Exhibit 10.1

 

APPLIED MINERALS INC.

2016 LONG-TERM INCENTIVE PLAN

 

ARTICLE I

PURPOSE

 

The purpose of this Applied Minerals, Inc. 2016 Long-Term Incentive Plan is to
enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company to offer Eligible Employees, Consultants
and Non-Employee Directors incentive awards in order to attract, retain and
reward such individuals and strengthen the mutuality of interests between such
individuals and the Company’s stockholders. The Plan, as set forth herein, is
effective as of the Effective Date (as defined in Article XVI).

 

ARTICLE II

DEFINITIONS

 

For purposes of this Plan, the following terms shall have the following
meanings:

 

2.1 “Acquisition Event” has the meaning set forth in Section 4.2(d).

 

2.2 “Affiliate” means each of the following: (a) any Subsidiary; (b) any Parent;
(c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company or one of its Affiliates;
(d) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which directly or indirectly controls
50% or more (whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) of the Company; and (e) any other entity in which
the Company or any of its Affiliates has a material equity interest and which is
designated as an “Affiliate” by resolution of the Committee.

 

2.3 “Appreciation Award” means any Award under this Plan of any Stock Option,
Stock Appreciation Right or Other Stock-Based Award, provided that such Other
Stock-Based Award is based on the appreciation in value of a share of Common
Stock in excess of an amount equal to at least the Fair Market Value of the
Common Stock on the date such Other Stock-Based Award is granted.

 

2.4 “Award” means any award under this Plan of any Stock Option, Stock
Appreciation Right, Restricted Stock, Performance Shares, Performance Units or
Other Stock-Based Award. All Awards shall be granted by, confirmed by, and
subject to the terms of, a written agreement executed by the Company and the
Participant.

 

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

 

 
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2.6 “Cause” means with respect to a Participant’s Termination of Employment or
Termination of Consultancy, the following:

 

 

(a)   in the case where there is no employment agreement, consulting agreement,
management agreement, Change in Control agreement or similar agreement in effect
between the Company or an Affiliate and the Participant at the time of the grant
of the Award (or where there is such an agreement but it does not define “Cause”
(or words of like import)), termination due to a Participant’s insubordination,
dishonesty, fraud, incompetence, moral turpitude, willful misconduct, refusal to
perform his  duties or responsibilities for any reason other than illness or
incapacity or materially unsatisfactory performance of his  duties for the
Company or an Affiliate, as determined by the Committee in its sole discretion;
or

 

 

(b)  in the case where there is an employment agreement, consulting agreement,
Change in Control agreement or similar agreement in effect between the Company
or an Affiliate and the Participant at the time of the grant of the Award that
defines “Cause” (or words of like import), “Cause” as defined under such
agreement; provided, however, that with regard to any agreement under which the
definition of “Cause” only applies on occurrence of a Change in Control, such
definition of “Cause” shall not apply until a Change in Control actually takes
place and then only with regard to a termination thereafter and otherwise the
definition of “Cause” in (a) above applies.

 

2.7 “Change in Control” has the meaning set forth in Article XII.

 

2.8 “Change in Control Price” has the meaning set forth in Section 12.1.

 

2.9 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to
any section of the Code shall also be a reference to any successor provision and
any Treasury Regulation promulgated thereunder.

 

2.10 “Committee” means:

 

(a) with respect to the application of this Plan to Eligible Employees and
Consultants, a committee or subcommittee of the Board appointed from time to
time by the Board, which committee or subcommittee shall consist of two or more
non-employee directors, each of whom is intended to be

 

 

(i)    to the extent required by Rule 16b-3 promulgated under Section 16(b) of
the Exchange Act, a “nonemployee director” as defined in Rule 16b-3;

 

 

(ii)  to the extent required by Section 162(m) of the Code, an “outside
director” as defined under Section 162(m) of the Code;

 

 

(iii) an “independent director” as defined under NASDAQ Listing Rule 5605(a)(2)
or, if applicable or selected by the Board to determine independence, another
stock exchange rule; and

 

 

(iv) as may be applicable, “independent” as provided pursuant to rules
promulgated by the Securities and Exchange Commission under The Dodd-Frank Wall
Street Reform and Consumer Protection Act; and

  

 
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(b) with respect to the application of this Plan to Non-Employee Directors, the
Board.

 

To the extent that no Committee exists which has the authority to administer
this Plan, the functions of the Committee shall be exercised by the Board.

 

If for any reason the appointed Committee does not meet the requirements of Rule
16b-3, such noncompliance shall not affect the validity of Awards, grants,
interpretations or other actions of the Committee.

 

2.11 “Common Stock” means the Common Stock, $.001 par value per share, of the
Company.

 

2.12 “Company” means Applied Minerals Inc., a Delaware corporation, and its
successors by operation of law.

 

2.13 “Consultant” means any natural or non-natural person who provides bona fide
consulting, advisory, or management services to the Company or its Affiliates
pursuant to a written agreement, which are not primarily in connection with the
offer and sale of securities in a capital-raising transaction, and do not
primarily, directly or indirectly, promote or maintain a market for the
Company’s or its Affiliates’ securities.

 

2.14 “Detrimental Activity” means:

 

 

(a)   the disclosure to anyone outside the Company or its Affiliates, or the use
in any manner other than in the furtherance of the Company’s or its Affiliate’s
business, without written authorization from the Company, of any confidential
information or proprietary information, relating to the business of the Company
or its Affiliates that is acquired by a Participant prior to the Participant’s
Termination;

 

 

(b)  activity while employed or performing services that results, or if known
could result, in the Participant’s Termination that is classified by the Company
as a termination for Cause;

 

 

(c)   any attempt, directly or indirectly, to solicit, induce or hire (or the
identification for solicitation, inducement or hiring of) any non-clerical
employee of the Company or its Affiliates to be employed by, or to perform
services for, the Participant or any Person with which the Participant is
associated (including, but not limited to, due to the Participant’s employment
by, consultancy for, equity interest in, or creditor relationship with such
Person) or any Person from which the Participant receives direct or indirect
compensation or fees as a result of such solicitation, inducement or hire (or
the identification for solicitation, inducement or hire) without, in all cases,
written authorization from the Company;

  

 
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(d)  any attempt, directly or indirectly, to solicit in a competitive manner any
current or prospective customer of the Company or its Affiliates without, in all
cases, written authorization from the Company;

 

 

(e)   the Participant’s Disparagement, or inducement of others to do so, of the
Company or its Affiliates or their past and present officers, directors,
employees or products;

 

 

(f)   without written authorization from the Company, the rendering of services
for any organization, or engaging, directly or indirectly, in any business,
which is competitive with the Company or its Affiliates, or the rendering of
services to such organization or business if such organization or business is
otherwise prejudicial to or in conflict with the interests of the Company or its
Affiliates provided, however, that competitive activities shall only be those
competitive with any business unit or Affiliate of the Company with regard to
which the Participant performed services at any time within the two years prior
to the Participant’s Termination; or

 

 

(g)   breach of any agreement between the Participant and the Company or an
Affiliate (including, without limitation, any employment agreement or
noncompetition or nonsolicitation agreement).

 

For purposes of subsections (a), (c), (d) and (f) above, the Chief Executive
Officer of the Company (or his designee as evidenced in writing) shall have
authority to provide the Participant with written authorization to engage in the
activities contemplated thereby and no other person shall each have authority to
provide the Participant with such authorization.

 

2.15 “Disability” means with respect to a Participant’s Termination, a permanent
and total disability as defined in Section 22(e)(3) of the Code. A Disability
shall only be deemed to occur at the time of the determination by the Committee
of the Disability. Notwithstanding the foregoing, with respect to any payment
pursuant to a Section 409A Covered Award that is triggered upon a Disability,
Disability shall mean that a Participant is disabled under
Section 409A(a)(2)(C)(i) or (ii) of the Code.

 

2.16 “Disparagement” means making comments or statements to the press, the
Company’s or its Affiliates’ employees, consultants or any individual or entity
which could reasonably be expected to adversely affect in any manner: (a) the
conduct of the business of the Company or its Affiliates (including, without
limitation, any products or business plans or prospects); or (b) the business
reputation of the Company or its Affiliates, or any of their products, or their
past or present officers, directors, employees, or Consultants.

 

2.17 “Eligible Employee” means each employee of the Company or an Affiliate.

 

2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any
references to any section of the Exchange Act shall also be a reference to any
successor provision.

 

 
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2.19 “Fair Market Value” means, for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, as of any date and except as provided below, the closing price
reported for the Common Stock on the applicable date: (a) as reported on the
principal national securities exchange in the United States on which it is then
traded or The Nasdaq Stock Market, Inc.; or (b) if not traded on any such
national securities exchange or The Nasdaq Stock Market, Inc., as quoted on an
automated quotation system sponsored by the Financial Industry Regulatory
Authority or if the Common Stock shall not have been reported or quoted pursuant
to (a) or (b) on such date, on the first day prior thereto on which the Common
Stock was reported or quoted.

 

If the Common Stock is not traded, listed or otherwise reported or quoted
pursuant to (a) or (b) in the preceding paragraph, then Fair Market Value means
the fair market value of the Common Stock as determined by the Committee in good
faith in whatever manner it considers appropriate taking into account the
requirements of Section 422 of the Code or Section 409A of the Code, as
applicable.

 

For purposes of the grant of any Award, the applicable date shall be the trading
day on which the Award is granted, or if such grant date is not a trading day,
the trading day immediately prior to the date on which the Award is granted.

 

For purposes of the exercise of any Award the applicable date shall be the date
a notice of exercise is received by the Committee (or its designee) or, if not a
day on which the applicable market is open, the next day that it is open.

 

2.20 “Family Member” means “family member” as defined in Section A.1.(5) of the
general instructions of Form S-8, as may be amended from time to time.

 

2.21 “Full-Value Awards” has the meaning set forth in Section 4.4.

 

2.22 “Good Reason” means, with respect to a Participant’s Termination of
Employment:

 

 

(a)   in the case where there is no employment agreement, management agreement,
Change in Control agreement or similar agreement in effect between the Company
or an Affiliate and the Participant at the time of the grant of the Award (or
where there is such an agreement but it does not define “Good Reason” (or words
or a concept of like import)), a voluntary termination due to Good Reason, as
the Committee, in its sole discretion, decides to treat as a Good
Reason termination; or

 

 

(b)  in the case where there is an employment agreement, management agreement,
Change in Control agreement or similar agreement in effect between the Company
or an Affiliate and the Participant at the time of the grant of the Award that
defines “Good Reason” (or words or a concept of like import), a termination due
to Good Reason (or words or a concept of like import), as defined in such
agreement at the time of the grant of the Award, and, for purposes of the Plan,
as determined by the Committee in its sole discretion; provided that provided,
however, that with regard to any agreement under which the definition of “Good
Reason” only applies on occurrence of a Change in Control, such definition of
“Good Reason” shall not apply until a Change in Control actually takes place and
then only with regard to a termination thereafter and otherwise the definition
of “Good Reason ” in (a) above applies.

  

 
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2.23 “Incentive Stock Option” means any Stock Option awarded to an Eligible
Employee of the Company, its Subsidiaries and its Parent (if any) under this
Plan intended to be and designated as an “Incentive Stock Option” within the
meaning of Section 422 of the Code.

 

2.24 “Limited Stock Appreciation Right” has the meaning set forth in
Section 7.5.

 

2.25 “Non-Employee Director” means a director of the Company who is not an
active employee of the Company or an Affiliate.

 

2.26 “Non-Qualified Stock Option” means any Stock Option awarded under this Plan
that is not an Incentive Stock Option.

 

2.27 “Other Stock-Based Award” means an Award under Article XI of this Plan that
is valued in whole or in part by reference to, or is payable in or otherwise
based on, Common Stock, including, without limitation, (i) an Award valued by
reference to an Affiliate and (ii) dividend equivalent rights.

 

2.28 “Parent” means any parent corporation of the Company within the meaning of
Section 424(e) of the Code.

 

2.29 “Participant” means an Eligible Employee, Non-Employee Director or
Consultant to whom an Award has been granted pursuant to this Plan.

 

2.30 “Performance Cycle” has the meaning set forth in Section 10.1.

 

2.31 “Performance Goals” has the meaning set forth in Exhibit A.

 

2.32 “Performance Period” means each fiscal year of the Company or such other
period (as specified by the Committee) over which the performance of any
performance criteria (including, the Performance Goals) is to be measured.

 

2.33 “Performance Share” means an Award made pursuant to Article IX of this Plan
of the right to receive Common Stock or cash of an equivalent value at the end
of a specified Performance Period.

 

2.34 “Performance Unit” means an Award made pursuant to Article X of this Plan
of the right to receive a fixed dollar amount, payable in cash or Common Stock
or a combination of both.

 

 
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2.35 “Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
incorporated organization, governmental or regulatory or other entity.

 

2.36 “Plan” means this Applied Minerals Inc. 2016 Long-Term Incentive Plan, as
amended from time to time.

 

2.37 “Reference Stock Option” has the meaning set forth in Section 7.1.

 

2.38 “Effective Date” has the meaning set forth in Article XVI.

 

2.39 “Restricted Stock” means an Award of shares of Common Stock under this Plan
that is subject to restrictions under Article VIII.

 

2.40 “Restriction Period” has the meaning set forth in Subsection 8.3(a) with
respect to Restricted Stock.

 

2.41 “Retirement” means, unless otherwise determined, in its sole discretion, by
the Committee at grant, or if no rights of the Participant are reduced,
thereafter, a voluntary Termination of Employment or Termination of Consultancy
by the Participant, other than at a time when circumstances for a termination
for Cause exist, at or after age 65 or, in each case as may be approved by the
Committee with regard to such Participant, in its sole discretion, such earlier
date after age 55.

 

With respect to a Participant’s Termination of Directorship, Retirement means
the failure to stand for reelection or the failure to be reelected on or after a
Participant has attained age 65 or, with the consent of the Board, before age 65
but after age 55.

 

2.42 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as
then in effect or any successor provision.

 

 2.43 “Section 162(m) of the Code” means the exception for performance-based
compensation under Section 162(m) of the Code and any applicable Treasury
regulations thereunder.

 

2.44 “Section 409A Covered Award” has the meaning set forth in Section 15.14.

 

2.45 “Section 409A of the Code” means the nonqualified deferred compensation
rules under Section 409A of the Code and any applicable Treasury regulations
thereunder.

 

2.46 “Securities Act” means the Securities Act of 1933, as amended and all rules
and regulations promulgated thereunder. Any reference to any section of the
Securities Act shall also be a reference to any successor provision.

 

 
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2.47 “Stock Appreciation Right” shall mean the right pursuant to an Award
granted under Article VII.

 

A Tandem Stock Appreciation Right shall mean the right to surrender to the
Company all (or a portion) of a Stock Option in exchange for an amount in cash
and/or stock equal to the difference between

 

 

(i)   the Fair Market Value on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option (or
such portion thereof), and

 

 

(ii)  the aggregate exercise price of such Stock Option (or such portion
thereof).

 

A Non-Tandem Stock Appreciation Right shall mean the right to receive an amount
in cash and/or stock equal to the difference between

 

 

(x) the Fair Market Value of a share of Common Stock on the date such right is
exercised, and

 

 

(y) the aggregate exercise price of such right, otherwise than on surrender of a
Stock Option.

 

2.48 “Stock Option” or “Option” means any option to purchase shares of Common
Stock granted to Eligible Employees, Non-Employee Directors or Consultants
granted pursuant to Article VI.

 

2.49 “Subsidiary” means any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.

 

2.50 “Ten Percent Stockholder” means a person owning stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
its Subsidiaries or its Parent.

 

2.51 “Termination” means a Termination of Consultancy, Termination of
Directorship or Termination of Employment, as applicable.

 

2.53 “Termination of Consultancy” means that the Consultant is no longer acting
as a consultant to the Company or to an Affiliate.

 

In the event that a Consultant or a member or a partner thereof becomes an
Eligible Employee or a Non-Employee Director upon the Termination of the
Consultancy, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Consultancy shall be deemed to occur until such
time as such Consultant or a member or a partner thereof is no longer a
Consultant, an Eligible Employee or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may otherwise define Termination of Consultancy in the
Award agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Consultancy thereafter.

 

 
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2.54 “Termination of Directorship” means that the Non-Employee Director has
ceased to be a director of the Company; except that if a Non-Employee Director
becomes an Eligible Employee or a Consultant upon the termination of
his  directorship, his  ceasing to be a director of the Company shall not be
treated as a Termination of Directorship unless and until the Participant has a
Termination of Employment or Termination of Consultancy, as the case may be.

 

2.55 “Termination of Employment” means a termination of employment (for reasons
other than a military or personal leave of absence granted by the Company) of a
Participant from the Company and its Affiliates. In the event that an Eligible
Employee becomes a Consultant or a Non-Employee Director upon the termination of
his  employment, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Employment shall be deemed to occur until such
time as such Eligible Employee is no longer an Eligible Employee, a Consultant
or a Non-Employee Director. Notwithstanding the foregoing, the Committee may
otherwise define Termination of Employment in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Employment thereafter.

 

2.56 “Transfer” means: (a) when used as a noun, any direct or indirect transfer,
sale, assignment, pledge, hypothecation, encumbrance or other disposition
(including the issuance of equity in a Person), whether for value or no value
and whether voluntary or involuntary (including by operation of law), and
(b) when used as a verb, to directly or indirectly transfer, sell, assign,
pledge, encumber, charge, hypothecate or otherwise dispose of (including the
issuance of equity in a Person) whether for value or for no value and whether
voluntarily or involuntarily (including by operation of law). “Transferred” and
“Transferable” shall have a correlative meaning.

 

ARTICLE III

ADMINISTRATION

 

3.1 The Committee. The Plan shall be administered and interpreted by the
Committee.

 

3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant
to the terms of this Plan, to Eligible Employees, Consultants and Non-Employee
Directors: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted
Stock, (iv) Performance Shares, (v) Performance Units; and (vi) Other
Stock-Based Awards. In particular, the Committee shall have the authority:

 

 

(a)

to select the Eligible Employees, Consultants and Non-Employee Directors to whom
Awards may from time to time be granted hereunder;

 

 

(b)

to determine whether and to what extent Awards, or any combination thereof, are
to be granted hereunder to one or more Eligible Employees, Consultants or
Non-Employee Directors;

  

 
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(c)

to determine the number of shares of Common Stock to be covered by each Award
granted hereunder;

 

 

(d)

to determine the terms and conditions, not inconsistent with the terms of this
Plan, of any Award granted hereunder (including, but not limited to, the
exercise or purchase price (if any), any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof, regarding any Award and the shares of Common Stock relating thereto,
based on such factors, if any, as the Committee shall determine, in its sole
discretion);

 

 

(e)

to determine whether, to what extent and under what circumstances grants of
Options and other Awards under this Plan are to operate on a tandem basis and/or
in conjunction with or apart from other awards made by the Company outside of
this Plan;

 

 

(f)

to determine whether and under what circumstances a Stock Option may be settled
in cash, Common Stock and/or Restricted Stock under Section 6.4(d);

 

 

(g)

to determine whether, to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award under this Plan shall be
deferred either automatically or at the election of the Participant in any case,
in a manner intended to comply with Section 409A of the Code;

 

 

(h)

to determine whether a Stock Option is an Incentive Stock Option or
Non-Qualified Stock Option;

 

 

(i)

to determine whether to require a Participant, as a condition of the granting of
any Award, to not sell or otherwise dispose of shares acquired pursuant to the
exercise of an Award for a period of time as determined by the Committee, in its
sole discretion, following the date of the acquisition of such Award;

 

 

(j)

to modify, extend or renew an Award, subject to Article XIII and Section 6.4(l)
herein, provided, however, that such action does not subject the Award to
Section 409A of the Code without the consent of the Participant;

 

 

(k)

solely to the extent permitted by applicable law, to determine whether, to what
extent and under what circumstances to provide loans (which may be on a recourse
basis and shall bear interest at the rate the Committee shall provide) to
Participants in order to exercise Options under the Plan;

 

 

(l)

to offer to buy out an Award previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the Participant
at the time such offer is made; provided that any such purchase of an Award
shall be limited to no more than the fair market value of the Award on the date
of such purchase and shall be subject to approval by the stockholders of the
Company to the extent required under the rules of any exchange or system on
which the Company’s securities are listed or traded at the request of the
Company;

  

 
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(m)

to set the performance criteria and the Performance Period with respect to any
Award for which the grant, vesting or payment of such Award is conditioned upon
the attainment of specified performance criteria and to certify the attainment
of any such performance criteria; and

 

 

(n)

generally, to exercise such powers and to perform such acts as the Committee
deems necessary or expedient to promote the best interests of the Company that
are not in conflict with the provisions of this Plan.

 

 

3.3 Guidelines. Subject to Article XIII hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan and perform all acts, including the delegation of
its responsibilities (to the extent permitted by applicable law and applicable
stock exchange rules), as it shall, from time to time, deem advisable; to
construe and interpret the terms and provisions of this Plan and any Award
issued under this Plan (and any agreements relating thereto); and to otherwise
supervise the administration of this Plan.

 

The Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement relating thereto in the manner
and to the extent it shall deem necessary to effectuate the purpose and intent
of this Plan.

 

The Committee may adopt special guidelines and provisions for persons who are
residing in or employed in, or subject to, the taxes of, any domestic or foreign
jurisdictions to comply with applicable tax and securities laws of such domestic
or foreign jurisdictions.

 

Notwithstanding the foregoing, no action of the Committee under this Section 3.3
shall impair the rights of any Participant without the Participant’s consent. To
the extent applicable, this Plan is intended to comply with the applicable
requirements of Rule 16b-3, and this Plan shall be limited, construed and
interpreted in a manner so as to comply therewith.

 

3.4 Decisions Final. Any decision, interpretation or other action made or taken
in good faith by or at the direction of the Company, the Board or the Committee
(or any of its members) arising out of or in connection with this Plan shall be
within the absolute discretion of all and each of them, as the case may be, and
shall be final, binding and conclusive on the Company and all employees and
Participants and their respective heirs, executors, administrators, successors
and assigns.

 

 
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3.5 Procedures. If the Committee is appointed, the Board shall designate one of
the members of the Committee as chairman and the Committee shall hold meetings,
subject to the By-Laws of the Company, at such times and places as it shall deem
advisable, including, without limitation, by telephone conference or by written
consent to the extent permitted by applicable law. A majority of the Committee
members shall constitute a quorum. All determinations of the Committee shall be
made by a majority of its members. Any decision or determination reduced to
writing and signed by all the Committee members in accordance with the By-Laws
of the Company, shall be fully effective as if it had been made by a vote at a
meeting duly called and held. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.

 

3.6 Designation of Consultants/Liability.

 

 

(a)

The Committee may designate employees of the Company and professional advisors
to assist the Committee in the administration of this Plan and (to the extent
permitted by applicable law and applicable exchange rules) may grant authority
to officers to grant Awards and/or execute agreements or other documents on
behalf of the Committee.

 

 

(b)

The Committee may employ such legal counsel, consultants and agents as it may
deem desirable for the administration of this Plan and may rely upon any opinion
received from any such counsel or consultant and any computation received from
any such consultant or agent. Expenses incurred by the Committee or the Board in
the engagement of any such counsel, consultant or agent shall be paid by the
Company. The Committee, its members and any person designated pursuant to
subsection (a) above shall not be liable for any action or determination made in
good faith with respect to this Plan. To the maximum extent permitted by
applicable law, no officer of the Company or member or former member of the
Committee or of the Board shall be liable for any action or determination made
in good faith with respect to this Plan or any Award granted under it.

 

3.7 Indemnification. To the maximum extent permitted by applicable law and the
Certificate of Incorporation and By-Laws of the Company and to the extent not
covered by insurance directly insuring such person, each officer or employee of
the Company or any Affiliate and member or former member of the Committee or the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Committee) or liability (including any sum paid in settlement of a claim with
the approval of the Committee), and advanced amounts necessary to pay the
foregoing at the earliest time and to the fullest extent permitted, arising out
of any act or omission to act in connection with the administration of this
Plan, except to the extent arising out of such employee’s, officer’s, member’s
or former member’s own fraud or bad faith. Such indemnification shall be in
addition to any rights of indemnification the employees, officers, directors or
members or former officers, directors or members may have under applicable law
or under the Certificate of Incorporation or By-Laws of the Company or any
Affiliate. Notwithstanding anything else herein, this indemnification will not
apply to the actions or determinations made by an individual with regard to
Awards granted to him  under this Plan.

 

 
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ARTICLE IV

SHARE LIMITATION

 

4.1 Shares. (a) The aggregate number of shares of Common Stock that may be
issued or used for reference purposes with respect to which Awards may be
granted under this Plan on or following the Effective Date shall not exceed
_______ shares (subject to any increase or decrease pursuant to Section 4.2),
which may be either authorized and unissued Common Stock or Common Stock held in
or acquired for the treasury of the Company or both.

 

If any Option, Stock Appreciation Right or Other Stock-Based Awards granted
under this Plan expires, terminates or is canceled for any reason without having
been exercised in full, the number of shares of Common Stock underlying any
unexercised Award shall again be available for the purpose of Awards under the
Plan.

 

If any shares of Restricted Stock, Performance Units, Performance Shares or
Other Stock-Based Awards denominated in shares of Common Stock awarded under
this Plan to a Participant are forfeited for any reason, the number of forfeited
shares of Restricted Stock, Performance Units, Performance Shares or Other
Stock-Based Awards denominated in shares of Common Stock shall again be
available for the purposes of Awards under the Plan.

 

If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is
granted in tandem with an Option, such grant shall only apply once against the
maximum number of shares of Common Stock that may be issued under this Plan.

 

The number of shares of Common Stock available for the purpose of Awards under
the Plan shall be reduced by (i) the total number of Stock Options, Stock
Appreciation Rights or Other Stock-Based Awards (subject to exercise) that have
been exercised, regardless of whether any of the shares of Common Stock
underlying such Awards are not actually issued to the Participant as the result
of a net settlement, and (ii) any shares of Common Stock used to pay any
exercise price or tax withholding obligation with respect to any Award.

 

In addition, the Company may not use the cash proceeds it receives from Stock
Option exercises to repurchase shares of Common Stock on the open market for
reuse under the Plan.

 

Notwithstanding anything to the contrary herein, Awards that may be settled
solely in cash shall not be deemed to use any shares of Common Stock that may be
issued or used for reference purposes under this Plan.

 

 

(b)

Individual Participant Limitations.

  

 
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(i)   The maximum number of shares of Common Stock issuable or referenced with
respect to any Award of (i) Stock Options, or (ii) Stock Appreciation Rights, or
(iii) shares of Restricted Stock or Other Stock-Based Awards, including
Restricted Stock and Other Stock-Based Awards for which the grant of such Award
or the lapse of the relevant Restriction Period or payment (with respect to
dividend equivalents rights) is subject to the attainment of Performance Goals
in accordance with Section 8.3(a)(ii) herein which may be granted under this
Plan during any fiscal of the Company to each Eligible Employee or Consultant
shall be 350,000, shares per type of Award (which shall be subject to any
further increase or decrease pursuant to Section 4.2).   Notwithstanding the
foregoing, if a Tandem Stock Appreciation Right is granted or a Limited Stock
Appreciation Right is granted in tandem with a Stock Option, it shall apply
against the Eligible Employee’s or Consultant’s individual share limitations for
both Stock Appreciation Rights and Stock Options.

 

 

(ii) The maximum number of shares of Common Stock subject to any Award which may
be granted under this Plan during any fiscal of the Company to each Non-Employee
Director shall be 350,000 shares (which shall be subject to any further increase
or decrease pursuant to Section 4.2).

 

 

(iii)  The maximum number of shares of Common Stock subject to any Award of
Performance Shares which may be granted under this Plan during any fiscal year
of the Company to each Eligible Employee or Consultant shall be 1,000,000 shares
(which shall be subject to any further increase or decrease pursuant to
Section 4.2) with respect to any fiscal year of the Company. Each Performance
Share shall be referenced to one share of Common Stock.

 

 

(iv) The maximum value of the payment of Performance Units which may be granted
under this Plan with respect to any fiscal year of the Company to each Eligible
Employee or Consultant shall be $500,000.

 

4.2 Changes.

 

(a)

The existence of this Plan and the Awards granted hereunder shall not affect in
any way the right or power of the Board or the stockholders of the Company to
make or authorize (i) any adjustment, recapitalization, reorganization or other
change in the Company’s capital structure or its business, (ii) any merger or
consolidation of the Company or any Affiliate, (iii) any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock, (iv) the dissolution or liquidation of the Company or any Affiliate,
(v) any sale or transfer of all or part of the assets or business of the Company
or any Affiliate or (vi) any other corporate act or proceeding.

  

 
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(b)

Subject to the provisions of Section 4.2(d), if there shall occur any such
change in the capital structure or business of the Company by reason of any
stock split, reverse stock split, stock dividend, subdivision, combination or
reclassification of shares that may be issued under the Plan, any extraordinary
cash dividend in an amount per share greater than three percent (3%) of the Fair
Market Value of one share of Common Stock on the date of the declaration of such
dividend, any recapitalization, any merger, any consolidation, any spin off, any
reorganization or any partial or complete liquidation, or any other corporate
transaction or event that would be considered an “equity restructuring” within
the meaning of FASB ASC Topic 718 (a “Section 4.2 Event”), then (i) the
aggregate number and/or kind of shares that thereafter may be issued under the
Plan, (ii) the number and/or kind of shares or other property (including cash)
to be issued upon exercise of an outstanding Award or under other Awards granted
under the Plan, (iii) the purchase price thereof, and/or (iv) the individual
Participant limitations set forth in Section 4.1(b) (other than those based on
cash limitations) shall be appropriately adjusted.

 

In addition, subject to Section 4.2(d), if there shall occur any change in the
capital structure or the business of the Company that is not a Section 4.2 Event
(an “Other Extraordinary Event”), then the Committee, in good faith, may adjust
any Award and make such other adjustments to the Plan as described in
subsections (i) through (iv) above.

 

Any adjustment pursuant to this Section 4.2 shall be consistent with the
applicable Section 4.2 Event or the applicable Other Extraordinary Event, as the
case may be, and shall be executed in such manner as the Committee may deem
appropriate to prevent substantial dilution or enlargement of the rights granted
to, or available for, Participants under the Plan. Any such adjustment
determined by the Committee in good faith shall be final, binding and conclusive
on the Company and all Participants and their respective heirs, executors,
administrators, successors and permitted assigns. Except as expressly provided
in this Section 4.2 or in the applicable Award agreement, a Participant shall
have no rights by reason of any Section 4.2 Event or any Other Extraordinary
Event.

 

Notwithstanding the foregoing, the Committee shall not make any adjustments
pursuant to this Section 4.2 that would (i) Cause an Award that is exempt from
or otherwise not subject to Section 409A of the Code to be subject to
Section 409A of the Code or (ii) with respect to an Award that is subject to
Section 409A of the Code, subject a Participant to additional tax or penalties
under Section 409A of the Code, without the Participant’s consent.

 

(c)

Fractional shares of Common Stock resulting from any adjustment in Awards
pursuant to Section 4.2(a) or (b) shall be aggregated until, and eliminated at,
the time of exercise by rounding-down for fractions less than one-half and
rounding-up for fractions equal to or greater than one-half. No cash settlements
shall be made with respect to fractional shares eliminated by rounding. Notice
of any adjustment shall be given by the Committee to each Participant whose
Award has been adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding for all purposes of this Plan.

  

 
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(d)

In the event of a merger or consolidation in which the Company is not the
surviving entity or in the event of any transaction that results in the
acquisition of substantially all of the Company’s outstanding Common Stock by a
single person or entity or by a group of persons and/or entities acting in
concert, or in the event of the sale or transfer of all or substantially all of
the Company’s assets (all of the foregoing being referred to as an “Acquisition
Event”), then the Committee may, in its sole discretion, terminate all
outstanding and unexercised Stock Options, or Stock Appreciation Rights, or any
Other Stock-Based Award that provides for a Participant-elected exercise,
effective as of or immediately before the Acquisition Event, by delivering
notice of termination to each Participant at least 20 days prior to the date of
consummation of the Acquisition Event.  In such case, during the period from the
date on which such notice of termination is delivered to the consummation of the
Acquisition Event, each such Participant shall have the right to exercise in
full all of his Awards that are then outstanding (without regard to any
limitations on exercisability otherwise contained in the Award agreements), but
any such exercise shall be contingent on the occurrence of the Acquisition
Event, and, provided that, if the Acquisition Event does not take place within a
specified period after giving such notice for any reason whatsoever, the notice
and exercise pursuant thereto shall be null and void.

 

If an Acquisition Event occurs but the Committee does not terminate the
outstanding Awards pursuant to this Section 4.2(d), then the provisions of
Section 4.2(b) and Article XII shall apply.

 

4.3 Minimum Purchase Price. Notwithstanding any provision of this Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration that
is less than as permitted under applicable law.

 

4.4 Minimum Restriction and Vesting Period. Unless otherwise determined by the
Committee at grant, or if no rights of the Participant are reduced, thereafter,
with respect to any Award of Restricted Stock, Performance Shares, Performance
Units, or Other Stock-Based Award which by its terms does not require the
recipient of the Award to pay a per share exercise price or purchase price equal
to the Fair Market Value of the underlying Common Stock at the grant date,
including restricted stock units (collectively, “Full-Value Awards”), (i) the
Restriction Period with respect to any such Award of Restricted Stock, (ii) the
Performance Period with respect to any such Award of Performance Shares,
(iii) the Performance Cycle with respect to any such Award of Performance Units
and (iv) the vesting period with respect to any such Other Stock-Based Award
that is payable in shares of Common Stock granted on or after such date shall be
no less than one year. In addition, unless otherwise determined by the Committee
at grant, with respect to any Appreciation Award the vesting schedule shall be
no less than one year. Notwithstanding the foregoing, for purposes of the
definition of Full Value Awards, dividend equivalent rights are not deemed to be
Full-Value Awards.

 

 
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Notwithstanding the foregoing,

 

(a) the Committee may (at the time of grant or thereafter) provide for the
earlier lapsing of restrictions or the vesting of any Award in the event of a
Change in Control, a Participant’s retirement, death or Disability, or a
Participant’s Termination by the Company without Cause or by the Participant for
Good Reason, and

 

(b) subject to the limitations set forth in Section 4.1(a), Awards may be
granted that are not subject to the foregoing limitations (x) with respect to up
to five percent (5%) of the total number of Shares reserved for Awards under the
Plan and (y) in addition to the Awards permitted under the preceding clause (x),
that are made as annual Awards to Non-Employee Directors or are made to
Non-Employee Directors upon their initial election or appointment as a director.

 

4.5  Dividends and Dividend Equivalents. Notwithstanding any other provision of
the Plan to the contrary, any rights granted hereunder to a Participant under an
Award to receive or retain dividends or dividend equivalents with respect to the
shares of Common Stock underlying any Full-Value Award (with respect to which
the lapsing of the restrictions subject thereto or the vesting thereof is based
(in whole or in part) on the attainment of one or more Performance Goals), shall
be subject to the same vesting and/or forfeiture conditions (performance-based,
service-based or otherwise) as are applicable to such Full-Value
Award.  However, dividend equivalent rights that are other Stock-Based Awards
may be granted on a stand-alone basis.

 

 

ARTICLE V

ELIGIBILITY

 

5.1 General Eligibility. All Eligible Employees, prospective employees and
Consultants of the Company and its Affiliates, and Non-Employee Directors of the
Company, are eligible to be granted Awards. Eligibility for the grant of Awards
and actual participation in this Plan shall be determined by the Committee in
its sole discretion. Notwithstanding anything herein to the contrary, no Award
under which a Participant may receive shares of Common Stock may be granted
under this Plan to an Eligible Employee, Consultant or Non-Employee Director of
any Affiliate if such shares of Common Stock does not constitute “service
recipient stock” for purposes of Section 409A of the Code with respect to such
Eligible Employee, Consultant or Non-Employee Director unless such Award is
structured in a manner intended to comply with, or be exempt from, Section 409A
of the Code.

 

 
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5.2 Incentive Stock Options. Notwithstanding anything herein to the contrary,
only Eligible Employees of the Company, its Subsidiaries and its Parent (if any)
are eligible to be granted Incentive Stock Options under this Plan. Eligibility
for the grant of an Incentive Stock Option and actual participation in this Plan
shall be determined by the Committee in its sole discretion.

 

5.3 General Requirement. The vesting and exercise of Awards granted to a
prospective employee or consultant are conditioned upon such individual actually
becoming an Eligible Employee or Consultant.

 

 

ARTICLE VI

STOCK OPTIONS

 

6.1 Options. Stock Options may be granted alone or in addition to other Awards
granted under this Plan. Each Stock Option granted under this Plan shall be of
one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock
Option.

 

6.2 Grants. The Committee shall have the authority to grant to any Eligible
Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options. The Committee shall have the authority to grant any
Consultant or Non-Employee Director one or more Non-Qualified Stock Options.

 

To the extent that any Stock Option does not qualify as an Incentive Stock
Option (whether because of its provisions or the time or manner of its exercise
or otherwise), such Stock Option or the portion thereof which does not qualify
shall constitute a separate Non-Qualified Stock Option.

 

6.3 Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Participants affected, to disqualify
any Incentive Stock Option under such Section 422.

 

6.4 Terms of Options. Options granted under this Plan shall be subject to the
following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:

 

(a)

Exercise Price. The exercise price per share of Common Stock subject to a Stock
Option shall be determined by the Committee at the time of grant, provided that
the per share exercise price of a Stock Option shall not be less than 100% (or,
in the case of an Incentive Stock Option granted to a Ten Percent Stockholder,
110%) of the Fair Market Value of the Common Stock at the time of grant.

  

 
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(b)

Stock Option Term. The term of each Stock Option shall be fixed by the
Committee, provided that no Stock Option shall be exercisable more than 10 years
after the date the Option is granted; and provided further that the term of an
Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed
five years.

(c)

Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
grant. If the Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without limitation, that
such Stock Option is exercisable only in installments or within certain time
periods), the Committee may waive such limitations on the exercisability at any
time at or after grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration of the time at
which such Stock Option may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.

Unless otherwise determined by the Committee at grant, the Option agreement
shall provide that

(i)    in the event the Participant engages in Detrimental Activity prior to any
exercise of the Stock Option, all Stock Options held by the Participant shall
thereupon terminate and expire,

(ii)  as a condition of the exercise of a Stock Option, the Participant shall be
required to certify (or shall be deemed to have certified) at the time of
exercise in a manner acceptable to the Company that the Participant is in
compliance with the terms and conditions of the Plan and that the Participant
has not engaged in, and does not intend to engage in, any Detrimental Activity,
and

(iii) in the event the Participant engages in Detrimental Activity during the
one year period commencing on the date the Stock Option is exercised or becomes
vested, the Company shall be entitled to recover from the Participant at any
time within one year after such exercise or vesting, and the Participant shall
pay over to the Company, an amount equal to any gain realized as a result of the
exercise (whether at the time of exercise or thereafter).

The foregoing provisions described in subsections (i), (ii) and (iii) shall
cease to apply upon a Change in Control.

(d)

Method of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under subsection (c) above, to the extent vested, Stock Options
may be exercised in whole or in part at any time during the Option term, by
giving written notice of exercise to the Committee (or its designee) specifying
the number of shares of Common Stock to be purchased. Such notice shall be in a
form acceptable to the Company and shall be accompanied by payment in full of
the purchase price as follows: (i) in cash or by check, bank draft or money
order payable to the order of the Company; (ii) solely to the extent permitted
by applicable law, if the Committee authorizes, through a procedure whereby the
Participant delivers irrevocable instructions to a broker reasonably acceptable
to the Committee to deliver promptly to the Company an amount equal to the
purchase price; or (iii) on such other terms and conditions as may be acceptable
to the Committee (including, without limitation, the relinquishment of Stock
Options or by payment in full or in part in the form of Common Stock owned by
the Participant (for which the Participant has good title free and clear of any
liens and encumbrances) based on the Fair Market Value of the Common Stock on
the payment date as determined by the Committee). No shares of Common Stock
shall be issued until payment therefor, as provided herein, has been made or
provided for.

  

 
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(e)

Non-Transferability of Options. No Stock Option shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Participant’s lifetime,
only by the Participant. Notwithstanding the foregoing, the Committee may
determine, in its sole discretion, at the time of grant, or if no rights of the
Participant are reduced, thereafter that a Non-Qualified Stock Option that is
otherwise not Transferable pursuant to this Section is Transferable to a Family
Member in whole or in part and in such circumstances, and under such conditions,
as specified by the Committee. A Non-Qualified Stock Option that is Transferred
to a Family Member pursuant to the preceding sentence (i) may not be
subsequently Transferred otherwise than by will or by the laws of descent and
distribution and (ii) remains subject to the terms of this Plan and the
applicable Award agreement. Any shares of Common Stock acquired upon the
exercise of a Non-Qualified Stock Option by a permissible transferee of a
Non-Qualified Stock Option or a permissible transferee pursuant to a Transfer
after the exercise of the Non-Qualified Stock Option shall be subject to the
terms of this Plan and the applicable Award agreement.

(f)

Termination by Death, Disability or Retirement. Unless otherwise determined by
the Committee, in its sole discretion, at the time of grant, or if no rights of
the Participant are reduced, thereafter, if Participant’s Termination is by
reason of death, Disability or Retirement, all Stock Options that are held by
such Participant that are vested and exercisable at the time of the
Participant’s Termination may be exercised by the Participant (or, in the case
of death, by the legal representative of the Participant’s estate) at any time
within a period of one year from the date of such Termination, but in no event
beyond the expiration of the stated term of such Stock Options; provided,
however, that in the case of Retirement, if the Participant dies within such
exercise period, all unexercised Stock Options held by such Participant shall
thereafter be exercisable, to the extent to which they were exercisable at the
time of death, for a period of the later of one year from the date of such death
or the expiration of the stated term of such Stock Options.

(g)

Involuntary Termination Without Cause or for Good Reason. Unless otherwise
determined by the Committee at grant, or if no rights of the Participant are
reduced, thereafter, if a Participant’s Termination is by involuntary
termination without Cause or for Good Reason, all Stock Options that are held by
such Participant that are vested and exercisable at the time of the
Participant’s Termination may be exercised by the Participant at any time within
a period of 90 days from the date of such Termination, but in no event beyond
the expiration of the stated term of such Stock Options.

(h)

Voluntary Termination. Unless otherwise determined by the Committee at grant, or
if no rights of the Participant are reduced, thereafter, if a Participant’s
Termination is voluntary (other than a voluntary termination described in
subsection (i)(y) below), all Stock Options that are held by such Participant
that are vested and exercisable at the time of the Participant’s Termination may
be exercised by the Participant at any time within a period of 90 days from the
date of such Termination, but in no event beyond the expiration of the stated
term of such Stock Options.

 

  

 
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(i)

Termination for Cause. Unless otherwise determined by the Committee at grant, or
if no rights of the Participant are reduced, thereafter, if a Participant’s
Termination (x) is for Cause or (y) is a voluntary Termination (as provided in
subsection (h) above) after the occurrence of an event that would be grounds for
a Termination for Cause, all Stock Options, whether vested or not vested, that
are held by such Participant shall thereupon terminate and expire as of the date
of such Termination.

 

(j)

Unvested Stock Options. Unless otherwise determined by the Committee at grant,
or if no rights of the Participant are reduced, thereafter, Stock Options that
are not vested as of the date of a Participant’s Termination for any reason
shall terminate and expire as of the date of such Termination.

 

(k)

Incentive Stock Option Limitations. To the extent that the aggregate Fair Market
Value (determined as of the time of grant) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an Eligible
Employee during any calendar year under this Plan and/or any other stock option
plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options
shall be treated as Non-Qualified Stock Options. If any provision of this Plan
not be necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the Committee may
amend this Plan accordingly, without the necessity of obtaining the approval of
the stockholders of the Company.

 

(l)

Form, Modification, Extension and Renewal of Stock Options. Subject to the terms
and conditions and within the limitations of this Plan, Stock Options shall be
evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may, subject to Section 13.1(iv), (i) modify, extend or renew
outstanding Stock Options granted under this Plan (provided that the rights of a
Participant are not reduced without his consent and provided further that such
action does not extend the Stock Option beyond its stated term), and (ii) accept
the surrender of outstanding Stock Options (up to the extent not theretofore
exercised) and authorize the granting of new Stock Options in substitution
therefor (to the extent not theretofore exercised).

 

Notwithstanding anything herein to the contrary, an outstanding Option may not
be modified to reduce the exercise price thereof nor may a new Option at a lower
price be substituted for a surrendered Option (other than adjustments or
substitutions in accordance with Section 4.2), unless such action is approved by
the stockholders of the Company.

 

  

 
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(m)

Buyout and Settlement Provisions. The Committee may at any time offer to buy out
an Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the Participant at the time that
such offer is made; provided that such purchase of an Option shall be based on
the Fair Market Value of the Common Stock on the date of purchase and shall be
subject to approval by the stockholders of the Company to the extent required
under the rules of any exchange or system on which the Company’s securities are
listed or traded at the request of the Company.

 

(n)

Other Terms and Conditions. Stock Options may contain such other provisions,
which shall not be inconsistent with any of the terms of this Plan, as the
Committee shall deem appropriate.

 

 

ARTICLE VII

STOCK APPRECIATION RIGHTS

 

7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option (a “Reference Stock Option”)
granted under this Plan (“Tandem Stock Appreciation Rights”). In the case of a
Non-Qualified Stock Option, such rights may be granted either at or after the
time of the grant of such Reference Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Reference Stock Option.

 

7.2 Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as shall be
determined from time to time by the Committee, and the following:

 

 

(a)

Exercise Price. The exercise price per share of Common Stock subject to a Tandem
Stock Appreciation Right shall be the exercise price of the Reference Stock
Option as determined in accordance with Section 6.4(a).

 

  

(b)

Term. A Tandem Stock Appreciation Right or applicable portion thereof granted
with respect to a Reference Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the Reference Stock Option,
except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the Reference Stock
Option shall not be reduced until and then only to the extent the exercise or
termination of the Reference Stock Option Causes the number of shares covered by
the Tandem Stock Appreciation Right to exceed the number of shares remaining
available and unexercised under the Reference Stock Option.

 

  

 
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(c)

Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Reference Stock Options to which
they relate shall be exercisable in accordance with the provisions of Article
VI, and shall be subject to the provisions of Section 6.4(c).

 

  

(d)

Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the
Participant by surrendering the applicable portion of the Reference Stock
Option. Upon such exercise and surrender, the Participant shall be entitled to
receive an amount determined in the manner prescribed in this Section 7.2. Stock
Options that have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Tandem Stock Appreciation Rights have been
exercised.

 

  

(e)

Payment. Upon the exercise of a Tandem Stock Appreciation Right a Participant
shall be entitled to receive up to, but no more than, an amount in cash and/or
Common Stock (as chosen by the Committee in its sole discretion) equal in value
to the excess of the Fair Market Value of one share of Common Stock over the
Option exercise price per share specified in the Reference Stock Option
agreement multiplied by the number of shares in respect of which the Tandem
Stock Appreciation Right shall have been exercised, with the Committee having
the right to determine the form of payment.

 

 

(f)

Deemed Exercise of Reference Stock Option. Upon the exercise of a Tandem Stock
Appreciation Right, the Reference Stock Option or part thereof to which such
Stock Appreciation Right is related shall be deemed to have been exercised for
the purpose of the limitation set forth in Article IV of the Plan on the number
of shares of Common Stock to be issued under the Plan.

 

 

(g)

Non-Transferability. Tandem Stock Appreciation Rights shall be Transferable only
when and to the extent that the underlying Stock Option would be Transferable
under Section 6.4(e) of the Plan.

 

7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights
may also be granted without reference to any Stock Options granted under this
Plan.

 

7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem
Stock Appreciation Rights granted hereunder shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as shall be
determined from time to time by the Committee, and the following:

 

 

(a)

Exercise Price. The exercise price per share of Common Stock subject to a
Non-Tandem Stock Appreciation Right shall be determined by the Committee at the
time of grant, provided that the per share exercise price of a Non-Tandem Stock
Appreciation Right shall not be less than 100% of the Fair Market Value of the
Common Stock at the time of grant.

 

  

 
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(b)

Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the
Committee, but shall not be greater than 10 years after the date the right is
granted.

 

  

(c)

Exercisability. Non-Tandem Stock Appreciation Rights shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee at grant. If the Committee provides, in its
discretion, that any such right is exercisable subject to certain limitations
(including, without limitation, that it is exercisable only in installments or
within certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part (including,
without limitation, waiver of the installment exercise provisions or
acceleration of the time at which such right may be exercised), based on such
factors, if any, as the Committee shall determine, in its sole discretion.

 

Unless otherwise determined by the Committee at grant, the Award agreement shall
provide that (i) in the event the Participant engages in Detrimental Activity
prior to any exercise of the Non-Tandem Stock Appreciation Right, all Non-Tandem
Stock Appreciation Rights held by the Participant shall thereupon terminate and
expire, (ii) as a condition of the exercise of a Non-Tandem Stock Appreciation
Right, the Participant shall be required to certify (or shall be deemed to have
certified) at the time of exercise in a manner acceptable to the Company that
the Participant is in compliance with the terms and conditions of the Plan and
that the Participant has not engaged in, and does not intend to engage in, any
Detrimental Activity, and (iii) in the event the Participant engages in
Detrimental Activity during the one year period commencing on the later of the
date the Non-Tandem Stock Appreciation Right is exercised or becomes vested, the
Company shall be entitled to recover from the Participant at any time within one
year after such exercise or vesting, and the Participant shall pay over to the
Company, an amount equal to any gain realized as a result of the exercise
(whether at the time of exercise or thereafter). The foregoing provisions
described in subsections (i), (ii) and (iii) shall cease to apply upon a Change
in Control.

 

  

(d)

Method of Exercise. Subject to whatever installment exercise and waiting period
provisions apply under subsection (b) above, Non-Tandem Stock Appreciation
Rights may be exercised in whole or in part at any time in accordance with the
applicable Award agreement, by giving written notice of exercise to the Company
specifying the number of Non-Tandem Stock Appreciation Rights to be exercised.

 

  

(e)

Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right, a
Participant shall be entitled to receive, for each right exercised, up to, but
no more than, an amount in cash and/or Common Stock (as chosen by the Committee
in its sole discretion) equal in value to the excess of the Fair Market Value of
one share of Common Stock on the date the right is exercised over the Fair
Market Value of one share of Common Stock on the date the right was awarded to
the Participant.

 

  

 
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(f)

Non-Transferability. No Non-Tandem Stock Appreciation Rights shall be
Transferable by the Participant otherwise than by will or by the laws of descent
and distribution, and all such rights shall be exercisable, during the
Participant’s lifetime, only by the Participant.

 

  

(g)

Termination. Unless otherwise provided in an Award agreement, upon Termination,
Non-Tandem Stock Appreciation Rights shall be exercised in accordance with the
provisions of Section 6.4(f) through (j) of the Plan.

 

7.5 Limited Stock Appreciation Rights. The Committee may, in its sole
discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a
general Stock Appreciation Right or as a limited stock appreciation right (a
“Limited Stock Appreciation Right”). Limited Stock Appreciation Rights may be
exercised only upon the occurrence of a Change in Control or such other event as
the Committee may, in its sole discretion, designate at the time of grant or
thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as
otherwise provided in an Award agreement, the Participant shall receive in cash
and/or Common Stock, as determined by the Committee, an amount equal to the
amount (i) set forth in Section 7.2(e) with respect to Tandem Stock Appreciation
Rights or (ii) set forth in Section 7.4(e) with respect to Non-Tandem Stock
Appreciation Rights, as applicable.

 

ARTICLE VIII

RESTRICTED STOCK

 

8.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued either
alone or in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Employees, Consultants and Non-Employee Directors, to
whom, and the time or times at which, grants of Restricted Stock shall be made,
the number of shares to be awarded, the price (if any) to be paid by the
Participant (subject to Section 8.2), the time or times within which such Awards
may be subject to forfeiture, the vesting schedule and rights to acceleration
thereof, and all other terms and conditions of the Awards.

 

Unless otherwise determined by the Committee at grant, each Award of Restricted
Stock shall provide that in the event the Participant engages in Detrimental
Activity prior to, or during the one year period after, any vesting of
Restricted Stock, the Committee may direct that all unvested Restricted Stock
shall be immediately forfeited to the Company and that the Participant shall pay
over to the Company an amount equal to the Fair Market Value at the time of
vesting of any Restricted Stock which had vested in the period referred to
above. The foregoing provision shall cease to apply upon a Change in Control.

 

 
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The Committee may condition the grant or vesting of Restricted Stock upon the
attainment of specified performance targets (including, the Performance Goals
specified in Exhibit A attached hereto) or such other factors as the Committee
may determine, in its sole discretion.

 

8.2 Awards and Certificates. Eligible Employees, Consultants and Non-Employee
Directors selected to receive Restricted Stock shall not have any rights with
respect to such Award, unless and until such Participant has delivered a fully
executed copy of the agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:

 

 

(a)

Purchase Price. The purchase price of Restricted Stock shall be fixed by the
Committee. Subject to Section 4.3, the purchase price for shares of Restricted
Stock may be zero to the extent permitted by applicable law, and, to the extent
not so permitted, such purchase price may not be less than par value.

 

 

(b)

Acceptance. Awards of Restricted Stock must be accepted within a period of 60
days (or such other period as the Committee may specify) after the grant date,
by executing a Restricted Stock agreement and by paying whatever price (if any)
the Committee has designated thereunder.

 

 

(c)

Legend. Each Participant receiving Restricted Stock shall be issued a stock
certificate in respect of such shares of Restricted Stock, unless the Committee
elects to use another system, such as book entries by the transfer agent, as
evidencing ownership of shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant, and shall, in addition to such
legends required by applicable securities laws, bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:

 

“The anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the Applied Minerals Inc.
(the “Company”) 2016 Long-Term Incentive Plan (as amended from time to time, the
“Plan”), and an Agreement entered into between the registered owner and the
Company dated                     . Copies of such Plan and Agreement are on
file at the principal office of the Company.”

 

(d)

Custody. If stock certificates are issued in respect of shares of Restricted
Stock, the Committee may require that any stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any grant of Restricted Stock, the
Participant shall have delivered a duly signed stock power, endorsed in blank,
relating to the Common Stock covered by such Award.

  

 
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8.3 Restrictions and Conditions. The shares of Restricted Stock awarded pursuant
to this Plan shall be subject to the following restrictions and conditions:

 

 

(a)

Restriction Period. (i) The Participant shall not be permitted to Transfer
shares of Restricted Stock awarded under this Plan during the period or periods
set by the Committee (the “Restriction Period”) commencing on the date of such
Award, as may be set forth in the Restricted Stock Award agreement and such
agreement shall set forth a vesting schedule and any events that would
accelerate vesting of the shares of Restricted Stock.

 

Based on service, attainment of performance goals pursuant to Section 8.3(a)(ii)
below and/or such other factors or criteria as the Committee may determine in
its sole discretion, the Committee may condition the grant or provide for the
lapse of such restrictions in installments in whole or in part, or may
accelerate the vesting of all or any part of any Restricted Stock Award and/or
waive the deferral limitations for all or any part of any Restricted Stock
Award.

 

(ii) Objective Performance Goals, Formulae or Standards.    If the grant of
shares of Restricted Stock or the lapse of restrictions is based on the
attainment of performance goals, the Committee shall establish the objective
performance goals and the applicable vesting percentage of the Restricted Stock
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable Performance Period or at such later date determined
by the Committee in its sole discretion Such performance goals may incorporate
provisions for disregarding (or adjusting for) changes in accounting methods,
corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances.

 

 

(b)

Rights as a Stockholder. Except as provided in this subsection (b) and
subsection (a) above and as otherwise determined by the Committee, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a holder of shares of Common Stock of the Company including,
without limitation, the right to receive any dividends, the right to vote such
shares and, subject to and conditioned upon the full vesting of shares of
Restricted Stock, the right to tender such shares. The Committee may, in its
sole discretion, determine at the time of grant that the payment of dividends
shall be deferred until, and conditioned upon, the expiration of the applicable
Restriction Period.

 

(c)

Termination. Unless otherwise determined by the Committee at grant or, if no
rights of the Participant are reduced, thereafter, subject to the applicable
provisions of the Restricted Stock Award agreement and this Plan, upon a
Participant’s Termination for any reason during the relevant Restriction Period,
all Restricted Stock still subject to restriction will vest or be forfeited in
accordance with the terms and conditions established by the Committee at grant
or thereafter.

 

  

 
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(d)

Lapse of Restrictions. If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock, the certificates for such shares shall
be delivered to the Participant. All legends shall be removed from said
certificates at the time of delivery to the Participant, except as otherwise
required by applicable law or other limitations imposed by the Committee.

 

  

 

ARTICLE IX

PERFORMANCE SHARES

 

9.1 Award of Performance Shares. Performance Shares may be awarded either alone
or in addition to other Awards granted under this Plan. The Committee shall
determine the Eligible Employees, Consultants and Non-Employee Directors, to
whom, and the time or times at which, Performance Shares shall be awarded, the
number of Performance Shares to be awarded to any person, the duration of the
applicable Performance Period during which, and the conditions under which,
receipt of the Shares will be deferred, and the other terms and conditions of
the Award in addition to those set forth in Section 9.2.

 

Unless otherwise determined by the Committee at grant, each Award of Performance
Shares shall provide that in the event the Participant engages in Detrimental
Activity prior to, or during the one year period after, any vesting of
Performance Shares, the Committee may direct (at any time within one year
thereafter) that all unvested Performance Shares shall be immediately forfeited
to the Company and that the Participant shall pay over to the Company an amount
equal to any gain the Participant realized from any Performance Shares which had
vested in the period referred to above. The foregoing provision shall cease to
apply upon a Change in Control.

 

Except as otherwise provided herein, the Committee shall condition the right to
payment of any Performance Share upon the attainment of specified objective
performance goals (including, the Performance Goals specified in Exhibit A
attached hereto) established pursuant to Section 9.2(c) below and such other
factors as the Committee may determine, in its sole discretion.

 

9.2 Terms and Conditions. Performance Shares awarded pursuant to this Article IX
shall be subject to the following terms and conditions:

 

 

(a)

Earning of Performance Share Award. At the expiration of the applicable
Performance Period, the Committee shall determine the extent to which the
performance goals established pursuant to Section 9.2(c) are achieved and the
percentage of each Performance Share Award that has been earned.

 

 

(b)

Non-Transferability. Subject to the applicable provisions of the Award agreement
and this Plan, Performance Shares may not be Transferred during the Performance
Period.

 

  

 
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(c)

Objective Performance Goals, Formulae or Standards. The Committee shall
establish the objective performance goals for the earning of Performance Shares
based on a Performance Period applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable Performance
Period or at such later date as determined by the Committee in its sole
discretion

  

 

(d)

Dividends. Unless otherwise determined by the Committee at the time of grant,
amounts equal to any dividends declared during the Performance Period with
respect to the number of shares of Common Stock covered by a Performance Share
will not be paid to the Participant.

 

 

(e)

Payment. Following the Committee’s determination in accordance with subsection
(a) above, shares of Common Stock or, as determined by the Committee in its sole
discretion, the cash equivalent of such shares shall be delivered to the
Eligible Employee, Consultant or Non-Employee Director, or his legal
representative, in an amount equal to such individual’s earned Performance
Share. Notwithstanding the foregoing, the Committee may, in its sole discretion,
award an amount less than the earned Performance Share and/or subject the
payment of all or part of any Performance Share to additional vesting,
forfeiture and deferral conditions as it deems appropriate.

 

 

(f)

Termination. Subject to the applicable provisions of the Award agreement and
this Plan, upon a Participant’s Termination for any reason during the
Performance Period for a given Award, the Performance Shares in question will
vest or be forfeited in accordance with the terms and conditions established by
the Committee at grant.

 

 

(g)

Accelerated Vesting. Based on service, performance and/or such other factors or
criteria, if any, as the Committee may determine, the Committee may, at or after
grant, accelerate the vesting of all or any part of any Performance Share Award.

 

 

 

 

ARTICLE X

PERFORMANCE UNITS

 

10.1 Award of Performance Units. Performance Units may be awarded either alone
or in addition to other Awards granted under this Plan. The Committee shall
determine the Eligible Employees, Consultants and Non-Employee Directors, to
whom, and the time or times at which, Performance Units shall be awarded, the
number of Performance Units to be awarded to any person, the duration of the
period (the “Performance Cycle”) during which, and the conditions under which, a
Participant’s right to Performance Units will be vested, the ability of
Participants to defer the receipt of payment of such Units, and the other terms
and conditions of the Award in addition to those set forth in Section 10.2.

 

 
29

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A Performance Unit shall have a fixed dollar value.

 

Unless otherwise determined by the Committee at grant, each Award of Performance
Units shall provide that in the event the Participant engages in Detrimental
Activity prior to, or during the one year period after, any vesting of
Performance Units, the Committee may direct (at any time within one year
thereafter) that all unvested Performance Units shall be immediately forfeited
to the Company and that the Participant shall pay over to the Company an amount
equal to any gain the Participant realized from any Performance Units which had
vested in the period referred to above. The foregoing provision shall cease to
apply upon a Change in Control.

 

Except as otherwise provided herein, the Committee shall condition the vesting
of any Performance Unit upon the attainment of specified objective performance
goals (including, the Performance Goals specified in Exhibit A attached hereto)
established pursuant to Section 10.2(a) below and such other factors as the
Committee may determine, in its sole discretion.

 

10.2 Terms and Conditions. The Performance Units awarded pursuant to this
Article X shall be subject to the following terms and conditions:

 

 

(a)

Performance Goals. The Committee shall establish the objective performance goals
for the earning of Performance Units based on a Performance Cycle applicable to
each Participant or class of Participants in writing prior to the beginning of
the applicable Performance Cycle or at such later date as determined by the
Committee in its sole discretion.

 

 

(b)

Non-Transferability. Subject to the applicable provisions of the Award agreement
and this Plan, Performance Unit Awards may not be Transferred.

 

 

(c)

Vesting. At the expiration of the Performance Cycle, the Committee shall
determine the extent to which the performance goals have been achieved, and the
percentage of the Performance Unit Award of each Participant that has vested.

 

 

(d)

Payment. Subject to the applicable provisions of the Award agreement and this
Plan, at the expiration of the Performance Cycle, cash and/or share certificates
of an equivalent value (as the Committee may determine in its sole discretion)
shall be delivered to the Participant, or his legal representative, in payment
of the vested Performance Units covered by the Performance Unit Award.

 

 

(e)

Termination. Subject to the applicable provisions of the Award agreement and
this Plan, upon a Participant’s Termination for any reason during the
Performance Cycle for a given Award, the Performance Units in question will vest
or be forfeited in accordance with the terms and conditions established by the
Committee at grant.

 

 

(f)

Accelerated Vesting. Based on service, performance and/or such other factors or
criteria, if any, as the Committee may determine, the Committee may, at or after
grant, accelerate the vesting of all or any part of any Performance Unit and/or
waive the deferral limitations for all or any part of such Award.

 

 
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ARTICLE XI

OTHER STOCK-BASED AWARDS

 

11.1 Other Awards. The Committee is authorized to grant to Eligible Employees,
Consultants and Non-Employee Directors Other Stock-Based Awards that are payable
in, valued in whole or in part by reference to, or otherwise based on or related
to shares of Common Stock, including but not limited to, shares of Common Stock
awarded purely as a bonus as payment for directors’ fees and not subject to any
restrictions or conditions, shares of Common Stock in payment of the amounts due
under an incentive or performance plan sponsored or maintained by the Company or
an Affiliate, stock equivalent units, restricted stock units, Awards valued by
reference to book value of shares of Common Stock, and dividend equivalent
rights, which may or may not reference shares underlying other Awards or shares
already owned. Other Stock-Based Awards may be granted either alone or in
addition to or in tandem with other Awards granted under the Plan.  The maximum
payment for each dividend equivalents right is the amount of the dividend paid
on a share of Common Stock.

 

Subject to the provisions of this Plan, the Committee shall have authority to
determine the Eligible Employees, Consultants and Non-Employee Directors, to
whom, and the time or times at which, such Awards shall be made, the number of
shares of Common Stock to be awarded pursuant to such Awards, and all other
conditions of the Awards. The Committee may also provide for the grant of Common
Stock under such Awards upon the completion of a specified Performance Period.

 

The Committee may condition the grant or vesting of Other Stock-Based Awards
upon the attainment of specified performance criteria (including the Performance
Goals set forth on Exhibit A) or such other factors as the Committee may
determine, in its sole discretion. If the grant or vesting of an Other
Stock-Based Award is based on the attainment of performance goals, the Committee
shall, in its sole discretion, establish the objective performance goals for the
grant or vesting of such Other Stock-Based Awards applicable to each Participant
or class of Participants in writing prior to the beginning of the applicable
Performance Period or at such later date as determined by the Committee in its
sole discretion.

 

11.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article XI shall be subject to the following terms and conditions:

 

 

(a)

Non-Transferability. Subject to the applicable provisions of the Award agreement
and this Plan, shares of Common Stock subject to Awards made under this Article
XI may not be Transferred prior to the date on which the shares are issued, or,
if later, the date on which any applicable restriction, performance or deferral
period lapses.

 

  

 
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(b)

Dividends. Unless otherwise determined by the Committee at the time of Award,
subject to the provisions of the Award agreement and this Plan, the recipient of
an Award under this Article XI shall not be entitled to receive, currently or on
a deferred basis, dividends or dividend equivalents with respect to the number
of shares of Common Stock covered by the Award, as determined at the time of the
Award by the Committee, in its sole discretion.  The foregoing does not apply to
Awards of an Other Stock-Based Award consisting of dividend equivalent rights
only.

 

 

(c)

Vesting. Any Award under this Article XI and any Common Stock covered by any
such Award shall vest or be forfeited to the extent so provided in the Award
agreement, as determined by the Committee, in its sole discretion.

 

 

(d)

Price. Common Stock issued on a bonus basis under this Article XI may be issued
for no cash consideration; Common Stock purchased pursuant to a purchase right
awarded under this Article XI shall be priced, as determined by the Committee in
its sole discretion.

 

 

ARTICLE XII

CHANGE IN CONTROL PROVISIONS

 

12.1 Benefits. In the event of a Change in Control of the Company (as defined
below), or in anticipation of a Change in Control, effective as of or
immediately before the Change in Control, but such action being contingent on
the occurrence of the Change in Control, and, provided that, if the Change in
Control does not take place within a specified period after such action by the
Committee for any reason whatsoever, the action shall be null and void, and
except as otherwise provided by the Committee in an Award agreement, a
Participant’s Award shall be treated in accordance with one of the following
methods as determined by the Committee acting in the best interests of the
Participant in his capacity as such without regard to the best interests of the
Company or the Participant in any other capacity (references to determinations
of the Committee below incorporating such standard):

 

 

(a)

Awards subject to vesting conditions, whether or not then vested, shall be
continued, assumed, have new rights substituted therefor (in each case, the
vesting conditions shall be continued or shall lapse, as determined by the
Committee, but shall not be increased or extended) or in the case of Stock
Options, or Stock Appreciation Rights, or any Other Stock-Based Award that
provides for a Participant-elected exercise, be treated in accordance with
Section 4.2(d) hereof, as determined by the Committee. Full Value Awards subject
to Restrictions, Performance Periods, or Performance Cycles  shall be continued,
assumed, have new rights substituted therefor (in each case, the Restrictions,
Performance Periods, or Performance Cycles shall be continued or shall lapse, as
determined by the Committee, but shall not be increased or extended).
Notwithstanding anything to the contrary herein, for purposes of Incentive Stock
Options, any assumed or substituted Stock Option shall comply with the
requirements of Treasury Regulation § 1.424-1 (and any amendments thereto).

  

 
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(b)

If there is a Change in Control Price, the Committee, in its sole discretion,
may provide for the purchase in cash by the Company or an Affiliate of (i) any
Stock Options, or Stock Appreciation Rights, or any Other Stock-Based Award that
provides for a Participant-elected exercise, for an amount equal to the excess
of the Change in Control Price (as defined below) of the shares of Common Stock
covered by such Awards, over the aggregate exercise price of such Awards, (ii)
any other Appreciation Awards for an amount equal to the excess of the Change on
Control of the shares of Common Stock covered by such Awards over the Fair
Market Value at the date of grant, and (iii) any Full Value Awards at the Change
in Control Price of the shares of Common Stock covered by such Awards. For
purposes of this Section 12.1, Change in Control Price shall mean the highest
price per share of Common Stock paid in any transaction related to a Change in
Control of the Company; provided, however, that the Change in Control Price
shall not exceed the fair market value of the Common Stock at the time of
purchase as determined in accordance Section 409A of the Code.

 

(c)

In the event of a transaction described in Section 4.2(d), the Committee may, in
its sole discretion, provide for the cancellation of any Appreciation Awards
without payment, if the Change in Control Price is less than the exercise price
of such Appreciation Award.

 

(d)

Notwithstanding anything else herein, the Committee may, in its sole discretion,
provide for accelerated vesting or lapse of restrictions Performance Periods, or
Performance Cycles, of an Award at any time.

 

(e)

Dividend equivalent rights shall not be affected by a Change in Control except
that such rights shall terminate in the event of a Change of Control in a
transaction described in Section 4.2(d).

 

12.1 Benefits. In the event of a Change in Control of the Company (as defined
below), or in anticipation of a Change of Control and subject to a Change of
Control occurring within a reasonable time, and except as otherwise provided by
the Committee in an Award agreement, a Participant’s Award shall be treated in
accordance with one of the following methods as determined by the Committee
acting in the best interest of the Participant as a Participant:

 

 

(a)

Awards, whether or not then vested, shall be continued, assumed, have new rights
substituted therefor or be treated in accordance with Section 4.2(d) hereof, as
determined by the Committee, and restrictions to which any shares of Restricted
Stock or any other Award granted prior to the Change in Control are subject
shall not lapse upon a Change in Control and the Restricted Stock or other Award
shall, where appropriate in the sole discretion of the Committee, receive the
same distribution as other Common Stock on such terms as determined by the
Committee; provided that, the Committee may decide to award additional
Restricted Stock or other Award in lieu of any cash distribution.
Notwithstanding anything to the contrary herein, for purposes of Incentive Stock
Options, any assumed or substituted Stock Option shall comply with the
requirements of Treasury Regulation § 1.424-1 (and any amendments thereto).

 

  

 
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(b)

The Committee, in its sole discretion, may provide for the purchase of any
Awards by the Company or an Affiliate for an amount of cash equal to the excess
of the Change in Control Price (as defined below) of the shares of Common Stock
covered by such Awards, over the aggregate exercise price of such Awards. For
purposes of this Section 12.1, Change in Control Price shall mean the highest
price per share of Common Stock paid in any transaction related to a Change in
Control of the Company; provided, however, that the Change in Control Price
shall not exceed the fair market value of the Common Stock at the time of
purchase as determined in accordance Section 409A of the Code.

 

 

(c)

The Committee may, in its sole discretion, provide for the cancellation of any
Appreciation Awards without payment, if the Change in Control Price is less than
the exercise price of such Appreciation Award.

 

 

(d)

Notwithstanding anything else herein, the Committee may, in its sole discretion,
provide for accelerated vesting or lapse of restrictions, of an Award at any
time.

 

 

12.2 Change in Control. Unless otherwise determined by the Committee in the
applicable Award agreement or other written agreement approved by the Committee,
a “Change in Control” shall be deemed to occur if

 

(i) any “person” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Common Stock), 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;

 

(ii)  a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no “person” (other than those covered by the exceptions in (i) above)
acquires more than 50% of the combined voting power of the Company’s then
outstanding securities shall not constitute a Change in Control of the Company;
or

 

 
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(iii) the stockholders of the Company approve a plan of complete liquidation of
the Company or the consummation of the sale or disposition by the Company of all
or substantially all of the Company’s assets pursuant to a spinoff type
transaction, directly or indirectly of such assets to the stockholders of the
Company; provided, that with respect to any payment pursuant to a Section 409A
Covered Award that is triggered upon a Change in Control, stockholder approval
of a plan of liquidation of the Company shall not constitute a Change in
Control.

 

 

ARTICLE XIII

TERMINATION OR AMENDMENT OF PLAN

 

13.1 Termination or Amendment. Notwithstanding any other provision of this Plan,
the Board may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XV or Section 409A of the Code), or suspend or terminate
it entirely, retroactively or otherwise;

 

provided, however, that, unless otherwise required by law or specifically
provided herein, the rights of a Participant with respect to Awards granted
prior to such amendment, suspension or termination, may not be impaired without
the consent of such Participant and,

 

provided further, without the approval of the holders of the Company’s Common
Stock entitled to vote in accordance with applicable law, no amendment may be
made which would

 

 

(i)    increase the aggregate number of shares of Common Stock that may be
issued under this Plan (except by operation of Section 4.2);

 

 

(ii)   increase the maximum individual Participant limitations for a fiscal year
under Section 4.1(b) (except by operation of Section 4.2);

 

 

(iii) change the classification of individuals eligible to receive Awards under
this Plan;

 

 

(iv)  decrease the minimum exercise price of any Stock Option or Stock
Appreciation Right;

 

 

(v)  extend the maximum option period under Section 6.4;

 

 

(vi)  alter the Performance Goals set forth in Exhibit A; or

 

 

(vii) other than adjustments or substitutions in accordance with Section 4.2,
amend the terms of outstanding Awards to reduce the exercise price of
outstanding Stock Options or Stock Appreciation Rights or to cancel outstanding
Stock Options or Stock Appreciation Rights (where prior to the reduction or
cancellation the exercise price equals or exceeds the fair market value of the
shares of Common Stock underlying such Awards) in exchange for cash, other
Awards or Stock Options or Stock Appreciation Rights with an exercise price that
is less than the exercise price of the original Stock Options or Stock
Appreciation Rights.

  

 
35

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In no event may this Plan be amended without the approval of the stockholders of
the Company in accordance with the applicable laws of the State of Delaware to
increase the aggregate number of shares of Common Stock that may be issued under
this Plan, decrease the minimum exercise price of any Award, or to make any
other amendment that would require stockholder approval under the rules of any
exchange or system on which the Company’s securities are listed or traded at the
request of the Company.

 

Notwithstanding anything herein to the contrary, the Board may amend the Plan or
any Award agreement at any time without a Participant’s consent to comply with
applicable law including Section 409A of the Code.

 

The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article IV above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder’s consent.

 

 

ARTICLE XIV

UNFUNDED PLAN

 

14.1 Unfunded Status of Plan. This Plan is an “unfunded” plan for compensation.
With respect to any payments as to which a Participant has a fixed and vested
interest but which are not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general unsecured creditor of the Company.

 

 

ARTICLE XV

GENERAL PROVISIONS

 

15.1 Legend. The Committee may require each person receiving shares of Common
Stock pursuant to a Stock Option or other Award under the Plan to represent to
and agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof. In addition to any legend
required by this Plan, the certificates for such shares may include any legend
that the Committee deems appropriate to reflect any restrictions on Transfer.

 

 
36

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All certificates for shares of Common Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities exchange system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may Cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

15.2 Other Plans. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.

 

15.3 No Right to Employment/Directorship/Consultancy. Neither this Plan nor the
grant of any Option or other Award hereunder shall give any Participant or other
employee, Consultant or Non-Employee Director any right with respect to
continuance of employment, consultancy or directorship by the Company or any
Affiliate, nor shall they be a limitation in any way on the right of the Company
or any Affiliate by which an employee is employed or a Consultant or
Non-Employee Director is retained to terminate his  employment, consultancy or
directorship at any time.

 

15.4 Withholding of Taxes. The Company shall have the right to deduct from any
payment to be made pursuant to this Plan, or to otherwise require, prior to the
issuance or delivery of any shares of Common Stock or the payment of any cash
hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Upon the vesting of Restricted Stock (or other
Award that is taxable upon vesting), or upon making an election under
Section 83(b) of the Code, a Participant shall pay all required withholding to
the Company. Any statutorily required withholding obligation with regard to any
Participant may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.

 

15.5 No Assignment of Benefits. No Award or other benefit payable under this
Plan shall, except as otherwise specifically provided by law or permitted by the
Committee, be Transferable in any manner, and any attempt to Transfer any such
benefit shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.

 

15.6 Listing and Other Conditions.

 

 

(a)

Unless otherwise determined by the Committee, if the Common Stock is listed on a
national securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to an Award shall
be conditioned upon such shares being listed on such exchange or system. The
Company shall have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Option or other Award with
respect to such shares shall be suspended until such listing has been effected.

 

  

 
37

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(b)

If at any time counsel to the Company shall be of the opinion that any sale or
delivery of shares of Common Stock pursuant to an Option or other Award is or
may in the circumstances be unlawful or result in the imposition of excise taxes
on the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on the Company.

 

 

(c)

Upon termination of any period of suspension under this Section 15.6, any Award
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available before such suspension and as to
shares which would otherwise have become available during the period of such
suspension, but no such suspension shall extend the term of any Award.

 

 

(d)

A Participant shall be required to supply the Company with any certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.

 

 

15.7 Governing Law. This Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Delaware
(regardless of the law that might otherwise govern under applicable Delaware
principles of conflict of laws).

 

15.8 Construction. Wherever any words are used in this Plan in the masculine
gender they shall be construed as though they were also used in the feminine or
neuter gender in all cases where they would so apply, and wherever any words are
used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

 

15.9 Other Benefits. No Award granted or paid out under this Plan shall be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or its Affiliates nor affect any benefits under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

 

 
38

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15.10 Costs. The Company shall bear all expenses associated with administering
this Plan, including expenses of issuing Common Stock pursuant to any Awards
hereunder.

 

15.11 No Right to Same Benefits. The provisions of Awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.

 

15.12 Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant’s death or Disability and to supply it with a copy of the will (in
the case of the Participant’s death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

 

15.13 Section 16(b) of the Exchange Act. All elections and transactions under
this Plan by persons subject to Section 16 of the Exchange Act involving shares
of Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
this Plan and the transaction of business thereunder.

 

15.14 Section 409A of the Code. Although the Company does not guarantee to a
Participant the particular tax treatment of an Award granted under the Plan,
Awards made under the Plan are intended to comply with, or be exempt from, the
applicable requirements of Section 409A of the Code and the Plan and any Award
agreement hereunder shall be limited, construed and interpreted in accordance
with such intent. To the extent that any Award granted under the Plan
constitutes “non-qualified deferred compensation” pursuant to Section 409A of
the Code (a “Section 409A Covered Award”), it shall be paid in a manner that
will comply with Section 409A of the Code. In no event whatsoever shall the
Company be liable for any additional tax, interest or penalties that may be
imposed on a Participant by Code Section 409A or any damages for failing to
comply with Code Section 409A or this Section 15.14. Notwithstanding anything in
the Plan or in an Award to the contrary, the following provisions shall apply to
Section 409A Covered Awards:

 

 

(a)

A termination of employment shall not be deemed to have occurred for purposes of
any provision of a Section 409A Covered Award providing for payment upon or
following a termination of the Participant’s employment unless such termination
is also a “Separation from Service” within the meaning of Code Section 409A and,
for purposes of any such provision of Section 409A Covered Award, references to
a “termination,” “termination of employment” or like terms shall mean Separation
from Service. Notwithstanding any provision to the contrary in the Plan or the
Award, if the Participant is deemed on the date of the Participant’s Termination
to be a “specified employee” within the meaning of that term under Code
Section 409A(a)(2)(B) and using the identification methodology selected by the
Company from time to time, or if none, the default methodology set forth in Code
Section 409A, then with regard to any such payment under a Section 409A Covered
Award, to the extent required to be delayed in compliance with Code
Section 409A(a)(2)(B), such payment shall not be made prior to the earlier of
(i) the expiration of the six (6)-month period measured from the date of the
Participant’s Separation from Service, and (ii) the date of the Participant’s
death (the “Delay Period”). All payments delayed pursuant to this
Section 15.15(a) shall be paid to the Participant on the first day of the
seventh month following the date of the Participant’s Separation from Service
or, if earlier, on the date of the Participant’s death.

  

 
39

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(b)

Whenever a payment under a Section 409A Covered Award specifies a payment period
with reference to a number of days, the actual date of payment within the
specified period shall be within the sole discretion of the Company.

 

 

(c)

If under the Section 409A Covered Award an amount is to be paid in two or more
installments, for purposes of Code Section 409A, each installment shall be
treated as a separate payment.

 

15.15 Successor and Assigns. The Plan shall be binding on all successors and
permitted assigns of a Participant, including, without limitation, the estate of
such Participant and the executor, administrator or trustee of such estate.

 

15.16 Severability of Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.

 

15.17 Payments to Minors, Etc. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person’s guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Board, the Company, its Affiliates and
their employees, agents and representatives with respect thereto.

 

15.18 Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and
shall not be employed in the construction of the Plan.

 

15.19 Recoupment. All Awards granted or other compensation paid by the Company
under this Plan, including any shares of Common Stock issued under any Award
hereunder, will be subject to any compensation recapture policies established by
the Board or the Committee from time to time, in their respective sole
discretion.

 

 
40

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15.20 Reformation. If any provision regarding Detrimental Activity or any other
provision set forth in the Plan or an Award agreement is found by any court of
competent jurisdiction or arbitrator to be invalid, void or unenforceable or to
be excessively broad as to duration, activity, geographic application or
subject, such provision or provisions shall be construed, by limiting or
reducing them to the extent legally permitted, so as to be enforceable to the
maximum extent compatible with then applicable law.

 

15.21 Electronic Communications. Notwithstanding anything else herein to the
contrary, any Award agreement, notice of exercise of an Option or Non-Tandem
Stock Appreciation Right, or other document or notice required or permitted by
this Plan that is required to be delivered in writing may, to the extent
determined by the Committee, be delivered and accepted electronically.
Signatures may also be electronic if permitted by the Committee. The term
“written agreement” as used in the Plan shall include any document that it is
delivered and/or accepted electronically.

 

  

ARTICLE XVI

EFFECTIVE DATE OF PLAN

 

On May __, 2016, the Board approved this Plan in the form set forth herein (the
“Effective Date”). 

 

ARTICLE XVII

TERM OF PLAN

 

No Award shall be granted pursuant to the Plan on or after the date of the
Company’s 2016 Annual Meeting, except for awards to be made in 2017 relating to
2016 bonus arrangements. 

 

ARTICLE XVIII

NAME OF PLAN

 

This Plan shall be known as “Applied Minerals Inc. 2016 Long-Term Incentive
Plan”.

 

 
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EXHIBIT A

PERFORMANCE GOALS

 

Performance goals established for purposes of the grant and/or vesting of
performance-based Awards of Restricted Stock, Other Stock-Based Awards,
Performance Units and/or Performance Shares shall be based on one or more of the
following performance goals (“Performance Goals”): enterprise value of the
Company; income or net income; operating income; net operating income or net
operating income after tax; operating profit or net operating profit; cash flow
including, but not limited to, from operations or free cash flow; bank debt or
other long-term or short-term public or private debt or other similar financial
obligations (which may be calculated net of cash balances and/or other offsets
and adjustments); operating margin; return on operating revenue or return on
operating profit; net sales, revenues, net income or earnings before income tax
or other exclusions of the Company; return measures (after tax or pre-tax),
including return on capital employed, return on invested capital; return on
equity, return on assets, return on net assets; total stockholder return or
growth in total stockholder return (with or without dividend reinvestment);
estimated market share; expense management/control or reduction (including
without limitation, compensation and benefits expense); customer satisfaction;
technological improvements/implementation, new product innovation;
property/asset purchases or sales; litigation and regulatory
resolution/implementation goals; leases, contracts or financings (including
renewals, overhead, savings, G&A and other expense control goals); risk
management/implementation; development and implementation of strategic plans
and/or organizational restructuring goals; formations of joint ventures or
partnerships or the completion of other similar transactions intended to enhance
the Corporation’s revenue or profitability or to enhance its customer base; or
completion of a merger, acquisition or any transaction that results in the sale
of all or substantially all of the stock or assets of the Company; sales to
individual or related customers; sales to new customers; contacts with potential
customers; evaluations of the company’s products by potential customers; and
identification of and/or exploitation of new markets.

 

All Performance Goals may be based upon the attainment of specified levels of
the Company (or its subsidiary, division or other operational unit) performance.
Any goal may be expressed as a dollar figure, on a percentage basis (if
applicable) or on a per share basis, and goals may be either absolute, relative
to a selected peer group or index, or a combination of both. The Committee may:
(i) designate additional business criteria on which the Performance Goals may be
based or (ii) adjust, modify or amend the aforementioned business criteria.

 

 
42

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Except as otherwise determined by the Committee at grant, the measures used in
Performance Goals set under the Plan shall be determined in accordance with
generally accepted accounting principles (“GAAP”) and in a manner consistent
with the methods used in the Company’s regular reports on Forms 10-K and 10-Q,
without regard to any of the following unless otherwise determined by the
Committee:

 

 

(a)  all items of gain, loss or expense for the fiscal year or other applicable
performance period that are related to special, unusual or non-recurring items,
events or circumstances affecting the Company (or a Subsidiary, division, other
operational unit or administrative department of the Company) or the financial
statements of the Company (or a Subsidiary, division, other operational unit or
administrative department of the Company);

 

 

(b)   all items of gain, loss or expense for the fiscal year or other applicable
performance period that are related to (i) the disposal of a business or
discontinued operations or (ii) the operations of any business acquired by the
Company (or a Subsidiary, division, other operational unit or administrative
department of the Company) during the fiscal year or other applicable
performance period; and

 

 

(c) all items of gain, loss or expense for the fiscal year or other applicable
performance period that are related to changes in accounting principles or to
changes in applicable law or regulations.

 

To the extent any objective Performance Goals are expressed using any measures
that require deviations from GAAP, such deviations shall be at the discretion of
the Committee as exercised at the time the Performance Goals are set.

 

 
43

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Exhibit 1 (employee option agreement)

 

APPLIED MINERALS, INC.

2016 LONG-TERM INCENTIVE

NON-QUALIFIED STOCK OPTION AGREEMENT

Capitalized terms not defined in this Agreement have the meaning

assigned in the 2016 Long-Term Incentive Plan

 

Date of Grant:

  

 

   

Name of

Optionee:

  

     

Number of Shares Subject to the Option:

  

_______ Shares of Common Stock

   

Option Price

  

 

(Price Per Share):

  

$0. ______ per Share.

   

Expiration Date:

  

 

   

Vesting Schedule:

  

.

   

Optional Provisions

Applicable:

  

Option A Yes No

Option B Yes No

Option C Yes No

Option D Yes No

Option E Yes No

Option F Yes No

Option G (i) Yes No

Option G (ii) Yes No

Option G (iii) Yes No

 

This is a Non-Statutory Stock Option Agreement ("Agreement") between Applied
Minerals, Inc., a Delaware corporation (the "Company"), and the optionee
identified above (the "Optionee") effective as of the date of grant specified
above. To the extent any capitalized terms used in this Agreement are not
defined, they shall have the meaning ascribed to them in the Company's 2016
Long-Term Incentive Plan (the "Plan").

 

1. Grant. The Optionee is granted this Option to purchase the number of Shares
specified at the beginning of this Agreement.

 

2. Exercise Price. The price to the Optionee of each Share subject to this
Option shall be the exercise price specified at the beginning of this Agreement.

 

 
44

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3. Non-Statutory Stock Option. This Option is not intended to be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").

 

4. Exercise Schedule. This Option shall vest and become exercisable as to the
number of Shares and on the date(s) specified in the exercise schedule at the
beginning of this Agreement. The exercise schedule shall be cumulative; thus, to
the extent this Option has not already been exercised and has not expired,
terminated or been cancelled, the Optionee or the person otherwise entitled to
exercise this Option as provided herein may at any time, and from time to time,
purchase all or any portion of the Shares then purchasable under the exercise
schedule.

 

5. Exercise. Subject to whatever installment exercise and waiting period
provisions apply, to the extent vested, Stock Options may be exercised in whole
or in part at any time during the Option term, by giving written notice of
exercise to the Secretary of the Company specifying the number of shares of
Common Stock to be purchased. Such notice shall be in a form set forth in
Exhibit A and shall be accompanied by payment in full of the purchase price as
follows: (i) in cash or by check, bank draft or money order payable to the order
of the Company and (ii) solely to the extent permitted by applicable law,
through a procedure whereby the Optionee delivers irrevocable instructions to a
broker reasonably acceptable to the Committee to deliver promptly to the Company
an amount equal to the purchase price.

 

6. Incentive Compensation Recoupment. The Option Award including any shares of
Common Stock issued under the Options hereunder, will be subject to any
compensation recapture policies established by the Board or the Committee from
time to time, in their respective sole discretion.

 

7. Option Subject to Plan, Articles of Incorporation and By-Laws. The Optionee
acknowledges that this Option and the exercise thereof is subject to the Plan,
the Articles of Incorporation, as amended from time to time, and the By-Laws, as
amended from time to time, of the Company, and any applicable federal or state
laws, rules or regulations.

 

8. Binding Effect. This Agreement shall be binding in all respects on the heirs,
representatives, successors and assigns of the Optionee.

 

Optional Provisions

 

A. (i) In the event Optionee engages in Detrimental Activity prior to any
exercise of the Stock Option, all Stock Options held by the Optionee, vested or
unvested, shall thereupon terminate and expire,

 

(ii)  as a condition of the exercise of a Stock Option, the Optionee shall be
required to certify (or shall be deemed to have certified) at the time of
exercise in a manner acceptable to the Company that the Optionee is in
compliance with the terms and conditions of the Plan and that the Optionee has
not engaged in, and does not intend to engage in, any Detrimental Activity, and

 

 
45

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(iii) in the event the Optionee engages in Detrimental Activity during the one
year period commencing on the date the Stock Option is exercised, the Company
shall be entitled to recover from the Optionee at any time within one year after
such exercise, and the Optionee shall pay over to the Company, an amount equal
to any gain realized as a result of the exercise (whether at the time of
exercise or thereafter).

 

The foregoing provisions described in subsections (i), (ii) and (iii) shall
cease to apply upon a Change in Control.

 

B. If Optionee’s Termination is by reason of death, Disability or Retirement,
all Stock Options that are held by Optionee that are vested and exercisable at
the time of the Optionee’s Termination may be exercised by Optionee (or, in the
case of death, by the legal representative of Optionee’s estate) at any time
within a period of one year from the date of such Termination, but in no event
beyond the expiration of the stated term of such Stock Options; provided,
however, that in the case of Retirement, if Optionee dies within such exercise
period, all unexercised Stock Options held by Optionee shall thereafter be
exercisable, to the extent to which they were exercisable at the time of death,
for a period of the later of one year from the date of such death or the
expiration of the stated term of such Stock Options.

 

C. If Optionee’s Termination is by involuntary termination for Cause or
voluntary termination without Good Reason, all Stock Options that are held by
such Optionee that are vested and exercisable at the time of Optionee’s
Termination may be exercised by the Optionee at any time within a period of 90
days from the date of such Termination, but in no event beyond the expiration of
the stated term of such Stock Options.

 

D. If a Optionee’s Termination is by involuntary termination without Cause or
voluntary termination for Good Reason, all Stock Options that are held by
Optionee that are vested and exercisable at the time of the Optionee’s
Termination may be exercised by the Optionee at any time within a period of 90
days from the date of such Termination, but in no event beyond the expiration of
the stated term of such Stock Options.

 

E. Stock Options that are not vested as of the date of Optionee’s Termination
for any reason shall terminate and expire as of the date of such Termination.

 

F. Stock Options are Transferable to a Family Member in whole or in part and in
such circumstances, and under such conditions, as specified by the Committee.

 

G. The following are added as methods of exercise for purposes of Section 5:

 

(i) “Net-Exercise,” which means a procedure by which the Optionee will be issued
a number of shares of Stock determined in accordance with the following formula:
N = X(A-B)/A, where “N” = the number of shares of Stock to be issued to the
Participant upon exercise of the Option; “X” = the total number of shares with
respect to which the Participant has elected to exercise the Option; “A” = the
Fair Market Value of one share of Stock determined on the exercise date; and “B”
= the exercise price per share (as defined in the Participant’s Award Agreement)

 

 
46

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(ii) cancellation of indebtedness;

 

(iii) delivery to the Company of unencumbered shares of Common Stock having an
aggregate Fair Market Value on the date of exercise equal to the purchase price
of the Shares as to which this Option is exercised.

 

 

 

Applied Minerals, Inc.                         

 

By: ____________________  

Date: ______________

 

 

 

 

 

 

________________________ 

Date: ______________

Signature of Optionee

 

 

 
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Exhibit 2 (Directors’ option agreement)

 

APPLIED MINERALS, INC.

2016 LONG-TERM INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

 

Date of Grant:

____,

   

Name of Optionee:

 

   

Number of Shares Subject to Option:

     

Exercise Price (Per Share):

     

Expiration Date:

______,

   

Vesting Schedule:

Date

Shares Vested            

     

Optional Provisions Applicable:

Provision

Yes

No

   

A

       

B

       

C

       

D (i)

       

D (ii)

       

D (iii)

     

 

This is a Non-Statutory Stock Option Agreement ("Agreement") between Applied
Minerals, Inc., a Delaware corporation (the "Company"), and the optionee
identified above (the "Optionee") effective as of the date of grant specified
above. To the extent any capitalized terms used in this Agreement are not
defined, they shall have the meaning ascribed to them in the Company's 2016
Long-Term Incentive Plan (the "Plan").

 

1. Grant

The Optionee is granted this Option to purchase the number of Shares specified
at the beginning of this Agreement.

2. Exercise Price

The price to the Optionee of each Share subject to this Option shall be the
exercise price specified at the beginning of this Agreement.

3. Non-Statutory Stock Option

This Option is not intended to be an "incentive stock option" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

  

 
48

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4. Exercise Schedule

This Option shall vest and become exercisable as to the number of Shares and on
the date(s) specified in the exercise schedule at the beginning of this
Agreement. The exercise schedule shall be cumulative; thus, to the extent this
Option has not already been exercised and has not expired, terminated or been
cancelled, the Optionee or the person otherwise entitled to exercise this Option
as provided herein may at any time, and from time to time, purchase all or any
portion of the Shares then purchasable under the exercise schedule.

5. Exercise

Subject to whatever installment exercise and waiting period provisions apply, to
the extent vested, Stock Options may be exercised in whole or in part at any
time during the Option term, by giving written notice of exercise to the
Secretary of the Company specifying the number of shares of Common Stock to be
purchased. Such notice shall be in a form set forth in Exhibit A and shall be
accompanied by payment in full of the purchase price as follows: (i) in cash or
by check, bank draft or money order payable to the order of the Company and
(ii) solely to the extent permitted by applicable law, through a procedure
whereby the Optionee delivers irrevocable instructions to a broker reasonably
acceptable to the Committee to deliver promptly to the Company an amount equal
to the purchase price.

6.  Incentive Compensation

     Recoupment

The Option Award including any shares of Common Stock issued under the Options
hereunder, will be subject to any compensation recapture policies established by
the Board or the Committee from time to time, in their respective sole
discretion.

7. Option Subject to Plan, Articles

     of Incorporation and By-Laws

The Optionee acknowledges that this Option and the exercise thereof is subject
to the Plan, the Articles of Incorporation, as amended from time to time, and
the By-Laws, as amended from time to time, of the Company, and any applicable
federal or state laws, rules or regulations.

8. Binding Effect

This Agreement shall be binding in all respects on the heirs, representatives,
successors and assigns of the Optionee.

  

 
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Optional Provisions:

 

A

Vesting of options will accelerate upon the Optionee’s death, disability (as
defined by the Company’s 2016 Long-Term Inventive Plan (the “Plan”), resignation
from the Board of Directors for health reasons, failure to be included in the
list of nominees of the Board of Directors for election at the next annual
meeting of shareholders (the lapse of restrictions occurring at such time the
Board makes such determination), failure to be reelected as a director at an
annual meeting of shareholders if the director was a nominee of the Board of
Directors, or a Change in Control (as defined in the Plan).

 

B

In the event of the termination of the Optionee’s service as a director of the
Company for any reason other than those listed in Optional Provision prior to
vesting of all of the options, such portion of the options that have not vested
shall be automatically forfeited by the director as of the date of termination.

 

C

The option may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of except to a wholly-owned entity, by court order, or by
will or the laws of descent and distribution or by David Taft, to his IBS funds.

 

D

The following are added as methods of exercise for purposes of Section 5:

 

I.“Net-Exercise,” which means a procedure by which the Optionee will be issued a
number of shares of Stock determined in accordance with the following formula: N
= X(A-B)/A, where “N” = the number of shares of Stock to be issued to the
Participant upon exercise of the Option; “X” = the total number of shares with
respect to which the Participant has elected to exercise the Option; “A” = the
Fair Market Value of one share of Stock determined on the exercise date; and “B”
= the exercise price per share (as defined in the Participant’s Award Agreement)

 

II.Cancellation of indebtedness;

 

III.Delivery to the Company of unencumbered shares of Common Stock having an
aggregate Fair Market Value on the date of exercise equal to the purchase price
of the Shares as to which this Option is exercised.

  

 
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Applied Minerals, Inc.

Date:

   

By: _____________________

     

Name:

     

Title:

         

________________________

Date:

Signature of Optionee

 

 

 

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