Exhibit 10.1

 

SG BLOCKS, INC.
STOCK INCENTIVE PLAN

 

1.           Establishment, Purpose, Duration.

 

a.       History; Amendment and Restatement. The Board of SG Blocks, Inc. (the
“Company”) adopted the SG Blocks, Inc. Stock Option Plan effective as of October
26, 2016 (the “Effective Date”), with 1.5 million Shares reserved for issuance
thereunder, subject to stockholder approval within 12 months thereafter in order
to authorize the issuance of Incentive Stock Options to Employees thereunder.
The Board desires to amend and restate the SG Blocks, Inc. Stock Option Plan in
order to, among other things, increase the number of Shares reserved for
issuance thereunder and to authorize other types of Awards thereunder, in
addition to Stock Options. Therefore, effective as of January 30, 2017 (the
“Restatement Date”), the SG Blocks, Inc. Stock Option Plan is hereby amended and
restated in its entirety as set forth herein as the SG Blocks, Inc. Stock
Incentive Plan (the “Plan”), subject to the approval of the Plan by the
stockholders of the Company in order to authorize the issuance of Incentive
Stock Options to Employees hereunder. Definitions of capitalized terms used in
the Plan are contained in Section 2 of the Plan.

 

b.       Reverse Stock Split. The Board has approved a 1-for-3 reverse stock
split of the Company’s Shares to be effected on or around February 2017. If such
split does not occur on or before March 31, 2017, the Shares as presented in
this Plan shall be automatically multiplied by three to reflect such Shares on a
pre-reverse split basis.

 

c.       Purpose. The purpose of the Plan is to attract and retain Directors,
Consultants, and officers and other key Employees of the Company and its
Subsidiaries and to provide to such persons incentives and rewards for superior
performance.

 

d.       Duration. No Award may be granted under the Plan after the day
immediately preceding the tenth (10th) anniversary of the Effective Date, or
such earlier date as the Board shall determine. The Plan will remain in effect
with respect to outstanding Awards until no Awards remain outstanding.

 

2.           Definitions. As used in the Plan, the following definitions shall
apply.

 

“Applicable Law” means the applicable requirements relating to the
administration of equity-based compensation plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, the rules of any stock
exchange or quotation system on which the Shares are listed or quoted and the
applicable laws of any other country or jurisdiction where Awards are granted
under the Plan.

 

“Award” means an award of Nonqualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Shares, Restricted Share Units, Other
Share-Based Awards, or Cash-Based Awards granted pursuant to the terms and
conditions of the Plan.

 

“Award Agreement” means either: (a) an agreement, in written or electronic
format, entered into by the Company and a Participant setting forth the terms
and provisions applicable to an Award granted under the Plan; or (b) a
statement, in written or electronic format, issued by the Company to a
Participant describing the terms and provisions of such Award, which need not be
signed by the Participant.

 

 

 

 

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

 

“Cash-Based Award” shall mean a cash Award granted pursuant to Section 11 of the
Plan.

 

“Cause” shall have the meaning provided in the applicable employment agreement
or consulting agreement between the Participant and the Company, if any, or if
there is no such agreement that defines the term, “Cause” shall mean (a) the
willful and continued failure of the Participant to perform substantially the
Participant’s duties with the Company or any of its Subsidiaries (other than any
such failure resulting from any medically determined physical or mental
impairment), which failure is not cured by the Participant within 20 calendar
days after a written demand for substantial performance is delivered to the
Participant by the Committee which specifically identifies the manner in which
the Committee believes that the Participant has not substantially performed the
Participant’s duties; (b) the engaging by the Participant in illegal conduct,
gross misconduct, gross insubordination or gross negligence that is materially
and demonstrably injurious to the Company’s business or financial condition; (c)
a conviction, guilty plea or plea of nolo contendere of the Participant for any
crime involving dishonesty or for any felony; or (d) a material breach by the
Participant of a fiduciary duty of loyalty or care to the Company or any of its
Subsidiaries.

 

“Change in Control” means, except as otherwise provided in the applicable Award
Agreement, the occurrence of any of the following: (a) an acquisition after the
date hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of fifty percent (50%) of the voting
securities of the Company (other than by means of conversion or exercise of
convertible debt or equity securities of the Company); (b) the Company merges
into or consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction own less than
fifty percent (50%) of the aggregate voting power of the Company or the
successor entity of such transaction; or (c) the Company sells or transfers all
or substantially all of its assets to another Person and the stockholders of the
Company immediately prior to such transaction own less than fifty percent (50%)
of the aggregate voting power of the acquiring entity immediately after the
transaction.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee of the Board or such other
committee or subcommittee of the Board as may be duly appointed to administer
the Plan and having such powers in each instance as shall be specified by the
Board. To the extent required by Applicable Law, the Committee shall consist of
two or more members of the Board, each of whom is a “non-employee director”
within the meaning of Rule 16b-3 promulgated under the Exchange Act, an “outside
director” within the meaning of regulations promulgated under Section 162(m) of
the Code, and an “independent director” within the meaning of applicable rules
of any securities exchange upon which Shares are listed.

 

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“Company” has the meaning given such term in Section 1(a) and any successor
thereto.

 

“Consultant” means an independent contractor who performs services for the
Company or a Subsidiary in a capacity other than as an Employee or Director.

 

“Date of Grant” means the date specified by the Committee on which the grant of
an Award is to be effective. The Date of Grant shall not be earlier than the
date of the resolution and action therein by the Committee. In no event shall
the Date of Grant be earlier than the Effective Date.

 

“Director” means any individual who is a member of the Board and who is not an
Employee.

 

“Effective Date” has the meaning given such term in Section 1(a).

 

“Employee” means any employee of the Company or a Subsidiary; provided, however,
that for purposes of determining whether any person may be a Participant for
purposes of any grant of Incentive Stock Options, the term “Employee” has the
meaning given to such term in Section 3401(c) of the Code, as interpreted by the
regulations thereunder and Applicable Law.

 

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and
regulations thereunder, as such law, rules and regulations may be amended from
time to time.

 

“Fair Market Value” means the value of one Share on any relevant date,
determined under the following rules: (a) the closing sale price per Share on
that date as reported on the principal exchange on which Shares are then
trading, if any, or if applicable the Nasdaq Capital Market, or if there are no
sales on that date, on the next preceding trading day during which a sale
occurred; (b) if the Shares are not reported on a principal exchange or national
market system, the average of the closing bid and asked prices last quoted on
that date by an established quotation service for over-the-counter securities;
or (c) if neither (a) nor (b) applies, (i) with respect to Stock Options, Stock
Appreciation Rights and any Award of stock rights that is subject to Section
409A of the Code, the value as determined by the Committee through the
reasonable application of a reasonable valuation method, taking into account all
information material to the value of the Company, within the meaning of Section
409A of the Code, and (ii) with respect to all other Awards, the fair market
value as determined by the Committee in good faith.

 

“Incentive Stock Option” or “ISO” means a Stock Option that is designated as an
Incentive Stock Option and that is intended to meet the requirements of
Section 422 of the Code.

 

“Nonqualified Stock Option” means a Stock Option that is not intended to meet
the requirements of Section 422 of the Code or otherwise does not meet such
requirements.

 

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“Other Share-Based Award” means an equity-based or equity-related Award not
otherwise described by the terms of the Plan, granted in accordance with the
terms and conditions set forth in Section 10.

 

“Participant” means any eligible individual as set forth in Section 5 who holds
one or more outstanding Awards.

 

“Performance-Based Exception” means the performance-based exception from the tax
deductibility limitations of Section 162(m) of the Code.

 

“Performance Objectives” means the performance objective or objectives
established by the Committee with respect to an Award granted pursuant to the
Plan. Any Performance Objectives may relate to the performance of the Company or
one or more of its Subsidiaries, divisions, departments, units, functions,
partnerships, joint ventures or minority investments, product lines or products,
or the performance of the individual Participant, and may include, without
limitation, the Performance Objectives set forth in Section 13(b). The
Performance Objectives may be made relative to the performance of a group of
comparable companies, or a published or special index that the Committee, in its
sole discretion, deems appropriate, or the Company may select Performance
Objectives as compared to various stock market indices. Performance Objectives
may be stated as a combination of the listed factors.

 

“Person” means an individual, corporation, partnership, limited liability
company, association, joint venture, trust or other entity or organization.

 

“Plan” means this SG Blocks, Inc. Stock Incentive Plan, as amended from time to
time, and for the period from the Effective Date to the Restatement Date, the SG
Blocks, Inc. Stock Option Plan.

 

“Restricted Shares” means Shares granted or sold pursuant to Section 8 as to
which neither the substantial risk of forfeiture nor the prohibition on
transfers referred to in such Section 8 has expired.

 

“Restricted Share Unit” means a grant or sale of the right to receive Shares or
cash at the end of a specified restricted period made pursuant to Section 9.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Share” means a share of common stock of the Company, $0.01 par value per share,
or any security into which such Share may be changed by reason of any
transaction or event of the type referred to in Section 15.

 

“Stock Appreciation Right” means a right granted pursuant to Section 7.

 

“Stock Option” means a right to purchase a Share granted to a Participant under
the Plan in accordance with the terms and conditions set forth in Section 6.
Stock Options may be either Incentive Stock Options or Nonqualified Stock
Options.

 

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“Subsidiary” means: (a) with respect to an Incentive Stock Option, a “subsidiary
corporation” as defined under Section 424(f) of the Code; and (b) for all other
purposes under the Plan, any corporation or other entity in which the Company
owns, directly or indirectly, a proprietary interest of more than fifty percent
(50%) by reason of stock ownership or otherwise.

 

“Ten Percent Stockholder” means any Participant who owns more than ten percent
of the combined voting power of all classes of stock of the Company, within the
meaning of Section 422 of the Code.

 

3.           Shares Available Under the Plan.

 

a.       Shares Available for Awards. The maximum number of Shares that may be
issued or delivered pursuant to Awards under the Plan shall be one million five
hundred thousand (1,500,000) (all of which may be granted with respect to
Incentive Stock Options). Shares issued or delivered pursuant to an Award may be
authorized but unissued Shares, treasury Shares, including Shares purchased in
the open market, or a combination of the foregoing. The aggregate number of
Shares available for issuance or delivery under the Plan shall be subject to
adjustment as provided in Section 15.

 

b.       Share Counting. The following Shares shall not count against the Share
limit in Section 3(a): (i) Shares covered by an Award that expires or is
forfeited, canceled, surrendered, or otherwise terminated without the issuance
of such Shares; (ii) Shares covered by an Award that is settled only in cash;
(iii) Shares tendered in payment of the exercise price of a Stock Option; (iv)
Shares withheld by the Company or any Subsidiary to satisfy a tax withholding
obligation with respect to any Award; (v) Shares that are repurchased by the
Company with Stock Option proceeds; and (vi) Shares granted through the
assumption of, or in substitution for, outstanding awards granted by a company
to individuals who become Employees or Directors as the result of a merger,
consolidation, acquisition or other corporate transaction involving such company
and the Company or any of its Subsidiaries (except as may be required by reason
of the rules and regulations of any stock exchange or other trading market on
which the Shares are listed). This Section 3(b) shall apply to the number of
Shares reserved and available for Incentive Stock Options only to the extent
consistent with applicable Treasury Regulations relating to Incentive Stock
Options under the Code.

 

c.       Per Participant Limits. Subject to adjustment as provided in Section 15
of the Plan, the following limits shall apply with respect to Awards that are
intended to qualify for the Performance-Based Exception: (i) the maximum
aggregate number of Shares that may be subject to Stock Options or Stock
Appreciation Rights granted in any calendar year to any one Participant shall be
1,000,000 Shares; (ii) the maximum aggregate number of Restricted Shares and
Shares issuable or deliverable under Restricted Share Units and Other
Share-Based Awards granted in any calendar year to any one Participant shall be
1,000,000 Shares; and (iii) the maximum aggregate cash compensation that can be
paid pursuant to Cash-Based Awards or Other Share-Based Awards granted in any
calendar year to any one Participant shall be $1,000,000.

 

d.       Limit on Non-Employee Director Awards. Notwithstanding any other
provision of the Plan to the contrary, the aggregate grant date fair value
(computed as of the date of grant in accordance with applicable financial
accounting rules) of all Awards granted to any Director during any single
calendar year, taken together with any cash fees paid to such person during such
calendar year, shall not exceed $150,000.

 

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4.           Administration of the Plan.

 

a.       In General. The Plan shall be administered by the Committee. Except as
otherwise provided by the Board, the Committee shall have full and final
authority in its discretion to take all actions determined by the Committee to
be necessary in the administration of the Plan, including, without limitation,
discretion to: select Award recipients; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner consistent with the
Plan; grant waivers of terms, conditions, restrictions and limitations
applicable to any Award, or accelerate the vesting or exercisability of any
Award, in a manner consistent with the Plan; construe and interpret the Plan and
any Award Agreement or other agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations for the Plan’s
administration; and take such other action, not inconsistent with the terms of
the Plan, as the Committee deems appropriate. To the extent permitted by
Applicable Law, the Committee may, in its discretion, delegate to one or more
Directors or officers of the Company any of the Committee’s authority under the
Plan. The acts of any such delegates shall be treated hereunder as acts of the
Committee with respect to any matters so delegated.

 

b.       Determinations. The Committee shall have no obligation to treat
Participants or eligible Employees, Directors or Consultants uniformly, and the
Committee may make determinations under the Plan selectively among Participants
who receive, or Employees, Directors or Consultants who are eligible to receive,
Awards (whether or not such Participants or eligible Employees, Directors or
Consultants are similarly situated). All determinations and decisions made by
the Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Committee shall be final, conclusive and binding on all
persons, including the Company, its Subsidiaries, stockholders, Directors,
Employees, Consultants, Participants and their estates and beneficiaries.

 

c.       Authority of the Board. The Board may reserve to itself any or all of
the authority or responsibility of the Committee under the Plan or may act as
the administrator of the Plan for any and all purposes. To the extent the Board
has reserved any such authority or responsibility or during any time that the
Board is acting as administrator of the Plan, it shall have all the powers of
the Committee hereunder, and any reference herein to the Committee (other than
in this Section 4(c)) shall include the Board. To the extent that any action of
the Board under the Plan conflicts with any action taken by the Committee, the
action of the Board shall control.

 

5.           Eligibility and Participation. Each Employee, Director and
Consultant is eligible to participate in the Plan. Subject to the provisions of
the Plan, the Committee may, from time to time, select from all eligible
Employees, Directors and Consultants those to whom Awards shall be granted and
shall determine, in its sole discretion, the nature of any and all terms
permissible by Applicable Law and the amount of each Award.

 

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6.           Stock Options. Subject to the terms and conditions of the Plan,
Stock Options may be granted to Participants in such number, and upon such terms
and conditions, as shall be determined by the Committee in its sole discretion.

 

a.       Award Agreement. Each Stock Option shall be evidenced by an Award
Agreement that shall specify the exercise price, the term of the Stock Option,
the number of Shares covered by the Stock Option, the conditions upon which the
Stock Option shall become vested and exercisable and such other terms and
conditions as the Committee shall determine and which are not inconsistent with
the terms and conditions of the Plan. The Award Agreement also shall specify
whether the Stock Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option. No dividend equivalents may be granted with respect
to the Shares underlying a Stock Option.

 

b.       Exercise Price. The exercise price per Share of a Stock Option shall be
determined by the Committee at the time the Stock Option is granted and shall be
specified in the related Award Agreement; provided, however, that in no event
shall the exercise price per Share of any Stock Option be less than one hundred
percent (100%) of the Fair Market Value of a Share on the Date of Grant.

 

c.       Term. The term of a Stock Option shall be determined by the Committee
and set forth in the related Award Agreement; provided, however, that in no
event shall the term of any Stock Option exceed ten (10) years from its Date of
Grant.

 

d.       Exercisability. Stock Options shall become vested and exercisable at
such times and upon such terms and conditions as shall be determined by the
Committee and set forth in the related Award Agreement. Such terms and
conditions may include, without limitation, the satisfaction of (a) performance
goals based on one or more Performance Objectives, and (b) time-based vesting
requirements.

 

e.       Exercise of Stock Options. Except as otherwise provided in the Plan or
in a related Award Agreement, a Stock Option may be exercised for all or any
portion of the Shares for which it is then exercisable. A Stock Option shall be
exercised by the delivery of a notice of exercise to the Company or its designee
in a form specified by the Company which sets forth the number of Shares with
respect to which the Stock Option is to be exercised and full payment of the
exercise price for such Shares. The exercise price of a Stock Option may be
paid, in the discretion of the Committee and as set forth in the applicable
Award Agreement: (i) in cash or its equivalent; (ii) by tendering (either by
actual delivery or attestation) previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the aggregate exercise price;
(iii) by a cashless exercise (including by withholding Shares deliverable upon
exercise and through a broker-assisted arrangement to the extent permitted by
Applicable Law); (iv) by a combination of the methods described in clauses (i),
(ii) and/or (iii); or (v) through any other method approved by the Committee in
its sole discretion. As soon as practicable after receipt of the notification of
exercise and full payment of the exercise price, the Company shall cause the
appropriate number of Shares to be issued to the Participant.

 

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f.       Special Rules Applicable to Incentive Stock Options. Notwithstanding
any other provision in the Plan to the contrary:

 

(i)       Incentive Stock Options may be granted only to Employees of the
Company and its Subsidiaries. The terms and conditions of Incentive Stock
Options shall be subject to and comply with the requirements of Section 422 of
the Code.

 

(ii)       To the extent that the aggregate Fair Market Value of the Shares
(determined as of the Date of Grant) with respect to which an Incentive Stock
Option is exercisable for the first time by any Participant during any calendar
year (under all plans of the Company and its Subsidiaries) is greater than
$100,000 (or such other amount specified in Section 422 of the Code), as
calculated under Section 422 of the Code, then the Stock Option shall be treated
as a Nonqualified Stock Option.

 

(iii)       No Incentive Stock Option shall be granted to any Participant who,
on the Date of Grant, is a Ten Percent Stockholder, unless (A) the exercise
price per Share of such Incentive Stock Option is at least one hundred and ten
percent (110%) of the Fair Market Value of a Share on the Date of Grant, and (B)
the term of such Incentive Stock Option shall not exceed five (5) years from the
Date of Grant.

 

7.           Stock Appreciation Rights. Subject to the terms and conditions of
the Plan, Stock Appreciation Rights may be granted to Participants in such
number, and upon such terms and conditions, as shall be determined by the
Committee in its sole discretion.

 

a.       Award Agreement. Each Stock Appreciation Right shall be evidenced by an
Award Agreement that shall specify the exercise price, the term of the Stock
Appreciation Right, the number of Shares covered by the Stock Appreciation
Right, the conditions upon which the Stock Appreciation Right shall become
vested and exercisable and such other terms and conditions as the Committee
shall determine and which are not inconsistent with the terms and conditions of
the Plan. No dividend equivalents may be granted with respect to the Shares
underlying a Stock Appreciation Right.

 

b.       Exercise Price. The exercise price per Share of a Stock Appreciation
Right shall be determined by the Committee at the time the Stock Appreciation
Right is granted and shall be specified in the related Award Agreement;
provided, however, that in no event shall the exercise price per Share of any
Stock Appreciation Right be less than one hundred percent (100%) of the Fair
Market Value of a Share on the Date of Grant.

 

c.       Term. The term of a Stock Appreciation Right shall be determined by the
Committee and set forth in the related Award Agreement; provided, however, that
in no event shall the term of any Stock Appreciation Right exceed ten (10) years
from its Date of Grant.

 

d.       Exercisability of Stock Appreciation Rights. A Stock Appreciation Right
shall become vested and exercisable at such times and upon such terms and
conditions as may be determined by the Committee and set forth in the related
Award Agreement. Such terms and conditions may include, without limitation, the
satisfaction of (i) performance goals based on one or more Performance
Objectives, and (ii) time-based vesting requirements.

 

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e.       Exercise of Stock Appreciation Rights. Except as otherwise provided in
the Plan or in a related Award Agreement, a Stock Appreciation Right may be
exercised for all or any portion of the Shares for which it is then exercisable.
A Stock Appreciation Right shall be exercised by the delivery of a notice of
exercise to the Company or its designee in a form specified by the Company which
sets forth the number of Shares with respect to which the Stock Appreciation
Right is to be exercised. Upon exercise, a Stock Appreciation Right shall
entitle a Participant to an amount equal to (i) the excess of (A) the Fair
Market Value of a Share on the exercise date over (B) the exercise price per
Share, multiplied by (ii) the number of Shares with respect to which the Stock
Appreciation Right is exercised. A Stock Appreciation Right may be settled in
whole Shares, cash or a combination thereof, as specified by the Committee in
the related Award Agreement.

 

8.           Restricted Shares. Subject to the terms and conditions of the Plan,
Restricted Shares may be granted or sold to Participants in such number, and
upon such terms and conditions, as shall be determined by the Committee in its
sole discretion.

 

a.       Award Agreement. Each Restricted Shares Award shall be evidenced by an
Award Agreement that shall specify the number of Restricted Shares, the
restricted period(s) applicable to the Restricted Shares, the conditions upon
which the restrictions on the Restricted Shares will lapse and such other terms
and conditions as the Committee shall determine and which are not inconsistent
with the terms and conditions of the Plan.

 

b.       Terms, Conditions and Restrictions. The Committee shall impose such
other terms, conditions and/or restrictions on any Restricted Shares as it may
deem advisable, including, without limitation, a requirement that the
Participant pay a purchase price for each Restricted Share, restrictions based
on the achievement of specific Performance Objectives, time-based restrictions
or holding requirements or sale restrictions placed on the Shares by the Company
upon vesting of such Restricted Shares. Unless otherwise provided in the related
Award Agreement or required by Applicable Law, the restrictions imposed on
Restricted Shares shall lapse upon the expiration or termination of the
applicable restricted period and the satisfaction of any other applicable terms
and conditions.

 

c.       Custody of Certificates. To the extent deemed appropriate by the
Committee, the Company may retain any certificates representing Restricted
Shares in the Company’s possession until such time as all terms, conditions
and/or restrictions applicable to such Shares have been satisfied or lapse.

 

d.       Rights Associated with Restricted Shares during Restricted Period.
During any restricted period applicable to Restricted Shares: (i) the Restricted
Shares may not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated; (ii) unless otherwise provided in the related Award Agreement, the
Participant shall be entitled to exercise full voting rights associated with
such Restricted Shares; and (iii) the Participant shall be entitled to all
dividends and other distributions paid with respect to such Restricted Shares
during the restricted period. The Award Agreement may require that receipt of
any dividends or other distributions with respect to the Restricted Shares shall
be subject to the same terms and conditions as the Restricted Shares with
respect to which they are paid.

 

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9.           Restricted Share Units. Subject to the terms and conditions of the
Plan, Restricted Share Units may be granted or sold to Participants in such
number, and upon such terms and conditions, as shall be determined by the
Committee in its sole discretion.

 

a.       Award Agreement. Each Restricted Share Unit Award shall be evidenced by
an Award Agreement that shall specify the number of units, the restricted
period(s) applicable to the Restricted Share Units, the conditions upon which
the restrictions on the Restricted Share Units will lapse, the time and method
of payment of the Restricted Share Units, and such other terms and conditions as
the Committee shall determine and which are not inconsistent with the terms and
conditions of the Plan.

 

b.       Terms, Conditions and Restrictions. The Committee shall impose such
other terms, conditions and/or restrictions on any Restricted Share Units as it
may deem advisable, including, without limitation, a requirement that the
Participant pay a purchase price for each Restricted Share Unit, restrictions
based on the achievement of specific Performance Objectives or time-based
restrictions or holding requirements.

 

c.       Form of Settlement. Restricted Share Units may be settled in whole
Shares, cash or a combination thereof, as specified by the Committee in the
related Award Agreement.

 

d.        Dividend Equivalents. Restricted Share Units may provide the
Participant with dividend equivalents, on either a current or deferred or
contingent basis, and either in cash or in additional Shares, as determined by
the Committee in its sole discretion and set forth in the related Award
Agreement.

 

10.          Other Share-Based Awards. Subject to the terms and conditions of
the Plan, Other Share-Based Awards may be granted to Participants in such
number, and upon such terms and conditions, as shall be determined by the
Committee in its sole discretion. Other Share-Based Awards are Awards that are
valued in whole or in part by reference to, or otherwise based on the Fair
Market Value of, Shares, and shall be in such form as the Committee shall
determine, including without limitation, unrestricted Shares or time-based or
performance-based units that are settled in Shares and/or cash.

 

a.       Award Agreement. Each Other Share-Based Award shall be evidenced by an
Award Agreement that shall specify the terms and conditions upon which the Other
Share-Based Award shall become vested, if applicable, the time and method of
settlement, the form of settlement and such other terms and conditions as the
Committee shall determine and which are not inconsistent with the terms and
conditions of the Plan.

 

b.       Form of Settlement. An Other Share-Based Award may be settled in whole
Shares, cash or a combination thereof, as specified by the Committee in the
related Award Agreement.

 

c.       Dividend Equivalents. Other Share-Based Awards may provide the
Participant with dividend equivalents, on either a current or deferred or
contingent basis, and either in cash or in additional Shares, as determined by
the Committee in its sole discretion and set forth in the related Award
Agreement.

 

11.          Cash-Based Awards. Subject to the terms and conditions of the Plan,
Cash-Based Awards may be granted to Participants in such amounts and upon such
other terms and conditions as shall be determined by the Committee in its sole
discretion. Each Cash-Based Award shall be evidenced by an Award Agreement that
shall specify the payment amount or payment range, the time and method of
settlement and the other terms and conditions, as applicable, of such Award
which may include, without limitation, restrictions based on the achievement of
specific Performance Objectives.

 

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12.          Compliance with Section 409A. Awards granted under the Plan shall
be designed and administered in such a manner that they are either exempt from
the application of, or comply with, the requirements of Section 409A of the
Code. To the extent that the Committee determines that any award granted under
the Plan is subject to Section 409A of the Code, the Award Agreement shall
incorporate the terms and conditions deemed necessary by the Committee to avoid
the imposition of an additional tax under Section 409A of the Code upon a
Participant. Notwithstanding any other provision of the Plan or any Award
Agreement (unless the Award Agreement provides otherwise with specific reference
to this Section 12): (a) an Award shall not be granted, deferred, accelerated,
extended, paid out, settled, substituted or modified under the Plan in a manner
that would result in the imposition of an additional tax under Section 409A of
the Code upon a Participant; and (b) if an Award is subject to Section 409A of
the Code, and if the Participant holding the award is a “specified employee” (as
defined in Section 409A of the Code, with such classification to be determined
in accordance with the methodology established by the Company), then, to the
extent required to avoid the imposition of an additional tax under Section 409A
of the Code upon a Participant, no distribution or payment of any amount shall
be made before the date that is six (6) months following the date of such
Participant’s “separation from service” (as defined in Section 409A of the Code)
or, if earlier, the date of the Participant’s death. Although the Company
intends to administer the Plan so that Awards will be exempt from, or will
comply with, the requirements of Section 409A of the Code, the Company does not
warrant that any Award under the Plan will qualify for favorable tax treatment
under Section 409A of the Code or any other provision of federal, state, local,
or non-United States law. The Company shall not be liable to any Participant for
any tax, interest, or penalties the Participant might owe as a result of the
grant, holding, vesting, exercise, or payment of any Award under the Plan.

 

13.          Compliance with Section 162(m).

 

a.       In General. Notwithstanding anything in the Plan to the contrary,
Awards may be granted in a manner that is intended to qualify for the
Performance-Based Exception. As determined by the Committee in its sole
discretion, the grant, vesting, exercisability and/or settlement of any
Restricted Shares, Restricted Share Units, Other Share-Based Awards and
Cash-Based Awards intended to qualify for the Performance-Based Exception shall
be conditioned on the attainment of one or more Performance Objectives during a
performance period established by the Committee and must satisfy the
requirements of this Section 13.

 

b.       Performance Objectives. If an Award is intended to qualify for the
Performance-Based Exception, then the Performance Objectives shall be based on
specified levels of or growth in one or more of the following criteria:
revenues, weighted average revenue per unit, earnings from operations, operating
income, earnings before or after interest and taxes, operating income before or
after interest and taxes, net income, cash flow, earnings per share, debt to
capital ratio, increase in market capitalization, economic value added, return
on total capital, return on invested capital, return on equity, return on
assets, total return to stockholders, earnings before or after interest, taxes,
depreciation, amortization or extraordinary or special items, operating income
before or after interest, taxes, depreciation, amortization or extraordinary or
special items, return on investment, free cash flow, cash flow return on
investment (discounted or otherwise), net cash provided by operations, cash flow
in excess of cost of capital, operating margin, profit margin, contribution
margin, stock price and/or strategic business criteria consisting of one or more
objectives based on meeting specified product development, strategic partnering,
research and development, market penetration, geographic business expansion
goals, cost targets, customer satisfaction, gross or net additional customers,
average customer life, employee satisfaction, management of employment practices
and employee benefits, supervision of litigation and information technology, and
goals relating to acquisitions or divestitures of subsidiaries, affiliates and
joint ventures.

 

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c.        Establishment of Performance Goals. With respect to Awards intended to
qualify for the Performance-Based Exception, the Committee shall establish: (i)
the applicable Performance Objectives and performance period, and (ii) the
formula for computing the payout. Such terms and conditions shall be established
in writing while the outcome of the applicable performance period is
substantially uncertain, but in no event later than the earlier of: (x) ninety
days after the beginning of the applicable performance period; or (y) the
expiration of twenty-five percent (25%) of the applicable performance period.

 

d.        Certification of Performance. With respect to any Award intended to
qualify for the Performance-Based Exception, the Committee shall certify in
writing whether the applicable Performance Objectives and other material terms
imposed on such Award have been satisfied, and, if they have, ascertain the
amount of the payout or vesting of the Award. Notwithstanding any other
provision of the Plan, payment or vesting of any such Award shall not be made
until the Committee certifies in writing that the applicable Performance
Objectives and any other material terms of such Award were in fact satisfied in
a manner conforming to applicable regulations under Section 162(m) of the Code.

 

e.       Negative Discretion. With respect to any Award intended to qualify for
the Performance-Based Exception, after the date that the Performance Objectives
are required to be established in writing pursuant to Section 13(c), the
Committee shall not have discretion to increase the amount of compensation that
is payable upon achievement of the designated Performance Objectives. However,
the Committee may, in its sole discretion, reduce the amount of compensation
that is payable upon achievement of the designated Performance Objectives.

 

14.          Transferability. Except as otherwise determined by the Committee,
no Award or dividend equivalents paid with respect to any Award shall be
transferable by the Participant except by will or the laws of descent and
distribution; provided, that if so determined by the Committee, each Participant
may, in a manner established by the Board or the Committee, designate a
beneficiary to exercise the rights of the Participant with respect to any Award
upon the death of the Participant and to receive Shares or other property issued
or delivered under such Award. Except as otherwise determined by the Committee,
Stock Options and Stock Appreciation Rights will be exercisable during a
Participant’s lifetime only by the Participant or, in the event of the
Participant’s legal incapacity to do so, by the Participant’s guardian or legal
representative acting on behalf of the Participant in a fiduciary capacity under
state law and/or court supervision.

 

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15.          Adjustments. In the event of any equity restructuring (within the
meaning of Financial Accounting Standards Board Accounting Standards
Codification Topic 718, or any successor thereto), such as a stock dividend,
stock split, reverse stock split, spinoff, rights offering, or recapitalization
through a large, nonrecurring cash dividend, the Committee shall cause there to
be an equitable adjustment in the number and kind of Shares specified in
Sections 3(a) and 3(c) of the Plan and, with respect to outstanding Awards, in
the number and kind of Shares subject to outstanding Awards and the exercise
price or other price of Shares subject to outstanding Awards, in each case to
prevent dilution or enlargement of the rights of Participants. In the event of
any other change in corporate capitalization, or in the event of a merger,
consolidation, liquidation, or similar transaction, the Committee may, in its
sole discretion, cause there to be an equitable adjustment as described in the
foregoing sentence, to prevent dilution or enlargement of rights; provided,
however, that, unless otherwise determined by the Committee, the number of
Shares subject to any Award shall always be rounded down to a whole number.
Notwithstanding the foregoing, the Committee shall not make any adjustment
pursuant to this Section 15 that would (i) cause any Stock Option intended to
qualify as an ISO to fail to so qualify, (ii) cause an Award that is otherwise
exempt from Section 409A of the Code to become subject to Section 409A, or (iii)
cause an Award that is subject to Section 409A of the Code to fail to satisfy
the requirements of Section 409A. The determination of the Committee as to the
foregoing adjustments, if any, shall be conclusive and binding on all
Participants and any other persons claiming under or through any Participant.

 

16.          Fractional Shares. The Company shall not be required to issue or
deliver any fractional Shares pursuant to the Plan and, unless otherwise
provided by the Committee, fractional Shares shall be settled in cash.

 

17.          Withholding Taxes. To the extent required by Applicable Law, a
Participant shall be required to satisfy, in a manner satisfactory to the
Company or Subsidiary, as applicable, any withholding tax obligations that arise
by reason of the exercise of a Stock Option or Stock Appreciation Right, the
vesting of or settlement of Shares under an Award, an election pursuant to
Section 83(b) of the Code or otherwise with respect to an Award. The Company and
its Subsidiaries shall not be required to issue or deliver Shares, make any
payment or recognize the transfer or disposition of Shares until such
obligations are satisfied. The Committee may permit or require these obligations
to be satisfied by having the Company withhold a portion of the Shares that
otherwise would be issued or delivered to a Participant upon exercise of a Stock
Option or Stock Appreciation Right or upon the vesting or settlement of an
Award, or by tendering Shares previously acquired, in each case having a Fair
Market Value equal to the minimum amount required to be withheld or paid, or
such other amount as will not result in an adverse accounting consequence to the
Company. Any such elections are subject to such conditions or procedures as may
be established by the Committee and may be subject to disapproval by the
Committee.

 

18.          Foreign Employees. Without amending the Plan, the Committee may
grant Awards to Participants who are foreign nationals, or who are subject to
Applicable Law of one or more non-United States jurisdictions, on such terms and
conditions different from those specified in the Plan as may in the judgment of
the Committee be necessary or desirable to foster and promote achievement of the
purposes of the Plan, and, in furtherance of such purposes, the Committee may
approve such sub-plans, supplements to or amendments, modifications,
restatements or alternative versions of this Plan as may be necessary or
advisable to comply with provisions of Applicable Law of other countries in
which the Company or its Subsidiaries operate or have employees.

 

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19.          Compensation Recovery Policy.

 

a.       Compensation Recovery Policy. Any Award granted to a Participant shall
be subject to forfeiture or repayment pursuant to the terms of any applicable
compensation recovery policy adopted by the Company, including any such policy
that may be adopted to comply with Applicable Law.

 

b.       Set-Off and Other Remedies. To the extent that amounts are not
immediately returned or paid to the Company as provided in this Section 19, the
Company may, to the extent permitted by Applicable Law, seek other remedies,
including a set off of the amounts so payable to it against any amounts that may
be owing from time to time by the Company or a Subsidiary to the Participant for
any reason, including, without limitation, wages, or vacation pay or other
benefits; provided, however, that, except to the extent permitted by Treasury
Regulation Section 1.409A-3(j)(4), such offset shall not apply to amounts that
are “deferred compensation” within the meaning of Section 409A of the Code.

 

20.          Change in Control. In the event of a Change in Control, the
Committee, in its sole discretion, may take such actions, if any, as it deems
necessary or desirable with respect to any Award that is outstanding as of the
date of the consummation of the Change in Control. Such actions may include,
without limitation, and without the consent of any affected Participant: (a) the
acceleration of the vesting, settlement and/or exercisability of an Award; (b)
the payment of a cash amount in exchange for the cancellation of an Award; (c)
the cancellation of Stock Options and/or Stock Appreciation Rights without
payment therefor if the Fair Market Value of a Share on the date of the Change
in Control does not exceed the exercise price per Share of the applicable
Awards; and/or (d) the issuance of substitute Awards that substantially preserve
the value, rights and benefits of any affected Awards.

 

21.          Amendment, Modification and Termination.

 

a.       In General. The Board may at any time and from time to time, alter,
amend, suspend or terminate the Plan in whole or in part; provided, however,
that no alteration or amendment that requires stockholder approval in order for
the Plan to comply with any rule promulgated by the SEC or any securities
exchange on which Shares are listed or any other Applicable Law shall be
effective unless such amendment shall be approved by the requisite vote of
stockholders of the Company entitled to vote thereon within the time period
required under such applicable listing standard or rule.

 

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b.       Adjustments to Outstanding Awards. The Committee may in its sole
discretion at any time (i) provide that all or a portion of a Participant’s
Stock Options, Stock Appreciation Rights and other Awards in the nature of
rights that may be exercised shall become fully or partially exercisable; (ii)
provide that all or a part of the time-based vesting restrictions on all or a
portion of the outstanding Awards shall lapse, and/or that any Performance
Objectives or other performance-based criteria with respect to any Awards shall
be deemed to be wholly or partially satisfied; or (iii) waive any other
limitation or requirement under any such Award, in each case, as of such date as
the Committee may, in its sole discretion, declare. Unless otherwise determined
by the Committee, any such adjustment that is made with respect to an Award that
is intended to qualify for the Performance-Based Exception shall be made at such
times and in such manner as will not cause such Awards to fail to qualify under
the Performance-Based Exception. Additionally, the Committee shall not make any
adjustment pursuant to this Section 21(b) that would cause an Award that is
otherwise exempt from Section 409A of the Code to become subject to
Section 409A, or that would cause an Award that is subject to Section 409A of
the Code to fail to satisfy the requirements of Section 409A.

 

c.       Prohibition on Repricing. Except for adjustments made pursuant to
Sections 16 or 21, the Board or the Committee will not, without the further
approval of the stockholders of the Company, authorize the amendment of any
outstanding Stock Option or Stock Appreciation Right to reduce the exercise
price. No Stock Option or Stock Appreciation Right will be cancelled and
replaced with an Award having a lower exercise price, or for another Award, or
for cash without further approval of the stockholders of the Company, except as
provided in Sections 15 or 20. Furthermore, no Stock Option or Stock
Appreciation Right will provide for the payment, at the time of exercise, of a
cash bonus or grant or sale of another Award without further approval of the
stockholders of the Company. This Section 21(c) is intended to prohibit the
repricing of “underwater” Stock Options or Stock Appreciation Rights without
stockholder approval and will not be construed to prohibit the adjustments
provided for in Sections 15 or 20.

 

d.       Effect on Outstanding Awards. Notwithstanding any other provision of
the Plan to the contrary (other than Sections 15, 20, 21(b) and 23(d)), no
termination, amendment, suspension, or modification of the Plan or an Award
Agreement shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award; provided that the Committee may modify an ISO held by a Participant
to disqualify such Stock Option from treatment as an “incentive stock option”
under Section 422 of the Code without the Participant’s consent.

 

22.          Applicable Law. The obligations of the Company with respect to
Awards under the Plan shall be subject to Applicable Law and such approvals by
any governmental agencies as the Committee determines may be required. The Plan
and each Award Agreement shall be governed by the laws of the State of Delaware,
excluding any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of the Plan to the substantive law of
another jurisdiction.

 

23.          Miscellaneous.

 

a.       Conditions on Delivery of Shares. The Company will not be obligated to
deliver any Shares pursuant to the Plan or to remove restrictions from Shares
previously delivered under the Plan until (i) all conditions of the Award have
been met or removed to the satisfaction of the Company, (ii) in the opinion of
the Company’s counsel, all other legal matters in connection with the issuance
and delivery of such Shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and
regulations, and (iii) the Participant has executed and delivered to the Company
such representations or agreements as the Company may consider appropriate to
satisfy the requirements of Applicable Law. Unless and until the Shares have
been registered under the Securities Act of 1933, as amended, each certificate
evidencing any Shares delivered pursuant to the Plan shall bear a restrictive
legend specified by the Company.

 

 15 

 

 

b.       No Right of Continued Employment or Service. The Plan shall not confer
upon any Participant any right with respect to continuance of employment or
other service with the Company or any Subsidiary, nor shall it interfere in any
way with any right the Company or any Subsidiary would otherwise have to
terminate such Participant’s employment or other service at any time. No
Employee, Director or Consultant shall have the right to be selected to receive
an Award under the Plan, or, having been so selected, to be selected to receive
future Awards. Awards granted under the Plan shall not be considered a part of
any Participant’s normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation,
termination, redundancy, dismissal, end of service payments, bonuses,
long-service awards, pension or retirement or welfare benefits or similar
payments.

 

c.       Unfunded, Unsecured Plan. Neither a Participant nor any other person
shall, by reason of participation in the Plan, acquire any right or title to any
assets, funds or property of the Company or any Subsidiary, including without
limitation, any specific funds, assets or other property which the Company or
any Subsidiary may set aside in anticipation of any liability under the Plan. A
Participant shall have only a contractual right to an Award or the amounts, if
any, payable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.

 

d.       Severability. If any provision of the Plan is or becomes invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended or limited in scope to conform to Applicable Law
or, in the discretion of the Committee, it shall be stricken and the remainder
of the Plan shall remain in full force and effect.

 

e.       Acceptance of the Plan. By accepting any benefit under the Plan, each
Participant and each person claiming under or through any such Participant shall
be conclusively deemed to have indicated their acceptance and ratification of,
and consent to, all of the terms and conditions of the Plan and any action taken
under the Plan by the Committee, the Board or the Company, in any case in
accordance with the terms and conditions of the Plan.

 

f.       Successors. All obligations of the Company under the Plan and with
respect to Awards shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or other event, or a sale or disposition of all or
substantially all of the business and/or assets of the Company and references to
the “Company” herein and in any Award Agreements shall be deemed to refer to
such successors.

 

 

 

 

[END OF DOCUMENT]

 

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