Exhibit 10.1

 

BIRNER DENTAL MANAGEMENT SERVICES, INC.

2015 EQUITY INCENTIVE PLAN

As Amended as of June 20, 2018

 

1.       Purpose. The purpose of the Birner Dental Management Services, Inc.
2015 Equity Incentive Plan (the “Plan”) is to attract and retain the best
available personnel for positions of responsibility with the Company, to provide
additional incentives to them and align their interests with those of the
Company’s shareholders, and to thereby promote the Company’s long-term business
success.

 

2.       Definitions. In this Plan, the following definitions will apply.

 

(a)       “Affiliate” means any entity that is a Subsidiary or Parent of the
Company.

 

(b)       "Affiliated Corporation" means any corporation or other entity that is
affiliated with the Birner Dental Management Services, Inc. through stock
ownership or otherwise and is designated as an "Affiliated Corporation" by the
Board, provided, however, that for purposes of Incentive Options granted
pursuant to the Plan, an "Affiliated Corporation" means any parent or subsidiary
of Birner Dental Management Services, Inc. as defined in Code Section 424.

 

(c)       “Agreement” means the written or electronic agreement or notice
containing the terms and conditions applicable to each Award granted under the
Plan. An Agreement is subject to the terms and conditions of the Plan.

 

(d)       “Award” means a grant made under the Plan in the form of Options,
Stock Appreciation Rights, Restricted Stock, Stock Units or an Other Stock-Based
Award.

 

(e)       “Board” means the Board of Directors of the Company.

 

(f)       “Cause” means what the term is expressly defined to mean in a
then-effective written agreement (including an Agreement) between a Participant
and the Company or any Affiliate, or in the absence of any such then-effective
agreement or definition, means termination of employment as a result of a
violation of any Company policy, procedure or guideline, or engaging in any of
the following forms of misconduct: conviction of any felony or of any
misdemeanor involving dishonesty or moral turpitude; theft or misuse of the
Company's property or time; use of alcohol or controlled substances on the
Company's premises or appearing on such premises while intoxicated or under the
influence of drugs not prescribed by a physician, or after having abused
prescribed medications; illegal use of any controlled substance; illegal
gambling on the Company's premises; discriminatory or harassing behavior,
whether or not illegal under federal, state or local law; willful misconduct;
material breach of the Company's business conduct or ethics code or of any
fiduciary duty or nondisclosure, non-solicitation, non-competition or similar
obligation owed to the Company or any Affiliate or falsifying any document or
making any false or misleading statement relating to employment by the Company;
or injures the economic or ethical welfare of the Company by misconduct or
inattention to duties and responsibilities, or fails to meet the Company's
performance expectations, as determined by the Company

in its sole discretion (other than by reason of Disability).

 

(g)       “Change in Control” means, unless otherwise provided in an Agreement,
one of the following:

 

 

 

 

(1)       An Exchange Act Person becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding Voting Securities, except that the following will not constitute a
Change in Control:

 

(A)       any acquisition of securities of the Company by an Exchange Act Person
directly or indirectly from the Company for the purpose of providing financing
to the Company;

 

(B)       any formation of a Group consisting solely of beneficial owners of the
Company's Voting Securities as of the effective date of this Plan; or

 

(C)       any repurchase or other acquisition by the Company of its Voting
Securities that causes any Exchange Act Person to become the beneficial owner of
30% or more of the Company’s Voting Securities.

 

If, however, an Exchange Act Person or Group referenced in clause (A), (B) or
(C) above acquires beneficial ownership of additional Company Voting Securities
after initially becoming the beneficial owner of 30% or more of the combined
voting power of the Company’s Voting Securities by one of the means described in
those clauses, then a Change in Control will be deemed to have occurred.

 

(2)       Individuals who are Continuing Directors cease for any reason to
constitute a majority of the members of the Board.

 

(3)       A Corporate Transaction is consummated, unless, immediately following
such Corporate Transaction, (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Company's Voting Securities
immediately prior to such Corporate Transaction beneficially own, directly or
indirectly, more than two-thirds of the combined voting power of the then
outstanding Voting Securities of the surviving or acquiring entity resulting
from such Corporate Transaction (including beneficial ownership through the
ultimate Parent of such entity) in substantially the same proportions as their
ownership, immediately prior to such Corporate Transaction, of the Company's
Voting Securities; (ii) no Exchange Act Person beneficially owns, directly or
indirectly, 30% or more of the Voting Securities of the entity resulting from
such Corporate Transaction; and (iii) at least a majority of the members of the
board of directors (or comparable governors) of the entity resulting from such
Corporate Transaction were Continuing Directors at the time of the initial
agreement, or the action of the Board, providing for such Corporate Transaction.

 

Notwithstanding the foregoing, to the extent that any Award constitutes a
deferral of compensation subject to Code Section 409A, and if that Award
provides for a change in the time or form of payment upon a Change in Control,
then no Change in Control shall be deemed to have occurred upon an event
described in this Section 2(g) unless the event would also constitute a change
in ownership or effective control of, or a change in the ownership of a
substantial portion of the assets of, the Company under Code Section 409A.

 

(h)       “Code” means the Internal Revenue Code of 1986, as amended and in
effect from time to time. For purposes of the Plan, references to sections of
the Code shall be deemed to include any applicable regulations thereunder and
any successor or similar statutory provisions.

 

(i)       “Committee” means two or more Non-Employee Directors designated by the
Board to administer the Plan under Section 3, each member of which shall be (i)
an independent director within the meaning of the rules and regulations of the
Nasdaq Stock Market, (ii) a non-employee director within the meaning of Exchange
Act Rule 16b-3, and (iii) an outside director for purposes of Code Section
162(m).

 

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(j)       “Company” means Birner Dental Management Services, Inc., a Colorado
corporation, or any successor thereto, and the Affiliated Corporations, and also
includes dental centers managed by Birner Dental Management Services, Inc. or
its Affiliated Corporations pursuant to one or more management agreements.

 

(k)       “Continuing Director” means an individual (i) who is, as of the
effective date of the Plan, a director of the Company, or (ii) who becomes a
director of the Company after the effective date hereof and whose initial
election, or nomination for election by the Company’s shareholders, was approved
by at least a majority of the then Continuing Directors, but excluding, for
purposes of this clause (ii), an individual whose initial assumption of office
occurs as a result of an actual or threatened proxy contest relating to the
election of directors.

 

(l)       “Corporate Transaction” means (i) a sale or other disposition of all
or substantially all of the assets of the Company, or (ii) a merger,
consolidation, share exchange or similar transaction involving the Company,
regardless of whether the Company is the surviving corporation.

 

(m)       “Disability” means (A) any permanent and total disability under any
long-term disability plan or policy of the Company or its Affiliates that covers
the Participant, or (B) if there is no such long-term disability plan or policy,
“total and permanent disability” within the meaning of Code Section 22(e)(3).

 

(n)       “Employee” means an employee of the Company or an Affiliate.

 

(o)       “Exchange Act” means the Securities Exchange Act of 1934, as amended
and in effect from time to time.

 

(p)       “Exchange Act Person” means any natural person, entity or Group other
than (i) the Company or any Affiliate; (ii) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Affiliate; (iii) an
underwriter temporarily holding securities in connection with a registered
public offering of such securities; or (iv) an entity whose Voting Securities
are beneficially owned by the beneficial owners of the Company’s Voting
Securities in substantially the same proportions as their beneficial ownership
of the Company’s Voting Securities.

 

(q)       “Fair Market Value” of a Share means the fair market value of a Share
determined as follows:

 

(1)       If the Shares are readily tradable on an established securities market
(as determined under Code Section 409A), then Fair Market Value will be the
closing sales price for a Share on the principal securities market on which it
trades on the date for which it is being determined, or if no sale of Shares
occurred on that date, on the next preceding date on which a sale of Shares
occurred, as reported in The Wall Street Journal or such other source as the
Committee deems reliable; or

 

(2)       If the Shares are not then readily tradable on an established
securities market (as determined under Code Section 409A), then Fair Market
Value will be determined by the Committee as the result of a reasonable
application of a reasonable valuation method that satisfies the requirements of
Code Section 409A.

 

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(r)       “Full Value Award” means an Award other than an Option Award or Stock
Appreciation Right Award.

 

(s)       “Grant Date” means the date on which the Committee approves the grant
of an Award under the Plan, or such later date as may be specified by the
Committee on the date the Committee approves the Award.

 

(t)       “Group” means two or more persons who act, or agree to act together,
as a partnership, limited partnership, syndicate or other group for the purpose
of acquiring, holding, voting or disposing of securities of the Company.

 

(u)       “Non-Employee Director” means a member of the Board who is not an
Employee.

 

(v)       “Option” means a right granted under the Plan to purchase a specified
number of Shares at a specified price. An “Incentive Stock Option” or “ISO”
means any Option designated as such and granted in accordance with the
requirements of Code Section 422. A “Non-Statutory Stock Option” means an Option
other than an Incentive Stock Option.

 

(w)       “Other Stock-Based Award” means an Award described in Section 11 of
this Plan.

 

(x)       “Parent” means a “parent corporation,” as defined in Code Section
424(e).

 

(y)       “Participant” means a person to whom a then-outstanding Award has been
granted under the Plan.

 

(z)       “Performance-Based Compensation” means an Award to a person who is, or
is determined by the Committee to likely become, a “covered employee” (as
defined in Section 162(m)(3) of the Code) and that is intended to constitute
“performance-based compensation” within the meaning of Section 162(m)(4)(C) of
the Code.

 

(aa) “Plan” means this Birner Dental Management Services, Inc. 2015 Equity
Incentive Plan, as amended and in effect from time to time.

 

(bb)       “Restricted Stock” means Shares issued to a Participant that are
subject to such restrictions on transfer, vesting conditions and other
restrictions or limitations as may be set forth in this Plan and the applicable
Agreement.

 

(cc) “Service” means the provision of services by a Participant to the Company
or any Affiliate in any Service Provider capacity. A Service Provider’s Service
shall be deemed to have terminated either upon an actual cessation of providing
services to the Company or any Affiliate or upon the entity to which the Service
Provider provides services ceasing to be an Affiliate. Except as otherwise
provided in this Plan or any Agreement, Service shall not be deemed terminated
in the case of (i) any approved leave of absence; (ii) transfers among the
Company and any Affiliates in any Service Provider capacity; or (iii) any change
in status so long as the individual remains in the service of the Company or any
Affiliate in any Service Provider capacity.

 

(dd) “Service Provider” means an Employee, a Non-Employee Director, or any
consultant or advisor who is a natural person and who provides services (other
than in connection with (i) a capital-raising transaction or (ii) promoting or
maintaining a market in Company securities) to the Company or any Affiliate.

 

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(ee) “Share” means a share of Stock.

 

(ff) “Stock” means the common stock, no par value, of the Company.

 

(gg) “Stock Appreciation Right” or “SAR” means the right to receive, in cash
and/or Shares as determined by the Committee, an amount equal to the
appreciation in value of a specified number of Shares between the Grant Date of
the SAR and its exercise date.

 

(hh) “Stock Unit” means a right to receive, in cash and/or Shares as determined
by the Committee, the Fair Market Value of one or more Shares, subject to such
restrictions on transfer, vesting conditions and other restrictions or
limitations as may be set forth in this Plan and the applicable Agreement.

 

(ii)       “Subsidiary” means a “subsidiary corporation,” as defined in Code
Section 424(f), of the Company.

 

(jj) “Substitute Award” means an Award granted upon the assumption of, or in
substitution or exchange for, outstanding awards granted by a company or other
entity acquired by the Company or any Affiliate or with which the Company or any
Affiliate combines. The terms and conditions of a Substitute Award may vary from
the terms and conditions set forth in the Plan to the extent that the Committee
at the time of the grant may deem appropriate to conform, in whole or in part,
to the provisions of the award in substitution for which it has been granted.

 

(kk) “Voting Securities” of an entity means the outstanding equity securities
entitled to vote generally in the election of directors of such entity.

 

3.       Administration of the Plan.

 

(a)       Administration. The authority to control and manage the operations and
administration of the Plan shall be vested in the Committee in accordance with
this Section 3.

 

(b)       Scope of Authority. Subject to the terms of the Plan, the Committee
shall have the authority, in its discretion, to take such actions as it deems
necessary or advisable to administer the Plan, including:

 

(1)       determining the Service Providers to whom Awards will be granted, the
timing of each such Award, the types of Awards and the number of Shares covered
by each Award, the terms, conditions, performance criteria, restrictions and
other provisions of Awards, and the manner in which Awards are paid or settled;

 

(2)       cancelling or suspending an Award, accelerating the vesting or
extending the exercise period of an Award, or otherwise amending the terms and
conditions of any outstanding Award, subject to the requirements of Sections
6(b), 15(d) and (e);

 

(3)       adopting sub-plans or special provisions applicable to Awards,
establishing, amending or rescinding rules to administer the Plan, interpreting
the Plan and any Award or Agreement, reconciling any inconsistency, correcting
any defect or supplying an omission in the Plan or any Agreement, and making all
other determinations necessary or desirable for the administration of the Plan;
and

 

(4)       granting Substitute Awards under the Plan.

 

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Notwithstanding the foregoing, the Board shall perform the duties and have the
responsibilities of the Committee with respect to Awards made to Non-Employee
Directors.

 

(c)       Acts of the Committee; Delegation. A majority of the members of the
Committee shall constitute a quorum for any meeting of the Committee, and any
act of a majority of the members present at any meeting at which a quorum is
present or any act unanimously approved in writing or electronically by all
members of the Committee shall be the act of the Committee. Any such action of
the Committee shall be valid and effective even if the members of the Committee
at the time of such action are later determined not to have satisfied all of the
criteria for membership in clauses (i), (ii) and (iii) of Section 2(i). To the
extent not inconsistent with applicable law or stock exchange rules, the
Committee may delegate all or any portion of its authority under the Plan to any
one or more of its members or, as to Awards to Participants who are not subject
to Section 16 of the Exchange Act, to one or more directors or executive
officers of the Company or to a committee of one or more directors of the
Company. The Committee may also delegate non-discretionary administrative
responsibilities in connection with the Plan to such other persons as it deems
advisable.

 

(d)       Finality of Decisions. The Committee’s interpretation of the Plan and
of any Award or Agreement made under the Plan and all related decisions or
resolutions of the Board or Committee shall be final and binding on all parties
with an interest therein.

 

(e)       Indemnification. Each person who is or has been a member of the
Committee or of the Board, and any other person to whom the Committee delegates
authority under the Plan, shall be indemnified by the Company, to the maximum
extent permitted by law, against liabilities and expenses imposed upon or
reasonably incurred by such person in connection with or resulting from any
claims against such person by reason of the performance of the individual's
duties under the Plan. This right to indemnification is conditioned upon such
person providing the Company an opportunity, at the Company’s expense, to handle
and defend the claims before such person undertakes to handle and defend them on
such person’s own behalf. The Company will not be required to indemnify any
person for any amount paid in settlement of a claim unless the Company has first
consented in writing to the settlement. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
person or persons may be entitled under the Company’s Articles of Incorporation
or Bylaws, each as amended, as a matter of law, or otherwise.

 

4.       Shares Available Under the Plan.

 

(a)       Maximum Shares Available. Subject to Section 4(b) and Section 4(c) and
to adjustment as provided in Section 12(a), the number of Shares that may be the
subject of Awards and issued under the Plan shall be 400,000 Shares issued under
the Plan may come from authorized and unissued shares or treasury shares. In
determining the number of Shares to be counted against this share reserve in
connection with any Award, the following rules shall apply:

 

(1)       Shares that are subject to Awards of Options, Stock Appreciation
Rights or Full Value Awards shall be counted against the share reserve as one
Share for every one Share granted.

 

(2)       Where the number of Shares subject to an Award is variable on the
Grant Date, the number of Shares to be counted against the share reserve shall
be the maximum number of Shares that could be received under that particular
Award, until such time as it has been determined that only a lesser number of
shares could be received.

 

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(3)       Where two or more types of Awards are granted to a Participant in
tandem with each other, such that the exercise of one type of Award with respect
to a number of Shares cancels at least an equal number of Shares of the other,
the number of Shares to be counted against the share reserve shall be the
largest number of Shares that would be counted against the share reserve under
either of the Awards.

 

(4)       Shares subject to Substitute Awards shall not be counted against the
share reserve, nor shall they reduce the Shares authorized for grant to a
Participant in any calendar year.

 

(5)       Awards that will be settled solely in cash shall not be counted
against the share reserve, nor shall they reduce the Shares authorized for grant
to a Participant in any calendar year.

 

(b)       Effect of Forfeitures and Other Actions. Any Shares subject to an
Award that expires, is cancelled or forfeited or is settled for cash and any
Shares tendered (either actually or by attestation) by the Participant or
withheld by the Company to satisfy any tax withholding obligation, shall, to the
extent of such cancellation, forfeiture, expiration, cash settlement, tender or
withholding, again become available for Awards under this Plan, and the share
reserve under Section 4(a) shall be correspondingly replenished as provided in
Section 4(c) below. The following Shares shall not, however, again become
available for Awards or replenish the share reserve under Section 4(a): (i)
Shares tendered (either actually or by attestation) by the Participant or
withheld by the Company in payment of the purchase price of an Option issued
under this Plan, (ii) Shares repurchased by the Company with proceeds received
from the exercise of an Option issued under this Plan, and (iii) Shares subject
to a Stock Appreciation Right award issued under this Plan that are not issued
in connection with the stock settlement of that award upon its exercise.

 

(c)       Counting Shares Again Available. Each Share that again becomes
available for Awards as provided in Section 4(b) shall correspondingly increase
the share reserve under Section 4(a) by one Share.

 

(d)       Effect of Plans Operated by Acquired Companies. If a company acquired
by the Company or any Subsidiary or with which the Company or any Subsidiary
combines has shares available under a pre-existing plan approved by shareholders
and not adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other
adjustment or valuation ratio or formula used in such acquisition or combination
to determine the consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the Shares authorized for grant under the Plan.
Awards using such available shares shall not be made after the date awards or
grants could have been made under the terms of the pre-existing plan, absent the
acquisition or combination, and shall only be made to individuals who were not
Employees or Non-Employee Directors prior to such acquisition or combination.

 

(e)       No Fractional Shares. Unless otherwise determined by the Committee,
the number of Shares subject to an Award shall always be a whole number. No
fractional Shares may be issued under the Plan, but the Committee may, in its
discretion, pay cash in lieu of any fractional Share in settlement of an Award.

 

(f)       Individual Option and SAR Limit. The aggregate number of Shares
subject to Options and/or Stock Appreciation Rights granted during any calendar
year to any one Participant shall not exceed 100,000 Shares.

 

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(g)       Performance-Based Compensation Limit. With respect to Awards of
Performance-Based Compensation, (i) the maximum number of Shares that may be the
subject of Full Value Awards that are denominated in Shares or Share equivalents
and that are granted to any Participant during any calendar year shall not
exceed 100,000 Shares (subject to adjustment as provided in Section 12(a)); and
(ii) the maximum amount payable with respect to Full Value Awards that are
denominated other than in Shares or Share equivalents and that are granted to
any one Participant during any calendar year shall not exceed $1,000,000.

 

5.       Eligibility. Participation in the Plan is limited to Service Providers.
Incentive Stock Options may only be granted to Employees.

 

6.       General Terms of Awards.

 

(a)       Award Agreement. Except for any Award that involves only the immediate
issuance of unrestricted Shares, each Award shall be evidenced by an Agreement
setting forth the amount of the Award together with such other terms and
conditions applicable to the Award (and not inconsistent with the Plan) as
determined by the Committee. An Award to a Participant may be made singly or in
combination with any form of Award. Two types of Awards may be made in tandem
with each other such that the exercise of one type of Award with respect to a
number of Shares reduces the number of Shares subject to the related Award by at
least an equal amount.

 

(b)       Vesting and Term. Each Agreement shall set forth the period until the
applicable Award is scheduled to expire (which shall not be more than ten years
from the Grant Date), and any applicable performance period.

 

(c)       Transferability. Except as provided in this Section 6(c), (i) during
the lifetime of a Participant, only the Participant or the Participant’s
guardian or legal representative may exercise an Option or SAR, or receive
payment with respect to any other Award; and (ii) no Award may be sold,
assigned, transferred, exchanged or encumbered, voluntarily or involuntarily,
other than by will or the laws of descent and distribution. Any attempted
transfer in violation of this Section 6(c) shall be of no effect. The Committee
may, however, provide at the time of grant or thereafter, in an Agreement or
otherwise, that an Award (other than an Incentive Stock Option) may be
transferred pursuant to a domestic relations order or may be transferable to a
member of the Participant's immediate family, a trust of which members of the
Participant's immediate family are the only beneficiaries, or a partnership of
which members of the Participant's immediate family or trusts for the sole
benefit of the Participant's immediate family are the only partners, or in other
circumstances at the Committee's sole discretion. Immediate family means the
Participant's spouse, issue (by birth or adoption), parents, grandparents, and
siblings (including half brothers and sisters and adopted siblings). Any Award
held by a transferee shall continue to be subject to the same terms and
conditions that were applicable to that Award immediately before the transfer
thereof. For purposes of any provision of the Plan relating to notice to a
Participant or to acceleration or termination of an Award upon the death or
termination of service of a Participant, the references to “Participant” shall
mean the original grantee of an Award and not any transferee.

 

(d)       Designation of Beneficiary. A Participant may designate a beneficiary
or beneficiaries to exercise any Award or receive a payment under any Award
payable on or after the Participant’s death. Any such designation shall be on a
form approved by the Company and shall be effective upon its receipt by the
Company.

 

(e)       Termination of Service. Unless otherwise provided in an applicable
Agreement or another then-effective written agreement between a Participant and
the Company, and subject to Section 12 of this Plan, if a Participant’s Service
with the Company and all of its Affiliates terminates, the following provisions
shall apply (in all cases subject to the scheduled expiration of an Option or
SAR Award, as applicable):

 

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(1)       Upon termination of Service for Cause, all unexercised Option and SAR
Awards and all unvested portions of any other outstanding Awards shall be
immediately forfeited without consideration.

 

(2)       Upon termination of Service for any other reason, all unvested and
unexercisable portions of any outstanding Awards shall be immediately forfeited
without consideration.

 

(3)       Upon termination of Service for any reason other than Cause, death or
Disability, the currently vested and exercisable portions of Option and SAR
Awards may be exercised for a period of three months after the date of such
termination. However, if a Participant thereafter dies during such three-month
period, the vested and exercisable portions of the Option and SAR Awards may be
exercised for a period of one year after the date of such termination.

 

(4)       Upon termination of Service due to death or Disability, the currently
vested and exercisable portions of Option and SAR Awards may be exercised for a
period of one year after the date of such termination.

 

(f)       Rights as Shareholder. Unless the Committee so provides in an
Agreement or otherwise, no Participant shall have any rights as a shareholder
with respect to any Shares covered by an Award unless and until the date the
Participant becomes the holder of record of the Shares, if any, to which the
Award relates.

 

(g)       Performance-Based Awards. Any Award may be granted as a
performance-based Award if the Committee establishes one or more measures of
corporate, business unit or individual performance which must be attained, and
the performance period over which the specified performance is to be attained,
as a condition to the grant, vesting, exercisability, lapse of restrictions
and/or settlement in cash or Shares of such Award. In connection with any such
Award, the Committee shall determine the extent to which performance measures
have been attained and other applicable terms and conditions have been
satisfied, and the degree to which vesting, exercisability, lapse of
restrictions and/or settlement in cash or Shares of such Award has been earned.
Any performance-based Award that is intended by the Committee to qualify as
Performance-Based Compensation shall additionally be subject to the requirements
of Section 16 of this Plan. Except as provided in Section 16 with respect to
Performance-Based Compensation, the Committee shall also have the authority to
provide, in an Agreement or otherwise, for the modification of a performance
period and/or an adjustment or waiver of the achievement of performance measures
upon the occurrence of certain events, which may include a Change of Control, a
Corporate Transaction, a recapitalization, a change in the accounting practices
of the Company, or the Participant’s death or Disability.

 

(h)       Dividends and Dividend Equivalents. No dividends, dividend equivalents
or distributions will be paid with respect to Shares subject to an Option or SAR
Award. Any dividends or distributions paid with respect to Shares that are
subject to the unvested portion of a Restricted Stock Award will be subject to
the same restrictions as the Shares to which such dividends or distributions
relate, except for regular cash dividends on Shares subject to the unvested
portion of a Restricted Stock Award that is subject only to service-based
vesting conditions. In its discretion, the Committee may provide in an Award
Agreement for a Stock Unit Award or an Other Stock-Based Award that the
Participant will be entitled to receive dividend equivalents on the units or
other Share equivalents subject to the Award based on dividends actually
declared and paid on outstanding Shares. The terms of any dividend equivalents
will be as set forth in the applicable Agreement, including the time and form of
payment and whether such dividend equivalents will be credited with interest or
deemed to be reinvested in additional units or Share equivalents. Dividend
equivalents paid with respect to units or Share equivalents that are subject to
the unvested portion of a Stock Unit Award or an Other Stock-Based Award whose
vesting is subject to the satisfaction of specified performance objectives will
be subject to the same restrictions as the units or Share equivalents to which
such dividend equivalents relate. The Committee may, in its discretion, provide
in an Agreement for restrictions on dividends and dividend equivalents in
addition to those specified in this Section 6(h). Any Shares issued or issuable
during the term of this Plan as the result of the reinvestment of dividends or
the deemed reinvestment of dividend equivalents in connection with an Award
shall be counted against, and replenish upon any subsequent forfeiture, the
Plan’s share reserve as provided in Section 4.

 

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7.       Stock Option Awards.

 

(a)       Type and Exercise Price. The Agreement pursuant to which an Option
Award is granted shall specify whether the Option is an Incentive Stock Option
or a Non-Statutory Stock Option. The exercise price at which each Share subject
to an Option Award may be purchased shall be determined by the Committee and set
forth in the Agreement, and shall not be less than the Fair Market Value of a
Share on the Grant Date, except in the case of Substitute Awards (to the extent
consistent with Code Section 409A and, in the case of Incentive Stock Options,
Code Section 424).

 

(b)       Payment of Exercise Price. The purchase price of the Shares with
respect to which an Option Award is exercised shall be payable in full at the
time of exercise. The purchase price may be paid in cash or in such other manner
as the Committee may permit, including by payment under a broker-assisted sale
and remittance program, by withholding Shares otherwise issuable to the
Participant upon exercise of the Option or by delivery to the Company of Shares
(by actual delivery or attestation) already owned by the Participant (in each
case, such Shares having a Fair Market Value as of the date the Option is
exercised equal to the purchase price of the Shares being purchased).

 

(c)       Exercisability and Expiration. Each Option Award shall be exercisable
in whole or in part on the terms provided in the Agreement. No Option Award
shall be exercisable at any time after its scheduled expiration. When an Option
Award is no longer exercisable, it shall be deemed to have terminated.

 

(d)       Incentive Stock Options.

 

(1)       An Option Award will constitute an Incentive Stock Option Award only
if the Participant receiving the Option Award is an Employee, and only to the
extent that (i) it is so designated in the applicable Agreement and (ii) the
aggregate Fair Market Value (determined as of the Option Award’s Grant Date) of
the Shares with respect to which Incentive Stock Options held by the Participant
first become exercisable in any calendar year (under the Plan and all other
plans of the Company and its Affiliates) does not exceed $100,000 or such other
amount specified by the Code. To the extent an Option granted to a Participant
exceeds this limit, the Option shall be treated as a Non-Statutory Stock Option.
The maximum number of Shares that may be issued upon the exercise of Incentive
Stock Options shall be 400,000, subject to adjustment as provided in Section
12(a).

 

(2)       No Participant may receive an Incentive Stock Option Award under the
Plan if, immediately after the grant of such Award, the Participant would own
(after application of the rules contained in Code Section 424(d)) Shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or an Affiliate, unless (i) the exercise price for that
Incentive Stock Option is at least 110% of the Fair Market Value of the Shares
subject to that Incentive Stock Option on the Grant Date and (ii) that Option
Award will expire no later than five years after its Grant Date.

 

 10 

 

 

(3)       For purposes of continued Service by a Participant who has been
granted an Incentive Stock Option Award, no approved leave of absence may exceed
three months unless reemployment upon expiration of such leave is provided by
statute or contract. If reemployment is not so provided, then on the date six
months following the first day of such leave, any Incentive Stock Option held by
the Participant shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Non-Statutory Stock Option.

 

(4)       If an Incentive Stock Option Award is exercised after the expiration
of the exercise periods that apply for purposes of Code Section 422, such Option
shall thereafter be treated as a Non-Statutory Stock Option.

 

(5)       The Agreement covering an Incentive Stock Option Award shall contain
such other terms and provisions that the Committee determines necessary to
qualify the Option Award as an Incentive Stock Option Award.

 

8.       Stock Appreciation Rights.

 

(a)       Nature of Award. An Award of Stock Appreciation Rights shall be
subject to such terms and conditions as are determined by the Committee, and
shall provide a Participant the right to receive upon exercise of the SAR Award
all or a portion of the excess of (i) the Fair Market Value as of the date of
exercise of the SAR Award of the number of Shares as to which the SAR Award is
being exercised, over (ii) the aggregate exercise price for such number of
Shares. The per Share exercise price for any SAR Award shall be determined by
the Committee and set forth in the applicable Agreement, and shall not be less
than the Fair Market Value of a Share on the Grant Date, except in the case of
Substitute Awards (to the extent consistent with Code Section 409A).

 

(b)       Exercise of SAR. Each SAR Award may be exercisable in whole or in part
at the times, on the terms and in the manner provided in the Agreement. No SAR
Award shall be exercisable at any time after its scheduled expiration. When a
SAR Award is no longer exercisable, it shall be deemed to have terminated. Upon
exercise of a SAR Award, payment to the Participant shall be made at such time
or times as shall be provided in the Agreement in the form of cash, Shares or a
combination of cash and Shares as determined by the Committee. The Agreement may
provide for a limitation upon the amount or percentage of the total appreciation
on which payment (whether in cash and/or Shares) may be made in the event of the
exercise of a SAR Award.

 

9.       Restricted Stock Awards.

 

(a)       Vesting and Consideration. Shares subject to a Restricted Stock Award
shall be subject to vesting and the lapse of applicable restrictions based on
such conditions or factors and occurring over such period of time as the
Committee may determine in its discretion. The Committee may provide whether any
consideration other than Services must be received by the Company or any
Affiliate as a condition precedent to the grant of a Restricted Stock Award, and
may correspondingly provide for Company reacquisition or repurchase rights if
such additional consideration has been required and some or all of a Restricted
Stock Award does not vest.

 

 11 

 

 

(b)       Shares Subject to Restricted Stock Awards. Unvested Shares subject to
a Restricted Stock Award shall be evidenced by a book-entry in the name of the
Participant with the Company’s transfer agent or by one or more Stock
certificates issued in the name of the Participant. Any such Stock certificate
shall be deposited with the Company or its designee, together with an assignment
separate from the certificate, in blank, signed by the Participant, and bear an
appropriate legend referring to the restricted nature of the Restricted Stock
evidenced thereby. Any book-entry shall be subject to comparable restrictions
and corresponding stop transfer instructions. Upon the vesting of Shares of
Restricted Stock, and the Company’s determination that any necessary conditions
precedent to the release of vested Shares (such as satisfaction of tax
withholding obligations and compliance with applicable legal requirements) have
been satisfied, such vested Shares shall be made available to the Participant in
such manner as may be prescribed or permitted by the Committee. Such vested
Shares may, however, continue to be subject to certain restrictions as provided
in Section 17. Except as otherwise provided in the Plan or an applicable
Agreement, a Participant with a Restricted Stock Award shall have all the rights
of a shareholder, including the right to vote the Shares of Restricted Stock.

 

10.       Stock Unit Awards.

 

(a)       Vesting and Consideration. A Stock Unit Award shall be subject to
vesting and the lapse of applicable restrictions based on such conditions or
factors and occurring over such period of time as the Committee may determine in
its discretion. If vesting of a Stock Unit Award is conditioned on the
achievement of specified performance goals, the extent to which they are
achieved over the specified performance period shall determine the number of
Stock Units that will be earned and eligible to vest, which may be greater than
the target number of Stock Units stated in the Agreement. The Committee may
provide whether any consideration other than Services must be received by the
Company or any Affiliate as a condition precedent to the settlement of a Stock
Unit Award.

 

(b)       Payment of Award. Following the vesting of a Stock Unit Award, and the
Company’s determination that any necessary conditions precedent to the
settlement of the Award (such as satisfaction of tax withholding obligations and
compliance with applicable legal requirements) have been satisfied, settlement
of the Award and payment to the Participant shall be made at such time or times
in the form of cash, Shares (which may themselves be considered Restricted Stock
under the Plan) or a combination of cash and Shares as determined by the
Committee. Amounts received in settlement may, however, continue to be subject
to certain restrictions as provided in Section 17.

 

11.       Other Stock-Based Awards. The Committee may from time to time grant
Shares and other Awards that are valued by reference to and/or payable in whole
or in part in Shares under the Plan. The Committee shall determine the terms and
conditions of such Awards, which shall be consistent with the terms and purposes
of the Plan. The Committee may direct the Company to issue Shares subject to
restrictive legends and/or stop transfer instructions that are consistent with
the terms and conditions of the Award to which the Shares relate.

 

12.       Changes in Capitalization, Corporate Transactions, Change in Control.

 

(a)       Adjustments for Changes in Capitalization. In the event of any equity
restructuring (within the meaning of FASB ASC Topic 718) that causes the per
share value of Shares to change, such as a stock dividend, stock split, spinoff,
rights offering or recapitalization through an extraordinary dividend, the
Committee shall make such adjustments as it deems equitable and appropriate to
(i) the aggregate number and kind of Shares or other securities issued or
reserved for issuance under the Plan, (ii) the number and kind of Shares or
other securities subject to outstanding Awards, (iii) the exercise price of
outstanding Options and SARs, and (iv) any maximum limitations prescribed by the
Plan with respect to certain types of Awards or the grants to individuals of
certain types of Awards. In the event of any other change in corporate
capitalization, including a merger, consolidation, reorganization, or partial or
complete liquidation of the Company, such equitable adjustments described in the
foregoing sentence may be made as determined to be appropriate and equitable by
the Committee to prevent dilution or enlargement of rights of Participants.  In
either case, any such adjustment shall be conclusive and binding for all
purposes of the Plan.  No adjustment shall be made pursuant to this Section
12(a) in connection with the conversion of any convertible securities of the
Company, or in a manner that would cause Incentive Stock Options to violate
Section 422(b) of the Code or cause an Award to be subject to adverse tax
consequences under Section 409A of the Code.

 

 12 

 

 

(b)       Corporate Transactions. Unless otherwise provided in an applicable
Agreement, the following provisions shall apply to outstanding Awards in the
event of a Change in Control that involves a Corporate Transaction.

 

(1)       Continuation, Assumption or Replacement of Awards. In the event of a
Corporate Transaction, then the surviving or successor entity (or its Parent)
may continue, assume or replace Awards outstanding as of the date of the
Corporate Transaction (with such adjustments as may be required or permitted by
Section 12(a)), and such Awards or replacements therefor shall remain
outstanding and be governed by their respective terms. A surviving or successor
entity may elect to continue, assume or replace only some Awards or portions of
Awards. For purposes of this Section 12(b)(1), an Award shall be considered
assumed or replaced if, in connection with the Corporate Transaction and in a
manner consistent with Code Sections 409A and 424, either (i) the contractual
obligations represented by the Award are expressly assumed by the surviving or
successor entity (or its Parent) with appropriate adjustments to the number and
type of securities subject to the Award and the exercise price thereof that
preserves the intrinsic value of the Award existing at the time of the Corporate
Transaction, or (ii) the Participant has received a comparable equity-based
award that preserves the intrinsic value of the Award existing at the time of
the Corporate Transaction and contains terms and conditions that are
substantially similar to those of the Award.

 

(2)       Acceleration. If and to the extent that outstanding Awards under the
Plan are not continued, assumed or replaced in connection with a Corporate
Transaction, then (i) all outstanding Options and SARs shall become fully vested
and exercisable for such period of time prior to the effective time of the
Corporate Transaction as is deemed fair and equitable by the Committee, and
shall terminate at the effective time of the Corporate Transaction, (ii) all
outstanding Full Value Awards shall fully vest immediately prior to the
effective time of the Corporate Transaction, and (iii) to the extent vesting of
any Award is subject to satisfaction of specified performance goals, such Award
shall be considered “fully vested” for purposes of this Section 12(b)(2) to the
extent the portion of the Award already earned for a completed performance
period and the portion of the Award that would be earned at the target level of
performance for any uncompleted performance period become vested. The Committee
shall provide written notice of the period of accelerated exercisability of
Options and SARs to all affected Participants. The exercise of any Option or SAR
whose exercisability is accelerated as provided in this Section 12(b)(2) shall
be conditioned upon the consummation of the Corporate Transaction and shall be
effective only immediately before such consummation.

 

(3)       Payment for Awards. If and to the extent that outstanding Awards under
the Plan are not continued, assumed or replaced in connection with a Corporate
Transaction, then the Committee may provide that some or all of such outstanding
Awards shall be canceled at or immediately prior to the effective time of the
Corporate Transaction in exchange for payments to the holders as provided in
this Section 12(b)(3). The Committee will not be required to treat all Awards
similarly for purposes of this Section 12(b)(3). The payment for any Award
surrendered shall be in an amount equal to the difference, if any, between (i)
the fair market value (as determined in good faith by the Committee) of the
consideration that would otherwise be received in the Corporate Transaction for
the number of Shares subject to the Award, and (ii) the aggregate exercise price
(if any) for the Shares subject to such Award. If the amount determined pursuant
to clause (i) of the preceding sentence is less than or equal to the amount
determined pursuant to clause (ii) of the preceding sentence with respect to any
Award, such Award may be canceled pursuant to this Section 12(b)(3) without
payment of any kind to the affected Participant. With respect to an Award whose
vesting is subject to the satisfaction of specified performance goals, the
number of Shares subject to such an Award for purposes of this Section 12(b)(3)
shall be the number of Shares that have been earned or deemed earned in the
manner specified in Section 12(b)(2). Payment of any amount under this Section
12(b)(3) shall be made in such form, on such terms and subject to such
conditions as the Committee determines in its discretion, which may or may not
be the same as the form, terms and conditions applicable to payments to the
Company’s shareholders in connection with the Corporate Transaction, and may, in
the Committee’s discretion, include subjecting such payments to vesting
conditions comparable to those of the Award surrendered, subjecting such
payments to escrow or holdback terms comparable to those imposed upon the
Company’s shareholders under the Corporate Transaction, or calculating and
paying the present value of payments that would otherwise be subject to escrow
or holdback terms.

 

 13 

 

  

(c)       Other Change in Control. Upon a Change in Control that does not
involve a Corporate Transaction, notwithstanding any exercise dates or vesting
provisions stated in any Agreement, all exercise dates of any outstanding Award
shall accelerate and all outstanding Awards shall vest in full.

 

(d)       Dissolution or Liquidation. Unless otherwise provided in an applicable
Agreement, in the event of a proposed dissolution or liquidation of the Company,
the Committee will notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. An Award will terminate immediately
prior to the consummation of such proposed action.

 

13.       Plan Participation and Service Provider Status. Status as a Service
Provider shall not be construed as a commitment that any Award will be made
under the Plan to that Service Provider or to eligible Service Providers
generally. Nothing in the Plan or in any Agreement or related documents shall
confer upon any Service Provider or Participant any right to continued Service
with the Company or any Affiliate, nor shall it interfere with or limit in any
way any right of the Company or any Affiliate to terminate the person’s Service
at any time with or without Cause or change such person’s compensation, other
benefits, job responsibilities or title.

 

14.       Tax Withholding. The Company or any Affiliate, as applicable, shall
have the right to (i) withhold from any cash payment under the Plan or any other
compensation owed to a Participant an amount sufficient to cover any required
withholding taxes related to the grant, vesting, exercise or settlement of an
Award, and (ii) require a Participant or other person receiving Shares under the
Plan to pay a cash amount sufficient to cover any required withholding taxes
before actual receipt of those Shares. In lieu of all or any part of a cash
payment from a person receiving Shares under the Plan, the Committee may permit
the individual to cover all or any part of the required tax withholdings (but
not to exceed the minimum statutory amount required to be withheld if such
limitation is necessary to avoid an adverse accounting impact) by authorizing
the Company to withhold a number of the Shares that would otherwise be delivered
to the Participant, or by delivering to the Company Shares already owned by the
Participant, with the Shares so withheld or delivered having a Fair Market Value
on the date the taxes are required to be withheld equal to the amount of taxes
to be withheld.

 

 14 

 

 

15.       Effective Date, Duration, Amendment and Termination of the Plan.

 

(a)       Effective Date. The Plan shall become effective on the date it is
approved by the Company’s shareholders, which shall be considered the date of
its adoption for purposes of Treasury Regulation §1.422-2(b)(2)(i). Upon
approval of the Plan by the Company’s shareholders as provided in the preceding
sentence, all Awards made under the Plan on or after the date of its approval by
the Board shall be fully effective. If the Company’s shareholders fail to
approve the Plan within 12 months after the date of its approval by the Board,
the Plan and any Awards made thereunder shall be terminated and of no further
force or effect.

 

(b)       Duration of the Plan. The Plan shall remain in effect until all Shares
subject to it are distributed, all Awards have expired or terminated, the Plan
is terminated pursuant to Section 15(c), or the tenth anniversary of the
effective date of the Plan, whichever occurs first (the “Termination Date”).
Awards made before the Termination Date shall continue to be outstanding in
accordance with their terms and the terms of the Plan unless otherwise provided
in the applicable Agreements.

 

(c)       Amendment and Termination of the Plan. The Board may at any time
terminate, suspend or amend the Plan. The Company shall submit any amendment of
the Plan to its shareholders for approval only to the extent required by
applicable laws or regulations or the rules of any securities exchange on which
the Shares may then be listed. No termination, suspension, or amendment of the
Plan may materially impair the rights of any Participant under a previously
granted Award without the Participant's consent, unless such action is necessary
to comply with applicable law or stock exchange rules.

 

(d)       Amendment of Awards. Subject to Section 15(e), the Committee may
unilaterally amend the terms of any Agreement previously granted, except that no
such amendment may materially impair the rights of any Participant under the
applicable Award without the Participant's consent, unless such amendment is
necessary to comply with applicable law or stock exchange rules or any
compensation recovery policy as provided in Section 17(i).

 

(e)       No Option or SAR Repricing. Except as provided in Section 12(a), no
Option or Stock Appreciation Right Award granted under the Plan may be (i)
amended to decrease the exercise price thereof, (ii) cancelled in conjunction
with the grant of any new Option or Stock Appreciation Right Award with a lower
exercise price, (iii) cancelled in exchange for cash, other property or the
grant of any Full Value Award at a time when the per share exercise price of the
Option or Stock Appreciation Right Award is greater than the current Fair Market
Value of a Share, or (iv) otherwise subject to any action that would be treated
under accounting rules as a “repricing” of such Option or Stock Appreciation
Right Award, unless such action is first approved by the Company’s shareholders.

 

16.       Performance-Based Compensation.

 

 

(a)       Designation of Awards. If the Committee determines at the time a Full
Value Award is granted to a Participant that such Participant is, or is likely
to be, a “covered employee” for purposes of Code Section 162(m) as of the end of
the tax year in which the Company would ordinarily claim a tax deduction in
connection with such Award, then the Committee may provide that this Section 16
will be applicable to such Award, which shall be considered Performance-Based
Compensation.

 

(b)       Compliance with Code Section 162(m). If an Award is subject to this
Section 16, then the grant of the Award, the vesting and lapse of restrictions
thereon and/or the distribution of cash, Shares or other property pursuant
thereto, as applicable, shall be subject to the achievement over the applicable
performance period of one or more performance goals based on one or more of the
performance measures specified in Section 16(c). The Committee will select the
applicable performance measure(s) and specify the performance goal(s) based on
those performance measures for any performance period, specify in terms of an
objective formula or standard the method for calculating the amount payable to a
Participant if the performance goal(s) are satisfied, and certify the degree to
which applicable performance goals have been satisfied and any amount that vests
and is payable in connection with an Award subject to this Section 16, all
within the time periods prescribed by and consistent with the other requirements
of Code Section 162(m). In specifying the performance goals applicable to any
performance period, the Committee may provide that one or more objectively
determinable adjustments shall be made to the performance measures on which the
performance goals are based, which may include adjustments that would cause such
measures to be considered “non-GAAP financial measures” within the meaning of
Rule 101 under Regulation G promulgated by the Securities and Exchange
Commission, such as excluding the impact of specified unusual or nonrecurring
events such as acquisitions, divestitures, restructuring activities, asset
write-downs, litigation judgments or settlements or changes in tax laws or
accounting principles. The Committee may also adjust performance measures for a
performance period to the extent permitted by Code Section 162(m) in connection
with an event described in Section 12(a) to prevent the dilution or enlargement
of a Participant’s rights with respect to Performance-Based Compensation. The
Committee may adjust downward, but not upward, any amount determined to be
otherwise payable in connection with an Award subject to this Section 16. The
Committee may also provide, in an Agreement or otherwise, that the achievement
of specified performance goals in connection with an Award subject to this
Section 16 may be waived upon the death or Disability of the Participant or
under any other circumstance with respect to which the existence of such
possible waiver will not cause the Award to fail to qualify as
“performance-based compensation” under Code Section 162(m).

 

 15 

 

 

(c)       Performance Measures. For purposes of any Full Value Award considered
Performance-Based Compensation subject to this Section 16, the performance
measures to be utilized shall be limited to one or a combination of two or more
of the following performance measures: (a) cash flow, (b) earnings per share,
(c) earnings before interest, taxes, depreciation and amortization, (d) return
on equity, (e) total shareholder return, (f) share price performance, (g) return
on capital, (h) return on assets or net assets, (i) total dental group practice
revenue, revenue or net revenue, including net revenue per office, (j) income or
net income, (k) operating income or net operating income, (l) operating profit
or net operating profit, (m) operating margin or profit margin, (n) return on
total dental group practice revenue, revenue or net revenue, (o) return on
invested capital, and (p) contribution from dental offices. The Committee may
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that occurs during a
performance period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax laws, accounting principles or
other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) any extraordinary
non-recurring items described in the Company's Exchange Act filings. Any
performance goal based on one or more of the foregoing performance measures may
be expressed in absolute amounts, on a per share basis (basic or diluted),
relative to one or more other performance measures, as a growth rate or change
from preceding periods, or as a comparison to the performance of specified
companies, indices or other external measures, and may relate to one or any
combination of Company, Affiliate, Affiliated Corporation division, business
unit, operational unit or individual performance.

 

17.       Other Provisions.

 

(a)       Unfunded Plan. The Plan shall be unfunded and the Company shall not be
required to segregate any assets that may at any time be represented by Awards
under the Plan. Neither the Company, its Affiliates, the Committee, nor the
Board shall be deemed to be a trustee of any amounts to be paid under the Plan
nor shall anything contained in the Plan or any action taken pursuant to its
provisions create or be construed to create a fiduciary relationship between the
Company and/or its Affiliates, and a Participant. To the extent any person has
or acquires a right to receive a payment in connection with an Award under the
Plan, this right shall be no greater than the right of an unsecured general
creditor of the Company.

 

 16 

 

 

(b)       Limits of Liability. Except as may be required by law, neither the
Company nor any member of the Board or of the Committee, nor any other person
participating (including participation pursuant to a delegation of authority
under Section 3(c) of the Plan) in any determination of any question under the
Plan, or in the interpretation, administration or application of the Plan, shall
have any liability to any party for any action taken, or not taken, in good
faith under the Plan.

 

(c)       Compliance with Applicable Legal Requirements. No Shares distributable
pursuant to the Plan shall be issued and delivered unless the issuance of the
Shares complies with all applicable legal requirements, including compliance
with the provisions of applicable state and federal securities laws, and the
requirements of any securities exchanges on which the Company’s Shares may, at
the time, be listed. During any period in which the offering and issuance of
Shares under the Plan is not registered under federal or state securities laws,
Participants shall acknowledge that they are acquiring Shares under the Plan for
investment purposes and not for resale, and that Shares may not be transferred
except pursuant to an effective registration statement under, or an exemption
from the registration requirements of, such securities laws.  Any stock
certificate or book-entry evidencing Shares issued under the Plan that are
subject to securities law restrictions shall bear or be accompanied by an
appropriate restrictive legend or stop transfer instruction.

 

(d)       Other Benefit and Compensation Programs. Payments and other benefits
received by a Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant’s regular, recurring compensation for purposes of
the termination, indemnity or severance pay laws of any country and shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement provided by the
Company or an Affiliate unless expressly so provided by such other plan,
contract or arrangement, or unless the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.

 

(e)       Governing Law. To the extent that federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant to the
Plan shall be governed by the laws of the State of Colorado without regard to
its conflicts-of-law principles and shall be construed accordingly.

 

(f)       Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

 

(g)       Code Section 409A. It is intended that (i) all Awards of Options, SARs
and Restricted Stock under the Plan will not provide for the deferral of
compensation within the meaning of Code Section 409A and thereby be exempt from
Code Section 409A, and (ii) all other Awards under the Plan will either not
provide for the deferral of compensation within the meaning of Code Section
409A, or will comply with the requirements of Code Section 409A, and Awards
shall be structured and the Plan administered and interpreted in accordance with
this intent. The Plan and any Agreement may be unilaterally amended by the
Company in any manner deemed necessary or advisable by the Committee or Board in
order to maintain such exemption from or compliance with Code Section 409A, and
any such amendment shall conclusively be presumed to be necessary to comply with
applicable law. Notwithstanding anything to the contrary in the Plan or any
Agreement, with respect to any Award that constitutes a deferral of compensation
subject to Code Section 409A:

 

 17 

 

 

(1)       If any amount is payable under such Award upon a termination of
Service, a termination of Service will be deemed to have occurred only at such
time as the Participant has experienced a “separation from service” as such term
is defined for purposes of Code Section 409A;

 

(2)       If any amount shall be payable with respect to any such Award as a
result of a Participant’s “separation from service” at such time as the
Participant is a “specified employee” within the meaning of Code Section 409A,
then no payment shall be made, except as permitted under Code Section 409A,
prior to the first business day after the earlier of (i) the date that is six
months after the Participant’s separation from service or (ii) the Participant’s
death. Unless the Committee has adopted a specified employee identification
policy as contemplated by Code Section 409A, specified employees will be
identified in accordance with the default provisions specified under Code
Section 409A.

 

None of the Company, the Board, the Committee nor any other person involved with
the administration of this Plan shall (i) in any way be responsible for ensuring
the exemption of any Award from, or compliance by any Award with, the
requirements of Code Section 409A, (ii) have any obligation to design or
administer the Plan or Awards granted thereunder in a manner that minimizes a
Participant’s tax liabilities, including the avoidance of any additional tax
liabilities under Code Section 409A, and (iii) shall have any liability to any
Participant for any such tax liabilities.

 

(h)       Rule 16b-3. It is intended that the Plan and all Awards granted
pursuant to it shall be administered by the Committee so as to permit the Plan
and Awards to comply with Exchange Act Rule 16b-3. If any provision of the Plan
or of any Award would otherwise frustrate or conflict with the intent expressed
in this Section 17(h), that provision to the extent possible shall be
interpreted and deemed amended in the manner determined by the Committee so as
to avoid the conflict. To the extent of any remaining irreconcilable conflict
with this intent, the provision shall be deemed void as applied to Participants
subject to Section 16 of the Exchange Act to the extent permitted by law and in
the manner deemed advisable by the Committee.

 

(i)       Forfeiture and Compensation Recovery. Awards and any compensation
associated therewith may be made subject to forfeiture, recovery by the Company
or other action pursuant to any compensation recovery policy adopted by the
Board or the Committee at any time, including in response to the requirements of
Section 10D of the Exchange Act and any implementing rules and regulations
thereunder, or as otherwise required by law. Agreements may contain provisions
to comply with any such compensation recovery policy, and any Agreement may be
unilaterally amended by the Committee to comply with any such compensation
recovery policy.

 

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