Exhibit 10.1

 

 

 

 

 

 

 

 

ZAGG INC

 

AMENDED AND RESTATED

 

2013 EQUITY INCENTIVE AWARD PLAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

table of contents

 

 

  Page ARTICLE 1 PURPOSE 1     ARTICLE 2 DEFINITIONS AND CONSTRUCTION 1    
ARTICLE 3 SHARES SUBJECT TO THE PLAN 5     3.1. Number of Shares 5    
3.2. Stock Distributed 5     3.3. Limitation on Number of Shares Subject to
Awards 5     ARTICLE 4 ELIGIBILITY AND PARTICIPATION 6     4.1. Eligibility 6  
  4.2. Participation 6     4.3. Foreign Participants 6     ARTICLE 5 STOCK
OPTIONS 6     5.1. General 6     5.2. Incentive Stock Options 7    
5.3. Substitution of Stock Appreciation Rights 8     5.4. Paperless Exercise 8  
  5.5. Granting of Options to Independent Directors 9     ARTICLE 6 RESTRICTED
STOCK AWARDS 9     6.1. Grant of Restricted Stock 9     6.2. Issuance and
Restrictions 9     6.3. Forfeiture 9     6.4. Certificates for Restricted Stock
9     ARTICLE 7 STOCK APPRECIATION RIGHTS 10     7.1. Grant of Stock
Appreciation Rights 10     7.2. No Coupled Stock Appreciation Rights 10    
7.3. Independent Stock Appreciation Rights 10     7.4. Payment and Limitations
on Exercise 10

 

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ARTICLE 8 OTHER TYPES OF AWARDS 11     8.1. Performance Share Awards 11    
8.2. Stock Payments 11     8.3. Deferred Stock 11     8.4. Restricted Stock
Units 11     8.5. Other Stock-Based Awards 11     8.6. Term 12     8.7. Exercise
or Purchase Price 12     8.8. Exercise Upon Termination of Employment or Service
12     8.9. Form of Payment 12     8.10. Award Agreement 12     ARTICLE 9
PERFORMANCE-BASED AWARDS 12     9.1. Purpose 12     9.2. Applicability 13    
9.3. Procedures with Respect to Performance-Based Awards 13     9.4. Payment of
Performance-Based Awards 13     9.5. Additional Limitations 13     ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS 14     10.1. Stand-Alone and Tandem Awards 14  
  10.2. Award Agreement 14     10.3. Limits on Transfer 14     10.4. Death of
Optionee. 14     10.5. Retirement or Disability 15     10.6. Forfeiture for
Other Reasons 15     10.7. Leaves of Absence and Performance Targets 15    
10.8. Newly Eligible Employees 15     10.9. Stock Certificates; Book Entry
Procedures 15     10.10. Minimum Vesting 16     10.11. Prohibition on Buyout of
Options and SARs 16

 

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ARTICLE 11 CHANGES IN CAPITAL STRUCTURE 16     11.1. Adjustments 16    
11.2. Outstanding Awards—Other Changes 17     11.3. No Other Rights 17    
ARTICLE 12 ADMINISTRATION 18     12.1. Committee 18     12.2. Committee
Membership 18     12.3. Certain Actions 18     12.4. Action by the Committee 18
    12.5. Authority of Committee 18     12.6. Decisions Binding 19    
12.7. Delegation of Authority 19     12.8. Committee Administration 20    
12.9. Liability 20     ARTICLE 13 EFFECTIVE AND EXPIRATION DATE 20    
13.1. Effective Date 20     13.2. Expiration Date 20

 

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ARTICLE 14 AMENDMENT, MODIFICATION, AND TERMINATION 20     14.1. Amendment,
Modification, and Termination 20     14.2. Awards Previously Granted 21    
ARTICLE 15 COMPLIANCE WITH SECTION 409A OF THE CODE 21     15.1. Awards subject
to Code Section 409A 21     15.2. Distributions under a Section 409A Award 21  
  15.3. Prohibition on Acceleration of Benefits 22     15.4. Elections under
Section 409A Awards 22     15.5. Compliance in Form and Operation 23     ARTICLE
16 GENERAL PROVISIONS 23     16.1. No Rights to Awards 23     16.2. Privileges
of Stock Ownership; Voting and Dividends 23     16.3. Withholding 23    
16.4. No Right to Employment or Services 24     16.5. Unfunded Status of Awards
24     16.6. Indemnification 24     16.7. Relationship to other Benefits 24    
16.8. Expenses 24     16.9. Titles and Headings 24     16.10. Fractional Shares
25     16.11. Limitations Applicable to Section 16 Persons 25    
16.12. Government and Other Regulations 25     16.13. Governing Law 25

 

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ZAGG INC

 

AMENDED AND RESTATED

2013 EQUITY INCENTIVE AWARD PLAN

 

ARTICLE 1
PURPOSE

 

The purposes of the ZAGG Inc Amended and Restated 2013 Equity Incentive Award
Plan (the “Plan”) are to:

 

(1) Closely associate the interests of management, employees, directors and
consultants of ZAGG Inc, a Delaware corporation (the “Company”), with the
shareholders of the Company by reinforcing the relationship between
participants’ rewards and shareholder gains;

 

(2) Provide management and employees with an equity ownership in the Company
commensurate with Company performance, as reflected in increased shareholder
value;

 

(3) Maintain competitive compensation levels; and

 

(4) Provide an incentive to management and employees to remain in continuing
employment with the Company and to put forth maximum efforts for the success of
its business.

 

The Plan is further intended to provide flexibility to the Company in its
ability to attract, motivate and retain the services of members of the Board,
Employees and Consultants upon whose judgment, interest, and special effort the
successful conduct of the Company’s operation is largely dependent.

 

ARTICLE 2
DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

 

2.1. “Award” means an Option, a Restricted Stock award, a Stock Appreciation
Right award, a Performance Share award, a Stock Payment award, a Deferred Stock
award, a Restricted Stock Unit award, an Other Stock-Based Award, or a
Performance-Based Award granted to a Participant pursuant to the Plan.

 

2.2. “Award Agreement” means any written agreement, contract, or other
instrument or document evidencing an Award.

 

 

 

 

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

 

2.4. “Change in Control” means the occurrence of any of the following in one or
a series of related transactions: (i) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1) under
the Exchange Act) of more than thirty percent (30%) of the voting rights or
equity interests in the Company; (ii) a replacement, during a 24-month period,
of more than one-half (1/2) of the members of the Board that is not approved by
those individuals who are members of the Board on the date hereof (or other
directors previously approved by such individuals); (iii) consummation of a
merger or consolidation of the Company or any Subsidiary or a sale of more than
one-half (1/2) of the assets of the Company in one or a series of related
transactions, unless following such transaction or series of transactions, the
holders of the Company’s securities prior to the first such transaction continue
to hold at least one-half (1/2) of the voting rights and equity interests of the
surviving entity or acquirer of such assets; (iv) a recapitalization,
reorganization or other transaction involving the Company or any Subsidiary that
constitutes or results in a transfer of more than one-half (1/2) of the voting
rights or equity interests in the Company; or (v) consummation of a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Exchange Act with respect to the
Company.

 

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

 

2.6. “Committee” means the committee of the Board described in Article 12.

 

2.7. “Consultant” means any consultant or adviser if:

 

(a) The consultant or adviser renders bona fide services to the Company;

 

(b) The services rendered by the consultant or adviser 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; and

 

(c) The consultant or adviser is a natural person who has contracted directly
with the Company to render such services.

 

2.8. “Covered Employee” means an Employee who is, or may be, as determined by
the Committee, a “covered employee” within the meaning of Section 162(m) of the
Code.

 

2.9.  “Deferred Stock” means a right to receive a specified number of shares of
Stock during specified time periods pursuant to Article 8.

 

2.10. “Disability” means that the Participant qualifies to receive long-term
disability payments under the Company’s long-term disability insurance program,
as it may be amended from time to time.

 

2.11. “Effective Date” shall have the meaning set forth in Section 13.1.

 

2.12. “Eligible Individual” means any person who is an Employee, a Consultant or
a member of the Board, as determined by the Committee.

 

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2.13. “Employee” means any officer or other employee (as defined in accordance
with Section 3401(c) of the Code) of the Company or any Subsidiary.

 

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

 

2.15. “Fair Market Value” means, as of any given date, the fair market value of
a share of Stock on the date determined by such methods or procedures as may be
established from time to time by the Committee. Unless otherwise determined by
the Committee, the Fair Market Value of a share of Stock as of any date shall be
(i) the closing price of a share of Common Stock on the principal exchange on
which shares of Common Stock are then trading, if any, on such date, or if
shares were not traded on such date, then on the closest preceding date on which
a trade occurred; or (ii) if Common Stock is not traded on an exchange, the mean
between the closing representative bid and asked prices for the Common Stock on
such date as reported by the OTC Bulletin Board or the OTC Markets Group, Inc,
or if not then in existence, by their successor quotation system; or (iii) if
Common Stock is not publicly traded, the Fair Market Value of a share of Common
Stock as established by the Committee acting in good faith.

 

2.16. “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

 

2.17. “Independent Director” means a member of the Board who is not an Employee
of the Company.

 

2.18. “ISAR” shall have the meaning set forth in Section 7.3(a).

 

2.19. “Non-Employee Director” means a member of the Board who qualifies as a
“Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or
any successor definition adopted by the Board.

 

2.20. “Non-Qualified Stock Option” means an Option that is not intended to be an
Incentive Stock Option.

 

2.21. “Option” means a right granted to a Participant pursuant to Article 5 of
the Plan to purchase a specified number of shares of Stock at a specified price
during specified time periods. An Option may be either an Incentive Stock Option
or a Non-Qualified Stock Option.

 

2.22. “Other Stock-Based Award” means an Award granted or denominated in Stock
or units of Stock pursuant to Section 8.5 of the Plan.

 

2.23. “Option Term” shall have the meaning set forth in Section 5.1(b).

 

2.24. “Original 2013 Plan” means the ZAGG Inc 2013 Equity Incentive Award Plan
originally adopted by the Board on January 15, 2013 and approved by the
stockholders of the Company on June 13, 2013.

 

2.25. “Original 2013 Plan Effective Date” means January 15, 2013.

 

2.26. “Participant” means any Eligible Individual who, as a member of the Board
or Employee or Consultant, has been granted an Award pursuant to the Plan.

 

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2.27. “Performance-Based Award” means an Award granted to selected Covered
Employees pursuant to Articles 6 and 8, but which is subject to the terms and
conditions set forth in Article 9. All Performance-Based Awards are intended to
qualify as Qualified Performance-Based Compensation.

 

2.28. “Performance Criteria” means the criteria that the Committee selects for
purposes of establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period. The Performance Criteria that will be used
to establish Performance Goals are limited to the following: net earnings
(either before or after interest, taxes, depreciation and amortization or
non-operating charges as determined by the Committee), other non-operating
charges (as determined by the Committee), economic value-added (as determined by
the Committee), sales or revenue, net income (either before or after taxes),
operating earnings, cash flow (including, but not limited to, operating cash
flow and free cash flow), cash flow return on capital, return on net assets,
return on stockholders’ equity, return on assets, return on capital, stockholder
returns, return on sales, gross or net profit margin, productivity, expense,
margins, operating efficiency, customer satisfaction, working capital, earnings
per share, price per share of Stock, and market share, 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. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

 

2.29. “Performance Goals” means, for a Performance Period, the goals established
in writing by the Committee for the Performance Period based upon the
Performance Criteria. Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be expressed in terms of
overall Company performance or the performance of a division, business unit, or
an individual. The Committee, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Period in order to prevent
the dilution or enlargement of the rights of Participants (a) in the event of,
or in anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (b) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.

 

2.30. “Performance Period” means the one or more periods of time, which may be
of varying and overlapping durations, as the Committee may select, over which
the attainment of one or more Performance Goals will be measured for the purpose
of determining a Participant’s right to, and the payment of, a Performance-Based
Award.

 

2.31. “Performance Share” means a right granted to a Participant pursuant to
Article 8, to receive Stock, the payment of which is contingent upon achieving
certain Performance Goals or other performance-based targets established by the
Committee.

 

2.32.  “Plan” means this ZAGG Inc Amended and Restated 2013 Equity Incentive
Award Plan, as it may be amended from time to time.

 

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2.33. “Qualified Performance-Based Compensation” means any compensation that is
intended to qualify as “qualified performance-based compensation” as described
in Section 162(m)(4)(C) of the Code.

 

2.34. “Restricted Stock” means Stock awarded to a Participant pursuant to
Article 6 that is subject to certain restrictions and may be subject to risk of
forfeiture.

 

2.35. “Restricted Stock Unit” means an Award granted pursuant to Section 8.4.

 

2.36. “Section 409A Award” shall have the meaning set forth in Section 15.1.

 

2.37. “Securities Act” shall mean the Securities Act of 1933, as amended.

 

2.38. “Stock” means the common stock of the Company, par value $0.001 per share,
and such other securities of the Company that may be substituted for Stock
pursuant to Article 11.

 

2.39. “Stock Appreciation Right” or “SAR” means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised over the
Fair Market Value on the date the SAR was granted as set forth in the applicable
Award Agreement.

 

2.40. “Stock Payment” means (a) a payment in the form of shares of Stock, or (b)
an option or other right to purchase shares of Stock, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Article 8.

 

2.41. “Subsidiary” means any “subsidiary corporation” as defined in Section
424(f) of the Code and any applicable regulations promulgated thereunder or any
other entity of which a majority of the outstanding voting stock or voting power
is beneficially owned directly or indirectly by the Company.

 

ARTICLE 3
SHARES SUBJECT TO THE PLAN

 

3.1. Number of Shares.

 

(a) Subject to Article 11 and Section 3.1(b), the aggregate number of shares of
Stock which may be issued, transferred or reserved for issuance pursuant to
Awards under the Plan shall be five million (5,000,000) shares. In order that
the applicable regulations under the Code relating to Incentive Stock Options be
satisfied, the maximum number of shares of Stock that may be delivered upon
exercise of Incentive Stock Options shall be the number specified in this
Section 3.1(a). Shares of stock that may be issued upon exercise of Options
under the Plan shall be authorized and unissued shares of Common Stock, par
value $0.001 per share, of the Company (“Common Stock”). In the absence of an
effective registration statement under the Securities Act of 1933 (the “Act”),
all Options granted and shares of Common Stock subject to their exercise will be
restricted as to subsequent resale or transfer, pursuant to the provisions of
Rule 144 promulgated under the Act.

 

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(b) To the extent that an Award (other than an Option or an SAR) terminates,
expires, or lapses for any reason, any shares of Stock subject to the Award
shall again be available for the grant of an Award pursuant to the Plan.
Additionally, any shares of Stock tendered or withheld to satisfy the grant or
exercise price or tax withholding obligation pursuant to any Award shall again
be available for the grant of an Award pursuant to the Plan. To the extent
permitted by applicable law or any exchange rule, shares of Stock issued in
assumption of, or in substitution for, any outstanding awards of any entity
acquired in any form of combination by the Company or any Subsidiary shall not
be counted against shares of Stock available for grant pursuant to this Plan.

 

3.2.  Stock Distributed.   Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

 

3.3.  Limitation on Number of Shares Subject to Awards.   Notwithstanding any
provision in the Plan to the contrary, and subject to Article 11, the maximum
number of shares of Stock with respect to one or more Awards that may be granted
to any one Participant during a one-year period (measured from the date of any
grant) shall be 600,000.

 

ARTICLE 4
ELIGIBILITY AND PARTICIPATION

 

4.1.  Eligibility.   Each Eligible Individual shall be eligible to be granted
one or more Awards pursuant to the Plan.

 

4.2.  Participation.   Subject to the provisions of the Plan, the Committee may,
from time to time, select from among all Eligible Individuals, those to whom
Awards shall be granted and shall determine the nature and amount of each Award.
No Eligible Individual shall have any right to be granted an Award pursuant to
this Plan.

 

4.3.  Foreign Participants.   In order 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, the Plan as it may consider necessary or appropriate for such
purposes without thereby affecting the terms of the Plan as in effect for any
other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan.

 

ARTICLE 5
STOCK OPTIONS

 

5.1.  General.   The Committee is authorized to grant Options to Participants on
the following terms and conditions:

 

(a)  Exercise Price.   The exercise price per share of Stock subject to an
Option shall be not less than 100% of the Fair Market Value of a share of Stock
on the date of the grant.

 

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(b)  Time and Conditions of Exercise.   Each Option shall be fully exercisable
at any time within the period beginning not earlier than twelve (12) months
after the date of the option grant and ending not later than ten (10) years
after the date of such grant (the “Option Term”), unless the Committee specifies
otherwise. In no event, however, shall the Option Term extend beyond ten (10)
years after the date of the grant. No Option shall be exercisable after the
expiration of the Option Term. The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or
part of an Option may be exercised.

 

(c)  Payment   The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, including, without
limitation: (i) cash, (ii) shares of Stock having a Fair Market Value on the
date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof, or (iii) other property acceptable to the Committee
(including through the delivery of a notice that the Participant has placed a
market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; provided that payment of such
proceeds is then made to the Company upon settlement of such sale), and the
methods by which shares of Stock shall be delivered or deemed to be delivered to
Participants. The Committee may also in its discretion permit a Participant to
pay the exercise price by the “net exercise” of such Option. In such case, the
Company will not require a cash payment of the exercise price, but will reduce
the number of shares of Common Stock issued upon the exercise of such Option by
the largest number of whole shares of Common Stock that have a Fair Market Value
which does not exceed the aggregate exercise price, including tax withholding,
with respect to the portion of such Option that is being exercised. With respect
to any remaining balance of the aggregate Option price, the Company shall accept
a cash payment. Upon the “net exercise” of an Option (i) shares used to pay the
Option price, (ii) shares actually delivered to the Option holder as a result of
such exercise, and (iii) shares withheld for purposes of minimum statutory tax
withholding, will no longer be outstanding under such Option (and will therefore
no longer be exercisable by the holder). Notwithstanding any other provision of
the Plan to the contrary, no Participant who is a member of the Board or an
“executive officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to pay the exercise price of an Option by means
of a personal loan or other credit extended by the Company or in any other
method which would violate Section 13(k) of the Exchange Act.

 

(d)  Evidence of Grant.   All Options shall be evidenced by a written Award
Agreement between the Company and the Participant. The Award Agreement shall
include the number of shares of Common Stock subject to the Option, the exercise
date, the Option Term, and such additional provisions as may be specified by the
Committee.

 

5.2.  Incentive Stock Options.   The terms of any Incentive Stock Options
granted pursuant to the Plan must comply with the conditions and limitations
contained in Section 13.2 and this Section 5.2.

 

(a)  Eligibility.   The Committee may grant one or more Incentive Stock Options
to employees of the Company or any “subsidiary corporation” thereof (within the
meaning of Section 424(f) of the Code and the applicable regulations promulgated
thereunder). The date an Incentive Stock Option is granted shall mean the date
selected by the Committee as of which the Committee shall allot a specific
number of shares to a participant pursuant to the Plan.

 

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(b)  Individual Dollar Limitation.   The aggregate Fair Market Value (determined
as of the time the Option is granted) of all shares of Stock with respect to
which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. Multiple Incentive Stock
Options may be granted to an Optionee in any calendar year.

 

(c)  Ten Percent Owners.   The Committee may determine to grant an Incentive
Stock Option to an employee who is also an individual who owns, at the date of
grant, directly or indirectly according to the stock ownership attribution
rules of Section 424(d) of the Code, stock possessing more than ten percent
(10%) of the total combined voting power of all classes of Stock of the Company.
However, the exercise price of such Option granted shall not be less than one
hundred ten percent (110%) of Fair Market Value on the date of grant.
Furthermore, the Option may be exercisable for no more than five (5) years from
the date of grant.

 

(d)  Notice of Disposition.   The Participant shall give the Company prompt
notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (i) two (2) years from the date of grant of such
Incentive Stock Option or (ii) one (1) year after the transfer of such shares of
Stock to the Participant. In order to obtain the favorable tax treatment
available for Incentive Stock Options under Section 422 of the Code, the
Optionee is prohibited from the sale, exchange, transfer, pledge, hypothecation,
gift or other disposition of the shares of Common Stock underlying the Incentive
Stock Options until the later of either two (2) years after the date of grant of
the Incentive Stock Option, or one (1) year after the transfer to the Optionee
of such underlying Common Stock after the Optionee’s exercise of such Incentive
Stock Option. Should Optionee choose to make a premature disposition of such
underlying Common Stock contrary to such restrictions, the Options related to
such Common Stock shall be treated as Non-qualified Stock Options pursuant to
the terms of the Plan.

 

(e)  Right to Exercise.   During a Participant’s lifetime, an Incentive Stock
Option may be exercised only by the Participant.

 

5.3.  Substitution of Stock Appreciation Rights.   The Committee may provide in
the Award Agreement evidencing the grant of an Option that the Committee, in its
sole discretion, shall have the right to substitute a Stock Appreciation Right
for such Option at any time prior to or upon exercise of such Option, subject to
the provisions of Section 7.2 hereof; provided that such Stock Appreciation
Right shall be exercisable with respect to the same number of shares of Stock
for which such substituted Option would have been exercisable.

 

5.4.  Paperless Exercise.   In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
exercise of Options, such as a system using an internet website or interactive
voice response, then the paperless exercise of Options by a Participant may be
permitted through the use of such an automated system.

 

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5.5.  Granting of Options to Independent Directors.   The Board may from time to
time, in its sole discretion, and subject to the limitations of the Plan:

 

(a)  Select from among the Independent Directors (including Independent
Directors who have previously been granted Options under the Plan) such of them
as in its opinion should be granted Options;

 

(b)  Subject to Section 3.3, determine the number of shares of Stock that may be
purchased upon exercise of the Options granted to such selected Independent
Directors; and

 

(c)  Subject to the provisions of this Article 5, determine the terms and
conditions of such Options, consistent with the Plan.

 

Options granted to Independent Directors shall be Non-Qualified Stock Options.

 

ARTICLE 6
RESTRICTED STOCK AWARDS

 

6.1.  Grant of Restricted Stock.   The Committee is authorized to make Awards of
Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee. All
Awards of Restricted Stock shall be evidenced by a written Award Agreement.

 

6.2.  Issuance and Restrictions.   Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose. These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter. Any
restrictions will be designated in the form of Award Agreement between the
Company and the Participant.

 

6.3.  Forfeiture.   Except as otherwise determined by the Committee at the time
of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that
the Committee may (a) provide in any Award Agreement that restrictions or
forfeiture conditions relating to Restricted Stock will be waived in whole or in
part in the event of terminations resulting from specified causes, and (b) in
other cases waive in whole or in part restrictions or forfeiture conditions
relating to Restricted Stock.

 

6.4.  Certificates for Restricted Stock.   Restricted Stock granted pursuant to
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

 

9

 

 

ARTICLE 7
STOCK APPRECIATION RIGHTS

 

7.1.  Grant of Stock Appreciation Rights.   A Stock Appreciation Right may be
granted to any Participant selected by the Committee. A Stock Appreciation Right
may be granted (a) in connection and simultaneously with the grant of an Option,
(b) with respect to a previously granted Option, or (c) independent of an
Option. A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.

 

7.2.  No Coupled Stock Appreciation Rights. No Coupled Stock Appreciation Rights
shall be granted pursuant to this Plan.

 

7.3.  Independent Stock Appreciation Rights.

 

(a)  An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any
Option and shall have a term set by the Committee. An ISAR shall be exercisable
in such installments as the Committee may determine. An ISAR shall cover such
number of shares of Stock as the Committee may determine. The exercise price per
share of Stock subject to each ISAR shall be set by the Committee; provided,
however, that the exercise price for any ISAR shall not be less than 100% of the
Fair Market Value on the date of grant; and provided, further, that, the
Committee in its sole and absolute discretion may provide that the ISAR may be
exercised subsequent to a termination of employment or service, as applicable,
or following a Change in Control of the Company, or because of the Participant’s
retirement, death or disability, or otherwise.

 

(b)  An ISAR shall entitle the Participant (or other person entitled to exercise
the ISAR pursuant to the Plan) to exercise all or a specified portion of the
ISAR (to the extent then exercisable pursuant to its terms) and to receive from
the Company an amount determined by multiplying the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Stock on the date of exercise of the ISAR by the number of shares
of Stock with respect to which the ISAR shall have been exercised, subject to
any limitations the Committee may impose.

 

7.4.  Payment and Limitations on Exercise.

 

(a)  Subject to Section 7.4(b) and (c), payment of the amounts determined under
Section 7.3(b) above shall be in cash, in Stock (based on its Fair Market Value
as of the date the Stock Appreciation Right is exercised) or a combination of
both, as determined by the Committee.

 

(b)  To the extent payment for a Stock Appreciation Right is to be made in cash,
the Award Agreement shall, to the extent necessary to comply with the
requirements of Section 409A of the Code, specify the date of payment, which may
be different than the date of exercise of the Stock Appreciation Right. If the
date of payment for a Stock Appreciation Right is later than the date of
exercise, the Award Agreement may specify that the Participant be entitled to
earnings on such amount until paid.

 

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(c)  To the extent any payment under Section 7.3(b) is effected in Stock it
shall be made subject to satisfaction of any applicable provisions of Article 5
above pertaining to Options.

 

ARTICLE 8
OTHER TYPES OF AWARDS

 

8.1.  Performance Share Awards.   Any Participant selected by the Committee may
be granted one or more Performance Share awards which shall be denominated in a
number of shares of Stock and which may be linked to any one or more of the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular Participant.

 

8.2.  Stock Payments.   Any Participant selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

 

8.3.  Deferred Stock.   Any Participant selected by the Committee may be granted
an award of Deferred Stock in the manner determined from time to time by the
Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Stock underlying a Deferred Stock award will not be issued until the
Deferred Stock award has vested, pursuant to a vesting schedule or performance
criteria set by the Committee.

 

8.4.  Restricted Stock Units.   The Committee is authorized to make Awards of
Restricted Stock Units to any Participant selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.
At the time of grant, the Committee shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may
specify such conditions to vesting as it deems appropriate. At the time of
grant, the Committee shall specify the maturity date applicable to each grant of
Restricted Stock Units which shall be no earlier than the vesting date or dates
of the Award and may be determined at the election of the grantee. On the
maturity date, the Company shall, subject to Section 10.9, transfer to the
Participant one (1) share of Stock, subject to any applicable transfer
restrictions, for each Restricted Stock Unit scheduled to be paid out on such
date and not previously forfeited. The Committee shall specify the purchase
price, if any, to be paid by the grantee to the Company for such shares of
Stock.

 

8.5.  Other Stock-Based Awards.   Any Participant selected by the Committee may
be granted one or more Awards that provide Participants with shares of Stock or
the right to purchase shares of Stock or that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or that
are otherwise payable in shares of Stock and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular Participant.

 

11

 

 

8.6.  Term.   Except as otherwise provided herein, the term of any Award of
Performance Shares, Stock Payments, Deferred Stock, Restricted Stock Units or
Other Stock-Based Award shall be set by the Committee in its discretion and
designated in the form of Award Agreement between the Company and the
Participant.

 

8.7.  Exercise or Purchase Price.   The Committee may establish the exercise or
purchase price, if any, of any Award of Performance Shares, Deferred Stock,
Stock Payments, Restricted Stock Units or Other Stock-Based Award; provided,
however, that such price shall not be less than the par value of a share of
Stock on the date of grant, unless otherwise permitted by applicable state law.
The exercise or purchase price, if any, will be designated in the form of Award
Agreement between the Company and the Participant.

 

8.8.  Exercise Upon Termination of Employment or Service.   An Award of
Performance Shares, Deferred Stock, Stock Payments, Restricted Stock Units and
Other Stock-Based Award shall only be exercisable or payable while the
Participant is an Employee, a Consultant, or a member of the Board, as
applicable; provided, however, that the Committee in its sole and absolute
discretion may provide that an Award of Performance Shares, Stock Payments,
Deferred Stock, Restricted Stock Units or Other Stock-Based Award may be
exercised or paid subsequent to a termination of employment or service, as
applicable, or following a Change in Control of the Company, or because of the
Participant’s retirement, death or disability, or otherwise; provided, however,
that any such provision with respect to Performance Shares shall be subject to
the requirements of Section 162(m) of the Code that apply to Qualified
Performance-Based Compensation.

 

8.9.  Form of Payment.   Payments with respect to any Awards granted under this
Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee, and as specifically designated in the form of Award
Agreement between the Company and the Participant.

 

8.10.  Award Agreement.   All Awards under this Article 8 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by a written Award Agreement.

 

ARTICLE 9
PERFORMANCE-BASED AWARDS

 

9.1.  Purpose.   The purpose of this Article 9 is to provide the Committee the
ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the
Committee, in its discretion, decides to grant a Performance-Based Award to a
Covered Employee, the provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are based
on Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.

 

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9.2.  Applicability.   This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one (1) Covered Employee as a Participant shall not require designation of
any other Covered Employees as a Participant in such period or in any other
period.

 

9.3.  Procedures with Respect to Performance-Based Awards.   To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (a) designate one or more Covered
Employees, (b) select the Performance Criteria applicable to the Performance
Period, (c) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (d) specify the
relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.

 

9.4.  Payment of Performance-Based Awards.   Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the day a Performance-Based Award for such Performance Period is
paid to the Participant. Furthermore, a Participant shall be eligible to receive
payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved.

 

9.5.  Additional Limitations.   Notwithstanding any other provision of the Plan,
any Award which is granted to a Covered Employee and is intended to constitute
Qualified Performance-Based Compensation shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any amendment to
Section 162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as qualified performance-based compensation
as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
amended to the extent necessary to conform to such requirements.

 

13

 

 

ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS

 

10.1.  Stand-Alone and Tandem Awards.   Awards granted pursuant to the Plan may,
in the discretion of the Committee, be granted either alone, in addition to, or
in tandem with, any other Award granted pursuant to the Plan. Awards granted in
addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.

 

10.2.  Award Agreement.   Awards under the Plan shall be evidenced by written
Award Agreements that shall set forth the terms, conditions, limitations and
award type for each Award which may include the term of an Award, the provisions
applicable in the event the Participant’s employment or service terminates, and
the Company’s authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award. Each Award Agreement shall specify whether payments
with respect to such Award may be made in cash, solely in Stock, or a
combination of both, as determined by the Committee, and such statement of means
of payment shall govern any question relating to whether such payments may be
made in cash or Stock.

 

10.3.  Limits on Transfer.   Except as otherwise provided by the Committee, no
right or interest of a Participant in any Award may be pledged, encumbered, or
hypothecated to or in favor of any party other than the Company or a Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Subsidiary. Except as otherwise
provided by the Committee, during the life of the recipient, such award shall be
exercisable only by such person or by such person’s guardian or legal
representative.

 

10.4.  Death of Optionee.

 

(a)  Options.   Notwithstanding Section 10.3, upon the death of the Optionee
while either in the Company’s employ or within six (6) months after termination
of Optionee’s employment, any rights to the extent exercisable on the date of
death may be exercised by the Optionee’s estate, or by a person who acquires the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee, provided that such exercise occurs within both the
remaining effective term of the Option and one (1) year after the Optionee’s
death. A beneficiary, legal guardian, legal representative, or other person
claiming any rights pursuant to the Plan is subject to all terms and conditions
of the Plan and any Award Agreement applicable to the Participant, except to the
extent the Plan and Award Agreement otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Committee. If no beneficiary
has been designated or survives the Participant, payment shall be made to the
person entitled thereto pursuant to the Participant’s will or the laws of
descent and distribution. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Committee.

 

(b)  Incentive Stock Options.   Upon the death of the Optionee while in the
Company’s employ or within not more than ninety (90) days after termination of
Optionee’s employment, any Incentive Stock Option exercisable on the date of
death may be exercised by the Optionee’s estate or by a person who acquires the
right to exercise such Incentive Stock Option by bequest or inheritance or by
reason of the death of the Optionee, provided that such exercise occurs within
both the remaining Option Term of the Incentive Stock Option and one (1) year
after the Optionee’s death.

 

14

 

 

10.5.  Retirement or Disability.

 

(a)  Options.   Upon termination of the Optionee’s employment by reason of
retirement or permanent disability, the Optionee may, within thirty-six (36)
months from the date of termination, exercise any Options to the extent such
Options are exercisable during such 36-month period.

 

(b)  Incentive Stock Options.   Upon termination of the Optionee’s employment by
reason of retirement or permanent disability, the Optionee may, within
thirty-six (36) months from the date of termination, exercise any Incentive
Stock Options to the extent such Incentive Stock Options are exercisable during
such 36-month period. However, the tax treatment available pursuant to
Section 422 of the Code will not be available to an Optionee who exercises any
Incentive Stock Option more than (i) twelve (12) months after the date of
termination of employment due to permanent disability, or (ii) three (3) months
after the date of termination of employment due to retirement.

 

10.6.  Forfeiture for Other Reasons.   Except as provided herein or except as
otherwise determined by the Committee, all Options shall forfeit ninety (90)
days after the termination of the Optionee’s employment with the Company.

 

10.7.  Leaves of Absence and Performance Targets.   The Committee shall be
entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by the
recipient of any award. Without limiting the generality of the foregoing, the
Committee shall be entitled to determine (i) whether or not any such leave of
absence shall constitute a termination of employment within the meaning of the
Plan and (ii) the impact, if any, of such leave of absence on awards under the
Plan theretofore made to any recipient who takes such leave of absence. The
Committee shall also be entitled to make such determination of performance
targets, if any, as it deems appropriate.

 

10.8.  Newly Eligible Employees.   The Committee shall be entitled to make such
rules, regulations, determinations and awards as it deems appropriate in respect
of any employee who becomes eligible to participate in the Plan or any portion
thereof, after the commencement of an award or incentive period.

 

10.9.  Stock Certificates; Book Entry Procedures.   As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a
certificate(s) for such shares of Stock. Upon receipt of such certificate(s),
the Optionee shall become a shareholder of the Company with respect to Stock
represented by share certificates so issued and as such shall be fully entitled
to receive dividends, to vote and to exercise all other rights of a shareholder.
All Stock certificates delivered pursuant to the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal, state, or foreign jurisdiction, securities or
other laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock. In addition to the terms and conditions
provided herein, the Board may require that a Participant make such reasonable
covenants, agreements, and representations as the Board, in its discretion,
deems advisable in order to comply with any such laws, regulations, or
requirements. The Committee shall have the right to require any Participant 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 Committee. Notwithstanding any other provision of the
Plan, unless otherwise determined by the Committee or required by any applicable
law, rule or regulation, the Company shall not deliver to any Participant
certificates evidencing shares of Stock issued in connection with any Award and
instead such shares of Stock shall be recorded in the books of the Company (or,
as applicable, its transfer agent or stock plan administrator).

 

15

 

 

10.10.  Minimum Vesting. Notwithstanding anything to the contrary set forth
herein, at the time of grant, no Award will be granted that vests (or, if
applicable, is exercisable) until at least twelve (12) months following the date
of grant of the Award; provided, however, that up to five percent (5%) of the
shares of Stock authorized for issuance under this Plan may be subject to Awards
that do not meet the foregoing vesting (and, if applicable, exercisability)
requirements.

 

10.11.  Prohibition on Buyout of Options and SARs. Notwithstanding anything to
the contrary set forth herein, the Company shall not be permitted at any time to
buy from a Participant an Option or SAR previously granted with payment in cash,
shares of Stock or other consideration.

 

ARTICLE 11
CHANGES IN CAPITAL STRUCTURE

 

11.1.  Adjustments.

 

(a)  In the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation, spin-off, recapitalization, distribution of
Company assets to stockholders (other than normal cash dividends), or any other
corporate event affecting the Stock or the share price of the Stock, the
Committee may make such proportionate adjustments, if any, as the Committee in
its discretion may deem appropriate to reflect such changes with respect to
(i) the aggregate number and type of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Sections 3.1
and 3.3); (ii) the terms and conditions of any outstanding Awards (including,
without limitation, any applicable performance targets or criteria with respect
thereto); and (iii) the grant or exercise price per share for any outstanding
Awards under the Plan. Any adjustment affecting an Award intended as Qualified
Performance-Based Compensation shall be made consistent with the requirements of
Section 162(m) of the Code.

 

16

 

 

(b)  In the event of any transaction or event described in Section 11.1(a) or
any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate (including without limitation any Change in Control), or of changes in
applicable laws, regulations or accounting principles, and whenever the
Committee determines that action is appropriate in order to prevent the dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles, the Committee, in its sole discretion and on
such terms and conditions as it deems appropriate, either by amendment of the
terms of any outstanding Awards or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Participant’s
request, is hereby authorized to take any one or more of the following actions:

 

(i)   To provide for either (A) termination of any such Award in exchange for an
amount of cash and/or other property, if any, equal to the amount that would
have been attained upon the exercise of such Award or realization of the
Participant’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 11.1(b) the
Committee determines in good faith that no amount would have been attained upon
the exercise of such Award or realization of the Participant’s rights, then such
Award may be terminated by the Company without payment) or (B) the replacement
of such Award with other rights or property selected by the Committee in its
sole discretion;

 

(ii)  To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; and

 

(iii)   To make adjustments in the number and type of shares of Stock (or other
securities or property) subject to outstanding Awards, and in the number and
kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included
in, outstanding options, rights and awards and options, rights and awards which
may be granted in the future;

 

(iv)   To provide that such Award shall be exercisable or payable or fully
vested with respect to all shares covered thereby, notwithstanding anything to
the contrary in the Plan or the applicable Award Agreement; and

 

(v)  To provide that the Award cannot vest, be exercised or become payable after
such event.

 

11.2.  Outstanding Awards—Other Changes.   In the event of any other change in
the capitalization of the Company or corporate change other than those
specifically referred to in this Article 11, the Committee may, in its absolute
discretion, make such adjustments in the number and kind of shares or other
securities subject to Awards outstanding on the date on which such change occurs
and in the per share grant or exercise price of each Award as the Committee may
consider appropriate to prevent dilution or enlargement of rights.

 

11.3.  No Other Rights.   Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.

 

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ARTICLE 12
ADMINISTRATION

 

12.1.  Committee.   The Board of Directors may delegate the administration of
the Plan to a Compensation Committee (the "Committee") in the event that such a
committee is established by the Board of Directors and is comprised of persons
appointed by the Board of Directors of the Company in accordance with the
provisions of Section 12.2; provided , however, that the Board shall delegate
administration of the Plan to a Committee as necessary to comply with the
requirements of Section 162(m) of the Code, Rule 16b-3 promulgated under the
Exchange Act or to the extent required by any other applicable rule or
regulation. The Board shall exercise full power and authority regarding the
administration of the Plan until such administration is delegated to the
Committee. Unless the context otherwise requires, references herein to the
Committee shall be deemed to refer to the Board of Directors until the
administration of the Plan has been delegated to the Committee.

 

12.2.  Committee Membership. The Committee shall be composed of one or more
members of the Board. The Board shall have the power to determine the number of
members which the Committee shall have and to change the number of membership
positions on the Committee from time to time. The Board shall appoint all
members of the Committee. The Board may from time to time appoint members to the
Committee in substitution for, or in addition to, members previously appointed
and may fill vacancies, however caused, on the Committee. Any member of the
Committee may be removed from the Committee by the Board at any time with or
without cause.

 

12.3.  Certain Actions.  Notwithstanding the foregoing: (a) the full Board,
acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to all Awards granted to Independent
Directors and, for purposes of such Awards, the term Committee as used in this
Plan shall be deemed to refer to the Board and (b) the Committee may delegate
its authority hereunder to the extent permitted by Section 12.8.

 

12.4.  Action by the Committee.   A majority of the Committee shall constitute a
quorum. The acts of a majority of the members present at any meeting at which a
quorum is present, and acts approved in writing by a majority of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company’s independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.

 

12.5.  Authority of Committee.   Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:

 

(a)  Designate Participants to receive Awards;

 

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(b)  Determine the type or types of Awards to be granted to each Participant;

 

(c)  Determine the number of Awards to be granted and the number of shares of
Stock to which an Award will relate;

 

(d)  Determine the terms and conditions of any Award granted pursuant to the
Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the exercisability of an
Award, and accelerations or waivers thereof, any provisions related to
non-competition and recapture of gain on an Award, based in each case on such
considerations as the Committee in its sole discretion determines;

 

(e)  Determine whether, to what extent, and pursuant to what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in, cash,
Stock, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;

 

(f)  Prescribe the form of each Award Agreement, which need not be identical for
each Participant;

 

(g)  Decide all other matters that must be determined in connection with an
Award;

 

(h)  Establish, adopt, or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan;

 

(i)   Interpret the terms of, and any matter arising pursuant to, the Plan or
any Award Agreement; and

 

(j)   Make all other decisions and determinations that may be required pursuant
to the Plan or as the Committee deems necessary or advisable to administer the
Plan.

 

The Committee may delegate to one or more of its members or to one or more
agents such administrative duties as it may deem advisable.

 

12.6.  Decisions Binding.   The Committee’s interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

 

12.7.  Delegation of Authority.   To the extent permitted by applicable law, the
Committee may from time to time delegate to a committee of one or more members
of the Committee or the Board or one or more officers of the Company the
authority to grant or amend Awards to Participants other than (a) senior
executives of the Company who are subject to Section 16 of the Exchange Act,
(b) Covered Employees, or (c) officers of the Company (or members of the Board)
to whom authority to grant or amend Awards has been delegated hereunder. Any
delegation hereunder shall be subject to the restrictions and limits that the
Committee specifies at the time of such delegation, and the Committee may at any
time rescind the authority so delegated or appoint a new delegatee. At all
times, the delegatee appointed under this Section 112.5 shall serve in such
capacity at the pleasure of the Committee.

 

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12.8.  Committee Administration.   One (1) member of the Committee shall be
elected by the Board as chairman. The Committee shall hold its meetings at such
times and places as it shall deem advisable. The Committee may appoint a
secretary and make such rules and regulations for the conduct of its business as
it shall deem advisable, and shall keep minutes of its meetings.

 

12.9.  Liability.   No member of the Board or Committee shall be liable for any
action taken or decision or determination made in good faith with respect to any
Option, the Plan, or any award thereunder.

 

ARTICLE 13
EFFECTIVE AND EXPIRATION DATE

 

13.1.  Effective Date.   The Plan is effective as of the date the Plan is
approved by the Committee (the “Effective Date”). The Plan, however, shall be
subject to approval by the stockholders. The Plan will be deemed to be approved
by the stockholders if it receives the affirmative vote of the holders of a
majority of the shares of stock of the Company present or represented and
entitled to vote at a meeting duly held in accordance with the applicable
provisions of the Company’s Bylaws, but, in any event, held no later than twelve
(12) months after adoption on the Effective Date.

 

13.2.  Expiration Date.   The Plan will expire on, and no Incentive Stock Option
or other Award may be granted pursuant to the Plan after, the tenth (10th)
anniversary of the of the Original 2013 Plan Effective Date. Any Awards that are
outstanding on the tenth (10th) anniversary of the Original 2013 Plan Effective
Date shall remain in force according to the terms of the Plan and the applicable
Award Agreement.

 

ARTICLE 14
AMENDMENT, MODIFICATION, AND TERMINATION

 

14.1.  Amendment, Modification, and Termination.   The Committee may at any time
and from time to time terminate or modify or amend the Plan in any respect,
except that (a) to the extent necessary and desirable to comply with any
applicable law, regulation, or stock exchange rule, the Company shall obtain
shareholder approval of any Plan amendment or any modification of any Options
that would be deemed a re-pricing under applicable rules, in such a manner and
to such a degree as required, and (b) without shareholder approval the Committee
may not (i) increase the maximum number of shares of Stock which may be issued
under the Plan, (ii) extend the period during which any Award may be granted or
exercised, (iii) amend to the Plan to permit the Committee to grant Options with
an exercise price that is below Fair Market Value on the date of grant, or
(iv) extend the term of the Plan. The termination or any modification or
amendment of the Plan, except as provided in subsection (a), shall not without
the consent of a Participant, affect his or her other rights under an Award
previously granted to him or her.

 

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14.2.  Awards Previously Granted.   No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent of the
Participant.

 

ARTICLE 15
COMPLIANCE WITH SECTION 409A OF THE CODE

 

15.1.  Awards subject to Code Section 409A.   Any Award that constitutes, or
provides for, a deferral of compensation subject to Section 409A of the Code (a
“Section 409A Award”) shall satisfy the requirements of Section 409A of the Code
and this Article 15, to the extent applicable. The Award Agreement with respect
to a Section 409A Award shall incorporate the terms and conditions required by
Section 409A of the Code and this Article 15.

 

15.2.  Distributions under a Section 409A Award.

 

(a)  Subject to subsection (b), any shares of Stock or other property or amounts
to be paid or distributed upon the grant, issuance, vesting, exercise or payment
of a Section 409A Award shall be distributed in accordance with the requirements
of Section 409A(a)(2) of the Code, and shall not be distributed earlier than:

 

(i)   the Participant’s separation from service, as determined by the Secretary
of the Treasury;

 

(ii)  the date the Participant becomes disabled;

 

(iii)   the Participant’s death;

 

(iv)   a specified time (or pursuant to a fixed schedule) specified under the
Award Agreement at the date of the deferral compensation;

 

(v)  to the extent provided by the Secretary of the Treasury, a change in the
ownership or effective control of the Company or a Parent or Subsidiary, or in
the ownership of a substantial portion of the assets of the Company or a Parent
or Subsidiary; or

 

(vi)   the occurrence of an unforeseeable emergency with respect to the
Participant.

 

(b)  In the case of a Participant who is a “specified employee,” the requirement
of paragraph (a)(i) shall be met only if the distributions with respect to the
Section 409A Award may not be made before the date which is six months after the
Participant’s separation from service (or, if earlier, the date of the
Participant’s death). For purposes of this subsection (b), a Participant shall
be a “specified employee” if such Participant is a key employee (as defined in
Section 416(i) of the Code without regard to paragraph (5) thereof) of a
corporation any stock of which is publicly traded on an established securities
market or otherwise, as determined under Section 409A(a)(2)(B)(i) of the Code
and the Treasury Regulations thereunder.

 

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(c)  The requirement of paragraph (a)(vi) shall be met only if, as determined
under Treasury Regulations under Section 409A(a)(2)(B)(ii) of the Code, the
amounts distributed with respect to the unforeseeable emergency do not exceed
the amounts necessary to satisfy such unforeseeable emergency plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution,
after taking into account the extent to which such unforeseeable emergency is or
may be relieved through reimbursement or compensation by insurance or otherwise
or by liquidation of the Participant’s assets (to the extent the liquidation of
such assets would not itself cause severe financial hardship).

 

(d)  For purposes of this Section, the terms specified therein shall have the
respective meanings ascribed thereto under Section 409A of the Code and the
Treasury Regulations thereunder.

 

15.3.  Prohibition on Acceleration of Benefits.   The time or schedule of any
distribution or payment of any shares of Stock or other property or amounts
under a Section 409A Award shall not be accelerated, except as otherwise
permitted under Section 409A(a)(3) of the Code and the Treasury Regulations
thereunder.

 

15.4.  Elections under Section 409A Awards.

 

(a)  Any deferral election provided under or with respect to an Award to any
Eligible Individual, or to the Participant holding a Section 409A Award, shall
satisfy the requirements of Section 409A(a)(4)(B) of the Code, to the extent
applicable, and, except as otherwise permitted under paragraph (i) or
(ii) below, any such deferral election with respect to compensation for services
performed during a taxable year shall be made not later than the close of the
preceding taxable year, or at such other time as provided in Treasury
Regulations.

 

(i)   In the case of the first year in which an Eligible Individual or a
Participant holding a Section 409A Award, becomes eligible to participate in the
Plan, any such deferral election may be made with respect to services to be
performed subsequent to the election with thirty days after the date the
Eligible Individual, or the Participant holding a Section 409A Award, becomes
eligible to participate in the Plan, as provided under
Section 409A(a)(4)(B)(ii) of the Code.

 

(ii)  In the case of any performance-based compensation based on services
performed by an Eligible Individual, or the Participant holding a Section 409A
Award, over a period of at least twelve months, any such deferral election may
be made no later than six months before the end of the period, as provided under
Section 409A(a)(4)(B)(iii) of the Code.

 

(b)  In the event that a Section 409A Award permits, under a subsequent election
by the Participant holding such Section 409A Award, a delay in a distribution or
payment of any shares of Stock or other property or amounts under such
Section 409A Award, or a change in the form of distribution or payment, such
subsequent election shall satisfy the requirements of Section 409A(a)(4)(C) of
the Code, and:

 

(i)   such subsequent election may not take effect until at least twelve months
after the date on which the election is made,

 

(ii)  in the case such subsequent election relates to a distribution or payment
not described in Section 10.2(a)(ii), (iii) or (vi), the first payment with
respect to such election may be deferred for a period of not less than five
years from the date such distribution or payment otherwise would have been made,
and

 

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(iii)   in the case such subsequent election relates to a distribution or
payment described in Section 10.2(a)(iv), such election may not be made less
than twelve months prior to the date of the first scheduled distribution or
payment under Section 10.2(a)(iv).

 

15.5.  Compliance in Form and Operation.  A Section 409A Award, and any election
under or with respect to such Section 409A Award, shall comply in form and
operation with the requirements of Section 409A of the Code and the Treasury
Regulations thereunder.

 

ARTICLE 16
GENERAL PROVISIONS

 

16.1.  No Rights to Awards.   No Eligible Individual or other person shall have
any claim to be granted any Award pursuant to the Plan, and neither the Company
nor the Committee is obligated to treat Eligible Individuals, Participants or
any other persons uniformly.

 

16.2.  Privileges of Stock Ownership; Voting and Dividends.   Except to the
extent that the Committee grants an Award that entitles the Participant to
credit for dividends paid on shares of Stock subject to such Award prior to the
vesting of such Award and issuance of the subject shares to the Participant (as
reflected in the Award Agreement), no Participant will have any of the rights of
a stockholder with respect to any such shares until such Award vests (or
applicable restrictions or forfeiture conditions lapse) and the subject shares
are issued to the Participant. For the avoidance of doubt, in the event the
Committee grants an Award that entitles a Participant to credit for dividends on
shares of Stock subject to such Award prior to the date such Award vests (or
applicable restrictions or forfeiture conditions lapse) and the subject shares
are issued, dividends shall not be paid to a Participant until such Award vests
(or applicable restrictions or forfeiture conditions lapse) and the subject
shares are issued with respect to such Award. Upon satisfaction of the foregoing
conditions, the Participant will be a stockholder and have all the rights of a
stockholder with respect to such shares, including the right to vote and receive
all dividends or other distributions made or paid with respect to such shares;
provided, that if such shares are restricted stock, then any new, additional or
different securities the Participant may become entitled to receive with respect
to such shares by virtue of a stock dividend, stock split or any other change in
the corporate or capital structure of the Company will be subject to the same
restrictions as the restricted stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to shares of Stock that are repurchased at the Participant’s original
purchase price or otherwise forfeited to the Company.

 

16.3.  Withholding.   The Company or any Subsidiary shall have the authority and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy minimum federal, state, local and
foreign taxes (including the Participant’s FICA obligation) required by law to
be withheld with respect to any taxable event concerning a Participant arising
as a result of this Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have
the Company withhold shares of Stock otherwise issuable under an Award (or allow
the return of shares of Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the
Participant of such Award within six (6) months (or such other period as may be
determined by the Committee) after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the Participant’s minimum
federal, state, local and foreign income and payroll tax liabilities with
respect to the issuance, vesting, exercise or payment of the Award shall be
limited to the number of shares which have a Fair Market Value on the date of
withholding or repurchase equal to the aggregate amount of such minimum
liabilities based on the statutory withholding rates for federal, state, local
and foreign income tax and payroll tax purposes that are applicable to such
supplemental taxable income.

 

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16.4.  No Right to Employment or Services.   Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant’s employment or services at any
time, nor confer upon any Participant any right to continue in the employ or
service of the Company or any Subsidiary.

 

16.5.  Unfunded Status of Awards.   The Plan is intended to be an “unfunded”
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.

 

16.6.  Indemnification.   To the extent allowable pursuant to applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by him
or her in satisfaction of judgment in such action, suit, or proceeding against
him or her; provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company’s Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

 

16.7.  Relationship to other Benefits.   No payment pursuant to the Plan shall
be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.

 

16.8.  Expenses.   The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries.

 

16.9.  Titles and Headings.   The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

 

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16.10.  Fractional Shares.   No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.

 

16.11.  Limitations Applicable to Section 16 Persons.   Notwithstanding any
other provision of the Plan, the Plan and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act shall be
subject to any additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3
of the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

 

16.12.  Government and Other Regulations.   The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register pursuant
to the Securities Act of 1933, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.

 

16.13.  Governing Law.   The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.

 

*  *  *  *  *

 

I hereby certify that the foregoing Plan was duly adopted by the Compensation
Committee of the Board of Directors of ZAGG Inc on April 20, 2017.

 

  /s/ Daniel Maurer   Daniel Maurer, Chair   Compensation Committee

 

*  *  *  *  *

 

I hereby certify that the foregoing Plan was approved by the stockholders of
ZAGG Inc on June 22, 2017.

 

  /s/ Cheryl A. Larabee   Cheryl A. Larabee, Chair   ZAGG Inc Board of Directors

 

 

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