Exhibit 10.49

 

Natural Grocers by Vitamin Cottage, Inc.

 

2012 Omnibus Incentive Plan

 

Effective as of July 19, 2012

 

As amended March 6, 2019

 

SECTION 1.     INTRODUCTION.

 

The Company’s Board of Directors adopts the Natural Grocers by Vitamin Cottage,
Inc. 2012 Omnibus Incentive Plan on July 19, 2012; provided that, the Plan shall
become effective upon its approval by Company shareholders. If the Company’s
shareholders do not approve this Plan, no Awards will be made under this Plan.

 

The purpose of the Plan is to promote the long-term success of the Company and
the creation of shareholder value by offering Key Employees an opportunity to
share in such long-term success by acquiring a proprietary interest in the
Company.

 

The Plan seeks to achieve this purpose by providing for discretionary long-term
incentive Awards in the form of Options (which may constitute Incentive Stock
Options or Nonstatutory Stock Options), Stock Appreciation Rights, Stock Grants,
Stock Units, Other Stock-Based Awards and Cash-Based Incentive Awards.

 

The Plan shall be governed by, and construed in accordance with, the laws of the
State of Delaware.

 

Capitalized terms shall have the meaning provided in Section 2 unless otherwise
provided in this Plan or any related Stock Option Agreement, SAR Agreement,
Stock Grant Agreement, Stock Unit Agreement or other Award agreement.

 

SECTION 2.     DEFINITIONS.

 

(a)     “Affiliate” means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)     “Award” means any award of an Option, SAR, Stock Grant, Stock Unit,
Other Award or Cash-Based Incentive Award under the Plan.

 

(c)     “Board” means the Board of Directors of the Company, as constituted from
time to time.

 

(d)     “Cash-Based Incentive Award” means an award described in Section 12.

 

(e)     “Cashless Exercise” means, to the extent that a Stock Option Agreement
so provides and as permitted by applicable law, a program approved by the
Committee in which payment may be made all or in part by delivery (on a form
prescribed by the Committee) of an irrevocable direction to a securities broker
to sell Shares and to deliver all or part of the sale proceeds to the Company in
payment of the aggregate Exercise Price and, if applicable, the amount necessary
to satisfy the Company’s withholding obligations at the minimum statutory
withholding rates, including, but not limited to, U.S. federal and state income
taxes, payroll taxes, and foreign taxes, if applicable.

 

(f)     “Cause” means, except as may otherwise be provided in a Participant’s
employment agreement or Award agreement, a conviction of a Participant for a
felony crime or the failure of a Participant to contest prosecution for a felony
crime, or a Participant’s misconduct, fraud or dishonesty (as such terms are
defined by the Committee in its sole discretion), or any unauthorized use or
disclosure of confidential information or trade secrets, in each case as
determined by the Committee, and the Committee’s determination shall be
conclusive and binding.

 

(g)     “Change In Control” except as may otherwise be provided in a
Participant’s employment agreement or Award agreement, means the occurrence of
any of the following:

 

(i)     A change in the composition of the Board over a period of thirty-six
consecutive months or less such that two-thirds of the Board membership ceases,
by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least two-thirds of the Board
members described in clause (A) who were still in office at the time the Board
approved such election or nomination; or

 

 

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(ii)     The acquisition, directly or indirectly, by any person or related group
of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company) of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company representing more than 35% of the total combined
voting power of the Company’s then outstanding securities pursuant to a tender
or exchange offer made directly to the Company’s voting shareholders which the
Board does not recommend such voting shareholders accept.

 

(h)     “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations promulgated thereunder.

 

(i)     “Committee” means a committee described in Section 3.

 

(j)     “Common Stock” means the Company’s common stock.

 

(k)     “Company” means Natural Grocers by Vitamin Cottage, Inc., a Delaware
corporation.

 

(l)     “Consultant” means an individual who performs bona fide services to the
Company, a Parent, a Subsidiary or an Affiliate, other than as an Employee or
Director or Non-Employee Director.

 

(m)     “Corporate Transaction” except as may otherwise be provided in a
Participant’s employment agreement or Award agreement, means the occurrence of
any of the following shareholder approved transactions:

 

(i)     The consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if more than 50% of
the combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not shareholders of the Company immediately prior
to such merger, consolidation or other reorganization; or

 

(ii)     The sale, transfer or other disposition of all or substantially all of
the Company’s assets.

 

A transaction shall not constitute a Corporate Transaction if its sole purpose
is to change the state of the Company’s incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such transactions.

 

(n)     “Covered Employees” means those persons who are subject to the
limitations of Code Section 162(m).

 

(o)     “Director” means a member of the Board who is also an Employee.

 

(p)     “Disability” means that the Key Employee is classified as disabled under
a long-term disability policy of the Company or, if no such policy applies, the
Key Employee is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.

 

(q)     “Employee” means any individual who is a common-law employee of the
Company, a Parent, a Subsidiary or an Affiliate.

 

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

 

(s)     “Exercise Price” means, in the case of an Option, the amount for which a
Share may be purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, means
an amount, as specified in the applicable SAR Agreement, which is subtracted
from the Fair Market Value in determining the amount payable upon exercise of
such SAR.

 

(t)     “Fair Market Value” means, on any date, (i) the closing sale price of a
Share as reported on an established stock exchange on which such Share is
regularly traded on such date or, if there were no sales on such date, on the
last date preceding such date on which a sale was reported; or (ii) if Shares
are not listed for trading on an established stock exchange, Fair Market Value
shall be determined by the Committee in good faith and otherwise in accordance
with Section 409A of the Code, and any regulations and other guidance
thereunder.

 

(u)     “Fiscal Year” means the Company’s fiscal year.

 

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(v)     “Grant” means any grant of an Award under the Plan.

 

(w)     “Incentive Stock Option” or “ISO” means an incentive stock option
described in Code Section 422.

 

(x)     “Key Employee” means an Employee, Director, Non-Employee Director or
Consultant who has been selected by the Committee to receive an Award under the
Plan.

 

(y)     “Non-Employee Director” means a member of the Board who is not an
Employee.

 

(z)     “Nonstatutory Stock Option” or “NSO” means a stock option that is not an
ISO.

 

(aa)     “Option” means an ISO or NSO granted under the Plan entitling the
Optionee to purchase Shares.

 

(bb)     “Optionee” means an individual, estate or other entity that holds an
Option.

 

(cc)     “Other Stock-Based Award” means an Award described in Section 11.

 

(dd)     “Parent” means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.

 

(ee)     “Participant” means an individual or estate or other entity that holds
an Award.

 

(ff)     “Performance Goals” means one or more objective measurable performance
factors as determined by the Committee with respect to each Performance Period
based upon one or more factors, including, but not limited to: (i) operating
income; (ii) earnings before interest, taxes, depreciation and amortization
(“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or
revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit
margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per
share; (xiii) economic value added (“EVA”); (xiv) stock price;
(xv) price/earnings ratio; (xvi) debt or debt-to-equity; (xvii) accounts
receivable; (xviii) writeoffs; (xix) cash; (xx) assets; (xxi) liquidity;
(xxii) operations; (xxiii) intellectual property (e.g., patents); (xxiv) product
development; (xxv) regulatory activity; (xxvi) manufacturing, production or
inventory; (xxvii) mergers and acquisitions or divestitures; and/or
(xxviii) financings, each with respect to the Company and/or one or more of its
affiliates or operating units. Awards issued to persons who are not Covered
Employees may take into account other factors.

 

(gg)     “Performance Period” means any period not exceeding 36 months as
determined by the Committee, in its sole discretion. The Committee may establish
different Performance Periods for different Participants, and the Committee may
establish concurrent or overlapping Performance Periods.

 

(hh)     “Plan” means this Vitamin Cottage, Inc. 2012 Omnibus Incentive Plan as
it may be amended from time to time.

 

(ii)     “Registration Date” means the first date (i) on which the Company sells
its Common Stock in a bona fide, firm commitment underwriting pursuant to a
registration statement under the Securities Act or (ii) any class of common
equity securities of the Company are required to be registered under Section 12
of the Exchange Act.

 

(jj)     “SAR Agreement” means the agreement described in Section 8 evidencing
each Award of a Stock Appreciation Right.

 

(kk)     “SEC” means the Securities and Exchange Commission.

 

(ll)     “Section 16 Persons” means those officers, directors or other persons
who are subject to Section 16 of the Exchange Act.

 

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

 

(nn)     “Service” means service as an Employee, Director, Non-Employee Director
or Consultant. A Participant’s Service does not terminate when continued service
crediting is required by applicable law. However, for purposes of determining
whether an Option is entitled to continuing ISO status, a common-law employee’s
Service will be treated as terminating ninety (90) days after such Employee went
on leave, unless such Employee’s right to return to active work is guaranteed by
law or by a contract. Service terminates in any event when the approved leave
ends, unless such Employee immediately returns to active work. The Committee
determines which leaves count toward Service, and when Service terminates for
all purposes under the Plan. Further, unless otherwise determined by the
Committee, a Participant’s Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant provides service to
the Company, a Parent, Subsidiary or Affiliate, or a transfer between entities
(the Company or any Parent, Subsidiary, or Affiliate); provided that there is no
interruption or other termination of Service.

 

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(oo)     “Share” means one share of Common Stock.

 

(pp)     “Stock Appreciation Right” or “SAR” means a stock appreciation right
awarded under the Plan.

 

(qq)     “Stock Grant” means Shares awarded under the Plan.

 

(rr)     “Stock Grant Agreement” means the agreement described in Section 9
evidencing each Award of a Stock Grant.

 

(ss)     “Stock Option Agreement” means the agreement described in Section 6
evidencing each Award of an Option.

 

(tt)     “Stock Unit” means a bookkeeping entry representing the equivalent of
one Share, as awarded under the Plan.

 

(uu)     “Stock Unit Agreement” means the agreement described in Section 10
evidencing each Award of a Stock Unit.

 

(vv)     “Subsidiary” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

 

(ww)     “10-Percent Shareholder” means an individual who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries. In determining stock ownership,
the attribution rules of Section 424 (d) of the Code shall be applied.

 

(xx)     “Transition Period” means the period beginning with the Registration
Date and ending as of the earlier of: (i) the date of the first annual meeting
of stockholders of the Company at which directors are to be elected that occurs
after the close of the third calendar year following the calendar year in which
the Registration Date occurs; or (ii) the expiration of the “reliance period”
under Treasury Regulation Section 1.162-27(f)(2).

 

SECTION 3.     ADMINISTRATION.

 

(a)     Committee Composition. The Board or a Committee appointed by the Board
shall administer the Plan. Members of the Committee shall serve for such period
of time as the Board may determine and shall be subject to removal by the Board
at any time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority previously delegated to the
Committee.

 

Following the appointment or election of a sufficient number of independent
directors to the Board, to the extent desired by the Board, the Committee shall
have membership composition which enables (i) Awards to Section 16 Persons to
qualify as exempt from liability under Section 16(b) of the Exchange Act and
(ii) Awards to Covered Employees to qualify as performance-based compensation as
provided under Code Section 162(m).

 

The Board may also appoint one or more separate committees of the Board, each
composed of two or more directors of the Company who need not be independent
under Rule 16b-3 or Code Section 162(m), that may administer the Plan with
respect to Key Employees who are not Section 16 Persons or Covered Employees,
respectively, may grant Awards under the Plan to such Key Employees and may
determine all terms of such Awards.

 

Notwithstanding the foregoing, the Board shall constitute the Committee and
shall administer the Plan with respect to Non-Employee Directors, shall grant
Awards under the Plan to such Non-Employee Directors, and shall determine all
terms of such Awards.

 

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(b)     Authority of the Committee. Subject to the provisions of the Plan, the
Committee shall have full authority and sole discretion to take any actions it
deems necessary or advisable for the administration of the Plan. Such actions
shall include:

 

(i)      selecting Key Employees who are to receive Awards under the Plan;

 

(ii)     determining the type, number, vesting requirements and other features
and conditions of such Awards and amending such Awards;

 

(iii)    correcting any defect, supplying any omission, or reconciling any
inconsistency in the Plan or any Award agreement;

 

(iv)     accelerating the vesting, or extending the post-termination exercise
term, of Awards at any time and under such terms and conditions as it deems
appropriate;

 

(v)     interpreting the Plan;

 

(vi)     making all other decisions relating to the operation of the Plan; and

 

(vii)    adopting such plans or subplans as may be deemed necessary or
appropriate to provide for the participation by Key Employees of the Company and
its Subsidiaries and Affiliates who reside outside the U.S., which plans and/or
subplans shall be attached hereto as Appendices.

 

The Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan. The Committee’s determinations under the Plan shall be final
and binding on all persons.

 

(c)     Indemnification. To the maximum extent permitted by applicable law, each
member of the Committee, or of the Board, shall be indemnified and held harmless
by the Company against and from (i) any loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Stock Option Agreement, SAR Agreement,
Stock Grant Agreement or Stock Unit Agreement, and (ii) from any and all amounts
paid by him or her in settlement thereof, with the Company’s approval, or paid
by him or her in satisfaction of any judgment in any such claim, action, suit,
or proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s Articles of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under
any power that the Company may have to indemnify them or hold them harmless.

 

SECTION 4.     GENERAL.

 

(a)     General Eligibility. Only Employees, Directors, Non-Employee Directors
and Consultants shall be eligible for designation as Key Employees by the
Committee, in its sole discretion.

 

(b)     Incentive Stock Options. Only Key Employees who are common-law employees
of the Company, a Parent or a Subsidiary shall be eligible for the grant of
ISOs. In addition, a Key Employee who is a 10-Percent Shareholder shall not be
eligible for the grant of an ISO unless the requirements set forth in
Section 422(c)(5) of the Code are satisfied.

 

(c)     Restrictions on Shares. Any Shares issued pursuant to an Award shall be
subject to such rights of repurchase, rights of first refusal and other transfer
restrictions as the Committee may determine, in its sole discretion. Such
restrictions shall apply in addition to any restrictions that may apply to
holders of Shares generally and shall also comply to the extent necessary with
applicable law. In no event shall the Company be required to issue fractional
Shares under this Plan.

 

(d)     Beneficiaries. Unless stated otherwise in an Award agreement, a
Participant may designate one or more beneficiaries with respect to an Award by
timely filing the prescribed form with the Company. A beneficiary designation
may be changed by filing the prescribed form with the Company at any time before
the Participant’s death. If no beneficiary was designated or if no designated
beneficiary survives the Participant, then after a Participant’s death any
vested Award(s) shall be transferred or distributed to the Participant’s estate.

 

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(e)     Performance Conditions. The Committee may, in its discretion, include
performance conditions in an Award. If performance conditions are included in
Awards to Covered Employees, then such Awards may be subject to the achievement
of Performance Goals established by the Committee. Such Performance Goals shall
be established and administered pursuant to the requirements of Code
Section 162(m). Before any Shares underlying an Award or any Award payments
subject to Performance Goals are released to a Covered Employee with respect to
a Performance Period, the Committee shall certify in writing that the
Performance Goals for such Performance Period have been satisfied. Awards with
performance conditions that are granted to Key Employees who are not Covered
Employees need not comply with the requirements of Code Section 162(m).

 

(f)     No Rights as a Shareholder. A Participant, or a transferee of a
Participant, shall have no rights as a shareholder with respect to any Common
Stock covered by an Award until such person has satisfied all of the terms and
conditions to receive such Common Stock, has satisfied any applicable
withholding or tax obligations relating to the Award and the Shares have been
issued (as evidenced by an appropriate entry on the books of the Company or a
duly authorized transfer agent of the Company).

 

(g)     Termination of Service. Unless the applicable Award agreement or, with
respect to Participants who reside in the U.S., the applicable employment
agreement provides otherwise, the following rules shall govern the vesting,
exercisability and term of outstanding Awards held by a Participant in the event
of termination of such Participant’s Service (in all cases subject to the term
of the Option or SAR as applicable): (1) upon termination of Service for any
reason, all unvested portions of any outstanding Awards shall be immediately
forfeited without consideration and the vested portions of any outstanding Stock
Units shall be settled upon termination; (ii) if the Service of a Participant is
terminated for Cause, then all unexercised Options and SARs, unvested portions
of Stock Units and unvested portions of Stock Grants shall terminate and be
forfeited immediately without consideration; (iii) if the Service of Participant
is terminated for any reason other than for Cause, death, or Disability, then
the vested portion of his/her then-outstanding Options/SARs may be exercised by
such Participant or his or her personal representative within three months after
the date of such termination; or (iv) if the Service of a Participant is
terminated due to death or Disability, the vested portion of his/her
then-outstanding Options/SARs may be exercised within eighteen months after the
date of termination of Service.

 

SECTION 5.     SHARES SUBJECT TO PLAN AND SHARE LIMITS.

 

(a)     Basic Limitation. The stock issuable under the Plan shall be authorized
but unissued Shares. The aggregate number of Shares reserved for Awards under
the Plan shall not exceed 1,690,151 Shares, subject to adjustment pursuant to
Section 13.

 

(b)     Additional Shares. If any portion or all of an Award is forfeited,
cancelled, exchanged or surrendered or if an Award otherwise terminates or
expires without a distribution of shares to the Participant, the Shares
underlying such Award shall, to the extent of any such forfeiture, cancellation,
exchange, surrender, termination or expiration, again be available for Awards
under the Plan. The number of Shares 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 underlying such Awards
are not actually issued to the Participant as the result of a net settlement,
and (ii) any Shares 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 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 which may be issued under the Plan.

 

(c)     Dividend Equivalents. Any dividend equivalents distributed under the
Plan shall not be applied against the number of Shares available for Awards.

 

(d)     Share Limits. Subject to adjustment in accordance with this Plan, in any
calendar year following the Transition Period, no Participant shall be granted
Awards in respect of more than 125,000 Shares (whether through grants of Options
or other Awards of Common Stock or rights with respect thereto) or cash-based
Awards for more than $2,000,000. Notwithstanding the foregoing, following the
Transition Period the Committee may grant Awards to a Participant in excess of
the preceding Award limits if the Committee expressly determines that a
particular Award shall not be designed to qualify as “performance-based
compensation” for purposes of Section 162(m) of the Code.

 

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SECTION 6.     TERMS AND CONDITIONS OF OPTIONS.

 

(a)     Stock Option Agreement. Each Grant of an Option under the Plan shall be
evidenced and governed exclusively by a Stock Option Agreement between the
Optionee and the Company. Such Option shall be subject to all applicable terms
and conditions of the Plan and may be subject to any other terms and conditions
that are not inconsistent with the Plan and that the Committee deems appropriate
for inclusion in a Stock Option Agreement (including without limitation any
performance conditions). The provisions of the various Stock Option Agreements
entered into under the Plan need not be identical. The Stock Option Agreement
shall also specify whether the Option is an ISO or an NSO.

 

(b)     Number of Shares. Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall be subject to adjustment of
such number in accordance with Section 13.

 

(c)     Exercise Price. An Option’s Exercise Price shall be established by the
Committee and set forth in a Stock Option Agreement. The Exercise Price of an
Option shall not be less than 100% of the Fair Market Value (110% for ISO grants
to 10-Percent Shareholders) on the date of Grant.

 

(d)     Exercisability and Term. Each Stock Option Agreement shall specify the
date when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an Option shall in no event exceed ten years from the date of Grant.
Unless the applicable Stock Option Agreement provides otherwise, each Option
shall vest and become exercisable with respect to 20% of the Shares subject to
the Option upon completion of one year of Service measured from the vesting
commencement date, the balance of the Shares subject to the Option shall vest
and become exercisable in forty-eight equal installments upon completion of each
month of Service thereafter, and the term of the Option shall expire ten years
from the date of Grant. A Stock Option Agreement may provide for accelerated
vesting in the event of the Participant’s death, Disability, or other events.
Notwithstanding any other provision of the Plan, no Option can be exercised
after the expiration date provided in the applicable Stock Option Agreement and
no Option may provide that, upon exercise of the Option, a new Option will
automatically be granted.

 

(e)     Modifications or Assumption of Options. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new Options for the same or a
different number of Shares, at the same or a different Exercise Price, and with
the same or different vesting provisions.

 

(f)     Assignment or Transfer of Options. Except as otherwise provided in the
applicable Stock Option Agreement and then only to the extent permitted by
applicable law, no Option shall be transferable by the Optionee other than by
will or by the laws of descent and distribution. Except as otherwise provided in
the applicable Stock Option Agreement, an Option may be exercised during the
lifetime of the Optionee only by the Optionee or by the guardian or legal
representative of the Optionee. No Option or interest therein may be assigned,
pledged or hypothecated by the Optionee during his or her lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or
similar process.

 

SECTION 7.     PAYMENT FOR OPTION SHARES.

 

The entire Exercise Price of Shares issued upon exercise of Options shall be
payable in cash at the time when such Shares are purchased, except as follows
and if so provided for in an applicable Stock Option Agreement:

 

(i)     Surrender of Stock. Payment for all or any part of the Exercise Price
may be made with Shares which have already been owned by the Optionee; provided
that the Committee may, in its sole discretion, require that Shares tendered for
payment be previously held by the Optionee for a minimum duration. Such Shares
shall be valued at their Fair Market Value.

 

(ii)     Cashless Exercise. Payment for all or any part of the Exercise Price
may be made through Cashless Exercise.

 

(iii)     Other Forms of Payment. Payment for all or any part of the Exercise
Price may be made in any other form that is consistent with applicable laws,
regulations and rules and approved by the Committee.

 

In the case of an ISO granted under the Plan, payment shall be made only
pursuant to the express provisions of the applicable Stock Option Agreement. The
Stock Option Agreement may specify that payment may be made in any form(s)
described in this Section 7. In the case of an NSO granted under the Plan, the
Committee may, in its discretion at any time, accept payment in any form(s)
described in this Section 7.

 

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SECTION 8.     TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

 

(a)     SAR Agreement. Each Grant of a SAR under the Plan shall be evidenced and
governed exclusively by a SAR Agreement between the Participant and the Company.
Such SAR shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions that are not inconsistent with
the Plan and that the Committee deems appropriate for inclusion in a SAR
Agreement (including without limitation any performance conditions). A SAR
Agreement may provide for a maximum limit on the amount of any payout
notwithstanding the Fair Market Value on the date of exercise of the SAR. The
provisions of the various SAR Agreements entered into under the Plan need not be
identical. SARs may be granted in consideration of a reduction in the
Participant’s compensation.

 

(b)     Number of Shares. Each SAR Agreement shall specify the number of Shares
to which the SAR pertains and shall be subject to adjustment of such number in
accordance with Section 13.

 

(c)     Exercise Price. Each SAR Agreement shall specify the Exercise Price
which shall be established by the Committee. The Exercise Price of SAR shall not
be less than 100% of the Fair Market Value on the date of Grant.

 

(d)     Exercisability and Term. Each SAR Agreement shall specify the date when
all or any installment of the SAR is to become exercisable. The SAR Agreement
shall also specify the term of the SAR which shall not exceed ten years from the
date of Grant. Unless the applicable SAR Agreement provides otherwise, each SAR
shall vest and become exercisable with respect to 20% of the Shares subject to
the SAR upon completion of one year of Service measured from the vesting
commencement date, the balance of the Shares subject to the SAR shall vest and
become exercisable in forty-eight equal installments upon completion of each
month of Service thereafter, and the term of the SAR shall be ten years from the
date of Grant. A SAR Agreement may provide for accelerated vesting in the event
of the Participant’s death, Disability, or other events. SARs may be awarded in
combination with Options or Stock Grants, and such an Award shall provide that
the SARs will not be exercisable unless the related Options or Stock Grants are
forfeited. A SAR may be included in an ISO only at the time of Grant but may be
included in an NSO at the time of Grant or at any subsequent time, but not later
than six months before the expiration of such NSO. No SAR may provide that, upon
exercise of the SAR, a new SAR will automatically be granted.

 

(e)     Exercise of SARs. If, on the date when a SAR expires, the Exercise Price
under such SAR is less than the Fair Market Value on such date but any portion
of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of a SAR, the Participant (or any person having the right
to exercise the SAR) shall receive from the Company (i) Shares, (ii) cash or
(iii) any combination of Shares and cash, as the Committee shall determine at
the time of Grant of the SAR, in its sole discretion. The amount of cash and/or
the Fair Market Value of Shares received upon exercise of SARs shall, in the
aggregate, be equal to the amount by which the Fair Market Value (on the date of
exercise) of the Shares subject to the SARs exceeds the Exercise Price of the
Shares.

 

(f)     Modification or Assumption of SARs. Within the limitations of the Plan,
the Committee may modify, extend or assume outstanding stock appreciation rights
or may accept the cancellation of outstanding stock appreciation rights
(including stock appreciation rights granted by another issuer) in return for
the grant of new SARs for the same or a different number of Shares, at the same
or a different Exercise Price, and with the same or different vesting
provisions.

 

(g)     Assignment or Transfer of SARs. Except as otherwise provided in the
applicable SAR Agreement and then only to the extent permitted by applicable
law, no SAR shall be transferable by the Participant other than by will or by
the laws of descent and distribution. Except as otherwise provided in the
applicable SAR Agreement, a SAR may be exercised during the lifetime of the
Participant only by the Participant or by the guardian or legal representative
of the Participant. No SAR or interest therein may be assigned, pledged or
hypothecated by the Participant during his or her lifetime, whether by operation
of law or otherwise, or be made subject to execution, attachment or similar
process.

 

SECTION 9.     TERMS AND CONDITIONS FOR STOCK GRANTS.

 

(a)     Amount and Form of Awards. Awards under this Section 9 may be granted in
the form of a Stock Grant. Each Stock Grant Agreement shall specify the number
of Shares to which the Stock Grant pertains and shall be subject to adjustment
of such number in accordance with Section 13. A Stock Grant may also be awarded
in combination with NSOs, and such an Award may provide that the Stock Grant
will be forfeited in the event that the related NSOs are exercised.

 

(b)     Stock Grant Agreement. Each Stock Grant awarded under the Plan shall be
evidenced and governed exclusively by a Stock Grant Agreement between the
Participant and the Company. Each Stock Grant shall be subject to all applicable
terms and conditions of the Plan and may be subject to any other terms and
conditions that are not inconsistent with the Plan and that the Committee deems
appropriate for inclusion in the applicable Stock Grant Agreement (including
without limitation any performance conditions). The provisions of the various
Stock Grant Agreements entered into under the Plan need not be identical.

 

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(c)     Payment for Stock Grants. Stock Grants may be issued with or without
cash consideration or any other form of legally permissible consideration
approved by the Committee.

 

(d)     Vesting Conditions. Each Stock Grant may or may not be subject to
vesting. Any such vesting provision may provide that Shares shall vest based on
Service over time or shall vest, in full or in installments, upon satisfaction
of performance conditions specified in the Stock Grant Agreement which may
include Performance Goals pursuant to Section 4(e). Unless the applicable Stock
Grant Agreement provides otherwise, each Stock Grant shall vest with respect to
20% of the Shares subject to the Stock Grant upon completion of each year of
Service on each of the first through fifth annual anniversaries of the vesting
commencement date. A Stock Grant Agreement may provide for accelerated vesting
in the event of the Participant’s death, Disability, or other events.

 

(e)     Assignment or Transfer of Stock Grants. Except as provided in the
applicable Stock Grant Agreement, and then only to the extent permitted by
applicable law, a Stock Grant awarded under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor’s process, whether voluntarily, involuntarily or by operation of law.
Any act in violation of this Section 9(e) shall be void. However, this
Section 9(e) shall not preclude a Participant from designating a beneficiary who
will receive any vested outstanding Stock Grant Awards in the event of the
Participant’s death, nor shall it preclude a transfer of vested Stock Grant
Awards by will or by the laws of descent and distribution.

 

(f)     Voting and Dividend Rights. The holder of a Stock Grant awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s
other shareholders. A Stock Grant Agreement, however, may require that the
holder of such Stock Grant invest any cash dividends received in additional
Shares subject to the Stock Grant. Such additional Shares subject to the Stock
Grant shall be subject to the same conditions and restrictions as the Stock
Grant with respect to which the dividends were paid. Such additional Shares
subject to the Stock Grant shall not reduce the number of Shares available for
issuance under Section 5.

 

(g)     Modification or Assumption of Stock Grants. Within the limitations of
the Plan, the Committee may modify or assume outstanding stock grants or may
accept the cancellation of outstanding stock grants (including stock granted by
another issuer) in return for the grant of new Stock Grants for the same or a
different number of Shares and with the same or different vesting provisions.
Notwithstanding the preceding sentence or anything to the contrary herein, no
modification of a Stock Grant shall, without the consent of the Participant,
impair his or her rights or obligations under such Stock Grant.

 

SECTION 10.     TERMS AND CONDITIONS OF STOCK UNITS.

 

(a)     Stock Unit Agreement. Each grant of Stock Units under the Plan shall be
evidenced and governed exclusively by a Stock Unit Agreement between the
Participant and the Company. Such Stock Units shall be subject to all applicable
terms and conditions of the Plan and may be subject to any other terms and
conditions that are not inconsistent with the Plan and that the Committee deems
appropriate for inclusion in the applicable Stock Unit Agreement (including
without limitation any performance conditions). The provisions of the various
Stock Unit Agreements entered into under the Plan need not be identical. Stock
Units may be granted in consideration of a reduction in the Participant’s other
compensation.

 

(b)     Number of Shares. Each Stock Unit Agreement shall specify the number of
Shares to which the Stock Unit Grant pertains and shall be subject to adjustment
of such number in accordance with Section 13.

 

(c)     Payment for Stock Units. Stock Units shall be issued without
consideration.

 

(d)     Vesting Conditions. Each Award of Stock Units may or may not be subject
to vesting. Any such vesting provision may provide that Shares shall vest based
on Service over time or shall vest, in full or in installments, upon
satisfaction of performance conditions specified in the Stock Unit Agreement
which may include Performance Goals pursuant to Section 4(e). Unless the
applicable Stock Unit Agreement provides otherwise, each Stock Unit shall vest
with respect to 20% of the Shares subject to the Stock Unit upon completion of
each year of Service on each of the first through fifth annual anniversaries of
the vesting commencement date. A Stock Unit Agreement may provide for
accelerated vesting in the event of the Participant’s death, Disability, or
other events.

 

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(e)     Voting and Dividend Rights. The holders of Stock Units shall have no
voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under
the Plan may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions as the
Stock Units to which they attach.

 

(f)     Form and Time of Settlement of Stock Units. Settlement of vested Stock
Units may be made in the form of (a) cash, (b) Shares or (c) any combination of
both, as determined by the Committee at the time of the grant of the Stock
Units, in its sole discretion. Methods of converting Stock Units into cash may
include (without limitation) a method based on the average Fair Market Value of
Shares over a series of trading days. Vested Stock Units may be settled in a
lump sum or in installments. The distribution may occur or commence when the
vesting conditions applicable to the Stock Units have been satisfied or have
lapsed, or it may be deferred, in accordance with applicable law, to any later
date. The amount of a deferred distribution may be increased by an interest
factor or by dividend equivalents. Until an Award of Stock Units is settled, the
number of such Stock Units shall be subject to adjustment pursuant to
Section 13.

 

(g)     Creditors’ Rights. A holder of Stock Units shall have no rights other
than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.

 

(h)     Modification or Assumption of Stock Units. Within the limitations of the
Plan, the Committee may modify or assume outstanding stock units or may accept
the cancellation of outstanding stock units (including stock units granted by
another issuer) in return for the grant of new Stock Units for the same or a
different number of Shares and with the same or different vesting provisions.
Notwithstanding the preceding sentence or anything to the contrary herein, no
modification of a Stock Unit shall, without the consent of the Participant,
impair his or her rights or obligations under such Stock Unit.

 

(i)     Assignment or Transfer of Stock Units. Except as provided in the
applicable Stock Unit Agreement, and then only to the extent permitted by
applicable law, Stock Units shall not be anticipated, assigned, attached,
garnished, optioned, transferred or made subject to any creditor’s process,
whether voluntarily, involuntarily or by operation of law. Any act in violation
of this Section 10(i) shall be void. However, this Section 10(i) shall not
preclude a Participant from designating a beneficiary who will receive any
outstanding vested Stock Units in the event of the Participant’s death, nor
shall it preclude a transfer of vested Stock Units by will or by the laws of
descent and distribution.

 

SECTION 11.     OTHER STOCK-BASED AWARDS.

 

(a)     Grant of Other Stock-Based Awards. Other stock-based awards, consisting
of substitute awards, stock purchase rights (with or without loans to
Participants by the Company containing such terms as the Committee shall
determine), Awards of Shares, or Awards valued in whole or in part by reference
to, or otherwise based on, Shares, may be granted either alone or in addition to
or in conjunction with other Awards under the Plan. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine the
persons to whom and the time or times at which such Awards shall be made, the
number of Shares to be granted pursuant to such Awards, and all other conditions
of the Awards. Any such Award shall be confirmed by an Award Agreement executed
by the Committee and the Participant, which Award Agreement shall contain such
provisions as the Committee determines to be necessary or appropriate to carry
out the intent of this Plan with respect to such Award.

 

(b)     Terms of Other Stock-Based Awards. In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Section 11 shall be subject to the following:

 

(i)     Any Shares subject to Awards made under this Section 11 may not be sold,
assigned, transferred, pledged or otherwise encumbered 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; and

 

(ii)     The Award Agreement with respect to any Award shall contain provisions
dealing with the disposition of such Award in the event of a termination of
Service prior to the exercise, payment or other settlement of such Award, with
such provisions taking account of the specific nature and purpose of the Award.

 

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SECTION 12.     CASH-BASED INCENTIVE AWARDS.

 

(a)     Eligibility. Executive officers of the Company as determined from time
to time by the Committee will be eligible to receive cash-based incentive awards
under this Section 12. Following the Transition Period, such executive officers
shall include be executive officers who are determined from time to time by the
Committee to be Covered Employees.

 

(b)     Awards.

 

(i)     Performance Targets. The Committee shall establish objective performance
targets based on specified levels of one or more of the Performance Goals.
Following the Transition Period, such performance targets shall be established
by the Committee on a timely basis to ensure that the targets are considered
“preestablished” for purposes of Section 162(m) of the Code.

 

(ii)     Amounts of Awards. In conjunction with the establishment of performance
targets for a fiscal year or such other performance period established by the
Committee, the Committee shall adopt an objective formula (on the basis of
percentages of Participants’ salaries, shares in a bonus pool or otherwise) for
computing the respective amounts payable under the Plan to Participants if and
to the extent that the performance targets are attained. Following the
Transition Period, such formula shall comply with the requirements applicable to
performance-based compensation plans under Section 162(m) of the Code and, to
the extent based on percentages of a bonus pool, such percentages shall not
exceed 100% in the aggregate.

 

(iii)     Payment of Awards. Awards will be payable to Participants in cash each
year upon prior written certification by the Committee of attainment of the
specified performance targets for the preceding fiscal year or other applicable
performance period.

 

(iv)     Negative Discretion. Notwithstanding the attainment by the Company of
the specified performance targets, the Committee shall have the discretion,
which need not be exercised uniformly among the Participants, to reduce or
eliminate the Award that would be otherwise paid.

 

(v)     Guidelines. The Committee may adopt from time to time written policies
for its implementation of this Section 12. Such guidelines shall reflect the
intention of the Company that following the Transition Period all payments
hereunder qualify as performance-based compensation under Section 162(m) of the
Code.

 

(vi)     Non-Exclusive Arrangement. The adoption and operation of this
Section 12 shall not preclude the Board or the Committee from approving other
cash-based incentive compensation arrangements for the benefit of individuals
who are Participants hereunder as the Board or Committee, as the case may be,
deems appropriate and in the best interests of the Company.

 

SECTION 13.     PROTECTION AGAINST DILUTION.

 

(a)     Adjustments. In the event of a stock split, reverse stock split, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the price
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spin-off, separation, partial or complete liquidation or a
similar occurrence, the Committee shall make appropriate adjustments to the
following:

 

(i)     the number of Shares and the kind of shares or securities available for
future Awards under Section 5;

 

(ii)     the limits on Awards specified in Section 5;

 

(iii)     the number of Shares and the kind of shares or securities covered by
each outstanding Award; or

 

(iv)     the Exercise Price under each outstanding SAR or Option.

 

(b)     Participant Rights. Except as provided in this Section 13, a Participant
shall have no rights by reason of any issue by the Company of stock of any class
or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class.
If by reason of an adjustment pursuant to this Section 13 a Participant’s Award
covers additional or different shares of stock or securities, then such
additional or different shares and the Award in respect thereof shall be subject
to all of the terms, conditions and restrictions which were applicable to the
Award and the Shares subject to the Award prior to such adjustment.

 

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(c)     Fractional Shares. Any adjustment of Shares pursuant to this Section 13
shall be rounded down to the nearest whole number of Shares. Under no
circumstances shall the Company be required to authorize or issue fractional
shares and no consideration shall be provided as a result of any fractional
shares not being issued or authorized.

 

SECTION 14.     EFFECT OF A CORPORATE TRANSACTION.

 

(a)     Corporate Transaction. In the event that the Company is a party to a
Corporate Transaction, outstanding Awards shall be subject to the applicable
agreement of merger, reorganization, or sale of assets. Such agreement may
provide, without limitation, for the assumption or substitution of outstanding
Options, SARs, or Stock Units by the surviving corporation or its parent, for
the assumption of outstanding Stock Grant Agreements by the surviving
corporation or its parent, for the replacement of outstanding Options, SARs, and
Stock Units with a cash incentive program of the surviving corporation which
preserves the spread existing on the unvested portions of such outstanding
Awards at the time of the transaction and provides for subsequent payout in
accordance with the same vesting provisions applicable to those Awards, for
accelerated vesting of outstanding Awards, or for the cancellation of
outstanding Options, SARs, and Stock Units, with or without consideration, in
all cases without the consent of the Participant.

 

(b)     Acceleration. The Committee may determine, at the time of grant of an
Award or thereafter, that such Award shall become fully vested as to all Shares
subject to such Award in the event that a Corporate Transaction or a Change in
Control occurs. Unless otherwise provided in the applicable Award agreement, in
the event that a Corporate Transaction occurs and any outstanding Options, SARs
or Stock Units are not assumed, substituted, or replaced with a cash incentive
program pursuant to Section 14(a) or any outstanding Stock Grant Agreements are
not assumed pursuant to Section 14(a), then such Awards shall fully vest and be
fully exercisable immediately prior to such Corporate Transaction. Immediately
following the consummation of a Corporate Transaction, all outstanding Options,
SARs and Stock Units shall terminate and cease to be outstanding, except to the
extent that they are assumed by the surviving corporation or its parent.

 

(c)     Dissolution. To the extent not previously exercised or settled, Options,
SARs and Stock Units shall terminate immediately prior to the dissolution or
liquidation of the Company.

 

SECTION 15.     LIMITATIONS ON RIGHTS.

 

(a)     No Entitlements. A Participant’s rights, if any, in respect of or in
connection with any Award is derived solely from the discretionary decision of
the Company to permit the individual to participate in the Plan and to benefit
from a discretionary Award. By accepting an Award under the Plan, a Participant
expressly acknowledges that there is no obligation on the part of the Company to
continue the Plan and/or grant any additional Awards. Any Award granted
hereunder is not intended to be compensation of a continuing or recurring
nature, or part of a Participant’s normal or expected compensation, and in no
way represents any portion of a Participant’s salary, compensation, or other
remuneration for purposes of pension benefits, severance, redundancy,
resignation or any other purpose.

 

Neither the Plan nor any Award granted under the Plan shall be deemed to give
any individual a right to remain an employee, consultant or director of the
Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parents and
Subsidiaries and Affiliates reserve the right to terminate the Service of any
person at any time, and for any reason, subject to applicable laws, the
Company’s Articles of Incorporation and Bylaws and a written employment
agreement (if any), and such terminated person shall be deemed irrevocably to
have waived any claim to damages or specific performance for breach of contract
or dismissal, compensation for loss of office, tort or otherwise with respect to
the Plan or any outstanding Award that is forfeited and/or is terminated by its
terms or to any future Award.

 

(b)     Shareholders’ Rights. A Participant shall have no dividend rights,
voting rights or other rights as a shareholder with respect to any Shares
covered by his or her Award prior to the issuance of such Shares (as evidenced
by an appropriate entry on the books of the Company or a duly authorized
transfer agent of the Company). No adjustment shall be made for cash dividends
or other rights for which the record date is prior to the date when such Shares
are issued, except as expressly provided in Section 13.

 

(c)     Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Shares or other
securities under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required. The
Company reserves the right to restrict, in whole or in part, the delivery of
Shares or other securities pursuant to any Award prior to the satisfaction of
all legal requirements relating to the issuance of such Shares or other
securities, to their registration, qualification or listing or to an exemption
from registration, qualification or listing.

 

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SECTION 16.     WITHHOLDING TAXES.

 

(a)     General. A Participant shall make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise in
connection with his or her Award. The Company shall not be required to issue any
Shares or make any cash payment under the Plan until such obligations are
satisfied.

 

(b)     Share Withholding. If a public market for the Company’s Shares exists,
the Committee may permit a Participant to satisfy all or part of his or her
withholding or income tax obligations by having the Company withhold all or a
portion of any Shares that otherwise would be issued to him or her or by
surrendering or attesting to all or a portion of any Shares that he or she
previously acquired. Such Shares shall be valued based on the value of the
actual trade or, if there is none, the Fair Market Value as of the previous day.
Any payment of taxes by assigning Shares to the Company may be subject to
restrictions, including, but not limited to, any restrictions required by rules
of the SEC. The Committee may, in its discretion, also permit a Participant to
satisfy withholding or income tax obligations related to an Award through
Cashless Exercise or through a sale of Shares underlying the Award.

 

SECTION 17.     DURATION AND AMENDMENTS.

 

(a)     Term of the Plan. The Plan shall become effective upon its approval by
Company shareholders and shall have a term of 15 years from such initial
adoption.

 

(b)     Right to Amend or Terminate the Plan. The Board may amend or terminate
the Plan at any time and for any reason. The termination of the Plan, or any
amendment thereof, shall not impair the rights or obligations of any Participant
under any Award previously granted under the Plan without the Participant’s
consent. No Awards shall be granted under the Plan after the Plan’s termination.
An amendment of the Plan shall be subject to the approval of the Company’s
shareholders only to the extent such approval is otherwise required by
applicable laws, regulations or rules.

 

(c)     No Repricing Without Shareholder Approval. Notwithstanding any provision
herein to the contrary, the repricing of Options or Stock Appreciation Rights is
prohibited without prior approval of the Company’s shareholders. For this
purpose, a “repricing” means any of the following (or any other action that has
the same effect as any of the following): (i) changing the terms of an Option or
Stock Appreciation Right to lower its Exercise Price; (ii) any other action that
is treated as a “repricing” under generally accepted accounting principles; and
(iii) repurchasing for cash or canceling an Option or Stock Appreciation Right
at a time when its Exercise Price is greater than the Fair Market Value of the
underlying Common Stock in exchange for another Award, unless the cancellation
and exchange occurs in connection with a change in capitalization or similar
change under Section 13 above. Such cancellation and exchange as described in
clause (iii) of the preceding sentence would be considered a “repricing”
regardless of whether it is treated as a “repricing” under generally accepted
accounting principles and regardless of whether it is voluntary on the part of
the Participant.

 

(d)     Recovery of Compensation in Connection with Financial Restatement.
Notwithstanding any other provision of this Plan or any applicable Award
Agreement to the contrary, if the Board determines that the Company is required
to restate its financial statements due to material noncompliance with any
financial reporting requirement under the law, whether such noncompliance is the
result of misconduct or other circumstances, a Participant shall be required to
reimburse the Company for any amounts earned or payable with respect to an Award
to the extent required by and otherwise in accordance with applicable law and
any Company policies. Without limiting the foregoing, all Awards granted or
other compensation paid by the Company under the Plan will be subject to any
compensation recapture policies required by applicable law (including the
Sarbanes-Oxley Act of 2002) or that are established by the Board or the
Committee from time to time, in their respective sole discretion, including any
clawback policy adopted or implemented by the Board or Committee in respect of
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and such
regulations as are promulgated thereunder from time to time to the extent
required therein and the implementing regulations.

 

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SECTION 18.     EXECUTION.

 

To record the adoption of the Plan by the Board, the Company has caused its duly
authorized officer to execute this Plan on behalf of the Company.

 

This 2012 Omnibus Incentive Plan has been executed this 19th day of July, 2012
and amended this 6th day of March, 2019.

 

NATURAL GROCERS BY VITAMIN COTTAGE, INC.

 

 

 

By: /s/ Kemper Isely          

Name: Kemper Isely

Title: Co-President

 

 

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