Exhibit 10.59

 

APOLLO MEDICAL HOLDINGS, INC.

 

2015 EQUITY INCENTIVE PLAN

 

1. Purpose, History and Effective Date.

 

(a) Purpose. The Apollo Medical Holdings, Inc. 2015 Equity Incentive Plan has
two complementary purposes: (i) to attract and retain outstanding individuals to
serve as officers, employees, directors or consultants and (ii) to increase
stockholder value. The Plan will provide participants incentives to increase
stockholder value by offering the opportunity to acquire shares of the Company's
common stock or receive monetary payments based on the value of such common
stock on the potentially favorable terms that this Plan provides.

 

(b) History. Prior to the effective date of this Plan, the Company had in effect
the 2010 Plan and the 2013 Plan, which were originally effective March 4, 2010
and April 30, 2013, respectively. Upon adoption of this Plan by the Board, no
new awards will be granted under the 2013 Plan. No awards have been granted
under the 2010 Plan since the effectiveness of the 2013 Plan.

 

(c) Effective Date. This Plan will become effective, and Awards may be granted
under this Plan, on and after the Effective Date; provided, however, that prior
to approval of this Plan by the Company's stockholders, but after adoption by
the Board, Incentive Stock Options may be granted under this Plan subject to
obtaining the stockholders' approval of this Plan; and provided, further, that
such stockholder approval must occur no later than 12 months after the date of
adoption of this Plan by the Board. This Plan will terminate as provided in
Section 14.

 

2. Definitions. Capitalized terms used in this Plan have the following meanings:

 

(a) "2010" Plan means the Apollo Medical Holdings, Inc. 2010 Equity Incentive
Plan.

 

(b) "2013 Plan" means the Apollo Medical Holdings, Inc. 2013 Equity Incentive
Plan.

 

(c) "Affiliate" has the meaning ascribed to such term in Rule 12b-2 promulgated
under the Exchange Act or any successor rule or regulation thereto.

 

(d) "Award" means a grant of Options, Stock Appreciation Rights, Performance
Shares, Performance Units, Restricted Stock, Restricted Stock Units or Dividend
Equivalent Units.

 

(e) "Award Agreement" means a written agreement, contract, or other instrument
or document evidencing the grant of an Award in such form as the Committee
determines.

 

(f) "Board" means the Board of Directors of the Company.

 

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(g) "Change of Control" means the occurrence of any one of the following events:

 

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

 

(ii) the sale, transfer or other disposition of all or substantially all of the
Company's assets;

 

(iii) a change in the composition of the Board, as a result of which fewer than
fifty percent (50%) of the incumbent directors are directors who either (A) had
been directors of the Company on the date twenty-four (24) months prior to the
date of the event that may constitute a Change of Control (the "original
directors") or (B) were elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination and
the directors whose election or nomination was previously so approved; or

 

(iv) any transaction as a result of which any Person is the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least fifty percent (50%) of the total
voting power represented by the Company's then outstanding voting securities.
For purposes of this paragraph (iv), the term "Person" shall exclude (A) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a Subsidiary and (B) a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same proportions as
their ownership of the common stock of the Company.

 

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

 

Notwithstanding anything herein contained to the contrary, with respect to an
Award that is or may be considered deferred compensation subject to Code Section
409A, the definition of "Change of Control" herein shall be amended and
interpreted in a manner that allows the definition to satisfy the requirements
of a change of control under Code Section 409A solely for purposes of complying
with the requirements of Code Section 409A.

 

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(h) "Code" means the Internal Revenue Code of 1986, as amended. Any reference to
a specific provision of the Code includes any successor provision and the
regulations promulgated under such provision.

 

(i) "Committee" means the Compensation Committee of the Board (or a successor
committee with the same or similar authority), except as otherwise provided in
Section 3(b).

 

(j) "Company" means Apollo Medical Holdings, Inc., a Delaware corporation, or
any successor thereto.

 

(k) "Director" means a member of the Board, and "Non-Employee Director" means a
Director who is not also an employee of the Company or its Subsidiaries.

 

(l) "Disability" has the meaning ascribed to the term in Code Section 22(e)(3),
as determined by the Committee.

 

(m) "Disinterested Persons" means the "non-employee directors" of the Company as
such term is defined in Rule 16b-3.

 

(n) "Dividend Equivalent Unit" means the right to receive a payment equal to the
cash dividends paid with respect to a Share.

 

(o) "Effective Date" means the earlier to occur of the date this Plan is (i)
adopted by the Board or (ii) approved by the Company's stockholders.

 

(p) "Exchange Act" means the Securities Exchange Act of 1934, as amended. Any
reference to a specific provision of the Exchange Act includes any successor
provision and the regulations and rules promulgated under such provision.

 

(q) "Fair Market Value" means, per Share on a particular date, (i) if the Stock
is listed for trading on the New York Stock Exchange, the last reported sales
price on the date in question as reported in The Wall Street Journal, or if no
sales of Stock occur on the date in question, on the last preceding date on
which there was a sale on such exchange; or (ii) if the Stock is not listed or
admitted to trading on the New York Stock Exchange, the last reported sales
price on the date in question on the principal national securities exchange on
which the Stock is listed or admitted to trading, or if no sales of Stock occur
on the date in question, on the last preceding date on which there was a sale on
such exchange; or (iii) if the Stock is not listed or admitted to trading on any
national securities exchange, the last sales price on the date in question in
the over-the-counter market reported by such reporting system as is then in use,
or if no sales of Stock occur on the date in question, on the last preceding
date on which there was a sale; or (iv) if on any such date the Stock is not
reported on any such system, the last sales price on the date in question as
furnished by a professional market making a market in the Stock selected by the
Board for the date in question, or if no sales of Stock occur on the date in
question, on the last preceding date on which there was a sale; or (v) if on any
such date no market maker is making a market in the Stock, the price as
determined in good faith by the Committee.

 

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(r) "Incentive Stock Option" means an Option that meets the requirements of Code
Section 422.

 

(s) "Option" means the right to purchase Shares at a specified price during a
specified period of time.

 

(t) "Participant" means an individual selected by the Committee to receive an
Award, and includes any individual who holds an Award after the death of the
original recipient.

 

(u) "Performance Goals" means any goals the Committee establishes that relate to
one or more of the following for such period as the Committee specifies:

 

(i) Revenue;

 

(ii)  Earnings before interest, taxes, depreciation and amortization, as
adjusted (EBITDA as adjusted);

 

(iii) Income before income taxes and minority interests;

 

(iv) Operating income;

 

(v)  Pre- or after-tax income;

 

(vi) Average accounts receivable;

 

(vii)  Cash flow;

 

(viii) Cash flow per share;

 

(ix)  Net earnings;

 

(x) Basic or diluted earnings per share;

 

(xi)  Return on equity;

 

(xii) Return on assets;

 

(xiii)  Return on capital;

 

(xiv) Growth in assets;

 

(xv)  Economic value added;

 

(xvi) Share price performance;

 

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(xvii)  Total stockholder return;

 

(xviii) Improvement or attainment of expense levels;

 

(xix)  Market share or market penetration; or

 

(xx) Business expansion, and/or acquisitions or divestitures.

 

The Committee may specify at the time an Award is made that the Performance
Goals are to be measured for an individual, the Company, for the Company on a
consolidated basis, for any one or more Affiliates or divisions of the Company
and/or for any other business unit or units of the Company, and/or that the
Performance Goals are to be measured either in absolute terms or relative to the
performance of one or more comparable companies or an index covering multiple
companies. In the case of Awards that the Committee determines will not be
considered "performance based compensation" under Code Section 162(m), the
Committee may establish other Performance Goals not listed in this Plan.

 

(v) "Performance Shares" means the right to receive Shares to the extent
Performance Goals are achieved.

 

(w) "Performance Units" means the right to receive a payment, based on a number
of units with a specified value, to the extent Performance Goals are achieved.

 

(x) "Person" has the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 14(d) and 15(d) thereof.

 

(y) "Plan" means this Apollo Medical Holdings, Inc. 2015 Equity Incentive Plan,
as may be amended from time to time.

 

(z) "Restricted Stock" means Shares that are subject to a risk of forfeiture
and/or restrictions on transfer, which may lapse upon the achievement or partial
achievement of Performance Goals and/or upon the completion of a period of
service.

 

(aa) "Restricted Stock Unit" means the right to receive a payment which right
may vest upon the achievement or partial achievement of Performance Goals and/or
upon the completion of a period of service, with each unit having a value equal
to the Fair Market Value of one or more Shares, or the average of the Fair
Market Value of one or more Shares over such period as the Committee specifies.

 

(bb) "Retirement" means, unless the Committee determines otherwise in an Award
Agreement, termination of employment from the Company and its Affiliates on or
after age 65 with five (5) years of continuous service with the Company and its
Affiliates.

 

(cc) "Rule 16b-3" means Rule 16b-3 as promulgated by the United States
Securities and Exchange Commission under the Exchange Act.

 

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(dd) "Section 16 Participants" means Participants who are subject to the
provisions of Section 16 of the Exchange Act.

 

(ee) "Share" means a share of Stock.

 

(ff) "Stock" means the Class A common stock of the Company.

 

(gg) "Stock Appreciation Right" or "SAR" means the right to receive a payment
equal to the appreciation of the Fair Market Value of a Share during a specified
period of time.

 

(hh) "Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each such corporation owns
stock possessing fifty percent (50%) or more of the total combined voting power
in one of the other corporations in the chain.

 

3. Administration.

 

(a) Committee Administration. In addition to the authority specifically granted
to the Committee in this Plan, the Committee has full discretionary authority to
administer this Plan, including but not limited to the authority to (i)
interpret the provisions of this Plan, (ii) prescribe, amend and rescind rules
and regulations relating to this Plan, (iii) correct any defect, supply any
omission, or reconcile any inconsistency in the Plan, any Award or Award
Agreement in the manner and to the extent it deems desirable to carry this Plan,
such Award or such Award Agreement into effect and (iv) make all other
determinations necessary or advisable for the administration of this Plan. All
decisions, interpretations and other actions of the Committee shall be final and
binding on all Participants and any other individual with a right under the Plan
or under any Award.

 

(b) Delegation to Other Committees or CEO. To the extent applicable law permits,
the Board may delegate to another committee of the Board, or the Committee may
delegate to a subcommittee or to the Chief Executive Officer of the Company, any
or all of the authority and responsibility of the Committee; provided, however,
that no such delegation shall be permitted with respect to Awards made to
Section 16 Participants. The Board may retain any or all of the authority and
responsibility of the Committee, or may delegate to another committee or
subcommittee of the Board consisting solely of two or more Disinterested Persons
any or all of the authority and responsibility of the Committee, with respect to
Section 16 Participants. If the Board or Committee has retained such authority
or made such a delegation, then all references to the Committee in this Plan
include the Board, such other committee, subcommittee or the Chief Executive
Officer to the extent of such retained authority or delegation.

 

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(c) Indemnification. In addition to such other rights of indemnification as they
may have as members of the Board or the Committee, the members of the Board and
the Committee shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be party by reason of any action taken or failure
to act under or in connection with the Plan or any Award, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except a
judgment based upon a finding of bad faith; provided that upon the institution
of any such action, suit or proceeding a Committee or Board member shall, in
writing, give the Company notice thereof and an opportunity, at its own expense,
to handle and defend the same before such Committee or Board member undertakes
to handle and defend it on such member's own behalf.

 

4. Eligibility. The Committee may designate any of the following as a
Participant from time to time: (i) any officer or other employee of the Company
or any of its Affiliates; (ii) an individual that the Company or an Affiliate
has engaged to become an officer or other employee; (iii) a Non-Employee
Director' or (iv) a consultant or advisor who provides bona fide services that
are not in connection with the offer or sale of securities in a capital raising
transaction, and does not directly or indirectly promote or maintain a market
for the Company's securities to the Company or an Affiliate as an independent
contractor. The Committee's designation of a Participant in any year will not
require the Committee to designate such person to receive an Award in any other
year. Notwithstanding the foregoing, each Non-Employee Director automatically
will be a Participant with respect to elections to receive Options in lieu of
directors' fees pursuant to Section 12.

 

5. Types of Awards. Subject to the terms of this Plan, the Committee may grant
any type of Award to any Participant it selects, but only employees of the
Company or a Subsidiary may receive grants of Incentive Stock Options. Awards
may be granted alone or in addition to, in tandem with, or in substitution for
any other Award (or any other award granted under another plan of the Company or
any Affiliate). Awards granted under the Plan shall be evidenced by an Award
Agreement except to the extent the Committee provides otherwise.

 

6. Shares Reserved under this Plan.

 

(a) Plan Reserve. Subject to adjustment as provided in Section 16, an aggregate
of 1,500,000 Shares, plus the number of Shares described in Section 6(c), are
reserved for issuance under this Plan. The number of Shares reserved for
issuance under this Plan shall be reduced only by the number of Shares delivered
in payment or settlement of Awards. Notwithstanding the foregoing, the Company
may issue only 1,500,000 Shares upon the exercise of Incentive Stock Options.

 

(b) Replenishment of Shares Under this Plan. If an Award lapses, expires,
terminates or is cancelled without the issuance of Shares under the Award, or if
Shares are forfeited under an Award, then the Shares subject to such Award may
again be used for new Awards under this Plan under Section 6(a), including
issuance upon the exercise of Incentive Stock Options. If Shares are issued
under any Award and the Company subsequently reacquires them pursuant to rights
reserved upon the issuance of the Shares, or if previously owned Shares are
delivered to the Company in payment of the exercise price of an Award or the
withholding taxes due as a result of the issuance or receipt of a payment or
Shares under an Award, then such Shares may again be used for new Awards under
this Plan under Section 6(a), but such Shares may not be issued upon the
exercise of Incentive Stock Options.

 

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(c) Addition of Shares from Predecessor Plan. After the Effective Date, if any
Shares subject to awards granted under the 2010 Plan or 2013 Plan would again
become available for new grants under the terms of such plan, then those Shares
will be available for the purpose of granting Awards under this Plan, thereby
increasing the number of Shares available for issuance under this Plan as
determined under the first sentence of Section 6(a), including with respect to
the exercise of Incentive Stock Options. Any such Shares will not be available
for future awards under the respective terms of the 2010 Plan and 2013 Plan
after the Effective Date.

 

(d) Participant Limitations. Subject to adjustment as provided in Section 16,
with respect to Awards that are intended to qualify as "performance-based
compensation" under Code Section 162(m), no Participant may be granted Awards
that could result in such Participant:

 

(i) receiving in any calendar year Options for, and/or Stock Appreciation Rights
with respect to, more than 500,000 Shares (reduced, in the initial calendar year
in which this Plan is effective, by the number of options granted to a
Participant under the 2010 Plan and/or 2013 Plan in such year, if any), except
that Options and/or Stock Appreciation Rights granted to a new employee in the
calendar year in which his or her employment commences may not relate to more
than 1,000,000 Shares;

 

(ii)  receiving in any calendar year Awards of Restricted Stock and/or
Restricted Stock Units relating to more than 500,000 Shares;

 

(iii) receiving in any calendar year Awards of Performance Shares, and/or Awards
of Performance Units (the value of which is based on the Fair Market Value of a
Share), for more than 500,000 Shares; or

 

(iv) receiving in any calendar year Awards of Performance Units (the value of
which is not based on the Fair Market Value of a Share) that could result in a
payment of more than $500,000.

 

With respect to Awards that are not intended to meet the requirements of
performance- based compensation under Code Section 162(m), the Committee may
grant Awards in excess of the limits described in this subsection (d), but only
if such discretion would not cause Awards that are intended to be
performance-based compensation under Code Section 162(m) from being treated as
such.

 

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7. Options. Subject to the terms of this Plan, the Committee shall determine all
terms and conditions of each Option, including but not limited to:

 

(a) Whether the Option is an Incentive Stock Option, or a "nonqualified stock
option" which does not meet the requirements of Code Section 422; provided that
in the case of an Incentive Stock Option, if the aggregate Fair Market Value
(determined at the time of grant) of the Shares with respect to which all
Incentive Stock Options are first exercisable by the Participant during any
calendar year (under this Plan and under all other incentive stock option plans
of the Company or any Affiliate that is required to be included under Code
Section 422) exceeds $100,000, such Option automatically shall be treated as a
nonqualified stock option to the extent this limit is exceeded.

 

(b) The number of Shares subject to the Option.

 

(c) The exercise price per Share, which may not be less than the Fair Market
Value of a Share as determined on the date of grant; provided that (i) no
Incentive Stock Option shall be granted to any employee who, at the time the
Option is granted, owns (directly or indirectly, within the meaning of Code
Section 424(d)) more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Subsidiary unless the exercise price
is at least 110 percent of the Fair Market Value of a Share on the date of
grant; and (ii) the exercise price may vary during the term of the Option if the
Committee determines that there should be adjustments to the exercise price
relating to achievement of Performance Goals and/or to changes in an index or
indices that the Committee determines is appropriate (but in no event may the
exercise price per Share be less than the Fair Market Value of a Share as
determined on the date of grant).

 

(d) The terms and conditions of exercise, which may include a requirement that
exercise of the Option is conditioned upon achievement of one or more
Performance Goals or may provide for an acceleration of the exercisability upon
the Participant's death, Disability or Retirement.

 

(e) The termination date, except that each Option must terminate no later than
the tenth (10th) anniversary of the date of grant, and each Incentive Stock
Option granted to any employee who, at the time the Option is granted, owns
(directly or indirectly, within the meaning of Code Section 424(d)) more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any Subsidiary must terminate no later than the fifth (5th)
anniversary of the date of grant. Notwithstanding the foregoing, the Committee
may extend the term of an Option for up to six (6) months beyond the tenth
(10th) anniversary of the date of grant in the event a Participant dies prior to
the Option's termination date.

 

(f) The exercise period following a Participant's termination of employment or
service. In all other respects, the terms of any Incentive Stock Option should
comply with the provisions of Code Section 422 except to the extent the
Committee determines otherwise.

 

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(g) Notwithstanding anything contained in this Plan to the contrary, the Board
as a whole shall pre-approve each option grant to Non-Employee Directors.

 

8. Stock Appreciation Rights. Subject to the terms of this Plan, the Committee
shall determine all terms and conditions of each SAR, including but not limited
to:

 

(a) Whether the SAR is granted independently of an Option or relates to an
Option; provided that if an SAR is granted in relation to an Option, then unless
otherwise determined by the Committee, the SAR shall be exercisable or shall
mature at the same time or times, on the same conditions and to the extent and
in the proportion, that the related Option is exercisable and may be exercised
or mature for all or part of the Shares subject to the related Option. Upon
exercise of any number of SARs, the number of Shares subject to the related
Option shall be reduced accordingly and such Option may not be exercised with
respect to that number of Shares. The exercise of any number of Options that
relate to an SAR shall likewise result in an equivalent reduction in the number
of Shares covered by the related SAR.

 

(b) The number of Shares to which the SAR relates.

 

(c) The grant price, provided that the grant price shall not be less than the
Fair Market Value of the Shares subject to the SAR as determined on the date of
grant.

 

(d) The terms and conditions of exercise or maturity, which may include a
provision that accelerates the exercisability of the SAR upon the Participant's
death, Disability or Retirement. Notwithstanding the foregoing, unless the
Committee determines otherwise in the Award Agreement, if on the date when the
SAR expires or otherwise terminates, the grant price for the SAR is less than
the Fair Market Value of a Share, then the unexercised portion of the SAR that
was exercisable immediately prior to such date shall automatically be deemed
exercised.

 

(e) The term, provided that an SAR must terminate no later than 10 years after
the date of grant. Notwithstanding the foregoing, the Committee may extend the
term of an SAR for up to six (6) months beyond the tenth (10th) anniversary of
the date of grant in the event a Participant dies prior to the SAR's termination
date.

 

(f) Whether the SAR will be settled in cash, Shares or a combination thereof.

 

(g) Notwithstanding anything contained in this Plan to the contrary, the Board
as a whole shall pre-approve each SAR grant to Non-Employee Directors.

 

9. Performance Awards. Subject to the terms of this Plan, the Committee shall
determine all terms and conditions of each award of Performance Shares or
Performance Units, including but not limited to:

 

(a) The number of Shares and/or units to which such Award relates, and with
respect to Performance Units, whether the value of each unit will be based on
the Fair Market Value of one or more Shares, the average of the Fair Market
Value of one or more Shares over such period as the Committee specifies, or such
other value as the Committee specifies in the Award Agreement.

 

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(b) One or more Performance Goals that must be achieved during such period as
the Committee specifies in order for the Participant to realize the benefit of
such Award.

 

(c) Whether all or a portion of the Performance Goals subject to an Award are
deemed achieved upon a Participant's death, Disability or Retirement.

 

(d) With respect to Performance Units, whether to settle such Award in cash,
Shares, or a combination of cash and Shares.

 

(e) Notwithstanding anything contained in this Plan to the contrary, the Board
as a whole shall pre-approve each Award grant under this Section 9 to
Non-Employee Directors.

 

Unless otherwise provided by the Committee, a Participant shall not be entitled
to and shall agree to waive or otherwise surrender any rights to receive
dividends or dividend equivalents paid with respect to Performance Shares or
Performance Units valued in Shares until after the Performance Shares or
Performance Units have been earned.

 

10. Restricted Stock and Restricted Stock Unit Awards.

 

Subject to the terms of this Plan, the Committee shall determine all terms and
conditions of each award of Restricted Stock or Restricted Stock Units,
including but not limited to:

 

(a) The number of Shares and/or units to which such Award relates.

 

(b) The period of time over which the restrictions imposed on Restricted Stock
will lapse and the vesting of Restricted Stock Units will occur, and whether, as
a condition for the Participant to realize all or a portion of the benefit
provided under the Award, one or more Performance Goals must be achieved during
such period as the Committee specifies; provided that, subject to the provisions
of Section 10(c), an Award that is subject to the achievement of Performance
Goals must have a restriction or vesting period of at least one year, and an
Award that is not subject to Performance Goals must have a restriction or
vesting period of at least three years. Notwithstanding the foregoing, if the
Committee determines in its sole discretion that an Award of Restricted Stock or
Restricted Stock Units is granted to a Participant in lieu of cash compensation
(including without limitation bonus cash compensation), the Committee may impose
such restriction or vesting period on such Award as it determines.

 

(c) Whether all or any portion of the restrictions or vesting schedule imposed
on the Award will lapse or be accelerated upon a Participant's death, Disability
or Retirement.

 

(d) With respect to Restricted Stock Units, whether to settle such Awards in
cash, Shares, or a combination of cash and Shares.

 

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(e) With respect to Restricted Stock, the manner of registration of certificates
for such Shares, and whether to hold such Shares in escrow pending lapse of the
restrictions or to issue such Shares with an appropriate legend referring to
such restrictions.

 

(f) Whether dividends paid with respect to an Award of Restricted Stock will be
immediately paid or held in escrow or otherwise deferred and whether such
dividends shall be subject to the same terms and conditions as the Award to
which they relate.

 

(g) Notwithstanding anything contained in this Plan to the contrary, the Board
as a whole shall pre-approve each grant under this Section 10 to Non-Employee
Directors.

 

11.  Dividend Equivalent Units. Subject to the terms and conditions of this
Plan, the Committee shall determine all terms and conditions of each award of
Dividend Equivalent Units, including but not limited to whether such Award will
be granted in tandem with another Award, and the form, timing and conditions of
payment.

 

12.  Payment of Directors' Fees in Options. Subject to such restrictions as may
be imposed by the Board, a Non-Employee Director may elect to receive all or any
portion of his or her annual cash retainer payment from the Company in the form
of Options. The number of Options granted as a result of such election shall be
determined by multiplying the amount of foregone cash compensation by four (4),
and dividing such product by the Fair Market Value of a Share on the date the
cash compensation would have otherwise been paid to the Non-Employee Director.

Such Options shall be issued under and subject to the terms of this Plan. An
election under this Section 12 shall be filed with the Company on such form and
in such manner as the Board determines. The Board as a whole shall pre-approve
each option grant under this Section 12.

 

13.  Transferability. Awards are not transferable other than by will or the laws
of descent and distribution, unless and to the extent the Committee allows a
Participant to: (a) designate in writing a beneficiary to exercise the Award
after the Participant's death; or (b) transfer an Award.

 

14.  Termination and Amendment of Plan; Amendment, Modification or Cancellation
of Awards.

 

(a) Term of Plan. This Plan will terminate on the tenth anniversary of the
Effective Date unless the Board or Committee earlier terminates this Plan
pursuant to Section 14(b).

 

(b) Termination and Amendment. The Board or the Committee may amend, suspend or
terminate this Plan at any time, subject to the following limitations:

 

(i) the Board must approve any amendment, suspension or termination of this Plan
to the extent the Company determines such approval is required by: (A) action of
the Board, (B) applicable corporate law, (C) the listing requirements of any
principal securities exchange or market on which the Shares are then traded, or
(D) any other applicable law;

 

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(ii)  stockholders must approve any amendment of this Plan to the extent the
Company determines such approval is required by: (A) Section 16 of the Exchange
Act, (B) the Code, (C) the listing requirements of any principal securities
exchange or market on which the Shares are then traded, or (D) any other
applicable law; and

 

(iii) stockholders must approve any of the following Plan amendments: (A) an
amendment to materially increase any number of Shares specified in Section 6(a)
or 6(d) (except as permitted by Section 16); or (B) an amendment to the
provisions of Section 14(e).

 

(c) Amendment, Modification or Cancellation of Awards. Except as provided in
Section 14(e) and subject to the requirements of this Plan, the Committee may
modify or amend any Award or waive any restrictions or conditions applicable to
any Award or the exercise of the Award, and the terms and conditions applicable
to any Awards may at any time be amended, modified or canceled by mutual
agreement between the Committee and the Participant, so long as any amendment or
modification does not increase the number of Shares issuable under this Plan
(except as permitted by Section 16), but the Committee need not obtain
Participant (or other interested party) consent for the cancellation of an Award
pursuant to the provisions of Section 16(a) or the modification of an Award to
the extent deemed necessary to comply with any applicable law or the listing
requirements of any principal securities exchange or market on which the Shares
are then traded, or to preserve favorable accounting treatment of any Award for
the Company.

 

(d) Survival of Authority and Awards. Notwithstanding the foregoing, the
authority of the Board and the Committee under this Section 14 will extend
beyond the date of this Plan's termination. In addition, termination of this
Plan will not affect the rights of Participants with respect to Awards
previously granted to them, and all unexpired Awards will continue in force and
effect after termination of this Plan except as they may lapse or be terminated
by their own terms and conditions.

 

(e) Repricing and Backdating Prohibited. Notwithstanding anything in this Plan
to the contrary, and except for the adjustments provided in Section 16, neither
the Committee nor any other person may decrease the exercise or grant price for
any outstanding Option or SAR after the date of grant, cancel an outstanding
Option or SAR in exchange for cash or other Awards (other than cash or other
Awards with a value equal to the excess of the Fair Market Value of the Shares
subject to such Option or SAR at the time of cancellation over the exercise or
grant price for such Shares) or allow a Participant to surrender an outstanding
Option or SAR to the Company as consideration for the grant of a new Option or
SAR with a lower exercise price. In addition, the Committee may not make a grant
of an Option or SAR with a grant date that is effective prior to the date the
Committee takes action to approve such Award.

 

 13 

 

  

(f) Foreign Participation. To assure the viability of Awards granted to
Participants employed in foreign countries, the Committee may provide for such
special terms as it may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to, or amendments, restatements or alternative versions
of, this Plan as it determines is necessary or appropriate for such purposes.
Any such amendment, restatement or alternative versions that the Committee
approves for purposes of using this Plan in a foreign country will not affect
the terms of this Plan for any other country. In addition, all such supplements,
amendments, restatements or alternative versions must comply with the provisions
of Section 14(b)(ii).

 

(g) Recoupment. Any Awards granted pursuant to the Plan, and any Stock issued or
cash paid pursuant to an Award, shall be subject to (A) any recoupment,
clawback, equity holding, stock ownership or similar policies adopted by the
Company from time to time and (B) any recoupment, clawback, equity holding,
stock ownership or similar requirements made applicable by law, regulation or
listing standards to the Company from time to time.

 

15. Taxes.

 

(a) Withholding Right. The Company is entitled to withhold the amount of any tax
attributable to any amount payable or Shares deliverable under this Plan after
giving the person entitled to receive such amount or Shares notice as far in
advance as practicable, and the Company may defer making payment or delivery if
any such tax may be pending unless and until indemnified to its satisfaction.

 

(b) Use of Shares to Satisfy Tax Withholding. A Participant shall have the right
to satisfy all or a portion of the federal, state and local withholding tax
obligations arising in connection with an Award by electing to (i) have the
Company withhold Shares otherwise issuable under the Award, (ii) tender back
Shares received in connection with such Award or (iii) deliver other previously
owned Shares, in each case having a Fair Market Value equal to the amount to be
withheld. However, the amount to be withheld may not exceed the total minimum
federal, state and local tax withholding obligations associated with the
transaction to the extent required to avoid an expense on the Company's
financial statements. The election must be made on or before the date as of
which the amount of tax to be withheld is determined and otherwise as the
Committee requires.

 

(c) No Guarantee of Tax Treatment. Notwithstanding any provision of the Plan to
the contrary, the Company does not guarantee to any Participant or any other
person with an interest in an Award that (i) any Award intended to be exempt
from Code Section 409A shall be so exempt, (ii) any Award intended to comply
with Code Section 409A or Code Section 422 shall so comply, or (iii) any Award
shall otherwise receive a specific tax treatment under any other applicable tax
law, nor in any such case will the Company or any Affiliate be obligated to
indemnify, defend or hold harmless any individual with respect to the tax
consequences of any Award.

 

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(d) Participant Responsibility. If a Participant shall dispose of Stock acquired
through exercise of an Incentive Stock Option within either (i) two years after
the date the Option is granted or (ii) one year after the date the Option is
exercised (i.e., in a disqualifying disposition), such Participant shall notify
the Company within seven days of the date of such disqualifying disposition.

 

16. Adjustment Provisions; Change of Control.

 

(a) Adjustment of Shares. If the Committee determines that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that the Committee
determines an adjustment to be appropriate to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under this
Plan, then, subject to Participants' rights under Section 16(c), the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and type of Shares subject to this Plan (including the number and type of
Shares described in Sections 6(a) and 6(d)), and which may after the event be
made the subject of Awards under this Plan, (ii) the number and type of Shares
subject to outstanding Awards, and (iii) the grant, purchase, or exercise price
with respect to any Award. In any such case, the Committee may also (or in lieu
of the foregoing) make provision for a cash payment to the holder of an
outstanding Award in exchange for the cancellation of all or a portion of the
Award (without the consent of the holder of an Award) in an amount determined by
the Committee effective at such time as the Committee specifies (which may be
the time such transaction or event is effective), but if such transaction or
event constitutes a Change of Control, then (A) such payment shall be at least
as favorable to the holder as the amount the holder could have received in
respect of such Award under Section 16(c) and (b) from and after the Change of
Control, the Committee may make such a provision only if the Committee
determines that doing so is necessary to substitute, for each Share then subject
to an Award, the number and kind of shares of stock, other securities, cash or
other property to which holders of Stock are or will be entitled in respect of
each Share pursuant to the transaction or event in accordance with the last
sentence of this subsection (a). However, in each case, with respect to Awards
of Incentive Stock Options, no such adjustment may be authorized to the extent
that such authority would cause this Plan to violate Code Section 422(b).
Further, the number of Shares subject to any Award payable or denominated in
Shares must always be a whole number. Without limitation, subject to
Participants' rights under Section 16(c), in the event of any reorganization,
merger, consolidation, combination or other similar corporate transaction or
event, whether or not constituting a Change of Control (other than any such
transaction in which the Company is the continuing corporation and in which the
outstanding Stock is not being converted into or exchanged for different
securities, cash or other property, or any combination thereof), the Committee
may substitute, on an equitable basis as the Committee determines, for each
Share then subject to an Award, the number and kind of shares of stock, other
securities, cash or other property to which holders of Stock are or will be
entitled in respect of each Share pursuant to the transaction.

 

 15 

 

  

(b) Issuance or Assumption. Notwithstanding any other provision of this Plan,
and without affecting the number of Shares otherwise reserved or available under
this Plan, in connection with any merger, consolidation, acquisition of property
or stock, or reorganization, the Committee may authorize the issuance of
substitute awards or assumption of awards under this Plan by another party to
any such merger, consolidation, acquisition or reorganization upon such terms
and conditions as it may deem appropriate.

 

(c) Change of Control.

 

(i) The Committee may specify, either in an Award Agreement or at the time of a
Change of Control, whether an outstanding Award shall become vested and/or
payable, in whole or in part, as a result of a Change of Control.

 

(ii)  If, in connection with the Change of Control, the Options and SARs issued
under the Plan are not assumed, or if substitute Options and SARs are not issued
by the successor or Affiliate thereof in the Change of Control transaction, or
if the assumed or substituted awards fail to contain similar terms and
conditions as the Award prior to the Change of Control or fail to preserve, to
the extent applicable, the benefit to be provided to the Participant as of the
date of the Change of Control, including but not limited to the right of the
Participant to receive shares upon exercise of the Option or SAR that are
registered for sale to the public pursuant to an effective registration
statement filed with the U.S. Securities and Exchange Commission, then (1) each
holder of an Option or SAR that is outstanding as of the date of the Change of
Control who is an employee of the Company or any Subsidiary shall have the
right, and (2) the Committee, in its sole discretion, may grant to a holder of
an Option or SAR that is outstanding as of the date of the Change of Control who
is not an employee of the Company or any Subsidiary the right, exercisable by
written notice to the Company (or its successor in the Change of Control
transaction) within 30 days after the Change of Control (but not beyond the
Option's or SAR's expiration date), to receive, in exchange for the surrender of
the Option or SAR, an amount of cash equal to the excess of the greater of the
Fair Market Value of the Shares determined on the Change of Control date or the
Fair Market Value of the Shares on the date of surrender covered by the Option
or SAR (to the extent vested and not yet exercised) that is so surrendered over
the purchase or grant price of such Shares under the Award. If the Committee so
determines prior to the Change of Control, any such Option or SAR that is not
exercised or surrendered prior to the end of such 30- day period will be
cancelled.

 

 16 

 

  

(iii) If, in connection with the Change of Control, the Shares issued to a
Participant as a result of the accelerated vesting or payment of a Restricted
Stock Award, Performance Share Award, Restricted Stock Unit Award, Performance
Unit Award or Dividend Equivalent Award under this subsection (c) are not
registered for sale to the public pursuant to an effective registration
statement filed with the U.S. Securities and Exchange Commission, then each
holder of such Shares shall have the right, exercisable by written notice to the
Company (or its successor in the Change of Control transaction) within 30 days
after the Change of Control, to receive, in exchange for the surrender of such
Shares an amount of cash equal to the greater of the Fair Market Value of a
Share on the Change of Control date or the Fair Market Value of such Share on
the date of surrender.

 

The provisions of Sections 16(c)(ii) and (iii) shall govern the treatment of
awards made under the 2010 Plan and 2013 Plan in the event of a Change of
Control, and the 2010 Plan and 2013 Plan are each deemed amended accordingly.

 

(d) Parachute Payment Limitation.

 

(i) Scope of Limitation. This Section 16(d) shall apply to an Award only if:

 

(A)  the independent auditors most recently selected by the Board (the
"Auditors") determine that the after-tax value of such Award to the Participant,
taking into account the effect of all federal, state and local income taxes,
employment taxes and excise taxes applicable to the Participant (including the
excise tax under Code Section 4999), will be greater after the application of
this Section 16(d) than it was before the application of this Section 16(d); or

 

(B)  the Committee, at the time of making an Award under the Plan or at any time
thereafter, specifies in writing that such Award shall be subject to this
Section 16(d) (regardless of the after-tax value of such Award to the
Participant).

 

If this Section 16(d) applies to an Award, it shall supersede any contrary
provision of the Plan or of any Award granted under the Plan.

 

(ii)  Basic Rule. Except as may be set forth in a written agreement by and
between the Company and the holder of an Award, in the event that the Auditors
determine that any payment or transfer by the Company under the Plan to or for
the benefit of a Participant (a "Payment") would be nondeductible by the Company
for federal income tax purposes because of the provisions concerning "excess
parachute payments" in Code Section 280G, then the aggregate present value of
all Payments shall be reduced (but not below zero) to the Reduced Amount. For
purposes of this Section 16(d), the "Reduced Amount" shall be the amount,
expressed as a present value, which maximizes the aggregate present value of the
Payments without causing any Payment to be nondeductible by the Company because
of Code Section 280G.

 

 17 

 

 

(iii) Reduction of Payments. If the Auditors determine that any Payment would be
nondeductible by the Company because of Code Section 280G, then the Company
shall promptly give the Participant notice to that effect and a copy of the
detailed calculation thereof and of the Reduced Amount, and the Participant may
then elect, in his or her sole discretion, which and how much of the Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Payments equals the Reduced Amount) and shall advise the
Company in writing of his or her election within ten (10) days of receipt of
notice. If no such election is made by the Participant within such ten (10) day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Section 16(d),
present value shall be determined in accordance with Code Section 280G(d)(4).
All determinations made by the Auditors under this Section 16(d) shall be
binding upon the Company and the Participant and shall be made within sixty (60)
days of the date when a Payment becomes payable or transferable. As promptly as
practicable following such determination and the elections hereunder, the
Company shall pay or transfer to or for the benefit of the Participant such
amounts as are then due to him or her under the Plan and shall promptly pay or
transfer to or for the benefit of the Participant in the future such amounts as
become due to him or her under the Plan.

 

(iv) Overpayments and Underpayments. As a result of uncertainty in the
application of Code Section 280G at the time of an initial determination by the
Auditors hereunder, it is possible that Payments will have been made by the
Company that should not have been made (an "Overpayment") or that additional
Payments that will not have been made by the Company could have been made (an
"Underpayment"), consistent in each case with the calculation of the Reduced
Amount hereunder. In the event that the Auditors, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the
Participant that the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in Code
Section 7872(f)(2); provided, however, that no amount shall be payable by the
Participant to the Company if and to the extent that such payment would not
reduce the amount subject to taxation under Code Section 4999. In the event that
the Auditors determine that an Underpayment has occurred, such Underpayment
shall promptly be paid or transferred by the Company to or for the benefit of
the Participant, together with interest at the applicable federal rate provided
in Code Section 7872(f)(2).

 

 18 

 

  

(v) Related Corporations. For purposes of this Section 16(d), the term "Company"
shall include affiliated corporations to the extent determined by the Auditors
in accordance with Code Section 280G(d)(5).

 

17. Miscellaneous.

 

(a) Other Terms and Conditions. The grant of any Award may also be subject to
other provisions (whether or not applicable to the Award granted to any other
Participant) as the Committee determines appropriate, including, without
limitation, provisions for:

 

(i) one or more means to enable Participants to defer the delivery of Shares or
recognition of taxable income relating to Awards or cash payments derived from
the Awards on such terms and conditions as the Committee determines, including,
by way of example, the form and manner of the deferral election, the treatment
of dividends paid on the Shares during the deferral period or a means for
providing a return to a Participant on amounts deferred, and the permitted
distribution dates or events (provided that if Shares would have otherwise been
issued under an Award but for the deferral described in this paragraph, then
such Shares shall be treated as if they were issued for purposes of Sections
6(a));

 

(ii)  the payment of the purchase price of Options by delivery of cash or other
Shares or other securities of the Company (including by attestation) having a
then Fair Market Value equal to the purchase price of such Shares, or by
delivery (including by fax) to the Company or its designated agent of an
executed irrevocable option exercise form together with irrevocable instructions
to a broker dealer to sell or margin a sufficient portion of the Shares and
deliver the sale or margin loan proceeds directly to the Company to pay for the
exercise price;

 

(iii) conditioning the grant or benefit of an Award on the Participant's
agreement to comply with covenants not to compete, not to solicit employees and
customers and not to disclose confidential information that may be effective
during or after the Participant's employment or service, and/or provisions
requiring the Participant to disgorge any profit, gain or other benefit received
in connection with an Award as a result of the breach of such covenant;

 

(iv) the automatic grant of a new Option (the "replenishment Option") to a
Participant who pays the exercise price of an existing Option in Shares;
provided that the replenishment Option shall cover only that number of Shares
that is used to pay the exercise price and shall expire at the same time as the
original Option to which it relates;

 

 19 

 

  

(v)  restrictions on resale or other disposition of Shares, including imposition
of a retention period; and

 

(vi) compliance with federal or state securities laws and stock exchange
requirements.

 

(b) Employment or Service. The issuance of an Award shall not confer upon a
Participant any right with respect to continued employment or service with the
Company or any Affiliate, or the right to continue as a Director. Unless
determined otherwise by the Committee, for purposes of the Plan and all Awards,
the following rules shall apply:

 

(i) a Participant who transfers employment between the Corporation and any
Affiliate of the Company, or between the Company's Affiliates, will not be
considered to have terminated employment;

 

(ii)  a Participant who ceases to be a Non-Employee Director because he or she
becomes an employee of the Company or an Affiliate shall not be considered to
have ceased service as a Director with respect to any Award until such
Participant's termination of employment with the Company and its Affiliates;

 

(iii) a Participant who ceases to be employed by the Company or an Affiliate of
the Company and immediately thereafter becomes a Non-Employee Director, a non-
employee director of any Affiliate, or a consultant to the Company or any
Affiliate shall not be considered to have terminated employment until such
Participant's service as a director of, or consultant to, the Company and its
Affiliates has ceased; and

 

(iv) a Participant employed by an Affiliate of the Company will be considered to
have terminated employment when such entity ceases to be an Affiliate of the
Company.

 

Notwithstanding anything herein contained to the contrary, for purposes of an
Award that is subject to Code Section 409A, if a Participant's termination of
employment or service triggers the payment of compensation under such Award,
then the Participant will be deemed to have terminated employment or service
upon his or her "separation from service" within the meaning of Code Section
409A. Notwithstanding any other provision in this Plan or an Award to the
contrary, if any Participant is a "specified employee" within the meaning of
Code Section 409A as of the date of his or her "separation from service" within
the meaning of Code Section 409A, then, to the extent required by Code Section
409A, any payment made to the Participant on account of such separation from
service shall not be made before a date that is six months after the date of the
separation from service.

 

(c) No Fractional Shares. No fractional Shares or other securities may be issued
or delivered pursuant to this Plan, and the Committee may determine whether
cash, other securities or other property will be paid or transferred in lieu of
any fractional Shares or other securities, or whether such fractional Shares or
other securities or any rights to fractional Shares or other securities will be
canceled, terminated or otherwise eliminated.

 

 20 

 

  

(d) Unfunded Plan. This Plan is unfunded and does not create, and should not be
construed to create, a trust or separate fund with respect to this Plan's
benefits. This Plan does not establish any fiduciary relationship between the
Company and any Participant or other person. To the extent any person holds any
rights by virtue of an Award granted under this Plan, such rights are no greater
than the rights of the Company's general unsecured creditors.

 

(e) Requirements of Law and Securities Exchange. The granting of Awards and the
issuance of Shares in connection with an Award are subject to all applicable
laws, rules and regulations and to such approvals by any governmental agencies
or national securities exchanges as may be required. Notwithstanding any other
provision of this Plan or any Award Agreement, the Company has no liability to
deliver any Shares under this Plan or make any payment unless such delivery or
payment would comply with all applicable laws and the applicable requirements of
any securities exchange or similar entity, and unless and until the Participant
has taken all actions required by the Company in connection therewith. The
Company may impose such restrictions on any Shares issued under the Plan as the
Company determines necessary or desirable to comply with all applicable laws,
rules and regulations or the requirements of any national securities exchanges.

 

(f) Governing Law. This Plan, and all agreements under this Plan, will be
construed in accordance with and governed by the laws of the State of Delaware,
without reference to any conflict of law principles. The parties agree that the
exclusive venue for any legal action or proceeding with respect to this Plan,
any Award or any Award Agreement, or for recognition and enforcement of any
judgment in respect of this Plan, any Award or any Award Agreement, shall be a
court sitting in the County of Los Angeles, or the Federal District Court for
the Central District of California sitting in the County of Los Angeles, in the
State of California, and further agree that any such action may be heard only in
a "bench" trial, and any party to such action or proceeding shall agree to waive
its right to assert a jury trial.

 

(g) Limitations on Actions. Any legal action or proceeding with respect to this
Plan, any Award or any Award Agreement, must be brought within one year (365
days) after the day the complaining party first knew or should have known of the
events giving rise to the complaint.

 

(h) Construction. Whenever any words are used herein in the masculine, they
shall be construed as though they were used in the feminine in all cases where
they would so apply; and wherever any words are used in the singular or plural,
they shall be construed as though they were used in the plural or singular, as
the case may be, in all cases where they would so apply. Titles of sections are
for general information only, and this Plan is not to be construed with
reference to such titles.

 

 21 

 

  

(i) Severability. If any provision of this Plan or any Award Agreement or any
Award (i) is or becomes or is deemed to be invalid, illegal or unenforceable in
any jurisdiction, or as to any person or Award, or (ii) would disqualify this
Plan, any Award Agreement or any Award under any law the Committee deems
applicable, then such provision should be construed or deemed amended to conform
to applicable laws, or if it cannot be so construed or deemed amended without,
in the determination of the Committee, materially altering the intent of this
Plan, Award Agreement or Award, then such provision should be stricken as to
such jurisdiction, person or Award, and the remainder of this Plan, such Award
Agreement and such Award will remain in full force and effect.

 

ADOPTED BY BOARD OF DIRECTORS: December 15, 2015

 

 22