan]