Exhibit 10.1

 

FIVE STAR SENIOR LIVING INC.

 

AMENDED AND RESTATED 2014 EQUITY COMPENSATION PLAN

 

EFFECTIVE JUNE 9, 2020

 

 

1.PURPOSE

 

The purpose of this Amended and Restated 2014 Equity Compensation Plan (the
"Plan") is to encourage employees, officers, directors and other individuals
(whether or not employees) who render services to Five Star Senior Living Inc.
(the "Company") and its Subsidiaries (as hereinafter defined), to continue their
association with the Company and its Subsidiaries by providing opportunities for
them to participate in the ownership of the Company and in its future growth
through the granting of options to acquire the Company's stock ("Options"),
stock awards, including stock to be transferred subject to restrictions ("Stock
Awards") and other rights, including Stock Appreciation Rights (as defined in
Section 6), to receive compensation in amounts determined by the value of the
Company's stock ("Other Rights"). The term "Subsidiary" as used in the Plan
means a corporation or other business entity of which the Company owns, directly
or indirectly through an unbroken chain of ownership, fifty percent or more of
the total combined voting power of all classes of stock, in the case of a
corporation, or fifty percent or more of the total combined interests by value,
in the case of any other type of business entity.

 

2.ADMINISTRATION OF THE PLAN

 

The Plan shall be administered by the Compensation Committee of the Company's
Board of Directors (the "Board") or by the Board itself. The Compensation
Committee shall from time to time determine to whom awards shall be granted
under the Plan, whether Options granted shall be incentive stock options
("ISOs") or nonqualified stock options ("NSOs"), the terms of the Options
(including vesting provisions) and the number of shares of Common Stock (as
hereinafter defined) that may be granted under Options, and the number of shares
subject to (and other terms of) Stock Awards or Other Rights. The Compensation
Committee shall report to the Board the names of individuals to whom Options,
Stock Awards or Other Rights are to be granted, the number of shares covered and
the terms and conditions of each grant. The determinations and actions described
in this Section 2 and elsewhere in the Plan may be made by the Compensation
Committee or by the Board, as the Board shall direct in its discretion, and
references in the Plan to the Compensation Committee shall be understood to
refer to the Board in any such case. The Compensation Committee shall have the
authority to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan. All questions of
interpretation and application of such rules and regulations of the Plan and of
awards granted hereunder shall be subject to the determination of the
Compensation Committee in its discretion, which determination shall be final and
binding. The Plan is intended to be administered in such a manner as to permit
those Options granted hereunder and specially designated under Section 5 hereof
as an ISO to qualify as incentive stock options as described in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and shall be
construed in a manner consistent with that interpretation. For so long as
Section 16 of the Securities Exchange Act of 1934, as amended from time to time
(the "Exchange Act"), is applicable to the Company, each member of the Committee
shall be a "non-employee director" or the equivalent within the meaning of Rule
16b-3 under the Exchange Act, and shall meet such other requirements as the
Board may determine to be necessary or appropriate.

 

With respect to persons subject to Section 16 of the Exchange Act ("Insiders"),
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed to be modified so as to be in compliance with such Rule, or, if
such modification is not possible, it shall be deemed to be null and void, to
the extent permitted by law and deemed advisable by the Committee.

 

   

 

 

3.STOCK SUBJECT TO THE PLAN

 

The total number of shares of capital stock of the Company that may be subject
to Options, Stock Awards and Other Rights under the Plan shall be 2,907,259
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"), inclusive of shares of Common Stock subject to awards outstanding on
the Restatement Effective Date (as defined below). All of shares of capital
stock of the Company available under the Plan may be granted as ISOs. Shares
issued under the Plan may be from authorized but unissued shares of Common
Stock. The maximum number of shares of Common Stock subject to ISOs that may be
granted to any Optionee in the aggregate in any calendar year shall not exceed
100,000 shares. The limits set forth in this Section 3 shall be subject to
adjustment in accordance with the provisions of Section 10. Awards (including
those issued under the Plan prior to the Restatement Effective Date) that fail
to vest or, if applicable, are not fully exercised prior to the award's
expiration or termination shall again become available for grant under the terms
of the Plan.

 

4.ELIGIBILITY

 

The individuals who shall be eligible to receive Option grants, Stock Awards and
Other Rights under the Plan shall be employees, officers, directors and other
individuals who render services to the management, operation or development of
the Company or a Subsidiary and who have contributed or may be expected to
contribute to the success of the Company or a Subsidiary. ISOs shall not be
granted to any individual who is not (i) an employee of the Company or (ii) an
employee of a Subsidiary who is treated as an employee of the Company for
purposes of Section 422 of the Code. The term "Optionee," as used in the Plan,
refers to any individual to whom an Option has been granted.

 

5.TERMS AND CONDITIONS OF OPTIONS

 

Every Option shall be evidenced by a written Stock Option Agreement in such form
as the Compensation Committee shall approve from time to time, specifying the
number of shares of Common Stock that may be purchased pursuant to the Option,
the time or times at which the Option shall become exercisable in whole or in
part, whether the Option is intended to be an ISO or an NSO and such other terms
and conditions as the Compensation Committee shall approve, and containing or
incorporating by reference the following terms and conditions.

 

(a)Duration. Each Option shall expire not later than ten years from its date of
grant; provided, however, that no ISO granted to an employee who owns (directly
or under the attribution rules of Section 424(d) of the Code) stock possessing
more than ten percent of the total combined voting power of all classes of stock
of the Company or any Subsidiary shall expire later than five years from its
date of grant.

 

(b)Exercise Price. The exercise price per share for each Option shall be at
least 100 percent of the Fair Market Value (as hereinafter defined) of the
shares on the date on which the Compensation Committee awards the Option, which
shall be considered the date of grant of the Option for purposes of fixing the
price; and provided, further, that the price with respect to an ISO granted to
an employee who at the time of grant owns (directly or under the attribution
rules of Section 424(d) of the Code) stock representing more than ten percent of
the voting power of all classes of stock of the Company or of any Subsidiary
shall be at least 110 percent of the Fair Market Value of the shares on the date
of grant of the ISO. For purposes of the Plan, the "Fair Market Value" of a
share of Common Stock at any particular date shall be determined according to
the following rules: (i) if the Common Stock is not at the time listed or
admitted to trading on a stock exchange or the NASDAQ, the Fair Market Value
shall be the closing price of the Common Stock on the date in question in the
over-the-counter market, as such price is reported in a publication of general
circulation selected by the Board and regularly reporting the price of the
Common Stock in such market, including any market that is outside of the United
States; provided, however, that if the price of the Common Stock is not so
reported, the Fair Market Value shall be determined in good faith by the Board,
which may take into consideration (1) the price paid for the Common Stock in the
most recent trade of a substantial number of shares known to the Board to have
occurred at arm's length between willing and knowledgeable investors, (2) an
appraisal by an independent party or (3) any other method of valuation
undertaken in good faith by the Board, or some or all of the above as the Board
shall in its discretion elect; or (ii) if the Common Stock is at the time listed
or admitted to trading on any stock exchange, including any market that is
outside of the United States, or the NASDAQ, then the Fair Market Value shall be
the closing sale price of the Common Stock on the date in question on the
principal exchange or the NASDAQ, as the case may be, on which the Common Stock
is then listed or admitted to trading. If no reported sale of Common Stock takes
place on the date in question on the principal exchange or the NASDAQ, as the
case may be, then the most recent previous reported closing sale price of the
Common Stock (or, in the Board's discretion, the reported closing asked price)
of the Common Stock on such date on the principal exchange or the NASDAQ, as the
case may be, shall be determinative of Fair Market Value. Without limitation of
the authority of the Compensation Committee under Section 10 hereof, unless
approved by the Company's stockholders, no Option shall be settled, canceled,
forfeited, exchanged or surrendered in exchange or otherwise in consideration
for either (A) a new Option or SAR (as defined below) with an exercise price
that is less than that of such settled, canceled, forfeited, exchanged or
surrendered Option (B) a Stock Award or Other Right with an intrinsic value at
issuance in an amount greater than the excess of the Fair Market Value of the
Common Stock over the exercise price per share applicable to the Option or (C)
in exchange for a payment in cash in an amount greater than the excess of the
Fair Market Value of the Common Stock over the exercise price per share
applicable to the Option.

 

 

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(c)Method of Exercise. To the extent that it has become exercisable under the
terms of the Stock Option Agreement, an Option may be exercised from time to
time by notice acceptable to the Chief Executive Officer of the Company, or his
delegate, stating the number of shares with respect to which the Option is being
exercised and accompanied by payment of the exercise price (and any applicable
withholding tax) in cash or check payable to the Company or, if the Stock Option
Agreement so provides, other payment or deemed payment described in this Section
5(c). Such notice shall be delivered in person to the Chief Executive Officer of
the Company, or his delegate, or shall be sent by registered mail, return
receipt requested, to the Chief Executive Officer of the Company, or his
delegate, in which case delivery shall be deemed made on the date such notice is
deposited in the mail.

 

Alternatively, payment of the exercise price may be made:

 

(i)In whole or in part in shares of Common Stock already owned by the Optionee
or to be received upon exercise of the Option; provided, however, that such
shares are fully vested and free of all liens, claims and encumbrances of any
kind; and provided, further, that the Optionee may not make payment in shares of
Common Stock that he acquired upon the earlier exercise of any ISO (or other
"incentive stock option"), unless he has held the shares for at least two years
after the date the ISO was granted and at least one year after the date the ISO
was exercised. If payment is made in whole or in part in shares of Common Stock,
then, in the case of certificated shares, the Optionee shall deliver to the
Company stock certificates registered in his name representing a number of
shares of Common Stock legally and beneficially owned by him, fully vested and
free of all liens, claims and encumbrances of every kind and having a Fair
Market Value on the date of delivery that is not greater than the exercise
price, such stock certificates to be duly endorsed, or accompanied by stock
powers duly endorsed, by the record holder of the shares represented by such
stock certificates. The Compensation Committee may approve comparable procedures
to those set forth in the preceding sentence in the event of shares held in
book-entry form. If the exercise price exceeds the Fair Market Value of the
shares for which stock certificates are delivered, the Optionee shall also
deliver cash or a check payable to the order of the Company in an amount equal
to the amount of that excess or, if the Stock Option Agreement so provides, his
promissory note as described in paragraph (2) of this Section 5(c); or

  

(ii)To the extent permitted under applicable law, by payment in cash of the par
value of the Common Stock to be acquired and by payment of the balance of the
exercise price in whole or in part by delivery of the Optionee's recourse
promissory note, in a form specified by the Company, secured by the Common Stock
acquired upon exercise of the Option and such other security as the Compensation
Committee may require.

 

In the case of an exercise pursuant to clause (1) or (2) above, the Company may
require the Optionee to pay to the Company in cash or by check, the amount of
any withholding tax due in connection with the exercise. At the time specified
in an Optionee's notice of exercise, the Company shall, without issue or
transfer tax to the Optionee, in the discretion of the Company, either (A)
register the Optionee's ownership of such shares in book-entry form or (B)
deliver to him at the main office of the Company, or such other place as shall
be mutually acceptable, a stock certificate for the shares as to which his
Option is exercised. If the Optionee fails to pay for or to accept delivery of
all or any part of the number of shares specified in his notice upon tender of
delivery thereof, his right to exercise the Option with respect to those shares
shall be terminated, unless the Company otherwise agrees.

 

(d)Exercisability. An Option may be exercised so long as it is outstanding from
time to time in whole or in part, to the extent and subject to the terms and
conditions that the Compensation Committee in its discretion may provide in the
Stock Option Agreement. Such terms and conditions shall include provisions for
exercise within twelve (12) months after his or her death or disability (within
the meaning of Section 22(e)(3)) of the Code, provided that no Option shall be
exercisable after the expiration of the maximum term of the Option. Except as
the Compensation Committee in its discretion may otherwise provide in the Stock
Option Agreement, an Option shall cease to be exercisable upon the expiration of
ninety (90) days following the termination of the Optionee's employment with, or
his other provision of services to, the Company or a subsidiary, subject to the
expiration of the maximum term of the Option and Section 10 hereof.

 

 

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(e)Notice of ISO Stock Disposition. The Optionee must notify the Company
promptly in the event that he sells, transfers, exchanges or otherwise disposes
of any shares of Common Stock issued upon exercise of an ISO before the later of
(i) the second anniversary of the date of grant of the ISO and (ii) the first
anniversary of the date the shares were issued upon his exercise of the ISO.

 

(f)No Rights as Stockholder. An Optionee shall have no rights as a stockholder
with respect to any shares covered by an Option until the date of either
registration of the Optionee's ownership of such shares in book-entry form or
the issuance of a stock certificate to him for the shares. No adjustment shall
be made for dividends or other rights for which the record date is earlier than
the date the stock certificate is issued (or ownership is registered by
book-entry), other than as required or permitted pursuant to Section 10.

 

(g)Transferability of Options. Options shall not be transferable by the Optionee
otherwise than by will or under the laws of descent and distribution, and shall
be exercisable during his or her lifetime only by the Optionee, except that the
Compensation Committee may specify in a Stock Option Agreement that pertains to
an NSO that the Optionee may transfer such NSO to a member of the Immediate
Family of the Optionee, to a trust solely for the benefit of the Optionee and
the Optionee's Immediate Family, or to a partnership or limited liability
company whose only partners or members are the Optionee and members of the
Optionee's Immediate Family. "Immediate Family" shall mean, with respect to any
Optionee, such Optionee's child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive
relationships.

 

6.STOCK APPRECIATION RIGHTS

 

The Committee may grant Stock Appreciation Rights ("SARs") in respect of such
number of Common Stock subject to the Plan as it shall determine, in its
discretion, and may grant SARs either separately or in connection with Options,
as described in the following sentence. An SAR granted in connection with an
Option may be exercised only to the extent of the surrender of the related
Option, and to the extent of the exercise of the related Option the SAR shall
terminate. Common Stock covered by an Option that terminates upon the exercise
of a related SAR shall cease to be available under the Plan. The terms and
conditions of an SAR related to an Option shall be contained in the Stock Option
Agreement, and the terms of an SAR not related to any Option shall be contained
in an SAR Agreement. The base value per share for share subject to an SAR shall
be at least 100 percent of the Fair Market Value of the shares on the date on
which the Compensation Committee awards the SAR. Without limitation of the
authority of the Compensation Committee under Section 10 hereof, unless approved
by the Company's stockholders, no SAR shall be settled, canceled, forfeited,
exchanged or surrendered in exchange or otherwise in consideration for (A) a new
SAR or Option with a base value per share or exercise price that is less than
that of such settled, canceled, forfeited, exchanged or surrendered SAR, (B) a
Stock Award or Other Right with an intrinsic value at issuance in an amount
greater than the excess of the Fair Market Value of the Common Stock over the
exercise price per share applicable to the Option or (C) in exchange for a
payment in cash in an amount greater than the excess of the Fair Market Value of
the Common Stock over the base value per share applicable to the SAR. Upon
exercise of an SAR, the Optionee shall be entitled to receive from the Company
an amount equal to the excess of the Fair Market Value, on the exercise date, of
the number of shares of Common Stock as to which the SAR is exercised, over the
exercise price for those shares under a related Option or, if there is no
related Option, over the base value stated in the SAR Agreement. Any amount
payable by the Company upon exercise of an SAR shall be paid in the form of cash
or other property (including Common Stock), as provided in the Stock Option
Agreement or SAR Agreement governing the SAR.

 

7.STOCK AWARDS

 

The Compensation Committee may grant or award Stock Awards in respect of such
number of shares of Common Stock, and subject to such terms or conditions (if
any), as it shall determine and specify in a Stock Award Agreement, and may
award shares of Common Stock which are not subject to vesting or forfeiture
conditions. The Compensation Committee may provide in a Stock Option Agreement
for an Option to be exercisable for Common Stock subject to forfeiture
conditions and restrictions on transfer ("Restricted Stock").

 

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A holder of Restricted Stock shall have all of the rights of a stockholder of
the Company, including the right to vote the shares and the right to receive any
cash dividends, unless the Compensation Committee shall otherwise determine.
Unless a grantee's Restricted Stock Agreement provides to the contrary, unvested
shares of Restricted Stock granted under the Plan shall not be transferred
without the written consent of the Compensation Committee. In addition, at the
time of termination for any reason of a grantee's employment or other service
relationship with the Company or a Subsidiary, the Company shall have the right,
in the case of unvested Restricted Stock, (1) to cause the forfeiture of such
shares of Restricted Stock for no consideration (2) to purchase all or any of
such shares of Restricted Stock at a price equal to the lower of (a) the price
paid to the Company for such shares of Restricted Stock or (b) the Fair Market
Value of such shares of Restricted Stock at the time of repurchase, (3) to waive
vesting requirements, (4) to permit continued vesting based on such criteria as
the Compensation Committee shall determine or (5) to provide for such other
treatment as the Compensation Committee shall determine and set forth in the
applicable agreement.. Nothing in the Plan shall be construed to give any person
the right to require the Company to purchase any Common Stock granted as
Restricted Stock.

 

Certificates representing Restricted Stock shall be imprinted with a legend to
the effect that the shares represented may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance with the
terms of the Restricted Stock Agreement. If shares of Restricted Stock are held
in book entry form, statements evidencing those shares shall include a similar
legend. If the Compensation Committee so determines, the holder of Restricted
Stock may be required to deposit certificates representing the Restricted Stock
with the President, Treasurer, Secretary or other officer of the Company or with
an escrow agent designated by the Compensation Committee, together with a stock
power or other instrument of transfer appropriately endorsed in blank.

 

8.METHOD OF GRANTING OPTIONS, STOCK AWARDS AND OTHER RIGHTS

 

The grant of Options, Stock Awards and Other Rights shall be made by action of
the Compensation Committee; provided, however, that if an individual to whom a
grant has been made fails to execute and deliver to the Compensation Committee a
Stock Option Agreement, Stock Award Agreement or agreement with respect to an
Other Award within thirty days after it is submitted to him, the Option, Stock
Award or Other Award granted under the agreement shall be voidable by the
Company at its election, without further notice to the grantee.

 

9.REQUIREMENTS OF LAW

 

The Company shall not be required to transfer Common Stock or to sell or issue
any shares upon the exercise of any Option or SAR or Other Award if the issuance
of such shares will result in a violation by the recipient or the Company of any
provisions of any law, statute or regulation of any governmental authority.
Specifically, in connection with the Securities Act of 1933, as amended from
time to time (the "Securities Act"), the Company shall not be required to issue
shares unless the Compensation Committee has received evidence satisfactory to
it to the effect that the holder of the Restricted Stock or the Option or SAR or
Other Award will not transfer such shares except pursuant to a registration
statement in effect under the Securities Act or unless an opinion of counsel
satisfactory to the Company has been received by the Company to the effect that
registration is not required. Any determination in this connection by the
Compensation Committee shall be conclusive. The Company shall not be obligated
to take any other affirmative action in order to cause the transfer of Common
Stock to comply with any law or regulations of any governmental authority,
including, without limitation, the Securities Act or applicable state securities
laws.

 

10.CHANGES IN CAPITAL STRUCTURE

 

In the event that the outstanding shares of Common Stock are hereafter changed
for a different number or kind of shares or other securities of the Company, by
reason of a reorganization, recapitalization, exchange of shares, stock split,
combination of shares or dividend payable in shares or other securities or in
the event of a similar corporate event, a corresponding adjustment shall be made
by the Compensation Committee in the number and kind of shares or other
securities covered by outstanding Options, Stock Awards and Other Rights and for
which Options, Stock Awards and Other Rights may be granted under the Plan. Any
such adjustment in outstanding Options shall be made without change in the total
price applicable to the unexercised portion of the Option, but the price per
share specified in each Stock Option Agreement shall be correspondingly
adjusted; provided, however, that no adjustment shall be made with respect to an
ISO that would constitute a modification as defined in Section 424 of the Code
without the consent of the holder. Any such adjustment made by the Compensation
Committee shall be conclusive and binding upon all affected persons, including
the Company and all award recipients.

 

If while unexercised Options remain outstanding under the Plan the Company
merges or consolidates with a wholly-owned subsidiary for the purpose of
reincorporating itself under the laws of another jurisdiction, the Optionees
will be entitled to acquire shares of common stock of the reincorporated Company
upon the same terms and conditions as were in effect immediately prior to such
reincorporation (unless such reincorporation involves a change in the number of
shares or the capitalization of the Company, in which case proportional
adjustments shall be made as provided above) and the Plan, unless otherwise
rescinded by the Board, will remain the Plan of the reincorporated Company.

 

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Except as otherwise provided in the preceding paragraph, if the Company or a
subsidiary is merged or consolidated with another corporation, whether or not
the Company is the surviving entity, or if the Company is liquidated or sells or
otherwise disposes of all or substantially all of its assets to another entity
while unexercised awards remain outstanding under the Plan, or if other
circumstances occur in which the Compensation Committee in its sole and absolute
discretion deems it appropriate for the provisions of this paragraph to apply
(in each case, an "Applicable Event"), then: (a) in the discretion of the
Compensation Committee, each holder of an outstanding award under the plan shall
be entitled, upon exercise or vesting of the award (as applicable), to receive
in lieu of shares of Common Stock, such stock or other securities or property as
he or she would have received had he exercised or vesting in the award
immediately prior to the Applicable Event; or (b) the Compensation Committee
may, in its sole and absolute discretion, cancel all outstanding and unexercised
awards as of the effective date of any such Applicable Event; or (c) the
Compensation Committee may, in its sole discretion, convert some or all awards
under the Plan into awards to purchase (or with respect to) the stock or other
securities of the surviving corporation pursuant to an Applicable Event; or (d)
the Compensation Committee may, in its sole and absolute discretion, cause the
outstanding and unexercised awards to be cancelled in exchange for a payment in
cash equal to the value (if any) of the shares subject to such award (less any
applicable exercise or base price), pursuant to an Applicable Event; provided,
however, that notice of any cancellation pursuant to clause (b) above shall be
given to each holder of an Option or SAR not less than thirty days preceding the
effective date of such Applicable Event. The Compensation Committee may, in its
sole discretion, provide for a combination of the foregoing treatments and/or
for different treatment hereunder of different awards and there is no
requirement for all awards of the same type to receive the same treatment
hereunder. Notwithstanding the foregoing, immediately upon the occurrence of a
"Change in Control" or "Termination Event" (as each is defined on Exhibit A
hereto) all awards issued and outstanding under the Plan shall become fully
vested and exercisable (as the case may be), whether or not the holder of the
award experiences a termination of employment or service in connection with the
Change in Control.

 

Except as expressly provided to the contrary in this Section 10 or as otherwise
determined by the Compensation Committee, the issuance by the Company of shares
of stock of any class for cash or property or for services, either upon direct
sale, upon the exercise of rights or warrants, upon conversion of shares or
obligations of the Company convertible into such shares or other securities or
otherwise, shall not affect the number, class or price of shares of Common Stock
then subject to outstanding Options, Stock Awards or Other Rights.

 

11.FORFEITURE FOR DISHONESTY, VIOLATION OF AGREEMENTS OR TERMINATION FOR CAUSE

 

Notwithstanding any provision of the Plan to the contrary, if the Compensation
Committee determines, after full consideration of the facts, that:

 

(a)the Optionee (or holder of a Stock Award or Other Right) has been engaged in
fraud, embezzlement or theft in the course of his or her employment by or
involvement with the Company or a Subsidiary, has made unauthorized disclosure
of trade secrets or other proprietary information of the Company or a Subsidiary
or of a third party who has entrusted such information to the Company or a
Subsidiary, or has been convicted of a felony, or crime involving moral
turpitude or any other crime which reflects negatively upon the Company; or

 

(b)the Optionee (or holder of a Stock Award or Other Right) has violated the
terms of any employment, noncompetition, nonsolicitation, confidentiality,
nondisclosure or other similar agreement with the Company to which he is a
party; or

 

(c)the employment or involvement with the Company or a Subsidiary of the
Optionee (or holder of a Stock Award or Other Right) was terminated for "cause,"
as defined in any employment agreement with the Optionee (or holder of a Stock
Award or Other Right), if applicable, or if there is no such agreement, as
determined by the Compensation Committee, which may determine that "cause"
includes among other matters the willful failure or refusal of the Optionee (or
holder of a Stock Award or Other Right) to perform and carry out his or her
assigned duties and responsibilities diligently and in a manner satisfactory to
the Compensation Committee;

 

then the recipient's right to exercise an Option or SAR shall terminate as of
the date of such act (in the case of (a) or (b)) or such termination (in the
case of (c)), the recipient shall forfeit all unexercised Options and SARS (or
the holder shall forfeit all Other Rights) and the Company shall have the right
to repurchase all or any part of the shares of Common Stock acquired by the
recipient upon any previous exercise of any Option or SAR (or any previous
acquisition by the holder of a Stock Award, whether then vested or unvested), at
a price equal to the lower of (a) the amount paid to the Company upon such
exercise or acquisition, or (b) the Fair Market Value of such shares at the time
of repurchase. If an Optionee or holder of a SAR whose behavior the Company
asserts falls within the provisions of the clauses above has exercised or
attempts to exercise an Option or SAR prior to consideration of the application
of this Section 11 or prior to a decision of the Compensation Committee, the
Company shall not be required to recognize such exercise until the Compensation
Committee has made its decision and, in the event any exercise shall have taken
place, it shall be of no force and effect (and shall be void ab initio) if the
Compensation Committee makes an adverse determination; provided, however, that
if the Compensation Committee finds in favor of the recipient then the recipient
will be deemed to have exercised the Option or SAR as of the date he or she
originally gave notice of his or her attempt to exercise or actual exercise, as
the case may be. The decision of the Compensation Committee as to the cause of
an Optionee's (or holder of a Stock Award or Other Right) discharge and the
damage done to the Company shall be final, binding and conclusive. No decision
of the Compensation Committee, however, shall affect in any manner the finality
of the discharge of such Optionee (or holder of a Stock Award or Other Right) by
the Company. For purposes of this Section 11, reference to the Company shall
include any Subsidiary. Notwithstanding anything herein to the contrary, the
Compensation Committee may provide, either in an award agreement or separately,
that the provisions of this Section 11 shall not apply following a change in
control of the Company (as defined by the Compensation Committee).

 

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12.MISCELLANEOUS

 

(a)No Guarantee of Employment or Other Service Relationship. Neither the Plan
nor any Stock Option Agreement, Stock Award Agreement or agreement with respect
to an Other Award shall give an employee the right to continue in the employment
of the Company or a Subsidiary or give the Company or a Subsidiary the right to
require an employee to continue in employment.

 

Neither the Plan nor any Stock Option Agreement, Stock Award Agreement or
agreement with respect to an Other Award shall give a director or other service
provider the right to continue to perform services for the Company or a
Subsidiary or give the Company or a Subsidiary the right to require the director
or service provider to continue to perform services.

 

(b)Tax Withholding. To the extent required by law, the Company shall withhold or
cause to be withheld income and other taxes with respect to any income
recognized by a recipient by reason of the exercise or vesting of an Option or
Stock Award, or payments with respect to Other Rights, and as a condition to the
receipt of any Option, Stock Award or Other Right the Optionee shall agree that
if the amount payable to him by the Company and any Subsidiary in the ordinary
course is insufficient to pay such taxes, then he shall upon the request of the
Company pay to the Company an amount sufficient to satisfy its tax withholding
obligations.

 

Without limiting the foregoing, the Compensation Committee may in its discretion
permit any Optionee's (or holder of a Stock Award or Other Right) withholding
obligation to be paid in whole or in part in the form of shares of Common Stock
by withholding from the shares to be issued or by accepting delivery from the
Optionee (or holder of a Stock Award or Other Right) of shares already owned by
him. The Fair Market Value of the shares for such purposes shall be determined
as set forth in Section 5(b). An Optionee (or holder of a Stock Award or Other
Right) may not make any such payment in the form of shares of Common Stock
acquired upon the exercise of an ISO until the shares have been held by him for
at least two years after the date the ISO was granted and at least one year
after the date the ISO was exercised. If payment of withholding taxes is made in
whole or in part in shares of Common Stock, the Optionee (or holder of a Stock
Award or Other Right) shall deliver to the Company stock certificates registered
in his name representing shares of Common Stock legally and beneficially owned
by him, fully vested and free of all liens, claims and encumbrances of every
kind, duly endorsed or accompanied by stock powers duly endorsed by the record
holder of the shares represented by such stock certificates. The Compensation
Committee may approve comparable procedures to those set forth in the preceding
sentence in the event of shares held in book-entry form. If the Optionee (or
holder of a Stock Award or Other Right) is subject to Section 16(a) of the
Exchange Act, his ability to pay his withholding obligation in the form of
shares of Common Stock shall be subject to such additional restrictions as may
be necessary to avoid any transaction that might give rise to liability under
Section 16(b) of the Exchange Act.

 

(c)Use of Proceeds. The proceeds from the issuance of shares pursuant to the
exercise of Options shall constitute general funds of the Company.

 

(d)Certain Vesting Rules. Notwithstanding anything in the Plan to the contrary,
the Compensation Committee shall have the authority to (1) grant awards
hereunder to members of the Board that are, to the extent determined by the
Compensation Committee, vested upon grant and (2) accelerate awards upon a
termination of a participant’s employment or service (which the Compensation
Committee may do in its discretion); any such acceleration provisions may be
(but are not required to be) set forth in an award agreement (which may, without
limitation, provide for accelerated vesting upon the death of a participant or
upon a change in control or similar event).

 

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(e)Construction. All masculine pronouns used in this Plan shall include both
sexes; the singular shall include the plural and the plural the singular unless
the context otherwise requires. The titles of the sections of the Plan are
included for convenience only and shall not be construed as modifying or
affecting their provisions. Any reference herein to a statutory or regulatory
provision includes the provision as amended, supplemented, or replaced.

 

(f)Governing Law. This Plan shall be governed by and construed in accordance
with the laws of the State of Maryland, without regard to the principles of
conflict of laws.

 

13.EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN

 

The Plan was originally effective as of the date of the Company's 2014 Annual
Meeting of Stockholders, and this amendment and restatement shall be effective
as of the date of the Company's 2020 Annual Meeting of Stockholders (the
"Restatement Effective Date") subject to approval by the holders of a majority
of the outstanding shares of capital stock present, or represented, and entitled
to vote thereon (voting as a single class) at a duly held meeting of the
stockholders of the Company. Awards of Options, Other Rights or Stock Awards
that are conditioned upon the approval of the Plan by the stockholders may be
granted prior to approval. The Compensation Committee may grant Options, Stock
Awards or Other Rights under the Plan from time to time until the close of
business on June 9, 2030. The Board may at any time amend the Plan; provided,
however, that without approval of the Company's stockholders there shall be no:
(a) change in the number of shares of Common Stock that may be issued under the
Plan, except by operation of the provisions of Section 10, either to any one
participant or in the aggregate; (b) change in the class of persons eligible to
receive Options, Stock Award or Other Rights; or (c) other change in the Plan
that requires stockholder approval under applicable law or regulation. No
amendment shall adversely affect outstanding Options (or Stock Awards or Other
Rights) without the consent of the Optionee (or holder of the Stock Award or
Other Right). The Plan may be terminated at any time by action of the Board, but
any such termination will not terminate any Option, Stock Award or Other Right
then outstanding without the consent of the Optionee or the holder of such Stock
Award or Other Right.

 

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EXHIBIT A

 

A “Change in Control” shall be deemed to have occurred if any of the events set
forth in any one of the following paragraphs shall have occurred:

 

(a)any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 50% or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the Company’s then outstanding securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in paragraph
(c)(i) below;

 

(b)the following individuals cease for any reason to constitute a majority of
the number of Directors then serving: individuals who, on the date of the
Agreement, constitute the Board and any new Director (other than a Director
whose initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of Directors) whose appointment or election by the Board or
nomination for election by the Company’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the Directors then in
office who either were Directors on the date of the Agreement or whose
appointment, election or nomination for election was previously so approved or
recommended;

 

(c)there is consummated a merger or consolidation of the Company or any direct
or indirect subsidiary of the Company with any other entity, other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 50% of the
combined voting power of the securities of the Company or such surviving entity
or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
50% or more of the combined voting power of the Company’s then outstanding
securities; or

 

(d)the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.

 

A “Termination Event” shall occur if The RMR Group LLC (or any entity controlled
by, under common control with or controlling The RMR Group LLC) ceases to be the
manager or shared services provider to the Company.

 

For purposes of the definitions set forth on this Exhibit A, the following
definitions shall apply, with capitalized terms used but not defined in this
Exhibit A having the meaning set forth in the Plan:

 

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act.

 

“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.

 

“Director” is a member of the Board of Directors of the Company.

 

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

 

“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities and (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of shares of the Company.

 

 

 

 

 

 

 

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