Exhibit 10.17

 

AUSTIN EV, INC.

 

2017 LONG TERM INCENTIVE PLAN

 

 

 

 

TABLE OF CONTENTS

 

1. Purpose 1 2. Definitions 1 3. Administration 5   (a) Authority of the
Committee 5   (b) Manner of Exercise of Committee Authority 6   (c) Limitation
of Liability 6 4. Stock Subject to Plan 6   (a) Overall Number of Shares
Available for Delivery 6   (b) Application of Limitation to Grants of Awards 7  
(c) Availability of Shares Not Issued under Awards 7   (d) Stock Offered 7 5.
Eligibility; Per Person Award Limitations 7 6. Specific Terms of Awards 7   (a)
General 7   (b) Options 8   (c) Stock Appreciation Rights 9   (d) Restricted
Stock 10   (e) Restricted Stock Units 11   (f) Bonus Stock and Awards in Lieu of
Obligations 11   (g) Dividend Equivalents 11   (h) Other Stock-Based Awards 12
7. Certain Provisions Applicable to Awards 12   (a) Termination of Employment 12
  (b) Stand-Alone, Additional, Tandem, and Substitute Awards 12   (c) Term of
Awards 12   (d) Form and Timing of Payment under Awards; Deferrals 13   (e)
Exemptions from Section 16(b) Liability 13   (f) Non-Competition Agreement 13 8.
Performance and Annual Incentive Awards 13   (a) Performance Conditions 13   (b)
Performance Awards Granted to Designated Covered Employees 13   (c) Annual
Incentive Awards Granted to Designated Covered Employees 15   (d) Written
Determinations 16   (e) Status of Subsection 8(b) and Subsection 8(c) Awards
under Section 162(m) of the Code 17 9. Subdivision or Consolidation;
Recapitalization; Change in Control; Reorganization 17   (a) Existence of Plans
and Awards 17   (b) Subdivision or Consolidation of Shares 17   (c) Corporate
Recapitalization 18   (d) Additional Issuances 18   (e) Change in Control 19  
(f) Change in Control Price 19 10. General Provisions 20   (a) Restricted
Securities 20   (b) Transferability 20   (c) Right of First Refusal 21   (d)
Purchase Option 24   (e) Taxes 25   (f) Changes to this Plan and Awards 25   (g)
Limitation on Rights Conferred under Plan 25   (h) Unfunded Status of Awards 26
  (i) Nonexclusivity of this Plan 26   (j) Fractional Shares 26   (k)
Severability 26   (l) Governing Law 26   (m) Conditions to Delivery of Stock 27
  (n) Section 409A of the Code 27   (o) Plan Effectiveness 27

 

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AUSTIN EV, INC.

2017 LONG TERM INCENTIVE PLAN

 

1. Purpose. The purpose of the AUSTIN EV, INC. 2017 LONG TERM INCENTIVE PLAN
(the “Plan”) is to provide a means through which AUSTIN EV, INC., a Texas
corporation (the “Company”), and its Subsidiaries may attract and retain able
persons as employees, nonemployee directors and consultants of the Company and
its Subsidiaries and to provide a means whereby those persons upon whom the
responsibilities of the successful administration and management of the Company
and its Subsidiaries rest, and whose present and potential contributions to the
welfare of the Company and its Subsidiaries are of importance, can acquire and
maintain stock ownership, or awards the value of which is tied to the
performance of the Company, thereby strengthening their concern for the welfare
of the Company and its Subsidiaries, and their desire to remain employed. A
further purpose of this Plan is to provide such employees, nonemployee directors
and consultants with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, this Plan primarily
provides for the granting of Incentive Stock Options, Nonqualified Stock
Options, Restricted Stock Awards, Restricted Stock Units, Stock Appreciation
Rights or any combination of the foregoing, as is best suited to the
circumstances of the particular individual as provided herein.

 

2. Definitions. For purposes of this Plan, the following terms shall be defined
as set forth below, in addition to such terms defined in Section 1 hereof:

 

(a) “Annual Incentive Award” means a conditional right granted to a Participant
under Subsection 8(c) hereof to receive a cash payment, Stock or other Award,
unless otherwise determined by the Committee, after the end of a specified year.

 

(b) “Award” means any Option, SAR (including Limited SAR), Restricted Stock
Award, Restricted Stock Unit, Bonus Stock, Dividend Equivalent, Other
Stock-Based Award, Performance Award or Annual Incentive Award, together with
any other right or interest granted to a Participant under this Plan.

 

(c) “Beneficiary” means one or more persons, trusts or other entities which have
been designated by a Participant, in his or her most recent written beneficiary
designation filed with the Committee, to receive the benefits specified under
this Plan upon such Participant’s death or to which Awards or other rights are
transferred if and to the extent permitted under Subsection 10(b) hereof. If,
upon a Participant’s death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the persons, trusts or
other entities entitled by will or the laws of descent and distribution to
receive such benefits.

 

(d) “Board” means the Company’s Board of Directors.

 

(e) “Business Day” means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the State of Texas are authorized or obligated by
law or executive order to close.

 

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(f) “Change in Control” means, unless otherwise defined in an Award agreement,
the occurrence of any of the following events:

 

(i) A “change in the ownership of the Company” which shall occur on the date
that any one person, or more than one person acting as a group, acquires
ownership of stock in the Company that, together with stock held by such person
or group, constitutes more than 50% of the total fair market value or total
voting power of the stock of the Company; provided, however, that if any one
person or more than one person acting as a group, is considered to own more than
50% of the total fair market value or total voting power of the stock of the
Company, the acquisition of additional stock by the same person or persons will
not be considered a “change in the ownership of the Company” (or to cause a
“change in the effective control of the Company” within the meaning of
Subsection 2(f)(ii) below) and an increase of the effective percentage of stock
owned by any one person, or persons acting as a group, as a result of a
transaction in which the Company acquires its stock in exchange for property
will be treated as an acquisition of stock for purposes of this paragraph;
provided, further, however, that for purposes of this Subsection 2(f)(i), the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company, or (B) any
acquisition by investors (immediately prior to such acquisition) in the Company
for financing purposes, as determined by the Committee in its sole discretion.
This Subsection 2(f)(i) applies only when there is a transfer of the stock of
the Company (or issuance of stock) and stock in the Company remains outstanding
after the transaction.

 

(ii) A “change in the effective control of the Company” which shall occur on the
date that either (A) any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve month period ending on the date of
the most recent acquisition by such person or persons) ownership of stock of the
Company possessing 30% or more of the total voting power of the stock of the
Company, except for (1) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by the
Company, or (2) any acquisition by investors (immediately prior to such
acquisition) in the Company for financing purposes, as determined by the
Committee in its sole discretion; or (B) a majority of the members of the Board
are replaced during any twelve-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board prior to the
date of the appointment or election. For purposes of a “change in the effective
control of the Company,” if any one person, or more than one person acting as a
group, is considered to effectively control the Company within the meaning of
this Subsection 2(f)(ii), the acquisition of additional control of the Company
by the same person or persons is not considered a “change in the effective
control of the Company,” or to cause a “change in the ownership of the Company”
within the meaning of Subsection 2(f)(i) above.

 

(iii) A “change in the ownership of a substantial portion of the Company’s
assets” which shall occur on the date that any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve month
period ending on the date of the most recent acquisition by such person or
persons) assets of the Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of all the assets of
the Company immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the Company,
or the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets. Any transfer of assets to an entity
that is controlled by the shareholders of the Company immediately after the
transfer, as provided in Treasury Regulation § 1.409A-3(i)(5)(vii), shall not
constitute a Change in Control.

 

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For purposes of this Subsection 2(f), the provisions of Section 318(a) of the
Code regarding the constructive ownership of stock will apply to determine stock
ownership; provided, however, that, stock underlying unvested options (including
options exercisable for stock that is not substantially vested) will not be
treated as owned by the individual who holds the option. In addition, for
purposes of this Subsection 2(f) and except as otherwise provided in an Award
agreement, “Company” includes (x) the Company, (y) the entity for whom a
Participant performs the services for which an Award is granted, and (z) an
entity that is a shareholder owning more than 50% of the total fair market value
and total voting power (a “Majority Shareholder”) of the Company or the entity
identified in (y) above, or any entity in a chain of entities in which each
entity is a Majority Shareholder of another entity in the chain, ending in the
Company or the entity identified in (y) above.

 

(g) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations
thereto.

 

(h) “Committee” means a committee of two or more directors designated by the
Board to administer this Plan; provided, however, that, unless otherwise
determined by the Board, the Committee shall consist solely of two or more
directors, each of whom shall be (i) a “nonemployee director” within the meaning
of Rule 16b-3, and (ii) an “outside director” as defined under section 162(m) of
the Code unless administration of this Plan by “outside directors” is not then
required in order to qualify for tax deductibility under section 162(m) of the
Code.

 

(i) “Covered Employee” means an Eligible Person who is a Covered Employee as
specified in Subsection 8(e) of this Plan.

 

(j) “Dividend Equivalent” means a right, granted to a Participant under
Subsection 6(g), to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.

 

(k) “Effective Date” means January 1, 2017.

 

(l) “Eligible Person” means all officers and employees of the Company or of any
Subsidiary, and other persons who provide services to the Company or any of its
Subsidiaries, including directors of the Company. An employee on leave of
absence may be considered as still in the employ of the Company or a Subsidiary
for purposes of eligibility for participation in this Plan.

 

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including rules thereunder and successor provisions and rules
thereto.

 

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(n) “Fair Market Value” means (A) as of any specified date other than the date
of a Qualifying Public Offering, (i) if the Stock is listed on a national
securities exchange, then the closing sales price per share of the Stock, as
reported on the consolidated transaction reporting system for the principal
national securities exchange on which shares of Stock are listed, on that date
(or if no sale is reported on that date, on the last preceding date on which
such sale of the Stock are so reported), (ii) if the Stock is not listed on a
national securities exchange, but is traded over the counter, then the average
of the closing bid and asked price on that date (or if there are no quotations
available for such date, on the last preceding date on which such quotations
shall be available, as reported by an inter-dealer quotation system), or (iii)
if the Stock is not so listed on a national securities exchange or traded over
the counter, then the fair market value of a share of Stock as determined by the
Committee, in its discretion in good faith, in such manner as it deems
appropriate; or (B) on the date of a Qualifying Public Offering of Stock, the
offering price under such public offering.

 

(o) “Incentive Stock Option” or “ISO” means any Option intended to be and
designated as an incentive stock option within the meaning of section 422 of the
Code or any successor provision thereto.

 

(p) “Nonqualified Stock Option” means any Option that does not meet the
requirements of an Incentive Stock Option.

 

(q) “Option” means a right, granted to a Participant under Subsection 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.

 

(r) “Other Stock-Based Awards” means Awards granted to a Participant under
Subsection 6(i) hereof.

 

(s) “Participant” means a person who has been granted an Award under this Plan
which remains outstanding, including a person who is no longer an Eligible
Person.

 

(t) “Performance Unit” means a right, granted to a Participant under Section 8
hereof, to receive Awards based upon performance criteria specified by the
Committee.

 

(u) “Person” means any person or entity of any nature whatsoever, specifically
including an individual, a firm, a company, a corporation, a partnership, a
limited liability company, a trust or other entity; a Person, together with that
Person’s Affiliates and Associates (as those terms are defined in Rule 12b-2
under the Exchange Act), and any Persons acting as a partnership, limited
partnership, joint venture, association, syndicate or other group (whether or
not formally organized), or otherwise acting jointly or in concert or in a
coordinated or consciously parallel manner (whether or not pursuant to any
express agreement), for the purpose of acquiring, holding, voting or disposing
of securities of the Company with such Person, shall be deemed a single
“Person.”

 

(v) “Qualifying Public Offering” shall mean a firm commitment underwritten
public offering of Stock for cash where the shares of Stock registered under the
Securities Act are listed on a national securities exchange.

 

(w) “Qualified Member” means a member of the Committee who is a “nonemployee
Director” within the meaning of Rule 16b-3(b)(3) and an “outside director”
within the meaning of Treasury Regulation § 1.162-27 under section 162(m) of the
Code.

 

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(x) “Restricted Stock” means Stock granted to a Participant under Subsection
6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.

 

(y) “Restricted Stock Unit” means a right, granted to a Participant under
Subsection 6(e) hereof, to receive Stock, cash or a combination thereof at the
end of a specified deferral period.

 

(z) “Rule 16b-3” means Rule 16b-3, promulgated by the Securities and Exchange
Commission under section 16 of the Exchange Act, as from time to time in effect
and applicable to this Plan and Participants.

 

(aa) “Securities Act” means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be amended
from time to time.

 

(bb) “Stock” means the Company’s Common Stock, par value $0.001 per share, and
such other securities as may be substituted (or resubstituted) for Stock
pursuant to Section 9.

 

(cc) “Stock Appreciation Rights” or “SAR” means a right granted to a Participant
under Subsection 6(c) hereof.

 

(dd) “Subsidiary” means with respect to the Company, any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by the Company.

 

3. Administration.

 

(a) Authority of the Committee. This Plan shall be administered by the Committee
except to the extent the Board elects to administer this Plan, in which case
references herein to the “Committee” shall be deemed to include references to
the “Board.” Subject to the express provisions of the Plan and Rule 16b-3, the
Committee shall have the authority, in its sole and absolute discretion, to (i)
adopt, amend, and rescind administrative and interpretive rules and regulations
relating to the Plan; (ii) determine the Eligible Persons to whom, and the time
or times at which, Awards shall be granted; (iii) determine the amount of cash
and the number of shares of Stock, Stock Appreciation Rights, Restricted Stock
Units or Restricted Stock Awards, or any combination thereof, that shall be the
subject of each Award; (iv) determine the terms and provisions of each Award
agreement (which need not be identical), including provisions defining or
otherwise relating to (A) the term and the period or periods and extent of
exercisability of the Options, (B) the extent to which the transferability of
shares of Stock issued or transferred pursuant to any Award is restricted, (C)
except as otherwise provided herein, the effect of termination of employment, or
the service relationship with the Company, of a Participant on the Award, and
(D) the effect of approved leaves of absence (consistent with any applicable
regulations of the Internal Revenue Service); (v) accelerate the time of
exercisability of any Award that has been granted; (vi) construe the respective
Award agreements and the Plan; (vii) make determinations of the Fair Market
Value of the Stock pursuant to the Plan; (viii) delegate its duties under the
Plan to such agents as it may appoint from time to time, provided that the
Committee may not delegate its duties with respect to making Awards to, or
otherwise with respect to Awards granted to, Eligible Persons who are subject to
section 16(b) of the Exchange Act or section 162(m) of the Code; and (ix) make
all other determinations, perform all other acts, and exercise all other powers
and authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee deems
appropriate. Subject to Rule 16b-3 and section 162(m) of the Code, the Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
the Plan, in any Award, or in any Award agreement in the manner and to the
extent it deems necessary or desirable to carry the Plan into effect, and the
Committee shall be the sole and final judge of that necessity or desirability.
The determinations of the Committee on the matters referred to in this
Subsection 3(a) shall be final and conclusive.

 

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(b) Manner of Exercise of Committee Authority. At any time that a member of the
Committee is not a Qualified Member, any action of the Committee relating to an
Award granted or to be granted to a Participant who is then subject to section
16 of the Exchange Act in respect of the Company, or relating to an Award
intended by the Committee to qualify as “performance-based compensation” within
the meaning of section 162(m) of the Code and regulations thereunder, may be
taken either (i) by a subcommittee, designated by the Committee, composed solely
of two or more Qualified Members, or (ii) by the Committee but with each such
member who is not a Qualified Member abstaining or recusing himself or herself
from such action; provided, however, that, upon such abstention or recusal, the
Committee remains composed solely of two or more Qualified Members. Such action,
authorized by such a subcommittee or by the Committee upon the abstention or
recusal of such non-Qualified Member(s), shall be the action of the Committee
for purposes of this Plan. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its Subsidiaries,
shareholders, Participants, Beneficiaries, and transferees under Subsection
10(b) hereof or other persons claiming rights from or through a Participant. The
express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any Subsidiary, or committees thereof, the authority, subject
to such terms as the Committee shall determine, to perform such functions,
including administrative functions, as the Committee may determine, to the
extent that such delegation will not result in the loss of an exemption under
Rule 16b-3(d)(1) for Awards granted to Participants subject to section 16 of the
Exchange Act in respect of the Company and will not cause Awards intended to
qualify as “performance-based compensation” under section 162(m) of the Code to
fail to so qualify.

 

(c) Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the Company or a
Subsidiary, the Company’s legal counsel, independent auditors, consultants or
any other agents assisting in the administration of this Plan. Members of the
Committee and any officer or employee of the Company or a Subsidiary acting at
the direction or on behalf of the Committee shall not be personally liable for
any action or determination taken or made in good faith with respect to this
Plan, and shall, to the fullest extent permitted by law, be indemnified and held
harmless by the Company with respect to any such action or determination.

 

4. Stock Subject to Plan.

 

(a) Overall Number of Shares Available for Delivery. Subject to adjustment in a
manner consistent with any adjustment made pursuant to Section 9, the total
number of shares of Stock reserved and available for issuance in connection with
Awards under this Plan shall not exceed 125,000 shares (all of which shares are
available for ISOs).

 

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(b) Application of Limitation to Grants of Awards. No Award may be granted if
the number of shares of Stock to be delivered in connection with such Award
exceeds the number of shares of Stock remaining available under this Plan minus
the number of shares of Stock issuable in settlement of or relating to
then-outstanding Awards. The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the number of
shares of Stock actually delivered differs from the number of shares previously
counted in connection with an Award.

 

(c) Availability of Shares Not Issued under Awards. Shares of Stock subject to
an Award under this Plan that expire or are canceled, forfeited, settled in cash
or otherwise terminated without an issuance of shares to the Participant,
including (i) the number of shares withheld in payment of any exercise or
purchase price of an Award or taxes relating to Awards, and (ii) the number of
shares surrendered in payment of any exercise or purchase price of an Award or
taxes relating to any Award, will again be available for Awards under this Plan,
except that if any such shares could not again be available for Awards to a
particular Participant under any applicable law or regulation, such shares shall
be available exclusively for Awards to Participants who are not subject to such
limitation.

 

(d) Stock Offered. The shares to be delivered under the Plan shall be made
available from (i) authorized but unissued shares of Stock, (ii) Stock held in
the treasury of the Company, or (iii) previously issued shares of Stock
reacquired by the Company, including shares purchased on the open market.

 

5. Eligibility; Per Person Award Limitations. Awards may be granted under this
Plan only to Persons who are Eligible Persons at the time of grant thereof or in
connection with the severance or retirement of Eligible Individuals. In each
calendar year, during any part of which this Plan is in effect, a Covered
Employee may not be granted (a) Awards (other than Awards designated to be paid
only in cash or the settlement of which is not based on a number of shares of
Stock) relating to more than 200,000 shares of Stock, subject to adjustment in a
manner consistent with any adjustment made pursuant to Section 9 and (b) Awards
designated to be paid only in cash, or the settlement of which is not based on a
number of shares of Stock, having a value determined on the date of grant in
excess of $1,000,000.

 

6. Specific Terms of Awards.

 

(a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Subsection 10(f)), such
additional terms and conditions, not inconsistent with the provisions of this
Plan, as the Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment by the Participant, or
termination of the Participant’s service relationship with the Company, and
terms permitting a Participant to make elections relating to his or her Award.
The Committee shall retain full power and discretion to accelerate, waive or
modify, at any time, any term or condition of an Award that is not mandatory
under this Plan; provided, however, that the Committee shall not have any
discretion to accelerate, waive or modify any term or condition of an Award that
is intended to qualify as “performance-based compensation” for purposes of
section 162(m) of the Code if such discretion would cause the Award to not so
qualify.

 

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(b) Options. The Committee is authorized to grant Options to Participants on the
following terms and conditions:

 

(i) Exercise Price. Each Option agreement shall state the exercise price per
share of Stock (the “Exercise Price”); provided, however, that the Exercise
Price per share of Stock subject to an Option shall not be less than the greater
of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value
per share of the Stock as of the date of grant of the Option (or, with respect
to an ISO, in the case of an individual who owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or its
parent or any subsidiary, 110% of the Fair Market Value per share of the Stock
on the date of grant).

 

(ii) Time and Method of Exercise. The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment, including without
limitation cash, Stock, other Awards or awards granted under other plans of the
Company or any Subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants, including, but not limited to, the delivery of
Restricted Stock subject to Subsection 6(d). In the case of an exercise whereby
the Exercise Price is paid with Stock, such Stock shall be valued as of the date
of exercise.

 

(iii) ISOs. The terms of any ISO granted under this Plan shall comply in all
respects with the provisions of section 422 of the Code. Anything in this Plan
to the contrary notwithstanding, no term of this Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under this Plan be
exercised, so as to disqualify either this Plan or any ISO under section 422 of
the Code, unless the Participant has first requested the change that will result
in such disqualification. ISOs shall not be granted more than ten (10) years
after the earlier of the adoption of this Plan or the approval of this Plan by
the Company’s shareholders. Notwithstanding the foregoing, the Fair Market Value
of shares of Stock subject to an ISO and the aggregate Fair Market Value of
shares of stock of any parent or Subsidiary corporation (within the meaning of
sections 424(e) and (f) of the Code) subject to any other ISO (within the
meaning of section 422 of the Code)) of the Company or a parent or Subsidiary
corporation (within the meaning of sections 424(e) and (f) of the Code) that
first becomes purchasable by a Participant in any calendar year may not (with
respect to that Participant) exceed $100,000, or such other amount as may be
prescribed under section 422 of the Code or applicable regulations or rulings
from time to time. As used in the previous sentence, Fair Market Value shall be
determined as of the date the ISOs are granted. Failure to comply with this
provision shall not impair the enforceability or exercisability of any Option
but shall cause the excess amount of shares to be reclassified in accordance
with the Code.

 

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(c) Stock Appreciation Rights. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

 

(i) Right to Payment. An SAR shall confer on the Participant to whom it is
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise over (B) the grant
price of the SAR as determined by the Committee.

 

(ii) Rights Related to Options. An SAR granted in connection with an Option
shall entitle a Participant, upon exercise, to surrender that Option or any
portion thereof, to the extent unexercised, and to receive payment of an amount
computed pursuant to Subsection 6(c)(ii)(B). That Option shall then cease to be
exercisable to the extent surrendered. SARs granted in connection with an Option
shall be subject to the terms of the Award agreement governing the Option, which
shall comply with the following provisions in addition to those applicable to
Options:

 

(A) An SAR granted in connection with an Option shall be exercisable only at
such time or times and only to the extent that the related Option is
exercisable.

 

(B) Upon the exercise of an SAR related to an Option, a Participant shall be
entitled to receive payment from the Company of an amount determined by
multiplying:

 

(1) the difference obtained by subtracting the exercise price of a share of
Stock specified in the related Option from the Fair Market Value of a share of
Stock on the date of exercise of the SAR, by

 

(2) the number of shares as to which that SAR has been exercised.

 

(iii) Right Without Option. An SAR granted independent of an Option shall be
exercisable as determined by the Committee and set forth in the Award agreement
governing the SAR, which Award agreement shall comply with the following
provisions:

 

(A) Each Award agreement shall state the total number of shares of Stock to
which the SAR relates.

 

(B) Each Award agreement shall state the time or periods in which the right to
exercise the SAR or a portion thereof shall vest and the number of shares of
Stock for which the right to exercise the SAR shall vest at each such time or
period.

 

(C) Each Award agreement shall state the date at which the SARs shall expire if
not previously exercised.

 

 9 

 

 

(D) Each SAR shall entitle a participant, upon exercise thereof, to receive
payment of an amount determined by multiplying:

 

(1) the difference obtained by subtracting the Fair Market Value of a share of
Stock on the date of grant of the SAR from the Fair Market Value of a share of
Stock on the date of exercise of that SAR, by

 

(2) the number of shares as to which the SAR has been exercised.

 

(iv) Terms. Except as otherwise provided herein, the Committee shall determine
at the date of grant or thereafter, the time or times at which and the
circumstances under which an SAR may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements),
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR.
SARs may be either freestanding or in tandem with other Awards.

 

(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Participants on the following terms and conditions:

 

(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant
or thereafter. During the restricted period applicable to the Restricted Stock,
the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.

 

(ii) Certificates for Stock. Restricted Stock granted under this Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

 

(iii) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require or permit a Participant to elect
that any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the purchase
of additional Awards under this Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split or Stock dividend,
and other property distributed as a dividend, shall be subject to restrictions
and a risk of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.

 

 10 

 

 

(e) Restricted Stock Units. The Committee is authorized to grant Restricted
Stock Units to Participants, which are rights to receive Stock or cash, as
determined by the Committee, at the end of a specified deferral period, subject
to the following terms and conditions:

 

(i) Award and Restrictions. Settlement of an Award of Restricted Stock Units
shall occur upon expiration of the deferral period specified for such Restricted
Stock Unit by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Restricted Stock Units shall be subject to such
restrictions (which may include a risk of forfeiture) as the Committee may
impose, if any, which restrictions may lapse at the expiration of the deferral
period or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine.
Restricted Stock Units shall be satisfied by the delivery of cash or Stock in
the amount equal to the Fair Market Value of the specified number of shares of
Stock covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.

 

(ii) Dividend Equivalents. Unless otherwise determined by the Committee at date
of grant, Dividend Equivalents on the specified number of shares of Stock
covered by an Award of Restricted Stock Units shall be either (A) paid with
respect to such Restricted Stock Units on the dividend payment date in cash or
in shares of unrestricted Stock having a Fair Market Value equal to the amount
of such dividends, or (B) deferred with respect to such Restricted Stock Units
and the amount or value thereof automatically deemed reinvested in additional
Restricted Stock Units, other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect.

 

(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized
to grant Stock as a bonus, or to grant Stock or other Awards in lieu of
obligations to pay cash or deliver other property under this Plan or under other
plans or compensatory arrangements, provided that, in the case of Participants
subject to section 16 of the Exchange Act, the amount of such grants remains
within the discretion of the Committee to the extent necessary to ensure that
acquisitions of Stock or other Awards are exempt from liability under section
16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to
such other terms as shall be determined by the Committee. In the case of any
grant of Stock to an officer of the Company or a Subsidiary in lieu of salary or
other cash compensation, the number of shares granted in place of such
compensation shall be reasonable, as determined by the Committee.

 

(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.

 

 11 

 

 

(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of this Plan, including without limitation
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
Subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Subsection 6(h) shall be purchased for such consideration,
paid for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
this Plan, may also be granted pursuant to this Subsection 6(h).

 

7. Certain Provisions Applicable to Awards.

 

(a) Termination of Employment. Except as provided herein, the treatment of an
Award upon a termination of employment or any other service relationship by and
between a Participant and the Company or any Subsidiary shall be specified in
the agreement controlling such Award.

 

(b) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under
this Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, any Subsidiary, or any
business entity to be acquired by the Company or a Subsidiary, or any other
right of a Participant to receive payment from the Company or any Subsidiary.
Such additional, tandem and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for another Award, the
Committee shall require the surrender of such other Award in consideration for
the grant of the new Award. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the
Company or any Subsidiary, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation, or in which the exercise price,
grant price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Stock minus the
value of the cash compensation surrendered.

 

(c) Term of Awards. Except as specified herein, the term of each Award shall be
for such period as may be determined by the Committee; provided, however, that
in no event shall the term of any Option or SAR exceed a period of ten (10)
years (or such shorter term as may be required in respect of an ISO under
section 422 of the Code).

 

 12 

 

 

(d) Form and Timing of Payment under Awards; Deferrals. Subject to the terms of
this Plan and any applicable Award agreement, payments to be made by the Company
or a Subsidiary upon the exercise of an Option or other Award or settlement of
an Award may be made in such forms as the Committee shall determine, including
without limitation cash, Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. Except
as otherwise provided herein, the settlement of any Award may be accelerated,
and cash paid in lieu of Stock in connection with such settlement, in the
discretion of the Committee or upon occurrence of one or more specified events
(in addition to a Change in Control). Installment or deferred payments may be
required by the Committee (subject to Subsection 10(f) of this Plan, including
the consent provisions thereof in the case of any deferral of an outstanding
Award not provided for in the original Award agreement) or permitted at the
election of the Participant on terms and conditions established by the
Committee. Payments may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock. Any deferral shall only
be allowed as is provided in a separate deferred compensation plan adopted by
the Company. This Plan shall not constitute an “employee benefit plan” for
purposes of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended.

 

(e) Exemptions from Section 16(b) Liability. It is the intent of the Company
that the grant of any Awards to or other transaction by a Participant who is
subject to section 16 of the Exchange Act shall be exempt from such section
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award agreement does not comply with the requirements of Rule
16b-3 as then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
section 16(b) of the Exchange Act.

 

(f) Non-Competition Agreement. Each Participant to whom an Award is granted
under this Plan may be required to agree in writing as a condition to the
granting of such Award not to engage in conduct in competition with the Company
or any of its Subsidiaries for a period after the termination of such
Participant’s employment with the Company and its Subsidiaries as determined by
the Committee.

 

8. Performance and Annual Incentive Awards.

 

(a) Performance Conditions. The right of a Participant to exercise or receive a
grant or settlement of any Award, and the timing thereof, may be subject to such
performance conditions as may be specified by the Committee. The Committee may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any Award subject to
performance conditions, except as limited under Subsections 8(b) and 8(c) hereof
in the case of a Performance Award or Annual Incentive Award intended to qualify
under section 162(m) of the Code.

 

(b) Performance Awards Granted to Designated Covered Employees. If the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of section 162(m) of the Code, the
grant, exercise and/or settlement of such Performance Award may be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Subsection 8(b).

 

 13 

 

 

(i) Performance Goals Generally. The performance goals for such Performance
Awards shall consist of one or more business criteria or individual performance
criteria and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this Subsection
8(b). Performance goals shall be objective and shall otherwise meet the
requirements of section 162(m) of the Code and regulations thereunder (including
Treasury Regulation § 1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being “substantially uncertain.”
The Committee may determine that such Performance Awards shall be granted,
exercised, and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or to different
Participants.

 

(ii) Business and Individual Performance Criteria.

 

(A) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified Subsidiaries or business
or geographical units of the Company (except with respect to the total
shareholder return criteria), shall be used by the Committee in establishing
performance goals for such Performance Awards: (1) earnings per share; (2)
revenues, (3) increase in revenues; (4) increase in cash flow; (5) increase in
cash flow return; (6) return on net assets; (7) return on assets; (8) return on
investment; (9) return on capital; (10) return on equity; (11) economic value
added; (12) operating margin; (13) contribution margin; (14) net income before
taxes; (15) net income after taxes; (16) pretax earnings; (17) pretax earnings
before interest, depreciation and amortization; (18) pretax operating earnings
after interest expense and before incentives, service fees, and extraordinary or
special items; (19) total shareholder return; (20) debt reduction; (21) market
share; (22) change in the Fair Market Value of the Stock; (23) productivity
measures; and (24) any of the above goals determined on an absolute or relative
basis or as compared to the performance of a published or special index deemed
applicable by the Committee including, but not limited to, the Standard & Poor’s
500 Stock Index or a group of comparable companies. One or more of the foregoing
business criteria shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered Employee under Subsection
8(c) hereof.

 

(B) Individual Performance Criteria. The grant, exercise and/or settlement of
Performance Awards may also be contingent upon individual performance goals
established by the Committee. If required for compliance with section 162(m) of
the Code, such criteria shall be approved by the shareholders of the Company.

 

 14 

 

 

(iii) Performance Period; Timing for Establishing Performance Goals. Achievement
of performance goals in respect of such Performance Awards shall be measured
over a performance period of up to ten (10) years, as specified by the
Committee. Performance goals shall be established not later than 90 days after
the beginning of any performance period applicable to such Performance Awards,
or at such other date as may be required or permitted for “performance-based
compensation” under section 162(m) of the Code.

 

(iv) Performance Award Pool. The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring performance of
the Company in connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the criteria set forth in Subsection 8(b)(ii)
hereof during the given performance period, as specified by the Committee in
accordance with Subsection 8(b)(iii) hereof. The Committee may specify the
amount of the Performance Award pool as a percentage of any of such criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such criteria.

 

(v) Settlement of Performance Awards; Other Terms. After the end of each
performance period, the Committee shall determine the amount, if any, of (A) the
Performance Award pool, and the maximum amount of the potential Performance
Award payable to each Participant in the Performance Award pool, or (B) the
amount of the potential Performance Award otherwise payable to each Participant.
Settlement of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable to a Covered Employee in respect of a Performance Award
subject to this Subsection 8(b). The Committee shall specify the circumstances
in which such Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a performance
period or settlement of Performance Awards.

 

(c) Annual Incentive Awards Granted to Designated Covered Employees. If the
Committee determines that an Annual Incentive Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as “performance-based compensation” for purposes of section
162(m) of the Code, the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Subsection 8(c).

 

(i) Potential Annual Incentive Awards. Not later than the end of the 90th day of
each applicable year, or at such other date as may be required or permitted in
the case of Awards intended to be “performance-based compensation” under section
162(m) of the Code, the Committee shall determine the Eligible Persons who will
potentially receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive Award pool
established by such date under Subsection 8(c)(i) hereof or as individual Annual
Incentive Awards. The amount potentially payable, with respect to Annual
Incentive Awards, shall be based upon the achievement of a performance goal or
goals based on one or more of the business criteria set forth in Subsection
8(b)(ii) hereof in the given performance year, as specified by the Committee.

 

 15 

 

 

(ii) Annual Incentive Award Pool. The Committee may establish an Annual
Incentive Award pool, which shall be an unfunded pool, for purposes of measuring
performance of the Company in connection with Annual Incentive Awards. The
amount of such Annual Incentive Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business criteria set
forth in Subsection 8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Subsection 8(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool as a
percentage of any of such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.

 

(iii) Payout of Annual Incentive Awards. After the end of each applicable year,
the Committee shall determine the amount, if any, of (A) the Annual Incentive
Award pool, and the maximum amount of the potential Annual Incentive Award
payable to each Participant in the Annual Incentive Award pool, or (B) the
amount of the potential Annual Incentive Award otherwise payable to each
Participant. The Committee may, in its discretion, determine that the amount
payable to any Participant as a final Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award, including a
determination to make no final Award whatsoever, but may not exercise discretion
to increase any such amount in the case of an Annual Incentive Award intended to
qualify under section 162(m) of the Code. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in
the event of termination of employment by the Participant prior to the end of
the applicable year or settlement of such Annual Incentive Award.

 

(d) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards, the achievement of performance goals
relating to Performance Awards under Subsection 8(b), the amount of any Annual
Incentive Award pool or potential individual Annual Incentive Awards, the
achievement of performance goals relating to Annual Incentive Awards under
Subsection 8(c) shall be made in writing in the case of any Award intended to
qualify under section 162(m) of the Code. The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards.

 

 16 

 

 

(e) Status of Subsection 8(b) and Subsection 8(c) Awards under Section 162(m) of
the Code. It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Subsections 8(b) and 8(c) hereof granted to persons who
are designated by the Committee as likely to be Covered Employees within the
meaning of section 162(m) of the Code and regulations thereunder (including
Treasury Regulation § 1.162-27 and successor regulations thereto) shall, if so
designated by the Committee, constitute “performance-based compensation” within
the meaning of section 162(m) of the Code and regulations thereunder.
Accordingly, the terms of Subsections 8(b), (c), (d) and (e), including the
definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with section 162(m) of the Code and
regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, who is likely to be a Covered Employee with respect to that fiscal year.
If any provision of this Plan as in effect on the date of adoption or any
agreements relating to Performance Awards or Annual Incentive Awards that are
designated as intended to comply with section 162(m) of the Code does not comply
or is inconsistent with the requirements of section 162(m) of the Code or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

 

9. Subdivision or Consolidation; Recapitalization; Change in Control;
Reorganization.

 

(a) Existence of Plans and Awards. The existence of this Plan and the Awards
granted hereunder shall not affect in any way the right or power of the Board or
the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities ahead of or affecting Stock or the rights thereof,
the dissolution or liquidation of the Company or any sale, lease, exchange or
other disposition of all or any part of its assets or business or any other
corporate act or proceeding.

 

(b) Subdivision or Consolidation of Shares. The terms of an Award and the number
of shares of Stock authorized pursuant to Section 4 for issuance under the Plan
shall be subject to adjustment from time to time, in accordance with the
following provisions:

 

(i) If at any time, or from time to time, the Company shall subdivide as a whole
(by a Stock split, by the issuance of a distribution on Stock payable in Stock,
or otherwise) the number of shares of Stock then outstanding into a greater
number of shares of Stock, then (A) the maximum number of shares of Stock
available in connection with the Plan or Awards as provided in Sections 4 and 5
shall be increased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, (B) the number of shares
of Stock (or other kind of shares or securities) that may be acquired under any
Award shall be increased proportionately, and (C) the price (including the
exercise price) for each share of Stock (or other kind of shares or securities)
subject to then outstanding Awards shall be reduced proportionately, without
changing the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.

 

(ii) If at any time, or from time to time, the Company shall consolidate as a
whole (by reverse Stock split, or otherwise) the number of shares of Stock then
outstanding into a lesser number of shares of Stock, (A) the maximum number of
shares of Stock available in connection with the Plan or Awards as provided in
Sections 4 and 5 shall be decreased proportionately, and the kind of shares or
other securities available for the Plan shall be appropriately adjusted, (B) the
number of shares of Stock (or other kind of shares or securities) that may be
acquired under any Award shall be decreased proportionately, and (C) the price
(including the exercise price) for each share of Stock (or other kind of shares
or securities) subject to then outstanding Awards shall be increased
proportionately, without changing the aggregate purchase price or value as to
which outstanding Awards remain exercisable or subject to restrictions.

 

 17 

 

 

(iii) Whenever the number of shares of Stock subject to outstanding Awards and
the price for each share of Stock subject to outstanding Awards are required to
be adjusted as provided in this Subsection 9(b), the Committee shall promptly
prepare, and deliver to each Participant, a notice setting forth, in reasonable
detail, the event requiring adjustment, the amount of the adjustment, the method
by which such adjustment was calculated, and the change in price and the number
of shares of Stock, other securities, cash, or property purchasable subject to
each Award after giving effect to the adjustments.

 

(iv) Adjustments under Subsections 9(b)(i) and (ii) shall be made by the
Committee, and its determination as to what adjustments shall be made and the
extent thereof shall be final, binding, and conclusive. No fractional interest
shall be issued under the Plan on account of any such adjustments.

 

(c) Corporate Recapitalization.

 

(i) If the Company recapitalizes, reclassifies its capital stock, or otherwise
changes its capital structure (a “recapitalization”), the number and class of
shares of Stock covered by an Option or an SAR theretofore granted shall be
adjusted so that such Option or SAR shall thereafter cover the number and class
of shares of stock and securities to which the holder would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the holder had been the holder of record of the number of
shares of Stock then covered by such Option or SAR and the share limitations
provided in Sections 4 and 5 shall be adjusted in a manner consistent with the
recapitalization.

 

(ii) In the event of changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Section 9, any
outstanding Awards and any agreements evidencing such Awards shall be subject to
adjustment by the Committee at its discretion as to the number and price of
shares of Stock or other consideration subject to such Awards. In the event of
any such change in the outstanding Stock, the share limitations provided in
Sections 4 and 5 may be appropriately adjusted by the Committee, whose
determination shall be conclusive.

 

(d) Additional Issuances. Except as hereinbefore expressly provided, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to Awards theretofore granted
or the purchase price per share, if applicable.

 

 18 

 

 

(e) Change in Control. Upon a Change in Control the Committee, acting in its
sole discretion without the consent or approval of any holder, shall affect one
or more of the following alternatives, which may vary among individual holders
and which may vary among Options or SARs (collectively “Grants”) held by any
individual holder: (i) accelerate the time at which Grants then outstanding may
be exercised so that such Grants may be exercised in full for a limited period
of time on or before a specified date (before or after such Change in Control)
fixed by the Committee, after which specified date all unexercised Grants and
all rights of holders thereunder shall terminate, (ii) require the mandatory
surrender to the Company by selected holders of some or all of the outstanding
Grants held by such holders (irrespective of whether such Grants are then
exercisable under the provisions of this Plan) as of a date, before or after
such Change in Control, specified by the Committee, in which event the Committee
shall thereupon cancel such Grants and pay to each holder an amount of cash per
share equal to the excess, if any, of the amount calculated in Subsection 9(f)
(the “Change in Control Price”) of the shares subject to such Grants over the
exercise price(s) under such Grants for such shares, or (iii) make such
adjustments to Grants then outstanding as the Committee deems appropriate to
reflect such Change in Control; provided, however, that the Committee may
determine in its sole discretion that no adjustment is necessary to Grants then
outstanding; provided, further, however, that the right to make such adjustments
shall include, but not be limited to, the modification of Grants such that the
holder of the Grant shall be entitled to purchase or receive (in lieu of the
total shares or other consideration that the holder would otherwise be entitled
to purchase or receive under the Grant (the “Total Consideration”)), the number
of shares of stock, other securities, cash or property to which the Total
Consideration would have been entitled to in connection with the Change in
Control (A) (in the case of Options), at an aggregate exercise price equal to
the exercise price that would have been payable if the total shares had been
purchased upon the exercise of the Grant immediately before the consummation of
the Change in Control and (B) (in the case of SARs) if the SARs had been
exercised immediately before the consummation of the Change in Control.

 

(f) Change in Control Price. The “Change in Control Price” shall equal the
amount determined in clause (i), (ii), (iii), (iv) or (v), whichever is
applicable, as follows: (i) the per share price offered to holders of Stock in
any merger or consolidation, (ii) the per share value of the Stock immediately
before the Change in Control without regard to assets sold in the Change in
Control and assuming the Company has received the consideration paid for the
assets in the case of a sale of the assets, (iii) the amount distributed per
share of Stock in a dissolution transaction, (iv) the price per share offered to
holders of Stock in any tender offer or exchange offer whereby a Change in
Control takes place, or (v) if such Change in Control occurs other than pursuant
to a transaction described in clauses (i), (ii), (iii), or (iv) of this
Subsection 9(f), the Fair Market Value per share of the shares that may
otherwise be obtained with respect to such Grants or to which such Grants track,
as determined by the Committee as of the date determined by the Committee to be
the date of cancellation and surrender of such Grants. In the event that the
consideration offered to shareholders of the Company in any transaction
described in this Subsection 9(f) or Subsection 9(e) consists of anything other
than cash, the Committee shall determine the fair cash equivalent of the portion
of the consideration offered which is other than cash.

 

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10. General Provisions.

 

(a) Restricted Securities. Prior to a Qualifying Public Offering, the Stock to
be issued under this Plan, which is issued in reliance on the exemption from
registration set forth in Rule 701, shall be deemed to be “restricted
securities” as defined in Rule 144, promulgated by the Securities and Exchange
Commission under the Securities Act as from time to time in effect and
applicable to the Plan and Participants. Resales of such Stock by the holder
thereof shall be in compliance with the Securities Act or an exemption
therefrom. Such Stock may bear a legend if determined necessary by the Committee
in substantially the following form:

 

“THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED, OR OTHERWISE
DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO AUSTIN EV,
INC. (THE “CORPORATION”) (WHICH, IN THE DISCRETION OF THE CORPORATION, MAY
INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION) THAT SUCH OFFER,
SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL
OR STATE LAWS.”

 

(b) Transferability.

 

(i) Permitted Transferees. The Committee may, in its discretion, permit a
Participant to transfer all or any portion of an Option, or authorize all or a
portion of an Option to be granted to an Eligible Person to be on terms which
permit transfer by such Participant; provided that, in either case the
transferee or transferees must be any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, in each case with respect to
the Participant, any person sharing the Participant’s household (other than a
tenant or employee of the Company), a trust in which these persons have more
than 50% of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, or any other entity in which
these persons (or the Participant) own more than 50% of the voting interests
(collectively, “Permitted Transferees”); provided further that, (X) there may be
no consideration for any such transfer and (Y) subsequent transfers of Options
transferred as provided above shall be prohibited except subsequent transfers
back to the original holder of the Option and transfers to other Permitted
Transferees of the original holder. Agreements evidencing Options with respect
to which such transferability is authorized at the time of grant must be
approved by the Committee, and must expressly provide for transferability in a
manner consistent with this Subsection 10(b)(i).

 

(ii) Qualified Domestic Relations Orders. An Option, Stock Appreciation Right,
Restricted Stock Unit Award, Restricted Stock Award or other Award may be
transferred, to a Permitted Transferee, pursuant to a domestic relations order
entered or approved by a court of competent jurisdiction upon delivery to the
Company of written notice of such transfer and a certified copy of such order.

 

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(iii) Other Transfers. Except as expressly permitted by Subsections 10(b)(i) and
10(b)(ii), Awards shall not be transferable other than by will or the laws of
descent and distribution. Notwithstanding anything to the contrary in this
Section 10, an Incentive Stock Option shall not be transferable other than by
will or the laws of descent and distribution.

 

(iv) Effect of Transfer. Following the transfer of any Award as contemplated by
Subsections 10(b)(i), 10(b)(ii) and 10(b)(iii), (A) such Award shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that the term “Participant” shall be deemed to refer to
the Permitted Transferee, the recipient under a qualified domestic relations
order, or the estate or heirs of a deceased Participant, as applicable, to the
extent appropriate to enable the Participant to exercise the transferred Award
in accordance with the terms of this Plan and applicable law and (B) the
provisions of the Award relating to exercisability shall continue to be applied
with respect to the original Participant and, following the occurrence of any
applicable events described therein the Awards shall be exercisable by the
Permitted Transferee, the recipient under a qualified domestic relations order,
or the estate or heirs of a deceased Participant, as applicable, only to the
extent and for the periods that would have been applicable in the absence of the
transfer.

 

(v) Procedures and Restrictions. Any Participant desiring to transfer an Award
as permitted under Subsections 10(b)(i), 10(b)(ii) or 10(b)(iii) shall make
application therefor in the manner and time specified by the Committee and shall
comply with such other requirements as the Committee may require to assure
compliance with all applicable securities laws. The Committee shall not give
permission for such a transfer if (A) it would give rise to short swing
liability under section 16(b) of the Exchange Act or (B) it may not be made in
compliance with all applicable federal, state and foreign securities laws.

 

(vi) Registration. To the extent the issuance to any Permitted Transferee of any
shares of Stock issuable pursuant to Awards transferred as permitted in this
Subsection 10(b) is not registered pursuant to the effective registration
statement of the Company generally covering the shares to be issued pursuant to
this Plan to initial holders of Awards, the Company shall not have any
obligation to register the issuance of any such shares of Stock to any such
transferee.

 

(c) Right of First Refusal. If any Participant (“Transferor”), regardless of
whether such Participant is the original holder of the Award contemplated in
this Subsection 10(c), proposes to sell, transfer, assign, hypothecate, make
gifts of or in any manner dispose of, encumber, or alienate (each individually
constituting a “Transfer”) to a transferee, any Stock, obtained in connection
with any Award held by such Transferor, either pursuant to a bona fide offer
(“Offer”) from a potential transferee (“Offeror”) or by effecting a gift of the
Stock (“Gift”) to a donee (“Donee”) without consideration, then the Transferor
must comply with the provisions of this Subsection 10(c), including, without
limitation, acknowledging and allowing the applicable time periods to lapse with
respect to the rights of the Company as provided herein, before accepting any
such Offer or otherwise affecting the Transfer of any Stock pursuant to such
Offer, or affecting any such Gift.

 

 21 

 

 

(i) Statement of Offer. Before accepting any Offer or affecting any Gift, the
Transferor shall obtain from the Offeror or Donee, as the case may be, a
statement (“Statement”) in writing addressed to the Transferor and signed by the
Offeror or Donee, setting forth: (i) the date of the Statement (the “Statement
Date”); (ii) the number of shares of Stock covered by the Offer or Gift and, in
the case of an Offer, the price per share to be paid by the Offeror and the
terms of payment of such price; (iii) the Offeror’s or Donee’s willingness to be
bound by the terms of this Subsection 10(c) and execute and deliver to the
Company such documentation as required under this Subsection 10(c); (iv) the
Offeror’s or Donee’s name, address and telephone number; and (v) the Offeror’s
or Donee’s willingness to supply any additional information about himself or
herself as may be reasonably requested by the Company. Promptly upon receipt of
a Statement, and before accepting the Offer or affecting the Gift to which the
Statement relates, the Transferor shall deliver to the Company (1) a copy of the
Statement, and (2) in the case of an Offer, evidence reasonably satisfactory to
the Company as to the Offeror’s financial ability to consummate the proposed
purchase.

 

(ii) Company Rights. Subject to the provisions of Subsection 10(c)(i), upon
receipt of a copy of the Statement, the Company shall have the exclusive right
and option (the “Right”), but not the obligation, to purchase all of the shares
of Stock that the Offeror proposes to purchase from the Transferor or, in the
case of a Gift, that the Transferor proposes to give to the Donee (collectively,
“Subject Securities”) (A) in the case of an Offer, for the per share price and
on the terms as set forth in the Statement; provided, however, that if the
purchase price is payable in whole or in part in property (which term shall
include the securities of any issuer other than the Company) other than cash,
the Company may pay, in lieu of such property, a sum of cash equal to the fair
market value of such property as determined by the Transferor and the Company in
good faith or, if the Transferor and the Company do not agree on the fair market
value of such property within five days after the Company delivers written
notice (as described below) of its intention to exercise the Right, then the
Transferor and the Company shall select one independent appraiser (with each of
the Transferor and the Company jointly bearing one-half of the expense of the
appraiser) to determine the fair market value of that property and the appraised
fair market value of that property as determined by such appraiser shall be
deemed the fair market value of that property for purposes of this Subsection
10(c)(ii), or (B) in the case of a Gift, the Fair Market Value of the Subject
Securities, as determined in good faith by the Company; provided that the
Transferor may elect to retain the Subject Securities rather than sell the
Subject Securities at the Fair Market Value as determined by the Company by
giving written notice thereof to the Company within five days after such
determination by the Company is received in writing by the Transferor. The
Company shall exercise the Right by giving written notice thereof to the
Transferor. Upon exercising the Right, the Company shall have the obligation, to
the extent it lawfully may do so, to purchase the Subject Securities within 30
days after the date of the Company’s receipt of its copy of the Statement on and
subject to the terms and conditions hereof. If the terms of the purchase include
the Transferor’s release of any pledge or encumbrance on the Subject Securities
and the Transferor shall have failed to obtain the release of the pledge or
encumbrance by the purchase date, at the Company’s option the purchase shall
occur on the scheduled date with the purchase price reduced to the extent of all
unpaid indebtedness for which the Subject Securities are then pledged or
encumbered. Failure by the Company to exercise the Right, or failure by the
Company to otherwise perform its obligations under this Subsection 10(c)(ii),
within the 30 day period herein prescribed shall be deemed an election by the
Company not to exercise the Right. If the Company exercises the Right and is
unable for any reason to perform its obligations thereunder in accordance with
this Subsection 10(c), the Company may assign all or a portion of its rights
under the Right to any one or more of the Company’s shareholders (other than the
Transferor) (“Assignee Shareholder”), as the Board shall determine, in its sole
and absolute discretion.

 

 22 

 

 

(iii) Purchase of Less Than All Shares. Anything in Subsection 10(c) to the
contrary notwithstanding, the Company and any Assignee Shareholder individually
may, pursuant to the exercise of the Right, purchase fewer than all of the
Subject Securities provided that such Persons in the aggregate purchase all, and
not less than all, of the Subject Securities, and it shall be a condition
precedent to the obligation of any of such Persons to purchase any Subject
Securities, that all, and not less than all, of the Subject Securities have been
elected to be purchased pursuant to the exercise of the Right.

 

(iv) Failure to Exercise Right or Consummate Transaction. If the Company elects
not to exercise the Right, or if the Right is exercised and the obligations to
be performed thereunder by the Company are not performed in accordance with this
Subsection 10(c), or if the Company’s rights are assigned to an Assignee
Shareholder and such Assignee Shareholder fails to perform his or her
obligations under the assigned Right in accordance with this Subsection 10(c),
then, subject to the application of any applicable state or federal securities
laws, the Transferor may dispose of all of the Subject Securities within 90 days
after the date of the Statement at the per share price and on the terms, if any,
as set forth in the Statement free and clear of the terms of this Subsection
10(c); provided, however, that (A) any subsequent transfer by the Offeror or
Donee, as applicable, shall once again be subject to this Subsection 10(c) and
(B) if the sale or gift of the Subject Securities is not consummated within such
90-day period, then the Transfer of any such Stock shall once again be subject
to the terms of this Subsection 10(c).

 

(v) Legend. To assure the enforceability of the Company’s rights under this
Subsection 10(c), until the date of a Qualifying Public Offering, each
certificate or instrument representing Stock or an Award held by him, her, or it
may, in the Committee’s discretion, bear a conspicuous legend in substantially
the following form:

 

“THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS
AGREEMENT] ARE SUBJECT TO THE COMPANY’S RIGHT OF FIRST REFUSAL IN THE CASE OF A
TRANSFER AS PROVIDED UNDER THE COMPANY’S 2017 LONG TERM INCENTIVE PLAN AND/OR AN
AWARD AGREEMENT ENTERED INTO PURSUANT THERETO. COPIES OF SUCH PLAN AND AWARD
AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES.”

 

 23 

 

 

(vi) Expiration. The rights and obligations pursuant to this Subsection 10(c)
hereof will terminate upon the date of a Qualifying Public Offering.

 

(d) Purchase Option.

 

(i) Except as otherwise expressly provided in any particular Award, (A) if a
Participant ceases to be employed by or perform services for the Company or its
Subsidiaries for any reason at any time or (B) upon the occurrence of a Change
in Control, the Company (and/or its designee(s)) shall have the option (the
“Purchase Option”) to purchase, and the Participant (or the Participant’s
executor or the administrator of the Participant’s estate in the event of the
Participant’s death, or the transferee of the Stock or Award in the case of any
disposition, or the Participant’s legal representative in the event of the
Participant’s incapacity) (hereinafter, collectively with such Participant, the
“Grantor”) shall sell to the Company and/or its designee(s), all or any portion
(at the Company’s option) of the shares of Stock issued pursuant to this Plan
and held by the Grantor (such shares of Stock herein referred to as the
“Purchasable Shares”).

 

(ii) The Company shall give notice in writing to the Grantor of the exercise of
the Purchase Option within one year of the date of the termination of the
Participant’s employment or service relationship or the date of the Change in
Control. Such notice shall state the number of Purchasable Shares to be
purchased and the determination of the Board of the Fair Market Value per share
of such Purchasable Shares, or the Change in Control Price as defined in
Subsection 9(f), if applicable. If no notice is given within the time limit
specified above, the Purchase Option shall terminate.

 

(iii) The purchase price to be paid for the Purchasable Shares purchased
pursuant to the Purchase Option shall be, the Fair Market Value per share, or
the Change in Control Price if applicable, as of the date of the notice of
exercise of the Purchase Option times the number of shares being purchased. The
purchase price shall be paid in cash. The closing of such purchase shall take
place at the Company’s principal executive offices within ten (10) days after
the purchase price has been determined. At such closing, the Grantor shall
deliver to the purchasers the certificates or instruments evidencing the
Purchasable Shares being purchased free and clear of all liens and encumbrances
(if any), duly endorsed (or accompanied by duly executed stock powers) and
otherwise in good form for delivery, against payment of the purchase price by
check of the purchasers. In the event that, notwithstanding the foregoing, the
Grantor shall have failed to obtain the release of any pledge or other
encumbrance on any Purchasable Shares by the scheduled closing date, at the
option of the purchasers, the closing shall nevertheless occur on such scheduled
closing date, with the cash purchase price being reduced to the extent of all
unpaid indebtedness for which such Purchasable Shares are then pledged or
encumbered.

 

 24 

 

 

(iv) To assure the enforceability of the Company’s rights under this Subsection
10(d), until the date of a Qualifying Public Offering, each certificate or
instrument representing Stock or an Award held by him, her, or it may, in the
Committee’s discretion, bear a conspicuous legend in substantially the following
form:

 

“THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS
AGREEMENT] ARE SUBJECT TO AN OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS
OF THE COMPANY’S 2017 LONG TERM INCENTIVE PLAN AND/OR AN AWARD AGREEMENT ENTERED
INTO PURSUANT THERETO. COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE AVAILABLE
UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.”

 

(v) The Company’s rights under this Subsection 10(d) shall terminate upon the
date of a Qualifying Public Offering.

 

(e) Taxes. The Company and any Subsidiary is authorized to withhold from any
Award granted, or any payment relating to an Award under this Plan, including
from a distribution of Stock, amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Committee may deem advisable to enable the
Company and Participants to satisfy obligations for the payment of withholding
taxes and other tax obligations relating to any Award. This authority shall
include authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant’s tax
obligations, either on a mandatory or elective basis in the discretion of the
Committee.

 

(f) Changes to this Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate this Plan or the Committee’s authority to grant Awards
under this Plan without the consent of shareholders or Participants, except that
any amendment or alteration to this Plan, including any increase in any share
limitation, shall be subject to the approval of the Company’s shareholders not
later than the annual meeting next following such Board action if such
shareholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the Stock
may then be listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to this Plan to shareholders for
approval; provided, however, that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any previously granted and outstanding Award. The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue or terminate any Award theretofore granted and any Award agreement
relating thereto, except as otherwise provided in this Plan; provided, however,
that, without the consent of an affected Participant, no such Committee action
may materially and adversely affect the rights of such Participant under such
Award.

 

(g) Limitation on Rights Conferred under Plan. Neither this Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a Subsidiary, (ii) interfering in any way
with the right of the Company or a Subsidiary to terminate any Eligible Person’s
or Participant’s employment or service relationship at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under this Plan
or to be treated uniformly with other Participants or employees or other service
providers, or (iv) conferring on a Participant any of the rights of a
shareholder of the Company unless and until the Participant is duly issued or
transferred shares of Stock in accordance with the terms of an Award.

 

 25 

 

 

(h) Unfunded Status of Awards. This Plan is intended to constitute an “unfunded”
plan for certain incentive awards.

 

(i) Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board
nor its submission to the shareholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem desirable,
including incentive arrangements and awards which do not qualify under section
162(m) of the Code. Nothing contained in this Plan shall be construed to prevent
the Company or any Subsidiary from taking any corporate action which is deemed
by the Company or such Subsidiary to be appropriate or in its best interest,
whether or not such action would have an adverse effect on this Plan or any
Award made under this Plan. No employee, beneficiary or other person shall have
any claim against the Company or any Subsidiary as a result of any such action.

 

(j) Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to this Plan or any Award. The Committee shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

 

(k) Severability. If any provision of this Plan is held to be illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
provisions hereof, but such provision shall be fully severable and the Plan
shall be construed and enforced as if the illegal or invalid provision had never
been included herein. If any of the terms or provisions of this Plan or any
Award agreement conflict with the requirements of Rule 16b3 (as those terms or
provisions are applied to Eligible Persons who are subject to section 16(b) of
the Exchange Act) or section 422 of the Code (with respect to Incentive Stock
Options), then those conflicting terms or provisions shall be deemed inoperative
to the extent they so conflict with the requirements of Rule 16b-3 (unless the
Board or the Committee, as appropriate, has expressly determined that the Plan
or such Award should not comply with Rule 16b-3) or section 422 of the Code.
With respect to Incentive Stock Options, if this Plan does not contain any
provision required to be included herein under section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
further, that, to the extent any Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, that Option (to that extent) shall be
deemed an Option not subject to section 422 of the Code for all purposes of the
Plan.

 

(l) Governing Law. All questions arising with respect to the provisions of the
Plan and Awards shall be determined by application of the laws of the State of
Texas, without giving effect to any conflict of law provisions thereof, except
to the extent Texas law is preempted by federal law. The obligation of the
Company to sell and deliver Stock hereunder is subject to applicable federal and
state laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale, or delivery of such Stock.

 

 26 

 

 

(m) Conditions to Delivery of Stock. Nothing herein or in any Award granted
hereunder or any Award agreement shall require the Company to issue any shares
with respect to any Award if that issuance would, in the opinion of counsel for
the Company, constitute a violation of the Securities Act or any similar or
superseding statute or statutes, any other applicable statute or regulation, or
the rules of any applicable securities exchange or securities association, as
then in effect. At the time of any exercise of an Option or Stock Appreciation
Right, or at the time of any grant of a Restricted Stock Award, Restricted Stock
Unit, or other Award the Company may, as a condition precedent to the exercise
of such Option or Stock Appreciation Right or settlement of any Restricted Stock
Award, Restricted Stock Unit or other Award, require from the Participant (or in
the event of his or her death, his or her legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
holder’s intentions with regard to the retention or disposition of the shares of
Stock being acquired pursuant to the Award and such written covenants and
agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Company, may be necessary to ensure that any
disposition by that holder (or in the event of the holder’s death, his or her
legal representatives, heirs, legatees, or distributees) will not involve a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable state or federal statute or regulation, or any
rule of any applicable securities exchange or securities association, as then in
effect.

 

(n) Section 409A of the Code. It is intended that any Awards under this Plan
that are subject to section 409A of the Code satisfy the requirements of section
409A of the Code and related regulations and Internal Revenue Service and
Department of Treasury pronouncements to avoid imposition of applicable taxes
thereunder. Accordingly, notwithstanding anything in this Plan to the contrary,
if any Plan provision or Award under this Plan would result in the imposition of
an applicable tax under section 409A of the Code and related regulations and
Internal Revenue Service and Department of Treasury pronouncements, that Plan
provision or Award will be reformed to the extent permissible under section 409A
of the Code with the intent to avoid imposition of the applicable tax and no
action taken to comply with Section 409A of the Code shall be deemed to
adversely affect the Participant’s rights to an Award. Moreover, notwithstanding
any provision in Section 9 to the contrary, no adjustment or substitution
pursuant to Section 9 shall be made in a manner that results in noncompliance
with the requirements of section 409A of the Code, to the extent applicable.

 

(o) Plan Effectiveness. This Plan has been adopted by the Board effective as of
the Effective Date. No new Awards shall be granted under the Plan after the
tenth (10th) anniversary of the Effective Date.

 

 27