Exhibit 10.1

 

TELKONET, INC.

 

2020 Stock Option and Incentive Plan

 

SECTION 1.GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The following sets forth the terms and conditions of the 2020 Stock Option and
Incentive Plan (the “Plan”) adopted by the Board of Directors of Telkonet, Inc.,
a Utah corporation (the “Company”) on February 24, 2020, and approved by the
stockholders of the Company on May 28, 2020. The purpose of the Plan is to
encourage and enable the officers, employees, Non-Employee Directors and other
key persons (including Consultants and prospective employees) of the Company and
its Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business, to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company’s welfare will assure a closer identification of
their interests with those of the Company and its stockholders, thereby
stimulating their efforts on the Company’s behalf and strengthening their desire
to remain with the Company.

 

The following terms shall be defined as set forth below:

 

“Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

 

“Administrator” means either the Board or the compensation committee of the
Board or a similar committee performing the functions of the compensation
committee and which is comprised of not less than two Non-Employee Directors who
are independent.

 

“Award” or “Awards,” except where referring to a particular category of grant
under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock
Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards
and Dividend Equivalent Rights.

 

“Award Certificate” means a written or electronic document setting forth the
terms and provisions applicable to an Award granted under the Plan. Each Award
Certificate is subject to the terms and conditions of the Plan.

 

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

 

“Cash-Based Award” means an Award entitling the recipient to receive a
cash-denominated payment.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
Code, and related rules, regulations and interpretations.

 

“Consultant” means any natural person that provides bona fide services to the
Company, and such services are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.

 

“Dividend Equivalent Right” means an Award entitling the grantee to receive
credits based on cash dividends that would have been paid on the shares of Stock
specified in the Dividend Equivalent Right (or other award to which it relates)
if such shares had been issued to and held by the grantee.

 

“Effective Date” means the date on which the Plan becomes effective as set forth
in Section 20.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.

 

 

 

 

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“Fair Market Value” of the Stock on any given date means the fair market value
of the Stock determined in good faith by the Administrator; provided, however,
that if the Stock is quoted on any market system or a national securities
exchange, the determination shall be made by reference to market quotations. If
there are no market quotations for such date, the determination shall be made by
reference to the last date preceding such date for which there are market
quotations.

 

“Incentive Stock Option” means any Stock Option designated and qualified as an
“incentive stock option” as defined in Section 422 of the Code.

 

“Non-Employee Director” means a member of the Board who is not also an employee
of the Company or any Subsidiary.

 

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

 

“Option” or “Stock Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

 

“Performance Criteria” means the criteria that the Administrator selects for
purposes of establishing the Performance Goal or Performance Goals for an
individual for a Performance Cycle. The Performance Criteria (which shall be
applicable to the organizational level specified by the Administrator,
including, but not limited to, the Company or a unit, division, group, or
Subsidiary of the Company) that will be used to establish Performance Goals are
including, but are not limited to, the following:  earnings before interest,
taxes, depreciation and amortization, net income (loss) (either before or after
interest, taxes, depreciation and/or amortization), changes in the market price
of the Stock, economic value-added, funds from operations or similar measure,
sales or revenue, acquisitions or strategic transactions, operating income
(loss), cash flow (including, but not limited to, operating cash flow and free
cash flow), return on capital, assets, equity, or investment, stockholder
returns, return on sales, gross or net profit levels, productivity, expense,
margins, operating efficiency, customer satisfaction, working capital, earnings
(loss) per share of Stock, sales or market shares and number of customers, any
of which may be measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group.

 

“Performance Cycle” means one or more periods of time, which may be of varying
and overlapping durations, as the Administrator may select, over which the
attainment of one or more Performance Criteria will be measured for the purpose
of determining a grantee’s right to and the payment of a Restricted Stock Award,
Restricted Stock Units, Performance Share Award or Cash-Based Award. Each such
period shall not be less than 12 months.

 

“Performance Goals” means, for a Performance Cycle, the specific goals
established in writing by the Administrator for a Performance Cycle based upon
the Performance Criteria.

 

“Performance Share Award” means an Award entitling the recipient to acquire
shares of Stock upon the attainment of specified Performance Goals.

 

“Restricted Stock Award” means an Award entitling the recipient to acquire, at
such purchase price (which may be zero) as determined by the Administrator,
shares of Stock subject to such restrictions and conditions as the Administrator
may determine at the time of grant.

 

“Restricted Stock Units” means an Award of phantom stock units to a grantee.

 

 

 

 

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“Sale Event” shall mean (i) the sale of all or substantially all of the assets
of the Company on a consolidated basis to an unrelated person or entity, (ii) a
merger, reorganization or consolidation pursuant to which the holders of the
Company’s outstanding voting power immediately prior to such transaction do not
own a majority of the outstanding voting power of the resulting or successor
entity (or its ultimate parent, if applicable) immediately upon completion of
such transaction, or (iii) the sale of all of the Stock of the Company to an
unrelated person or entity.

 

“Sale Price” means the value as determined by the Administrator of the
consideration payable, or otherwise to be received by stockholders, per share of
Stock pursuant to a Sale Event.

 

“Section 409A” means Section 409A of the Code and the regulations and other
guidance promulgated thereunder.

 

“Stock” means the common stock, par value $0.001 per share, of the Company,
subject to adjustments pursuant to Section 3.

 

“Stock Appreciation Right” means an Award entitling the recipient to receive
shares of Stock having a value equal to the excess of the Fair Market Value of
the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right multiplied by the number of shares of Stock with respect to
which the Stock Appreciation Right shall have been exercised.

 

“Subsidiary” means any corporation or other entity (other than the Company) in
which the Company has at least a 50 percent interest, either directly or
indirectly.

 

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of
the attribution rules of Section 424(d) of the Code) more than 10 percent of the
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation.

 

“Unrestricted Stock Award” means an Award of shares of Stock free of any
restrictions.

 

SECTION 2.ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND
DETERMINE AWARDS

 

(a)                 Administration of Plan. The Plan shall be administered by
the Administrator, provided that the amount, timing and terms of the grants of
Awards to Non-Employee Directors shall be determined by the compensation
committee or similar committee comprised solely of Non-Employee Directors.

 

(b)                Powers of Administrator. The Administrator shall have the
power and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:

 

(i)                 to select the individuals to whom Awards may from time to
time be granted;

 

(ii)                to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock
Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent
Rights, or any combination of the foregoing, granted to any one or more
grantees;

 

 

 

 

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(iii)              to determine the number of shares of Stock to be covered by
any Award;

 

(iv)               to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the Plan,
of any Award, which terms and conditions may differ among individual Awards and
grantees, and to approve the forms of Award Certificates;

 

(v)                to accelerate at any time the exercisability or vesting of
all or any portion of any Award, provided that the Administrator generally shall
not exercise such discretion to accelerate Awards subject to Sections 7 and 8
except in the event of the grantee’s death, disability or retirement, or a
change in control (including a Sale Event);

 

(vi)               subject to the provisions of Section 5(b), to extend at any
time the period in which Stock Options may be exercised; and

 

(vii)              at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and provisions of
the Plan and any Award (including related written instruments); to make all
determinations it deems advisable for the administration of the Plan; to decide
all disputes arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

 

All decisions and interpretations of the Administrator shall be binding on all
persons, including the Company and Plan grantees.

 

(c)                 Delegation of Authority to Grant Options. Subject to
applicable law, the Administrator, in its discretion, may delegate to the Chief
Executive Officer of the Company all or part of the Administrator’s authority
and duties with respect to the granting of Options to individuals who are not
subject to the reporting and other provisions of Section 16 of the Exchange
Act.  Any such delegation by the Administrator shall include a limitation as to
the amount of Options that may be granted during the period of the delegation
and shall contain guidelines as to the determination of the exercise price and
the vesting criteria. The Administrator may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Administrator’s delegate or delegates that were consistent with the terms of
the Plan.

 

(d)                 Award Certificate. Awards under the Plan shall be evidenced
by Award Certificates that set forth the terms, conditions and limitations for
each Award which may include, without limitation, the term of an Award and the
provisions applicable in the event employment or service terminates.

 

(e)                 Indemnification.  Neither the Board nor the Administrator,
nor any member of either or any delegate thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board and the Administrator
(and any delegate thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys’ fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under the Company’s
articles or bylaws or any directors’ and officers’ liability insurance coverage
which may be in effect from time to time and/or any indemnification agreement
between such individual and the Company.

 

 

 

 

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(f)                  Foreign Award Recipients. Notwithstanding any provision of
the Plan to the contrary, in order to comply with the laws in other countries in
which the Company and its Subsidiaries operate or have employees or other
individuals eligible for Awards, the Administrator, in its sole discretion,
shall have the power and authority to: (i) determine which Subsidiaries shall be
covered by the Plan; (ii) determine which individuals outside the United States
are eligible to participate in the Plan; (iii) modify the terms and conditions
of any Award granted to individuals outside the United States to comply with
applicable foreign laws; (iv) establish subplans and modify exercise procedures
and other terms and procedures, to the extent the Administrator determines such
actions to be necessary or advisable (and such subplans and/or modifications
shall be attached to this Plan as appendices); provided, however, that no such
subplans and/or modifications shall increase the share limitations contained in
Section 3(a) hereof; and (v) take any action, before or after an Award is made,
that the Administrator determines to be necessary or advisable to obtain
approval or comply with any local governmental regulatory exemptions or
approvals.  Notwithstanding the foregoing, the Administrator may not take any
actions hereunder, and no Awards shall be granted, that would violate the
Exchange Act or any other applicable United States securities law, the Code, or
any other applicable United States governing statute or law.

 

SECTION 3.STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(a)                 Stock Issuable. The maximum number of shares of Stock
reserved and available for issuance under the Plan shall be 10,000,000 shares,
subject to adjustment as provided in this Section 3. For purposes of this
limitation, the shares of Stock underlying any Awards that are forfeited,
canceled, held back upon exercise of an Option or settlement of an Award to
cover the exercise price or tax withholding, reacquired by the Company prior to
vesting, satisfied without the issuance of Stock or otherwise terminated (other
than by exercise) shall be added back to the shares of Stock available for
issuance under the Plan. In the event the Company repurchases shares of Stock on
the open market, such shares shall not be added to the shares of Stock available
for issuance under the Plan. Subject to such overall limitations, shares of
Stock may be issued up to such maximum number pursuant to any type or types of
Award; provided, however, that no more than 1,500,000 shares of the Stock may be
issued in the form of Incentive Stock Options. The shares available for issuance
under the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company.

 

(b)                Effect of Awards. The grant of any full-value Award (i.e., an
Award other than an Option or a Stock Appreciation Right), Option, or Stock
Appreciation Right shall be deemed, for purposes of determining the number of
shares of Stock available for issuance under Section 3(a), as an Award for one
share of Stock for each such share of Stock actually subject to the Award.  Any
forfeitures, cancellations or other terminations (other than by exercise) of
such Awards shall be returned to the reserved pool of shares of Stock under the
Plan in the same manner.

 

 

 

 

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(c)                 Changes in Stock. Subject to Section 3(d) hereof, if, as a
result of any reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar change in the
Company’s capital stock, the outstanding shares of Stock are increased or
decreased or are exchanged for a different number or kind of shares or other
securities of the Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are distributed with
respect to such shares of Stock or other securities, or, if, as a result of any
merger or consolidation, sale of all or substantially all of the assets of the
Company, the outstanding shares of Stock are converted into or exchanged for
securities of the Company or any successor entity (or a parent or subsidiary
thereof), the Administrator shall make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, including the maximum number of shares that may be issued in the form of
Incentive Stock Options, (ii) the number of Stock Options or Stock Appreciation
Rights that can be granted to any one individual grantee, (iii) the number and
kind of shares or other securities subject to any then outstanding Awards under
the Plan, (iv) the repurchase price, if any, per share subject to each
outstanding Restricted Stock Award or Unrestricted Stock Award, and (v) the
exercise price for each share subject to any then outstanding Stock Options and
Stock Appreciation Rights under the Plan, without changing the aggregate
exercise price (i.e., the exercise price multiplied by the number of Stock
Options and Stock Appreciation Rights) as to which such Stock Options and Stock
Appreciation Rights remain exercisable.  The Administrator shall also make
equitable or proportionate adjustments in the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration cash dividends paid other than in the ordinary course or
any other extraordinary corporate event.  The adjustment by the Administrator
shall be final, binding and conclusive.  No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but the Administrator
in its discretion may make a cash payment in lieu of fractional shares.

 

(d)                Mergers and Other Transactions. Except as the Administrator
may otherwise specify with respect to particular Awards in the relevant Award
Certificate, in the case of and subject to the consummation of a Sale Event, all
Options and Stock Appreciation Rights that are not exercisable immediately prior
to the effective time of the Sale Event shall become fully exercisable as of the
effective time of the Sale Event, all other Awards with time-based vesting,
conditions or restrictions shall become fully vested and nonforfeitable as of
the effective time of the Sale Event, and all Awards with conditions and
restrictions relating to the attainment of Performance Goals may become vested
and nonforfeitable in connection with a Sale Event in the Administrator’s
discretion, unless, in any case, the parties to the Sale Event agree that Awards
will be assumed or continued by the successor entity. Upon the effective time of
the Sale Event, the Plan and all outstanding Awards granted hereunder shall
terminate, unless provision is made in connection with the Sale Event in the
sole discretion of the parties thereto for the assumption or continuation of
Awards theretofore granted by the successor entity, or the substitution of such
Awards with new Awards of the successor entity or parent thereof, with
appropriate adjustment as to the number and kind of shares and, if appropriate,
the per share exercise prices, as such parties shall agree (after taking into
account any acceleration hereunder). In the event of such termination, (i) the
Company shall have the option (in its sole discretion) to make or provide for a
cash payment to the grantees holding Options and Stock Appreciation Rights, in
exchange for the cancellation thereof, in an amount equal to the difference
between (A) the Sale Price multiplied by the number of shares of Stock subject
to outstanding Options and Stock Appreciation Rights (to the extent then
exercisable (after taking into account any acceleration hereunder) at prices not
in excess of the Sale Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights; or (ii) each grantee shall be
permitted, within a specified period of time prior to the consummation of the
Sale Event as determined by the Administrator, to exercise all outstanding
Options and Stock Appreciation Rights held by such grantee.

 

 

 

 

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(e)                 Substitute Awards. The Administrator may grant Awards under
the Plan in substitution for stock and stock based awards held by employees,
directors or other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances. Any substitute Awards granted under
the Plan shall not count against the share limitation set forth in Section 3(a).

 

SECTION 4.ELIGIBILITY

 

Grantees under the Plan will be such full or part-time officers and other
employees, Non-Employee Directors and key persons (including Consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.

 

SECTION 5.STOCK OPTIONS

 

(a)                 Nature of Stock Option Awards. Any Stock Option granted
under the Plan shall be in such form as the Administrator may from time to time
approve. Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a “subsidiary
corporation” within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option, it shall be
deemed a Non-Qualified Stock Option. Stock Options granted pursuant to this
Section 5 shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Administrator shall deem desirable.  If the Administrator so
determines, Stock Options may be granted in lieu of cash compensation at the
optionee’s election, subject to such terms and conditions as the Administrator
may establish.

 

(b)                Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5 shall be determined
by the Administrator at the time of grant but shall not be less than 100 percent
of the Fair Market Value on the date of grant.  In the case of an Incentive
Stock Option that is granted to a Ten Percent Owner, the exercise price of such
Incentive Stock Option shall be not less than 110 percent of the Fair Market
Value on the grant date.

 

(c)                 Option Term. The term of each Stock Option shall be fixed by
the Administrator, but no Stock Option shall be exercisable more than ten years
after the date the Stock Option is granted. In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the term of such Stock Option
shall be no more than five years from the date of grant.

 

 

 

 

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(d)                Exercisability; Rights of a Stockholder. Stock Options shall
become exercisable at such time or times, whether or not in installments, as
shall be determined by the Administrator at or after the grant date. The
Administrator may at any time accelerate the exercisability of all or any
portion of any Stock Option. An optionee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.

 

(e)                 Method of Exercise. Stock Options may be exercised in whole
or in part, by giving written or electronic notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the purchase price
may be made by one or more of the following methods except to the extent
otherwise provided in the Option Award Certificate:

 

(i)                  In cash, by certified or bank check or other instrument
acceptable to the Administrator;

 

(ii)                Through the delivery (or attestation to the ownership) of
shares of Stock that have been purchased by the optionee on the open market or
that have been beneficially owned by the optionee for at least six months and
that are not then subject to restrictions under any Company plan. Such
surrendered shares shall be valued at Fair Market Value on the exercise date;

 

(iii)               By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable to the
Company for the purchase price; provided that in the event the optionee chooses
to pay the purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity and
other agreements as the Administrator shall prescribe as a condition of such
payment procedure; or

 

(iv)               With respect to Stock Options that are not Incentive Stock
Options, by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Stock issuable upon exercise by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price.

 

(f)                  Payment upon Exercise. Payment instruments will be received
subject to collection. The transfer to the optionee on the records of the
Company or of the transfer agent of the shares of Stock to be purchased pursuant
to the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the provisions
of the Stock Option) by the Company of the full purchase price for such shares
and the fulfillment of any other requirements contained in the Option Award
Certificate or applicable provisions of laws (including the satisfaction of any
withholding taxes that the Company is obligated to withhold with respect to the
optionee). In the event an optionee chooses to pay the purchase price by
previously-owned shares of Stock through the attestation method, the number of
shares of Stock transferred to the optionee upon the exercise of the Stock
Option shall be net of the number of attested shares.  In the event that the
Company establishes, for itself or using the services of a third party, an
automated system for the exercise of Stock Options, such as a system using an
internet website or interactive voice response, then the paperless exercise of
Stock Options may be permitted through the use of such an automated system.

 

 

 

 

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(g)                Annual Limit on Incentive Stock Options. To the extent
required for “incentive stock option” treatment under Section 422 of the Code,
the aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted under this
Plan and any other plan of the Company or its parent and subsidiary corporations
become exercisable for the first time by an optionee during any calendar year
shall not exceed $100,000. To the extent that any Stock Option exceeds this
limit, it shall constitute a Non-Qualified Stock Option.

 

SECTION 6.STOCK APPRECIATION RIGHTS

 

(a)                 Exercise Price of Stock Appreciation Rights. The exercise
price of a Stock Appreciation Right shall not be less than 100 percent of the
Fair Market Value of the Stock on the date of grant.

 

(b)                Grant and Exercise of Stock Appreciation Rights. Stock
Appreciation Rights may be granted by the Administrator independently of any
Stock Option granted pursuant to Section 5 of the Plan.

 

(c)                 Terms and Conditions of Stock Appreciation Rights. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined at the time of grant by the Administrator. The term of a Stock
Appreciation Right may not exceed ten years.

 

SECTION 7.RESTRICTED STOCK AWARDS

 

(a)                 Nature of Restricted Stock Awards. The Administrator shall
determine the restrictions and conditions applicable to each Restricted Stock
Award at the time of grant. Conditions may be based on continuing employment (or
other service relationship) and/or achievement of Performance Goals. The terms
and conditions of each such Award shall be determined by the Administrator and
set forth in an Award Certificate, and such terms and conditions may differ
among individual Awards and grantees.

 

(b)                Rights as a Stockholder. Upon the grant of the Restricted
Stock Award and payment of any applicable purchase price, a grantee shall have
the rights of a stockholder with respect to the voting of the Stock, subject to
such conditions contained in the Restricted Stock Award Certificate. Unless the
Administrator shall otherwise determine, (i) uncertificated Stock shall be
accompanied by a notation on the records of the Company or the transfer agent to
the effect that they are subject to forfeiture until such Restricted Stock Award
is vested as provided in Section 7(d) below, and (ii) certificated Stock shall
remain in the possession of the Company until such Restricted Stock Award is
vested as provided in Section 7(d) below, and the grantee shall be required, as
a condition of the grant, to deliver to the Company such instruments of transfer
as the Administrator may prescribe.

 

 

 

 

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(c)                 Restrictions. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award
Certificate.  Except as may otherwise be provided by the Administrator either in
the Award Certificate or, subject to Section 17 below, in writing after the
Award is issued, if a grantee’s employment (or other service relationship) with
the Company and its Subsidiaries terminates for any reason, any Restricted Stock
Award that has not vested at the time of termination shall automatically and
without any requirement of notice to such grantee from or other action by or on
behalf of, the Company be deemed to have been reacquired by the Company at its
original purchase price (if any) from such grantee or such grantee’s legal
representative simultaneously with such termination of employment (or other
service relationship), and thereafter shall cease to represent any ownership of
the Company by the grantee or rights of the grantee as a stockholder. Following
such deemed reacquisition of unvested Restricted Stock Award that is represented
by physical certificates, a grantee shall surrender such certificates to the
Company upon request without consideration.

 

(d)                Vesting of Restricted Stock. The Administrator at the time of
grant shall specify the date or dates and/or the attainment of Performance
Goals, objectives and other conditions on which the non-transferability of the
Restricted Stock Award and the Company’s right of repurchase or forfeiture shall
lapse. Notwithstanding the foregoing, in the event that any such Restricted
Stock Award granted to an employee shall be based upon the attainment of a
Performance Goal, the restriction period with respect to such shares shall not
be less than one year, and in the event any such Restricted Stock Award granted
to employees shall have a time-based restriction, the total restriction period
with respect to such shares shall not be less than three years; provided,
however, that Restricted Stock Awards with a time-based restriction may become
vested incrementally over such three-year period. Subsequent to such date or
dates and/or the attainment of such Performance Goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock Awards and shall be deemed “vested.” Except as may otherwise be
provided by the Administrator either in the Award Certificate or, subject to
Section 17 below, in writing after the Award is issued, a grantee’s rights in
any shares of Restricted Stock Awards that have not vested shall automatically
terminate upon the grantee’s termination of employment (or other service
relationship) with the Company and its Subsidiaries, and such shares shall be
subject to the provisions of Section 7(c) above.

 

SECTION 8.RESTRICTED STOCK UNITS

 

(a)                 Nature of Restricted Stock Units. The Administrator shall
determine the restrictions and conditions applicable to each Restricted Stock
Unit at the time of grant. Conditions may be based on continuing employment (or
other service relationship) and/or achievement of Performance Goals. The terms
and conditions of each such Award shall be determined by the Administrator and
set forth in an Award Certificate, and such terms and conditions may differ
among individual Awards and grantees. Notwithstanding the foregoing, in the
event that any such Restricted Stock Units granted to employees shall be based
upon the attainment of a Performance Goal, the restriction period with respect
to such Award shall not be less than one year, and in the event any such
Restricted Stock Units granted to employees shall have a time-based restriction,
the total restriction period with respect to such Award shall not be less than
three years; provided, however, that any Restricted Stock Units with a
time-based restriction may become vested incrementally over such three-year
period. At the end of the deferral period, the Restricted Stock Units, to the
extent vested, shall be settled in the form of shares of Stock. To the extent
that an Award of Restricted Stock Units is subject to Section 409A, the Award
may contain such additional terms and conditions as the Administrator shall
determine in its sole discretion in order for such Award to comply with the
requirements of Section 409A.

 

 

 

 

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(b)                Election to Receive Restricted Stock Units in Lieu of
Compensation. The Administrator may, in its sole discretion, permit a grantee to
elect to receive a portion of future cash compensation otherwise due to such
grantee in the form of an award of Restricted Stock Units.  Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with Section 409A and such
other rules and procedures established by the Administrator. Any such future
cash compensation that the grantee elects to defer shall be converted to a fixed
number of Restricted Stock Units based on the Fair Market Value of Stock on the
date the compensation would otherwise have been paid to the grantee if such
payment had not been deferred as provided herein. The Administrator shall have
the sole right to determine whether and under what circumstances to permit such
elections and to impose such limitations and other terms and conditions thereon
as the Administrator deems appropriate. Any Restricted Stock Units that are
elected to be received in lieu of cash compensation shall be fully vested,
unless otherwise provided in the Award Certificate.

 

(c)                 Rights as a Stockholder. A grantee shall have the rights as
a stockholder only as to shares of Stock acquired by the grantee upon settlement
of Restricted Stock Units; provided, however, that the grantee may be credited
with Dividend Equivalent Rights with respect to the phantom stock units
underlying his Restricted Stock Units, subject to such terms and conditions as
the Administrator may determine.

 

(d)                Termination. Except as may otherwise be provided by the
Administrator either in the Award Certificate or, subject to Section 17 below,
in writing after the Award is issued, a grantee’s right in all Restricted Stock
Units that have not vested shall automatically terminate upon the grantee’s
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

 

SECTION 9.UNRESTRICTED STOCK AWARDS

 

(a)                 Nature of Unrestricted Stock Awards. The Administrator may,
in its sole discretion, grant (or sell at par value or such higher purchase
price determined by the Administrator) an Unrestricted Stock Award under the
Plan. Unrestricted Stock Awards may be granted in respect of past services or
other valid consideration, or in lieu of cash compensation due to such grantee.

 

(b)                Rights as a Stockholder. Upon the grant of the Unrestricted
Stock Award and payment of any applicable purchase price, a grantee shall have
the rights of a stockholder with respect to the voting of the Stock underlying
the Unrestricted Stock Award.

 

SECTION 10.CASH-BASED AWARDS

 

The Administrator may, in its sole discretion, grant Cash-Based Awards to any
grantee in such number and amounts and upon such terms, and subject to such
conditions, as the Administrator shall determine at the time of grant. The
Administrator shall determine the maximum duration of the Cash-Based Award, the
amount of cash to which the Cash-Based Award pertains, the conditions upon which
the Cash-Based Award shall become vested or payable, and such other provisions
as the Administrator shall determine. Each Cash-Based Award shall specify a
cash-denominated payment amount, formula or payment ranges as determined by the
Administrator. Payment, if any, with respect to a Cash-Based Award shall be made
in accordance with the terms of the Award and may be made in cash or in shares
of Stock, as the Administrator shall determine.

 

 

 

 

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SECTION 11.PERFORMANCE SHARE AWARDS

 

(a)                 Nature of Performance Share Awards. The Administrator may,
in its sole discretion, grant Performance Share Awards independent of, or in
connection with, the granting of any other Award. The Administrator shall
determine whether and to whom Performance Share Awards shall be granted, the
Performance Goals, the Performance Cycle, and such other limitations and
conditions as the Administrator shall determine.

 

(b)                Rights as a Stockholder. A grantee receiving a Performance
Share Award shall have the rights of a stockholder only as to shares actually
received by the grantee under the Plan and not with respect to shares subject to
the Award but not actually received by the grantee. A grantee shall be entitled
to receive shares of Stock under a Performance Share Award only upon
satisfaction of all conditions specified in the Performance Share Award
Certificate (or in a performance plan adopted by the Administrator).

 

(c)                 Termination. Except as may otherwise be provided by the
Administrator either in the Award Certificate or, subject to Section 17 below,
in writing after the Award is issued, a grantee’s rights in all Performance
Share Awards shall automatically terminate upon the grantee’s termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason. 

 

SECTION 12.DIVIDEND EQUIVALENT RIGHTS

 

(a)                 Dividend Equivalent Rights. A Dividend Equivalent Right may
be granted hereunder to any grantee as a component of an award of Restricted
Stock Units, Restricted Stock Award, Performance Share Award or as a
freestanding award. The terms and conditions of Dividend Equivalent Rights shall
be specified in the Award Certificate. Dividend equivalents credited to the
holder of a Dividend Equivalent Right may be paid currently or may be deemed to
be reinvested in additional shares of Stock, which may thereafter accrue
additional equivalents. Any such reinvestment shall be at Fair Market Value on
the date of reinvestment or such other price as may then apply under a dividend
reinvestment plan sponsored by the Company, if any. Dividend Equivalent Rights
may be settled in cash or shares of Stock or a combination thereof, in a single
installment or installments. A Dividend Equivalent Right granted as a component
of an award of Restricted Stock Units, Restricted Stock Award or Performance
Share Award may provide that such Dividend Equivalent Right shall be settled
upon settlement or payment of, or lapse of restrictions on, such other Award,
and that such Dividend Equivalent Right shall expire or be forfeited or annulled
under the same conditions as such other Award. A Dividend Equivalent Right
granted as a component of Restricted Stock Units, a Restricted Stock Award or
Performance Share Award may also contain terms and conditions different from
such other Award.

 

 

 

 

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(b)                Interest Equivalents. Any Award that is settled in whole or
in part in cash on a deferred basis may provide for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
in the Award Certificate.

 

(c)                 Termination. Except as may otherwise be provided by the
Administrator either in the Award Certificate or, subject to Section 17 below,
in writing after the Award is issued, a grantee’s rights in all Dividend
Equivalent Rights or interest equivalents granted as a component of an Award of
Restricted Stock Units, Restricted Stock Award or Performance Share Award that
has not vested shall automatically terminate upon the grantee’s termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

 

SECTION 13.TRANSFERABILITY OF AWARDS

 

(a)                 Transferability. Except as provided in Section 13(b) below,
during a grantee’s lifetime, his or her Awards shall be exercisable only by the
grantee, or by the grantee’s legal representative or guardian in the event of
the grantee’s incapacity. No Awards shall be sold, assigned, transferred or
otherwise encumbered or disposed of by a grantee other than by will or by the
laws of descent and distribution or pursuant to a domestic relations order. No
Awards shall be subject, in whole or in part, to attachment, execution, or levy
of any kind, and any purported transfer in violation hereof shall be null and
void.

 

(b)                Administrator Action. Notwithstanding Section 13(a), the
Administrator, in its discretion, may provide either in the Award Certificate or
by subsequent written approval that the grantee (who is an employee or director)
may transfer his or her Awards (other than any Incentive Stock Options or
Restricted Stock Units) to his or her immediate family members, to trusts for
the benefit of such family members, or to partnerships in which such family
members are the only partners, provided that the transferee agrees in writing
with the Company to be bound by all of the terms and conditions of this Plan and
the applicable Award.  In no event may an Award be transferred by a grantee for
value.

 

(c)                 Family Member. For purposes of Section 13(b), “family
member” shall mean a grantee’s 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 grantee’s household
(other than a tenant of the grantee), a trust in which these persons (or the
grantee) have more than 50 percent of the beneficial interest, a foundation in
which these persons (or the grantee) control the management of assets, and any
other entity in which these persons (or the grantee) own more than 50 percent of
the voting interests.

 

(d)                Designation of Beneficiary. Each grantee to whom an Award has
been made under the Plan may designate a beneficiary or beneficiaries to
exercise any Award or receive any payment under any Award payable on or after
the grantee’s death. Any such designation shall be on a form provided for that
purpose by the Administrator and shall not be effective until received by the
Administrator. If no beneficiary has been designated by a deceased grantee, or
if the designated beneficiaries have predeceased the grantee, the beneficiary
shall be the grantee’s estate.

 

 

 

 

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SECTION 14.TAX WITHHOLDING

 

(a)                 Payment by Grantee. Each grantee shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the grantee for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld by the Company with
respect to such income. The Company and its Subsidiaries shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the grantee. The Company’s obligation to deliver
evidence of book entry (or stock certificates) to any grantee is subject to and
conditioned on tax withholding obligations being satisfied by the grantee.

 

(b)                Payment in Stock. Subject to approval by the Administrator, a
grantee may elect to have the Company’s minimum required tax withholding
obligation satisfied, in whole or in part, by authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due.

 

SECTION 15.SECTION 409A AWARDS

 

To the extent that any Award is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A (a “409A Award”), the Award
shall be subject to such additional rules and requirements as specified by the
Administrator from time to time in order to comply with Section 409A. In this
regard, if any amount under a 409A Award is payable upon a “separation from
service” (within the meaning of Section 409A) to a grantee who is then
considered a “specified employee” (within the meaning of Section 409A), then no
such payment shall be made prior to the date that is the earlier of (i) six
months and one day after the grantee’s separation from service, or (ii) the
grantee’s death, but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties and/or additional tax imposed
pursuant to Section 409A. Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.

 

SECTION 16.TRANSFER, LEAVE OF ABSENCE, ETC.

 

For purposes of the Plan, the following events shall not be deemed a termination
of employment:

 

(a)                 a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one Subsidiary 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 re-employment 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
Administrator otherwise so provides in writing.

 

SECTION 17.AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holder’s
consent. Except as provided in Section 3(c) or 3(d), without prior stockholder
approval, in no event may the Administrator exercise its discretion to reduce
the exercise price of outstanding Stock Options or Stock Appreciation Rights or
effect repricing through cancellation and re-grants or cancellation of Stock
Options or Stock Appreciation Rights in exchange for cash. To the extent
required under the rules of any securities exchange or market system on which
the Stock is listed or to the extent determined by the Administrator to be
required by the Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section 422 of the Code, Plan amendments shall be
subject to approval by the Company stockholders entitled to vote at a meeting of
stockholders. Nothing in this Section 17 shall limit the Administrator’s
authority to take any action permitted pursuant to Section 3(c) or 3(d).

 

 

 

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SECTION 18.STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company’s
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

 

SECTION 19.GENERAL PROVISIONS

 

(a)                 No Distribution. The Administrator may require each person
acquiring Stock pursuant to an Award to represent to and agree with the Company
in writing that such person is acquiring the shares without a view to
distribution thereof.

 

(b)                Delivery of Stock Certificates. Stock certificates to
grantees under this Plan shall be deemed delivered for all purposes when the
Company or a stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the grantee, at the
grantee’s last known address on file with the Company. Uncertificated Stock
shall be deemed delivered for all purposes when the Company or a Stock transfer
agent of the Company shall have given to the grantee by electronic mail (with
proof of receipt) or by United States mail, addressed to the grantee, at the
grantee’s last known address on file with the Company, notice of issuance and
recorded the issuance in its records (which may include electronic “book entry”
records). Notwithstanding anything herein to the contrary, the Company shall not
be required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Award, unless and until the Administrator has
determined, with advice of counsel (to the extent the Administrator deems such
advice necessary or advisable), that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed, quoted or traded. All Stock certificates
delivered pursuant to the Plan shall be subject to any stop-transfer orders and
other restrictions as the Administrator deems necessary or advisable to comply
with federal, state or foreign jurisdiction, securities or other laws, rules and
quotation system on which the Stock is listed, quoted or traded. The
Administrator may place legends on any Stock certificate to reference
restrictions applicable to the Stock. In addition to the terms and conditions
provided herein, the Administrator may require that an individual make such
reasonable covenants, agreements, and representations as the Administrator, in
its discretion, deems necessary or advisable in order to comply with any such
laws, regulations, or requirements. The Administrator shall have the right to
require any individual to comply with any timing or other restrictions with
respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Administrator.

 

 

 

 

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(c)                 Stockholder Rights. Until Stock is deemed delivered in
accordance with Section 19(b), no right to vote or receive dividends or any
other rights of a stockholder will exist with respect to shares of Stock to be
issued in connection with an Award, notwithstanding the exercise of a Stock
Option or any other action by the grantee with respect to an Award.

 

(d)                Other Compensation Arrangements; No Employment Rights.
Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including trusts, and such arrangements
may be either generally applicable or applicable only in specific cases. The
adoption of this Plan and the grant of Awards do not confer upon any employee
any right to continued employment with the Company or any Subsidiary.

 

(e)                 Trading Policy Restrictions. Option exercises and other
Awards under the Plan shall be subject to the Company’s insider trading policies
and procedures, as in effect from time to time.

 

(f)                  Forfeiture of Awards under Sarbanes-Oxley Act. If the
Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, then any grantee who is one of
the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any
Award received by such individual under the Plan during the 12-month period
following the first public issuance or filing with the United States Securities
and Exchange Commission, as the case may be, of the financial document embodying
such financial reporting requirement.

 

SECTION 20.EFFECTIVE DATE OF PLAN

 

This Plan shall become effective upon stockholder approval in accordance with
applicable state law, the Company’s bylaws and articles of incorporation, and
applicable stock exchange rules. No grants of Stock Options and other Awards may
be made hereunder after the tenth anniversary of the Effective Date and no
grants of Incentive Stock Options may be made hereunder after the tenth
anniversary of the date the Plan is approved by the Board.

 

SECTION 21.GOVERNING LAW

 

This Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Utah, applied without
regard to conflict of law principles.

 

 

 

 

DATE APPROVED BY BOARD OF DIRECTORS: February 24, 2020

DATE APPROVED BY STOCKHOLDERS: May 28, 2020

 

 

 

 

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