Exhibit 10.1

 

VAPORIN, INC. 2014 EQUITY INCENTIVE PLAN, AS AMENDED

 

1. Purpose; Eligibility.

 

1.1 General Purpose. The name of this plan is the Vaporin, Inc. 2014 Equity
Incentive Plan (the “Plan”). The purposes of the Plan are to (a) enable Vaporin,
Inc., a Delaware corporation (the “Company”), and any Affiliate to attract and
retain the types of Employees, Consultants, Officers and Directors who will
contribute to the Company’s long range success; (b) provide incentives that
align the interests of Employees, Consultants and Directors with those of the
shareholders of the Company; and (c) promote the success of the Company’s
business.

 

1.2 Eligible Award Recipients. The persons eligible to receive Awards are the
Employees, Consultants, Officers and Directors of the Company and its Affiliates
and such other individuals designated by the Committee who are reasonably
expected to become Employees, Consultants, Officers and Directors after the
receipt of Awards.

 

1.3 Available Awards. Awards that may be granted under the Plan include: (a)
Incentive Stock Options, (b) Non-Qualified Stock Options, (c) SARs, (d)
Restricted Awards, and (e) Restricted Stock Units.

 

2. Definitions.

 

“Affiliate” means a corporation or other entity that, directly or through one or
more intermediaries, controls, is controlled by or is under common control with,
the Company.

 

“Applicable Laws” means the requirements related to or implicated by the
administration of the Plan under applicable state corporate law, United States
federal and state securities laws, the Code, any stock exchange or quotation
system on which the shares of Common Stock are listed or quoted, and the
applicable laws of any foreign country or jurisdiction where Awards are granted
under the Plan.

 

“Award” means any right granted under the Plan, including an Incentive Stock
Option, a Non-Qualified Stock Option, a SAR, a Restricted Award or Restricted
Stock Unit.

 

“Award Agreement” means a written agreement, contract, certificate or other
instrument or document evidencing the terms and conditions of an individual
Award granted under the Plan which may, in the discretion of the Company, be
transmitted electronically to any Participant. Each Award Agreement shall be
subject to the terms and conditions of the Plan.

 

“Awardholder” means any person to whom non-Qualified Options, Restricted Stock
Units or SARs are granted pursuant to the Plan.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” shall be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.

 

“Board” means the Board of Directors of the Company, as constituted at any time.

 

“Cashless Exercise” shall have the meaning in Section 6.4(b)(ii).

 

“Cause” means:

 

With respect to any Employee or Consultant: (a) If the Employee or Consultant is
a party to an employment or service agreement with the Company or its Affiliates
and such agreement provides for a definition of Cause, the definition contained
therein; or (b) If no such agreement exists, or if such agreement does not
define Cause: (i) the commission of, or plea of guilty or no contest to, a
felony or a crime involving moral turpitude or the commission of any other act
involving willful malfeasance or material fiduciary breach with respect to the
Company or an Affiliate; (ii) conduct that results in or is reasonably likely to
result in harm to the reputation or business of the Company or any of its
Affiliates; (iii) gross negligence or willful misconduct with respect to the
Company or an Affiliate; or (iv) material violation of state or federal
securities laws.

 

 

 

 

With respect to any Director, a determination by a majority of the disinterested
Board members that the Director has engaged in any of the following: (a)
malfeasance in office; (b) gross misconduct or neglect; (c) false or fraudulent
misrepresentation inducing the Director’s appointment; (d) wilful conversion of
corporate funds; or (e) repeated failure to participate in Board meetings on a
regular basis despite having received proper notice of the meetings in advance.

 

The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to whether a Participant has been discharged for
Cause.

 

“Change in Control” means a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the
Company within the meaning of Treasury Regulation Section 1.409A-3(i)(5), as may
be amended from time to time.

 

“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time. Any reference to a section of the Code shall be deemed to include a
reference to any regulations promulgated thereunder.

 

“Committee” means a committee of one or more members of the Board appointed by
the Board to administer the Plan in accordance with Section 3.3 and Section 3.4.

 

“Common Stock” means the common stock, $.00001 par value per share, of the
Company, or such other securities of the Company as may be designated by the
Committee from time to time in substitution thereof.

 

“Company” means Vaporin, Inc., a Delaware corporation, and any successor
thereto.

 

“Consultant” means any individual who is engaged by the Company or any Affiliate
to render consulting or advisory services.

 

“Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Consultant or Director, is not interrupted or
terminated. The Participant’s Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s Continuous Service; provided further that if any Award is subject
to Section 409A of the Code, this sentence shall only be given effect to the
extent consistent with Section 409A of the Code. For example, a change in status
from an Employee of the Company to a Director of an Affiliate will not
constitute an interruption of Continuous Service. The Committee or its delegate,
in its sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal or family
leave of absence.

 

“Covered Employee” has the same meaning as set forth in Section 162(m)(3) of the
Code, as interpreted by Internal Revenue Service Notice 2007-49.

 

“Director” means a member of the Board.

 

“Disability” means that the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment; provided, however, for purposes of determining the term of an
Incentive Stock Option pursuant to Section 6.10 hereof, the term Disability
shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The
determination of whether an individual has a Disability shall be determined
under procedures established by the Committee. Except in situations where the
Committee is determining Disability for purposes of the term of an Incentive
Stock Option pursuant to Section 6.10 hereof within the meaning of Section 22(e)
(3) of the Code, the Committee may rely on any determination that a Participant
is disabled for purposes of benefits under any long-term disability plan
maintained by the Company or any Affiliate in which a Participant participates.

 

“Disqualifying Disposition” has the meaning set forth in Section 14.12.

 

 

 

 

“Effective Date” shall mean the date as of which this Plan is adopted by the
Board.

 

“Employee” means any person, including an Officer or Director, employed by the
Company or an Affiliate; provided that, for purposes of determining eligibility
to receive Incentive Stock Options, an Employee shall mean an employee of the
Company or a parent or subsidiary corporation within the meaning of Code Section
424. Mere service as a Director or payment of a Director’s fee by the Company or
an Affiliate shall not be sufficient to constitute “employment” by the Company
or an Affiliate.

 

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

 

“Fair Market Value” means, as of any date, the value of the Common Stock as
determined below. If the principal market for the Common Stock is any national
securities exchange, or the Over-the-Counter Bulletin Board, the OTC Markets or
a similar system, the Fair Market Value shall be the closing price of a share of
Common Stock (or if no sales were reported the closing price on the date
immediately preceding such date) as quoted on such exchange or market on the day
of determination, as reported in the Wall Street Journal or such other source as
the Committee deems reliable. In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Committee and such determination shall be conclusive and binding on all persons.

 

“Free Standing Rights” has the meaning set forth in Section 7.1(a).

 

“Good Reason” means a Separation From Service for good reason within the meaning
of Treasury Regulation Section 1.409A-1(n)(2), as may be amended from time to
time.

 

“Grant Date” means the date on which the Committee adopts a resolution, or takes
other appropriate action, expressly granting an Award to a Participant that
specifies the key terms and conditions of the Award or, if a later date is set
forth in such resolution, then such date as is set forth in such resolution.

 

“Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

 

“Incumbent Directors” means individuals who, on the Effective Date, constitute
the Board, provided that any individual becoming a Director subsequent to the
Effective Date whose election or nomination for election to the Board was
approved by a vote of at least two-thirds of the Incumbent Directors then on the
Board (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for Director without
objection to such nomination) shall be an Incumbent Director. No individual
initially elected or nominated as a Director of the Company as a result of an
actual or threatened election contest with respect to Directors or as a result
of any other actual or threatened solicitation of proxies by or on behalf of any
person other than the Board shall be an Incumbent Director.

 

“Non-Employee Director” means a Director who is a “non-employee director” within
the meaning of Rule 16b-3.

 

“Non-Qualified Stock Option” means an Option that by its terms does not qualify
or is not intended to qualify as an Incentive Stock Option.

 

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

 

“Option” means an Incentive Stock Option or a Non-Qualified Stock Option granted
pursuant to the Plan.

 

“Optionholder” means a person to whom an option is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Option.

 

“Option Exercise Price” means the price at which a share of Common Stock may be
purchased upon the exercise of an Option.

 

“Outside Director” means a Director who is an “outside director” within the
meaning of Section 162(m) of the Code and Treasury Regulations Section
1.162-27(e)(3) or any successor to such statute and regulation.

 

 

 

 

“Participant” means an eligible person to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Award.

 

“Permitted Transferee” means: (a) a member of the Awardholder’s immediate family
(child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships), any person sharing the Awardholder’s household (other than a
tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the Awardholder)
control the management of assets, and any other entity in which these persons
(or the Awardholder) own more than 50% of the voting interests; (b) third
parties designated by the Committee in connection with a program established and
approved by the Committee pursuant to which Participants may receive a cash
payment or other consideration in consideration for the transfer of an Award;
and (c) such other transferees as may be permitted by the Committee in its sole
discretion.

 

“Plan” means this Vaporin, Inc. 2014 Equity Incentive Plan, as amended and/or
amended and restated from time to time.

 

“Related Rights” has the meaning set forth in Section 7.1(a).

 

“Restricted Award” means any Award granted pursuant to Section 7.2(a).

 

“Restricted Period” has the meaning set forth in Section 7.2(a).

 

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

 

“SAR” means the right pursuant to an Award granted under Section 7.1 to receive,
upon exercise, an amount payable in cash or shares equal to the number of shares
subject to the SAR that is being exercised multiplied by the excess of (a) the
Fair Market Value of a share of Common Stock on the date the Award is exercised,
over (b) the exercise price specified in the SAR Award Agreement.

 

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

 

“Separation From Service” shall carry the meaning of that phrase as interpreted
under Treasury Regulation Section 1.409A-1(h), as may be amended from time, for
all purposes of this Plan.

 

“Without Cause” means an involuntary Separation From Service within the meaning
of Treasury Regulation Section 1.409A-1(n), as may be amended from time to time.

 

“10 Percent Shareholder” means a person who owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates.

 

3. Administration.

 

3.1 Authority of Committee. The Plan shall be administered by the Committee or,
in the Board’s sole discretion, by the Board. Subject to the terms of the Plan,
the Committee’s charter and Applicable Laws, and in addition to other express
powers and authorization conferred by the Plan, the Committee shall have the
authority:

 

(a) to construe and interpret the Plan and apply its provisions;

 

(b) to promulgate, amend, and rescind rules and regulations relating to the
administration of the Plan;

 

(c) to authorize any person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Plan;

 

 

 

 

(d) to delegate its authority to one or more Officers of the Company with
respect to Awards that do not involve Covered Employees or “insiders” within the
meaning of Section 16 of the Exchange Act;

 

(e) to determine when Awards are to be granted under the Plan and the applicable
Grant Date;

 

(f) from time to time to select, subject to the limitations set forth in this
Plan, those Participants to whom Awards shall be granted;

 

(g) to determine the number of shares of Common Stock to be made subject to each
Award;

 

(h) to determine whether each Option is to be an Incentive Stock Option or a
Non-Qualified Stock Option;

 

(i) to prescribe the terms and conditions of each Award, including, without
limitation, the exercise price and medium of payment and vesting provisions, and
to specify the provisions of the Award Agreement relating to such grant;

 

(j) to amend any outstanding Awards, including for the purpose of modifying the
time or manner of vesting, or the term of any outstanding Award; provided,
however, that if any such amendment impairs a Participant’s rights or increases
a Participant’s obligations under his or her Award or creates or increases a
Participant’s federal income tax liability with respect to an Award, such
amendment shall also be subject to the Participant’s consent;

 

(k) to determine the duration and purpose of leaves of absences which may be
granted to a Participant without constituting termination of their employment
for purposes of the Plan, which periods shall be no shorter than the periods
generally applicable to Employees under the Company’s employment policies;

 

(l) to make decisions with respect to outstanding Awards that may become
necessary upon a change in corporate control or an event that triggers
anti-dilution adjustments;

 

(m) to interpret, administer, reconcile any inconsistency in, correct any defect
in and/or supply any omission in the Plan and any instrument or agreement
relating to, or Award granted under, the Plan; and

 

(n) to exercise discretion to make any and all other determinations which it
determines to be necessary or advisable for the administration of the Plan.

 

The Committee also may modify the purchase price or the exercise price of any
outstanding Award, provided that if the modification effects a repricing,
shareholder approval shall be required before the repricing is effective.

 

3.2 Committee Decisions Final. All decisions made by the Committee pursuant to
the provisions of the Plan shall be final and binding on the Company and the
Participants, unless such decisions are determined by a court having
jurisdiction to be arbitrary and capricious.

 

3.3 Delegation. The Committee, or if no Committee has been appointed, the Board,
may delegate administration of the Plan to a committee or committees of one or
more members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. The Committee shall have the
power to delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board or
the Committee shall thereafter be to the committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
The members of the Committee shall be appointed by and serve at the pleasure of
the Board. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall act pursuant to a vote of the
majority of its members or, in the case of a Committee comprised of only two
members, the unanimous consent of its members, whether present or not, or by the
written consent of the majority of its members and minutes shall be kept of all
of its meetings and copies thereof shall be provided to the Board. Subject to
the limitations prescribed by the Plan and the Board, the Committee may
establish and follow such rules and regulations for the conduct of its business
as it may determine to be advisable.

 

 

 

 

3.4 Committee Composition. Except as otherwise determined by the Board, the
Committee shall consist solely of two or more Non-Employee Directors who are
also Outside Directors. The Board shall have discretion to determine whether or
not it intends to comply with the exemption requirements of Rule 16b-3 and/or
Section 162(m) of the Code. However, if the Board intends to satisfy such
exemption requirements, with respect to Awards to any Covered Employee and with
respect to any insider subject to Section 16 of the Exchange Act, the Committee
shall be a compensation committee of the Board that at all times consists solely
of two or more Non-Employee Directors who are also Outside Directors. Within the
scope of such authority, the Board or the Committee may (a) delegate to a
committee of one or more members of the Board who are not Outside Directors the
authority to grant Awards to eligible persons who are either (i) not then
Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Award or (ii) not persons with respect
to whom the Company wishes to comply with Section 162(m) of the Code or (b)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Awards to eligible persons who are
not then subject to Section 16 of the Exchange Act. Nothing herein shall create
an inference that an Award is not validly granted under the Plan in the event
Awards are granted under the Plan by a compensation committee of the Board that
does not at all times consist solely of two or more Non-Employee Directors who
are also Outside Directors.

 

3.5 Indemnification. In addition to such other rights of indemnification as they
may have as Directors or members of the Committee, and to the extent allowed by
Applicable Laws, the Committee members and other Directors shall be indemnified
by the Company against the reasonable expenses, including attorneys’ fees,
actually incurred in connection with pre-suit disputes arising from claims or
allegations made by or on behalf of an Award recipient and any action, suit or
proceeding or in connection with any appeal therein, to which the Company and/or
Directors may be a party by reason of any action taken or failure to act under
or in connection with the Plan or any Award granted under the Plan, and against
all amounts paid by such parties in settlement thereof (provided, however, that
the settlement has been approved by the Company, which approval shall not be
unreasonably withheld) or paid by the Committee in satisfaction of a judgment in
any such action, suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such parties did
not act in good faith and in a manner which such person reasonably believed to
be in the best interests of the Company, or in the case of a criminal
proceeding, had no reason to believe that the conduct complained of was
unlawful; provided, however, that within 60 days after institution of any such
action, suit or proceeding, such persons shall, in writing, offer the Company
the opportunity at its own expense to handle and defend such action, suit or
proceeding.

 

4. Shares Subject to the Plan.

 

4.1 Subject to adjustment in accordance with Section 11, a total of 50,000,000
shares of Common Stock shall be available for the grant of Awards under the
Plan. During the term of the Awards, the Company shall keep available at all
times the number of shares of Common Stock required to satisfy such Awards.

 

4.2 Shares of Common Stock available for distribution under the Plan may
consist, in whole or in part, of authorized and unissued shares, treasury shares
or shares reacquired by the Company in any manner.

 

4.3 Subject to adjustment in accordance with Section 11, no Participant shall be
granted, during any one year period, Options to purchase Common Stock and SARs
with respect to more than 2,500,000 shares of Common Stock in the aggregate or
any other Awards with respect to more than 5,000,000 shares of Common Stock in
the aggregate. If an Award is to be settled in cash, the number of shares of
Common Stock on which the Award is based shall count toward the individual share
limit set forth in this Section 4.

 

4.4 Any shares of Common Stock subject to an Award that is canceled, forfeited
or expires prior to exercise or realization, either in full or in part, shall
again become available for issuance under the Plan. Notwithstanding anything to
the contrary contained herein: shares subject to an Award under the Plan shall
not again be made available for issuance or delivery under the Plan if such
shares are (a) shares tendered in payment of an Option, (b) shares delivered or
withheld by the Company to satisfy any tax withholding obligation, or (c) shares
covered by a stock-settled SAR or other Awards that were not issued upon the
settlement of the Award.

 

 

 

 

5. Eligibility.

 

5.1 Eligibility for Specific Awards. Incentive Stock Options may be granted only
to Employees. Awards other than Incentive Stock Options may be granted to
Employees, Consultants, Officers and Directors and those individuals whom the
Committee determines are reasonably expected to become Employees, Consultants,
Officers and Directors following the Grant Date.

 

5.2 10 Percent Shareholders. A 10 Percent Shareholder shall not be granted an
Incentive Stock Option unless the Option Exercise Price is at least 110% of the
Fair Market Value of the Common Stock at the Grant Date and the Option is not
exercisable after the expiration of five years from the Grant Date.

 

6. Option Provisions. Each Option granted under the Plan shall be evidenced by
an Award Agreement. Each Option so granted shall be subject to the conditions
set forth in this Section 6, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award Agreement. All Options
shall be separately designated Incentive Stock Options or Non-Qualified Stock
Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. Notwithstanding the foregoing, the Company
shall have no liability to any Participant or any other person if an Option
designated as an Incentive Stock Option fails to qualify as such at any time or
if an Option is determined to constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code and the terms of such Option do
not satisfy the requirements of Section 409A of the Code. The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

 

6.1 Term. Subject to the provisions of Section 5.2 regarding 10 Percent
Shareholders, no Incentive Stock Option shall be exercisable after the
expiration of 10 years from the Grant Date. The term of a Non-Qualified Stock
Option granted under the Plan shall be determined by the Committee; provided,
however, no Non-Qualified Stock Option shall be exercisable after the expiration
of 10 years from the Grant Date.

 

6.2 Exercise Price of An Incentive Stock Option. Subject to the provisions of
Section 5.2 regarding 10 Percent Shareholders, the Option Exercise Price of each
Incentive Stock Option shall be not less than 100% of the Fair Market Value of
the Common Stock subject to the Option on the Grant Date. Notwithstanding the
foregoing, an Incentive Stock Option may be granted with an Option Exercise
Price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

 

6.3 Exercise Price of a Non-Qualified Stock Option. The Option Exercise Price of
each Non-Qualified Stock Option shall be not less than 100% of the Fair Market
Value of the Common Stock subject to the Option on the Grant Date.
Notwithstanding the foregoing, a Non-Qualified Stock Option may be granted with
an Option Exercise Price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 409A of the Code.

 

6.4 Consideration. The Option Exercise Price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (a) by wire transfer or by certified or bank check at the
time the Option is exercised or (b) in the discretion of the Committee, upon
such terms as the Committee shall approve, the Option Exercise Price may be
paid: (i) by delivery to the Company of other Common Stock, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the number of shares
being acquired; (ii) by means of attestation whereby the Participant identifies
for delivery specific shares of Common Stock that have an aggregate Fair Market
Value on the date of attestation equal to the Option Exercise Price (or portion
thereof) and receives a number of shares of Common Stock equal to the difference
between the number of shares thereby purchased and the number of identified
attestation shares of Common Stock (a “Cashless Exercise”); (iii) a “cashless”
exercise program established with a broker; (iv) by reduction in the number of
shares of Common Stock otherwise deliverable upon exercise of such Option with a
Fair Market Value equal to the aggregate Option Exercise Price at the time of
exercise; (v) any combination of the foregoing methods; or (vi) in any other
form of legal consideration that may be acceptable to the Committee. Unless
otherwise specifically provided in the Option, the exercise price of Common
Stock acquired pursuant to an Option that is paid by delivery (or through a
Cashless Exercise) to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes). Notwithstanding the foregoing, during any period for which
the Common Stock is publicly traded an exercise by a Director or Officer that
involves or may involve a direct or indirect extension of credit or arrangement
of an extension of credit by the Company, directly or indirectly, in violation
of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with
respect to any Award under this Plan.

 

 

 

 

6.5 Transferability of An Incentive Stock Option. An Incentive Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

 

6.6 Transferability of a Non-Qualified Stock Option. A Non-Qualified Stock
Option may, in the sole discretion of the Committee, be transferable to a
Permitted Transferee, upon written approval by the Committee to the extent
provided in the Award Agreement. If the Non-Qualified Stock Option does not
provide for transferability, then the Non-Qualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

 

6.7 Vesting of Options. The Committee (or an Officer if given authority to grant
Options by resolution of the Board) at the time of granting an Award may provide
for vesting terms based upon time of service to the Company and/or other
criteria. Awards which do not vest shall be forfeited and the underlying Common
Stock shall be available for future grant. The Committee may, but shall not be
required to, provide for an acceleration of vesting and exercisability in the
terms of any Award Agreement upon the occurrence of a specified event.

 

6.8 Termination of Continuous Service. Unless otherwise provided in an Award
Agreement or in an employment agreement the terms of which have been approved by
the Committee, in the event an Optionholder’s Continuous Service terminates
(other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (a) the date 12 months following the
termination of the Optionholder’s Continuous Service or (b) the expiration of
the term of the Option as set forth in the Award Agreement; provided that, if
the termination of Continuous Service is by the Company for Cause, all
outstanding Options (whether or not vested) shall immediately terminate and
cease to be exercisable. If, after termination, the Optionholder does not
exercise his or her Option within the time specified in the Award Agreement, the
Option shall terminate.

 

6.9 Extension of Termination Date. An Optionholder’s Award Agreement may also
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service for any reason would be prohibited at any time
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system,
then the Option shall terminate on the earlier of (a) the expiration of the term
of the Option in accordance with Section 6.1 or (b) the expiration of a period
after termination of the Participant’s Continuous Service that is 12 months
after the end of the period during which the exercise of the Option would be in
violation of such registration or other securities law requirements.

 

6.10 Disability of Optionholder. Unless otherwise provided in an Award
Agreement, in the event that an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination), but only within such period of time
ending on the earlier of (a) the date 12 months following such termination or
(b) the expiration of the term of the Option as set forth in the Award
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein or in the Award Agreement, the Option
shall terminate.

 

6.11 Death of Optionholder. Unless otherwise provided in an Award Agreement, in
the event an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the period ending on the
earlier of (a) the date 12 months following the date of death or (b) the
expiration of the term of such Option as set forth in the Award Agreement. If,
after the Optionholder’s death, the Option is not exercised within the time
specified herein or in the Award Agreement, the Option shall terminate.

 

 

 

 

6.12 Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds $100,000, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated
as Non-Qualified Stock Options.

 

7. Provisions of Awards Other Than Options.

 

7.1 SARs.

 

(a) General.

 

Each SAR granted under the Plan shall be evidenced by an Award Agreement. Each
SAR so granted shall be subject to the conditions set forth in this Section 7.1,
and to such other conditions not inconsistent with the Plan as may be reflected
in the applicable Award Agreement. SARs may be granted alone (“Free Standing
Rights”) or in tandem with an Option granted under the Plan (“Related Rights”).

 

(b) Grant Requirements.

 

Any Related Right that relates to a Non-Qualified Stock Option may be granted at
the same time the Option is granted or at any time thereafter but before the
exercise or expiration of the Option. Any Related Right that relates to an
Incentive Stock Option must be granted at the same time the Incentive Stock
Option is granted.

 

(c) Term of SARs.

 

The term of a SAR granted under the Plan shall be determined by the Committee;
provided, however, no SAR shall be exercisable later than the tenth anniversary
of the Grant Date.

 

(d) Vesting of SARs.

 

The Committee (or an Officer if given authority to grant SARs by resolution of
the Board) at the time of granting an Award may provide for vesting terms based
upon time of service to the Company and/or other criteria. Awards which do not
vest shall be forfeited and the underlying Common Stock shall be available for
future grant. The Committee may, but shall not be required to provide for an
acceleration of vesting and exercisability in the terms of any Award Agreement
upon the occurrence of a specified event.

 

(e) Exercise and Payment.

 

Upon exercise of a SAR, if a stock settled SAR the holder shall be entitled to
receive from the Company an amount equal to the number of shares of Common Stock
subject to the SAR that is being exercised multiplied by the excess of (i) the
Fair Market Value of a share of Common Stock on the date the Award is exercised,
over (ii) the exercise price specified in the SAR or related Option. Otherwise,
if a cash settled SAR, the holder shall be paid cash using the same formula.
Payment with respect to the exercise of a SAR shall be made on the date of
exercise. Payment shall be made in the form of shares of Common Stock (with or
without restrictions as to substantial risk of forfeiture and transferability,
as determined by the Committee in its sole discretion), cash or a combination
thereof, as determined by the Committee.

 

(f) Exercise Price.

 

The exercise price of a Free Standing SAR shall be determined by the Committee,
but shall not be less than 100% of the Fair Market Value of one share of Common
Stock on the Grant Date of such SAR. A Related Right granted simultaneously with
or subsequent to the grant of an Option and in conjunction therewith or in the
alternative thereto shall have the same exercise price as the related Option,
shall be transferable only upon the same terms and conditions as the related
Option, and shall be exercisable only to the same extent as the related Option;
provided, however, that a SAR, by its terms, shall be exercisable only when the
Fair Market Value per share of Common Stock subject to the SAR and related
Option exceeds the exercise price per share thereof and no SARs may be granted
in tandem with an Option unless the Committee determines that the requirements
of Section 0 are satisfied.

 

 

 

 

(g) Reduction in the Underlying Option Shares.

 

Upon any exercise of a Related Right, the number of shares of Common Stock for
which any related Option shall be exercisable shall be reduced by the number of
shares for which the SAR has been exercised. The number of shares of Common
Stock for which a Related Right shall be exercisable shall be reduced upon any
exercise of any related Option by the number of shares of Common Stock for which
such Option has been exercised.

 

7.2 Restricted Awards.

 

(a) General.

 

A Restricted Award is an Award of actual shares of Common Stock (“Restricted
Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a
value equal to the Fair Market Value of an identical number of shares of Common
Stock, which may, but need not, provide that such Restricted Award may not be
sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation or
for any other purpose for such period (the “Restricted Period”) as the Committee
shall determine. Each Restricted Award granted under the Plan shall be evidenced
by an Award Agreement. Each Restricted Award so granted shall be subject to the
conditions set forth in this Section 7.2, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.

 

(b) Restricted Stock and Restricted Stock Units.

 

(i) Each Participant granted Restricted Stock shall execute and deliver to the
Company an Award Agreement with respect to the Restricted Stock setting forth
the restrictions and other terms and conditions applicable to such Restricted
Stock. If the Committee determines that the Restricted Stock shall be held by
the Company or in escrow rather than delivered to the Participant pending the
release of the applicable restrictions, the Committee may require the
Participant to additionally execute and deliver to the Company (A) an escrow
agreement satisfactory to the Committee, if applicable and (B) the appropriate
blank stock power with respect to the Restricted Stock covered by such
agreement. If a Participant fails to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and stock power, the
Award shall be null and void. Subject to the restrictions set forth in the
Award, the Participant generally shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to vote such
Restricted Stock and the right to receive dividends; provided that, any cash
dividends and stock dividends with respect to the Restricted Stock shall be
withheld by the Company for the Participant’s account, and interest may be
credited on the amount of the cash dividends withheld at a rate and subject to
such terms as determined by the Committee. The cash dividends or stock dividends
so withheld by the Committee and attributable to any particular share of
Restricted Stock (and earnings thereon, if applicable) shall be distributed to
the Participant in cash or, at the discretion of the Committee, in shares of
Common Stock having a Fair Market Value equal to the amount of such dividends,
if applicable, upon the release of restrictions on such share and, if such share
is forfeited, the Participant shall have no right to such dividends.

 

(ii) The terms and conditions of a grant of Restricted Stock Units shall be
reflected in an Award Agreement. No shares of Common Stock shall be issued at
the time a Restricted Stock Unit is granted, and the Company will not be
required to set aside a fund for the payment of any such Award. A Participant
shall have no voting rights with respect to any Restricted Stock Units granted
hereunder. At the discretion of the Committee, each Restricted Stock Unit
(representing one share of Common Stock) may be credited with cash and stock
dividends paid by the Company in respect of one share of Common Stock (“Dividend
Equivalents”). Dividend Equivalents shall be withheld by the Company for the
Participant’s account, and interest may be credited on the amount of cash
Dividend Equivalents withheld at a rate and subject to such terms as determined
by the Committee. Dividend Equivalents credited to a Participant’s account and
attributable to any particular Restricted Stock Unit (and earnings thereon, if
applicable) shall be distributed in cash or, at the discretion of the Committee,
in shares of Common Stock having a Fair Market Value equal to the amount of such
Dividend Equivalents and earnings, if applicable, to the Participant upon
settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is
forfeited, the Participant shall have no right to such Dividend Equivalents.

 

(c) Restrictions.

 

(i) Restricted Stock awarded to a Participant shall be subject to the following
restrictions until the expiration of the Restricted Period, and to such other
terms and conditions as may be set forth in the applicable Award Agreement: (A)
if an escrow arrangement is used, the Participant shall not be entitled to
delivery of the stock certificate; (B) the shares shall be subject to the
restrictions on transferability set forth in the Award Agreement; (C) the shares
shall be subject to forfeiture to the extent provided in the applicable Award
Agreement; and (D) to the extent such shares are forfeited, the stock
certificates shall be returned to the Company, and all rights of the Participant
to such shares and as a shareholder with respect to such shares shall terminate
without further obligation on the part of the Company.

 

 

 

 

(ii) Restricted Stock Units awarded to any Participant shall be subject to (A)
forfeiture until the expiration of the Restricted Period to the extent provided
in the applicable Award Agreement, and to the extent such Restricted Stock Units
are forfeited, all rights of the Participant to such Restricted Stock Units
shall terminate without further obligation on the part of the Company and (B)
such other terms and conditions as may be set forth in the applicable Award
Agreement.

 

(iii) The Committee shall have the authority to remove any or all of the
restrictions on the Restricted Stock and Restricted Stock Units whenever it may
determine that, by reason of changes in Applicable Laws or other changes in
circumstances arising after the date the Restricted Stock or Restricted Stock
Units are granted, such action is appropriate.

 

(d) Vesting of Restricted Awards.

 

The Committee (or an Officer if given authority to grant Options by resolution
of the Board) at the time of granting an Award may provide for vesting terms
based upon time of service to the Company and/or other criteria. Awards which do
not vest shall be forfeited and the underlying Common Stock shall be available
for future grant. The Committee may, but shall not be required to provide for an
acceleration of vesting and exercisability in the terms of any Award Agreement
upon the occurrence of a specified event.

 

No Restricted Award may be granted or settled for a fraction of a share of
Common Stock. The Committee may, but shall not be required to, provide for an
acceleration of vesting in the terms of any Award Agreement upon the occurrence
of a specified event.

 

(e) Delivery of Restricted Stock and Settlement of Restricted Stock Units.

 

Upon the expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in Section 7.2(c) and the
applicable Award Agreement shall be of no further force or effect with respect
to such shares, except as set forth in the applicable Award Agreement. If an
escrow arrangement is used, upon such expiration, the Company shall deliver to
the Participant, or his or her beneficiary, without charge, the stock
certificate evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends credited to the
Participant’s account with respect to such Restricted Stock and the interest
thereon, if any. Upon the expiration of the Restricted Period with respect to
any outstanding Restricted Stock Units, the Company shall deliver to the
Participant, or his or her beneficiary, without charge, one share of Common
Stock for each such outstanding Restricted Stock Unit (“Vested Unit”) and cash
equal to any Dividend Equivalents credited with respect to each such Vested Unit
in accordance with Section 7.2(b)(ii) hereof and the interest thereon or, at the
discretion of the Committee, in shares of Common Stock having a Fair Market
Value equal to such Dividend Equivalents and the interest thereon, if any;
provided, however, that, if explicitly provided in the applicable Award
Agreement, the Committee may, in its sole discretion, elect to pay cash or part
cash and part Common Stock in lieu of delivering only shares of Common Stock for
Vested Units. If a cash payment is made in lieu of delivering shares of Common
Stock, the amount of such payment shall be equal to the Fair Market Value of the
Common Stock as of the date on which the Restricted Period lapsed with respect
to each Vested Unit.

 

(f) Stock Restrictions.

 

Each certificate representing Restricted Stock awarded under the Plan shall bear
a legend in such form as the Company deems appropriate.

 

8. Securities Law Compliance. Each Award Agreement shall provide that no shares
of Common Stock shall be purchased or sold thereunder unless and until (a) any
then applicable requirements of state or federal laws and regulatory agencies
have been fully complied with to the satisfaction of the Company and its counsel
and (b) if required to do so by the Company, the Participant has executed and
delivered to the Company a letter of investment intent in such form and
containing such provisions as the Committee may require. The Company shall use
reasonable efforts to seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to grant
Awards and to issue and sell shares of Common Stock upon exercise of the Awards;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Award or any Common Stock issued
or issuable pursuant to any such Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Awards unless and until such authority is obtained.

 

 

 

 

9. Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant
to Awards, or upon exercise thereof, shall constitute general funds of the
Company.

 

10. Miscellaneous.

 

10.1 Acceleration of Exercisability and Vesting. The Committee shall have the
power to accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest.

 

10.2 Shareholder Rights. Except as provided in the Plan or an Award Agreement,
no Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to such Award
unless and until such Participant has satisfied all requirements for exercise of
the Award pursuant to its terms and no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions of other rights for which the record date is prior to the date
such Common Stock certificate is issued, except as provided in Section 11
hereof.

 

10.3 No Employment or Other Service Rights. Nothing in the Plan or any
instrument executed or Award granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate (a) the employment of an Employee
with or without notice and with or without Cause or (b) the service of a
Director pursuant to the By-laws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

 

10.4 Transfer; Approved Leave of Absence. For purposes of the Plan, no
termination of employment by an Employee shall be deemed to result from either
(a) a transfer to the employment of the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another, or (b) an approved
leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the Employee’s right to reemployment is guaranteed
either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Committee otherwise so provides in
writing, in either case, except to the extent inconsistent with Section 409A of
the Code if the applicable Award is subject thereto.

 

10.5 Withholding Obligations. To the extent provided by the terms of an Award
Agreement and subject to the discretion of the Committee, the Participant may
satisfy any federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under an Award by any of the following
means (in addition to the Company’s right to withhold from any compensation paid
to the Participant by the Company) or by a combination of such means: (a)
tendering a cash payment; (b) authorizing the Company to withhold shares of
Common Stock from the shares of Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common Stock under the
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or (c)
delivering to the Company previously owned and unencumbered shares of Common
Stock of the Company.

 

11. Adjustments Upon Changes in Stock. In the event of changes in the
outstanding Common Stock or in the capital structure of the Company by reason of
any stock or extraordinary cash dividend, stock split, reverse stock split, an
extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any Award, Awards
granted under the Plan and any Award Agreements, the exercise price of Options
and SARs, the maximum number of shares of Common Stock subject to all Awards
stated in Section 4 and the maximum number of shares of Common Stock with
respect to which any one person may be granted Awards during any period stated
in Section 4 and Section 7.2 will be equitably adjusted or substituted, as to
the number, price or kind of a share of Common Stock or other consideration
subject to such Awards to the extent necessary to preserve the economic intent
of such Award. In the case of adjustments made pursuant to this Section 11,
unless the Committee specifically determines that such adjustment is in the best
interests of the Company or its Affiliates, the Committee shall, in the case of
Incentive Stock Options, ensure that any adjustments under this Section 11 will
not constitute a modification, extension or renewal of the Incentive Stock
Options within the meaning of Section 424(h)(3) of the Code and in the case of
Non-Qualified Stock Options, ensure that any adjustments under this Section 11
will not constitute a modification of such Non-Qualified Stock Options within
the meaning of Section 409A of the Code. Any adjustments made under this Section
11 shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to
Awards intended to qualify as “performance-based compensation” under Section
162(m) of the Code, any adjustments or substitutions will not cause the Company
to be denied a tax deduction on account of Section 162(m) of the Code. The
Company shall give each Participant notice of an adjustment hereunder and, upon
notice, such adjustment shall be conclusive and binding for all purposes.

 

 

 

 

12. Effect of Change in Control.

 

12.1 Unless otherwise provided in an Award Agreement, notwithstanding any
provision of the Plan to the contrary:

 

In the event of a Participant’s termination of Continuous Service without Cause
or for Good Reason during the 12-month period following a Change in Control,
notwithstanding any provision of the Plan or any applicable Award Agreement to
the contrary, all Options and SARs shall become immediately exercisable with
respect to 100% of the shares subject to such Options or SARs, and/or the
Restricted Period shall expire immediately with respect to 100% of the shares of
Restricted Stock or Restricted Stock Units as of the date of the Participant’s
termination of Continuous Service.

 

To the extent practicable, any actions taken by the Committee under the
immediately preceding clause shall occur in a manner and at a time which allows
affected Participants the ability to participate in the Change in Control with
respect to the shares of Common Stock subject to their Awards.

 

12.2 In addition, in the event of a Change in Control, the Committee may in its
discretion and upon at least 10 days’ advance notice to the affected persons,
cancel any outstanding Awards and pay to the holders thereof, in cash or stock,
or any combination thereof, the value of such Awards based upon the price per
share of Common Stock received or to be received by other shareholders of the
Company in the event. In the case of any Option or SAR with an exercise price
(or SAR Exercise Price in the case of a SAR) that equals or exceeds the price
paid for a share of Common Stock in connection with the Change in Control, the
Committee may cancel the Option or SAR without the payment of consideration
therefor.

 

12.3 The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to all or substantially all of the assets and business
of the Company and its Affiliates, taken as a whole.

 

13. Amendment of the Plan and Awards.

 

13.1 Amendment of Plan. The Board at any time, and from time to time, may amend
or terminate the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock and Section 13.3, no amendment shall be
effective unless approved by the shareholders of the Company to the extent
shareholder approval is necessary to satisfy any Applicable Laws. At the time of
such amendment, the Board shall determine, upon advice from counsel, whether
such amendment will be contingent on shareholder approval.

 

13.2 Shareholder Approval. The Board may, in its sole discretion, submit any
other amendment to the Plan for shareholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

 

13.3 Contemplated Amendments. It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees, Consultants and Directors with the maximum benefits provided
or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options or to the
nonqualified deferred compensation provisions of Section 409A of the Code and/or
to bring the Plan and/or Awards granted under it into compliance therewith.

 

 

 

 

13.4 No Impairment of Rights. Rights under any Award granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (a) the
Company requests the consent of the Participant and (b) the Participant consents
in writing.

 

13.5 Amendment of Awards. The Committee at any time, and from time to time, may
amend the terms of any one or more Awards; provided, however, that the Committee
may not affect any amendment which would otherwise constitute an impairment of
the rights under any Award unless (a) the Company requests the consent of the
Participant and (b) the Participant consents in writing.

 

14. General Provisions.

 

14.1 Forfeiture Events. The Committee may specify in an Award Agreement that the
Participant’s rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
of certain events, in addition to applicable vesting conditions of an Award.
Such events may include, without limitation, breach of non-competition,
non-solicitation, confidentiality, or other restrictive covenants that are
contained in the Award Agreement or otherwise applicable to the Participant, a
termination of the Participant’s Continuous Service for Cause, or other conduct
by the Participant that is detrimental to the business or reputation of the
Company and/or its Affiliates.

 

14.2 Clawback. Except as provided in a written agreement with the Participant,
all Awards shall be subject to possible clawback as provided below. Any clawback
as may be required to be made pursuant to any law, government regulation or
stock exchange listing requirement (or any policy adopted by the Company
pursuant to any such law, government regulation or stock exchange listing
requirement) shall be automatic without further action by the Board or Committee
and be incorporated in this Plan and all Award Agreements. The following
clawback provisions shall be deemed to be incorporated in any Award Agreement,
unless otherwise specified to the contrary.

 

(a) The Awardholder is dismissed as an employee based upon fraud, theft, or
dishonesty, which is reflected in a written or electronic notice given to the
employee;

 

(b) The Awardholder purchases or sells securities of the Company in violation of
the Company’s insider trading guidelines then in effect;

 

(c) The Awardholder breaches any duty of confidentiality including that required
by the Company’s insider trading guidelines then in effect;

 

(d) The Awardholder competes with the Company by soliciting customers located
within or otherwise where the Company is doing business within any state, or
where the Company expects to do business within three months following ceasing
to perform the Services and, in this later event, the Awardholder has actual
knowledge of such plans;

 

(e) The Awardholder is unavailable for consultation after termination of the
Awardholder if such availability is a condition of any agreement between the
Company and the Awardholder;

 

(f) The Awardholder recruits Company personnel for another entity or business;
within 24 months following termination of employment;

 

(g) The Awardholder fails to assign any invention, technology, or related
intellectual property rights to the Company if such assignment is a condition of
any agreement between the Company and the Awardholder;

 

(h) The Awardholder acts in a disloyal manner to the Company; or

 

(i) A finding by the Board that the Awardholder has acted against the interests
of the Company.

 

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

 

 

 

 

14.4 Sub-plans. The Committee may from time to time establish sub-plans under
the Plan for purposes of satisfying blue sky, securities, tax or other laws of
various jurisdictions in which the Company intends to grant Awards. Any
sub-plans shall contain such limitations and other terms and conditions as the
Committee determines are necessary or desirable. All sub-plans shall be deemed a
part of the Plan, but each sub-plan shall apply only to the Participants in the
jurisdiction for which the sub-plan was designed.

 

14.5 Deferral of Awards. The Committee may establish one or more programs under
the Plan to permit selected Participants the opportunity to elect to defer
receipt of consideration upon exercise of an Award, satisfaction of performance
criteria, or other event that absent the election would entitle the Participant
to payment or receipt of shares of Common Stock or other consideration under an
Award. The Committee may establish the election procedures, the timing of such
elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Committee deems
advisable for the administration of any such deferral program.

 

14.6 Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board
nor the Committee shall be required to establish any special or separate fund or
to segregate any assets to assure the performance of its obligations under the
Plan.

 

14.7 Recapitalizations. Each Award Agreement shall contain provisions required
to reflect the provisions of Section 11.

 

14.8 Delivery. Upon exercise of a right granted under this Plan, the Company
shall issue Common Stock or pay any amounts due within a reasonable period of
time thereafter. Subject to any statutory or regulatory obligations the Company
may otherwise have, for purposes of this Plan, 30 days shall be considered a
reasonable period of time.

 

14.9 No Fractional Shares. No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan. The Committee shall determine whether cash,
additional Awards or other securities or property shall be issued or paid in
lieu of fractional shares of Common Stock or whether any fractional shares
should be rounded, forfeited or otherwise eliminated.

 

14.10 Other Provisions. The Award Agreements authorized under the Plan may
contain such other provisions not inconsistent with this Plan, including,
without limitation, restrictions upon the exercise of the Awards, as the
Committee may deem advisable.

 

14.11 Section 409A. The Plan is intended to comply with Section 409A of the Code
to the extent subject thereto, and, accordingly, to the maximum extent
permitted, the Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A of the Code shall not be
treated as deferred compensation unless Applicable Laws require otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent required to
avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to the Plan during the six month period immediately following
the Participant’s termination of Continuous Service shall instead be paid on the
first payroll date after the six-month anniversary of the Participant’s
separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any excise tax or
penalty on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any Participant for such
tax or penalty.

 

14.12 Disqualifying Dispositions. Any Participant who shall make a “disposition”
(as defined in Section 424 of the Code) of all or any portion of shares of
Common Stock acquired upon exercise of an Incentive Stock Option within two
years from the Grant Date of such Incentive Stock Option or within one year
after the issuance of the shares of Common Stock acquired upon exercise of such
Incentive Stock Option (a “Disqualifying Disposition”) shall be required to
immediately advise the Company in writing as to the occurrence of the sale and
the price realized upon the sale of such shares of Common Stock.

 

14.13 Section 16. If the Company has a class of Common Stock registered under
Section 12(b) or (g) of the Exchange Act, it is the intent of the Company that
the Plan satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act
so that Participants will be entitled to the benefit of Rule 16b-3, or any other
rule promulgated under Section 16 of the Exchange Act, and will not be subject
to short-swing liability under Section 16 of the Exchange Act. Accordingly, if
the operation of any provision of the Plan would conflict with the intent
expressed in this Section 14.13, such provision to the extent possible shall be
interpreted and/or deemed amended so as to avoid such conflict.

 

 

 

 

14.14 Section 162(m). To the extent the Committee issues any Award that is
intended to be exempt from the deduction limitation of Section 162(m) of the
Code, the Committee may, without shareholder or grantee approval, amend the Plan
or the relevant Award Agreement retroactively or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company’s federal income tax
deduction for compensation paid pursuant to any such Award.

 

14.15 Beneficiary Designation. Each Participant under the Plan may from time to
time name any beneficiary or beneficiaries by whom any right under the Plan is
to be exercised in case of such Participant’s death. Each designation will
revoke all prior designations by the same Participant, shall be in a form
reasonably prescribed by the Committee and shall be effective only when filed by
the Participant in writing with the Company during the Participant’s lifetime.

 

14.16 Expenses. The costs of administering the Plan shall be paid by the
Company.

 

14.17 Severability. If any of the provisions of the Plan or any Award Agreement
is held to be invalid, illegal or unenforceable, whether in whole or in part,
such provision shall be deemed modified to the extent, but only to the extent,
of such invalidity, illegality or unenforceability and the remaining provisions
shall not be affected thereby.

 

14.18 Section Headings. The Section headings in the Plan are for purposes of
convenience only and are not intended to define or limit the construction of the
provisions hereof.

 

14.19 Non-Uniform Treatment. The Committee’s determinations under the Plan need
not be uniform and may be made by it selectively among persons who are eligible
to receive, or actually receive, Awards. Without limiting the generality of the
foregoing, the Committee shall be entitled to make non-uniform and selective
determinations, amendments and adjustments, and to enter into non-uniform and
selective Award Agreements.

 

15. Effective Date of Plan. The Plan shall become effective as of the Effective
Date.

 

16. Termination or Suspension of the Plan. The Plan shall terminate
automatically on March 31, 2024. No Award shall be granted pursuant to the Plan
after such date, but Awards theretofore granted may extend beyond that date. The
Board may suspend or terminate the Plan at any earlier date pursuant to Section
13.1 hereof. No Awards may be granted under the Plan while the Plan is suspended
or after it is terminated.

 

17. Choice of Law. The law of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state’s conflict of law rules.