Exhibit 10.3

 

 

NEW SENIOR INVESTMENT GROUP INC.

NONQUALIFIED STOCK OPTION AND

INCENTIVE AWARD PLAN

 

 

 

Adopted as of October 16, 2014

 

 

 

 

 

TABLE OF CONTENTS

 

PAGE

 

SECTION 1 PURPOSE OF PLAN; DEFINITIONS 1     1.1 Purpose 1 1.2 Definitions 1    
  SECTION 2 ADMINISTRATION 4     2.1 Administration 4 2.2 Duties and Powers of
Committee 5 2.3 Majority Rule 5 2.4 Delegation of Authority 5 2.5 Compensation;
Professional Assistance; Good Faith Actions 5     SECTION 3 STOCK SUBJECT TO
PLAN 6     3.1 Number of and Source of Shares 6 3.2 Unrealized and Tandem Awards
6 3.3 Adjustment of Awards 6       SECTION 4 ELIGIBILITY 7     SECTION 5 AWARDS
7     5.1 Stock Options 7 5.2 Stock Appreciation Rights 7 5.3 Restricted Stock 8
5.4 Performance Awards 8 5.5 Manager Awards and Tandem Awards 9 5.6 Automatic
Non-Officer Director Awards 10 5.7 Other Awards 11       SECTION 6 AWARD
AGREEMENTS 11     6.1 Terms of Award Agreements 11       SECTION 7 LOANS 13    
SECTION 8 AMENDMENT AND TERMINATION 13     SECTION 9 UNFUNDED STATUS OF PLAN 14
    SECTION 10 GENERAL PROVISIONS 14     10.1 Securities Laws Compliance 14

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10.2 Representation 14 10.3 Transfer Restrictions 14 10.4 Company Actions; No
Right to Employment 14 10.5 Section 409A of the Code 14 10.6 Payment of Taxes 15
10.7 Governing Law 15       SECTION 11 EFFECTIVE DATE OF PLAN 15     SECTION 12
TERM OF PLAN 15

 

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NEW SENIOR INVESTMENT GROUP INC.
NONQUALIFIED STOCK OPTION AND INCENTIVE AWARD PLAN

 

SECTION 1

 

PURPOSE OF PLAN; DEFINITIONS

 

1.1           Purpose. The purpose of the Plan is (a) to reinforce the long-term
commitment to the Company’s success of those Non-Officer Directors, officers,
directors, employees, advisors, service providers, consultants and other
personnel who are or will be responsible for such success; to facilitate the
ownership of the Company’s stock by such individuals, thereby reinforcing the
identity of their interests with those of the Company’s stockholders; to assist
the Company in attracting and retaining individuals with experience and ability,
(b) to compensate the Manager for its successful efforts in raising capital for
the Company and to provide performance-based compensation in order to provide
incentive to the Manager to enhance the value of the Company’s Stock and (c) to
benefit the Company’s stockholders by encouraging high levels of performance by
individuals whose performance is a key element in achieving the Company’s
continued success.

 

1.2           Definitions. For purposes of the Plan, the following terms shall
be defined as set forth below:

 

(a)           “Award” or “Awards” means an award described in Section 5 hereof.

 

(b)           “Award Agreement” means an agreement described in Section 6 hereof
entered into between the Company and a Participant, setting forth the terms,
conditions and any limitations applicable to the Award granted to the
Participant.

 

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

 

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

 

(e)           “Change in Control” of the Company shall be deemed to have
occurred if an event set forth in any one of the following paragraphs (i)-(iii)
shall have occurred unless prior to the occurrence of such event, the Board
determines that such event shall not constitute a Change in Control:

 

(i)any Person is or becomes a Beneficial Owner, directly or indirectly, of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the then outstanding securities of the Company,
excluding (A) any Person who becomes such a Beneficial Owner in connection with
a transaction described in clause (x) of paragraph (ii) below, and (B) any
Person who becomes such a Beneficial Owner

 

 

    through the issuance of such securities with respect to purchases made
directly from the Company; or

 

(ii)there is consummated a merger or consolidation of the Company or any direct
or indirect subsidiary of the Company with any other corporation, other than (x)
a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) fifty percent (50%) or
more of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation, or (y) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of the combined voting power
of the then outstanding securities of the Company; or

 

(iii)the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the assets of the
Company.

 

For each Award that constitutes deferred compensation under Section 409A of the
Code, to the extent required to avoid additional tax or other penalty, a Change
in Control shall be deemed to have occurred under the Plan with respect to such
Award only if a change in the ownership or effective control of the Company or a
change in ownership of a substantial portion of the assets of the Company shall
also be deemed to have occurred under Section 409A of the Code.

 

(f)           “Code” means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute thereto.

 

(g)           “Commission” means the Securities and Exchange Commission.

 

(h)           “Committee” means any committee the Board may appoint to
administer the Plan. To the extent necessary and desirable, the Committee shall
be composed entirely of individuals who meet the qualifications referred to in
Section 162(m) of the Code and Rule 16b-3 under the Exchange Act. If at any time
or to any extent the Board shall not administer the Plan, then the functions of
the Board specified in the Plan shall be exercised by the Committee.

 

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(i)            “Company” means New Senior Investment Group Inc., a Delaware
corporation.

 

(j)            “Disability” means, with respect to any Participant, that such
Participant (i) as determined by the Participant’s employer or service recipient
(such determination to be approved by the Committee) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering such Participant.

 

(k)           “Effective Date” means the date provided pursuant to Section 11.

 

(l)            “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

(m)           “Fair Market Value” means, as of any given date, (i) the closing
price of a share of the Company’s Stock on the principal exchange on which
shares of the Company’s Stock are then trading, if any, on the trading day
previous to such date, or, if stock was not traded on the trading day previous
to such date, then on the next preceding trading day during which a sale
occurred; or (ii) if such Stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (x) the last sales price (if the Stock
is then listed as a National Market Issue under the NASDAQ National Market
System) or (y) the mean between the closing representative bid and asked prices
(in all other cases) for the Stock on the trading day previous to such date as
reported by NASDAQ or such successor quotation system; or (iii) if such Stock is
not publicly traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the mean between the closing bid and asked prices for the
Stock, on the day previous to such date, as determined in good faith by the
Committee; or (iv) if the Stock is not publicly traded, the fair market value
established by the Committee using any reasonable method and acting in good
faith.

 

(n)           “Manager” means FIG LLC, a Delaware limited liability company, or
any affiliate of FIG LLC who shall succeed as manager under that certain
Management and Advisory Agreement by and among the Company and FIG LLC as
amended from time to time.

 

(o)           “Manager Awards” means the Awards granted to the Manager as
described in Section 5.5 hereof.

 

(p)           “Non-Officer Director” means a director of the Company who is not
an officer or employee of the Company.

 

(q)           “Non-Officer Director Stock Option” shall have the meaning set
forth in Section 5.6(a).

 

(r)           “Participant” means any Person selected by the Committee, pursuant
to the Committee’s authority in Section 2 below, to receive Awards, including
but not

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limited to (i) any Non-Officer Director, (ii) the Manager and its affiliates and
(iii) any director, officer or employee of the Company, any parent, affiliate or
subsidiary of the Company, or the Manager or any of its affiliates and (iv) any
consultant, service provider or advisor to the Company, any parent, affiliate or
subsidiary of the Company, or the Manager or any of its affiliates.

 

(s)           “Person” shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.

 

(t)           “Plan” means this New Senior Investment Group Inc. Nonqualified
Stock Option and Incentive Award Plan.

 

(u)           “Restricted Stock” means Stock as described in Section 5.3 hereof.

 

(v)           “Securities Act” shall have the meaning set forth in Section
5.5(h).

 

(w)           “Stock” means the common stock, par value $0.01 per share, of the
Company.

 

(x)            “Stock Appreciation Right” shall have the meaning set forth in
Section 5.2 hereof.

 

(y)           “Stock Option” shall have the meaning set forth in Section 5.1
hereof. The Stock Options granted hereunder are not intended to qualify as
“incentive stock options” within the meaning of Section 422 of the Code.

 

(z)           “Tandem Awards” shall have the meaning set forth in Section 5.5
herein.

 

SECTION 2

ADMINISTRATION

 

2.1           Administration. The Plan shall be administered in accordance with
the requirements of Section 162(m) of the Code (but only to the extent necessary
and desirable to maintain qualification of Awards under the Plan under Section
162(m) of the Code) and, to the extent applicable, Rule 16b-3 under the Exchange
Act (“Rule 16b-3”), by the Board or, at the Board’s sole discretion, by the
Committee, which shall be appointed by the Board, and which shall serve at the
pleasure of the Board. The Plan is intended to be exempt from, or to comply
with, and shall be administered in a manner that is intended to be exempt from,
or comply with, Section 409A of the Code and shall be construed and interpreted
in accordance with such intent, to the extent subject thereto. To the extent
that an Award and/or issuance and/or payment of an Award is subject to Section
409A of the Code, it shall be awarded and/or issued or paid in a manner that
will comply with Section 409A of the Code, including any applicable regulations
or guidance issued by the Secretary of the United States Treasury Department and
the Internal Revenue Service with respect thereto.

 

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2.2           Duties and Powers of Committee. The Committee shall have the power
and authority to grant Awards to Participants pursuant to the terms of the Plan,
and, in its discretion, to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall from time to time deem
advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final, conclusive and binding on
all Persons.

 

In particular, the Committee shall have the authority to determine, in a manner
consistent with the terms of the Plan:

 

(a)           in addition to the Manager and the Non-Officer Directors, those
Participants who shall receive Awards under the Plan;

 

(b)           subject to Section 3, the number of shares of Stock to be covered
by each Stock Option granted hereunder;

 

(c)           the terms and conditions of any Award granted hereunder,
including, subject to the requirements of Section 409A, the waiver or
modification of any such terms or conditions, consistent with the provisions of
the Plan (including, but not limited to, Section 8 of the Plan); and

 

(d)           the terms and conditions which shall govern all the Award
Agreements, including the waiver or modification of any such terms or
conditions.

 

2.3           Majority Rule. The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.

 

2.4           Delegation of Authority. To the extent permitted by applicable
law, the Committee or the Board may from time to time delegate to one or more
Persons the authority to take administrative actions pursuant to this Section 2.
Any delegation hereunder shall be subject to the restrictions and limitations
that the Committee specifies at the time of such delegation, and the Committee
may at any time rescind the authority so delegated or appoint a new delegatee.

 

2.5           Compensation; Professional Assistance; Good Faith Actions. Members
of the Committee may receive such compensation for their services as members as
may be determined by the Board. All expenses and liabilities that members of the
Committee or Board may incur in connection with the administration of this Plan
shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers or other
Persons. The Committee, the Board, the Company and any officers and directors of
the Company shall be entitled to rely upon the advice, opinions or valuations of
any such Persons. All actions taken and all interpretations and determinations
made by the Committee or Board in good faith shall be final and binding upon all
Participants, the Company and all other interested Persons. No member of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan or any Award, and
all members of the Committee and Board shall be fully protected and

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indemnified to the fullest extent permitted by law, by the Company, in respect
of any such action, determination or interpretation.

 

SECTION 3

STOCK SUBJECT TO PLAN

 

3.1           Number of and Source of Shares. The maximum number of shares of
Stock reserved and available for issuance under the Plan shall be 30,000,000, as
increased on the date of any equity issuance by the Company during the term of
the Plan by a number of shares of Stock equal to ten percent (10%) of the total
number of equity securities issued by the Company in such equity issuance. The
Stock which may be issued pursuant to an Award under the Plan may be treasury
Stock, authorized but unissued Stock, or Stock acquired, subsequently or in
anticipation of the transaction, in the open market to satisfy the requirements
of the Plan. Awards may consist of any combination of such Stock, or, at the
election of the Company, cash. The aggregate number of shares of Stock as to
which Awards may be granted during any calendar year to any Participant who is a
“covered employee” for purposes of Section 162(m) of the Code during such
calendar year may not be greater than the number of shares initially reserved
for issuance pursuant to this Section 3.1.

 

3.2           Unrealized and Tandem Awards. If any shares of Stock subject to an
Award are forfeited, cancelled, exchanged or surrendered or if an Award
otherwise terminates or expires without a distribution of shares to the
Participant, the shares of Stock with respect to such Award shall, to the extent
of any such forfeiture, cancellation, exchange, surrender, termination or
expiration, again be available for grants under the Plan. The grant of a Tandem
Award (as defined herein) shall not reduce the number of shares of Stock
reserved and available for issuance under the Plan. The Company reserves the
right to cancel any Stock Option which has a per-share exercise price that is
equal to or greater than the Fair Market Value of an underlying share of Stock
as of the date of such cancellation, and any shares of Stock which were subject
to such cancelled Stock Option shall again be available for the issuance of
Stock Options, including issuance to the Person that held the cancelled Stock
Option, irrespective of whether such issuance would be deemed a repricing of
such Stock Option.

 

3.3           Adjustment of Awards. Upon the occurrence of any event which
affects the shares of Stock in such a way that an adjustment of outstanding
Awards is appropriate in order to prevent the dilution or enlargement of rights
under the Awards (including, without limitation, any extraordinary dividend or
other distribution (whether in cash or in kind), recapitalization, stock split,
reverse split, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event),
the Committee shall make appropriate equitable adjustments, which may include,
without limitation, adjustments to any or all of the number and kind of shares
of Stock (or other securities) which may thereafter be issued in connection with
such outstanding Awards and adjustments to any exercise price specified in the
outstanding Awards and shall also make appropriate equitable adjustments to the
number and kind of shares of Stock (or other securities) authorized by or to be
granted under the Plan. Such other substitutions or adjustments shall be made
respecting Awards hereunder as may be determined by the Committee, in its sole
discretion. In connection with any event described in this paragraph, the
Committee may provide, in its discretion, for the

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cancellation of any outstanding Award and payment in cash or other property in
exchange therefor, equal to the difference, if any, between the fair market
value of the Stock or other property subject to the Award, and the exercise
price, if any.

 

SECTION 4

 

ELIGIBILITY

 

Each Participant shall be eligible to receive Awards under the Plan. Additional
Participants under the Plan may be selected from time to time by the Committee,
in its sole discretion, and the Committee shall determine, in its sole
discretion, the number of shares covered by each Award.

 

SECTION 5

 

AWARDS

 

Awards may include, but are not limited to, those described in this Section 5.
The Committee may grant Awards singly, in tandem or in combination with other
Awards, as the Committee may in its sole discretion determine.

 

5.1           Stock Options. Except as provided in any Award Agreement, a Stock
Option represents the right to receive an amount in cash equal to the excess of
the Fair Market Value of a share of Stock on the date of exercise over the per
share exercise price of such Stock Option, less any applicable tax withholdings.
The Award Agreement may provide for the settlement of a Stock Option in shares
of Stock, subject to the terms and conditions set forth in the Award Agreement.

 

(a)           A Stock Option may be exercised, in whole or in part, by giving
written notice of exercise to the Company, specifying the number of shares of
Stock with respect to which the Stock Option is being exercised.

 

(b)           If settled in shares of Stock, the exercise price of the Stock
Option may be paid in cash or its equivalent, as determined by the Committee. As
determined by the Committee, in its sole discretion, or as otherwise set forth
in Sections 5.5(b) and 5.5(c) below, payment in whole or in part may also be
made (i) by withholding from shares of Stock otherwise issuable upon exercise of
such Stock Option, (ii) in the form of unrestricted Stock already owned by the
Participant which has a Fair Market Value on the date of surrender equal to the
aggregate option price of the Stock as to which such Stock Option shall be
exercised or (iii) by means of any other cashless exercise procedure approved by
the Committee. No fractional shares of Stock will be issued or accepted.

 

5.2           Stock Appreciation Rights. A Stock Appreciation Right is a right
to receive, upon surrender of the right, an amount payable in cash and/or shares
of Stock under such terms and conditions as the Committee shall determine.

 

(a)           A Stock Appreciation Right may be granted in tandem with part or
all of (or in addition to, or completely independent of) a Stock Option or any
other Award under

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this Plan. A Stock Appreciation Right issued in tandem with a Stock Option may
be granted at the time of grant of the related Stock Option or at any time
thereafter during the term of the Stock Option.

 

(b)           The amount payable in cash and/or shares of Stock with respect to
each right shall be equal in value to a percentage (including up to 100%) of the
amount by which the Fair Market Value per share of Stock on the exercise date
exceeds the Fair Market Value per share of Stock on the date of grant of the
Stock Appreciation Right. The applicable percentage shall be established by the
Committee. The Award Agreement may state whether the amount payable is to be
paid wholly in cash, wholly in shares of Stock, or in any combination of the
foregoing; if the Award Agreement does not so state the manner of payment, the
Committee shall determine such manner of payment at the time of payment. The
amount payable in shares of Stock, if any, is determined with reference to the
Fair Market Value per share of Stock on the date of exercise.

 

(c)           Stock Appreciation Rights issued in tandem with Stock Options
shall be exercisable only to the extent that the Stock Options to which they
relate are exercisable. Upon exercise of the tandem Stock Appreciation Right,
and to the extent of such exercise, the Participant’s underlying Stock Option
shall automatically terminate. Similarly, upon the exercise of the tandem Stock
Option, and to the extent of such exercise, the Participant’s related Stock
Appreciation Right shall automatically terminate.

 

5.3           Restricted Stock. Restricted Stock is Stock that is issued to a
Participant and is subject to such terms, conditions and restrictions as the
Committee deems appropriate, which may include, but are not limited to,
restrictions upon the sale, assignment, transfer or other disposition of the
Restricted Stock and the requirement of forfeiture of the Restricted Stock upon
termination of employment or service under certain specified conditions. The
Committee may provide for the lapse of any such term or condition or waive any
term or condition based on such factors or criteria as the Committee may
determine. Subject to the restrictions stated in this Section 5.3 and in the
applicable Award Agreement, the Participant shall have, with respect to Awards
of Restricted Stock, all of the rights of a stockholder of the Company,
including the right to vote the Restricted Stock and the right to receive any
cash or stock dividends on such Stock. The Company may require that, as a
condition of any award of Restricted Stock, the Participant shall have delivered
a stock power, endorsed in blank, relating to the Stock covered by such award.

 

5.4           Performance Awards. Performance Awards may be granted under this
Plan from time to time based on such terms and conditions as the Committee deems
appropriate provided that such Awards shall not be inconsistent with the terms
and purposes of this Plan. Performance Awards are Awards which are contingent
upon the performance of all or a portion of the Company and/or its subsidiaries
and/or which are contingent upon the individual performance of a Participant.
Performance Awards may be in the form of performance units, performance shares
and such other forms of Performance Awards as the Committee shall determine. The
Committee shall determine the performance measurements and criteria for such
Performance Awards. The Company may require that, as a condition of any award of
Performance Awards, the Participant shall have delivered a stock power, endorsed
in blank, relating to the Stock covered by such award.

 

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5.5           Manager Awards and Tandem Awards.

 

(a)           Grant of Manager Awards. As consideration for the Manager’s role
in raising capital for the Company, the Manager may be awarded Stock Options in
connection with any equity issuance by the Company, relating to that number of
shares of Stock up to ten percent (10%) of the equity securities issued by the
Company in such equity issuance, subject to the proviso contained in Section
5.5(f) below (the “Manager Awards”).

 

(b)           Terms of Manager Awards. The Stock Options referred to in clause
(a) above shall be 100% vested as of the date of grant and become exercisable as
to 1/30th of the Stock subject to the Stock Options on the first day of each of
the following 30 calendar months following the date of grant. Such Stock Options
shall expire on the tenth anniversary of the date of grant. Such Stock Options
shall have a per share price equal to the offering price of the equity issuance
in connection with which such Stock Options are awarded (as determined by the
Committee), subject to adjustment as set forth in Section 3.3 hereof. If settled
in shares of Stock, the exercise price of such Stock Options may be paid in cash
or its equivalent, as determined by the Committee. Payment in whole or in part
may also be made by the following cashless exercise procedures: (i) by
withholding from shares of Stock otherwise issuable upon exercise of such Stock
Option, (ii) in the form of unrestricted Stock already owned by the Manager
which has a Fair Market Value on the date of surrender equal to the aggregate
option price of the Stock as to which such Stock Option shall be exercised or
(iii) by means of any other cashless exercise procedure approved by the
Committee. No fractional shares of Stock will be issued or accepted. The Award
Agreement with respect to such Stock Options shall also set forth the vesting
and exercise schedule of such Stock Options and such other terms and conditions
with respect to such Stock Options and the delivery of shares of Company Stock
subject to such Stock Options as the Committee may determine.

 

(c)           Each of the Committee and/or the Manager shall have the authority
to direct awards of Stock Options to such employees of the Manager who act as
officers of or perform other services for the Company, which options shall be
tandem to the Stock Options that are the subject of outstanding Manager Awards
designated by the Manager—i.e., Stock Options that are subject to certain
designated Manager Awards would alternatively relate to Stock Options that are
the subject of the tandem awards granted to Persons who perform services for or
on behalf of the Company, provided that such Stock Options may relate to either
the designated Manager Awards or the tandem awards but not both (the “Tandem
Awards”). As determined by the Manager, in its sole discretion, if a Tandem
Award is settled in shares of Stock, payment of the exercise price of such
Tandem Award in whole or in part may be made by the following cashless exercise
procedures: (i) by withholding from shares of Stock otherwise issuable upon
exercise of such Tandem Award, (ii) in the form of unrestricted Stock already
owned by the holder of such Tandem Award which has a Fair Market Value on the
date of surrender equal to the aggregate option price of the Stock as to which
such Tandem Award shall be exercised or (iii) by means of any other cashless
exercise procedure approved by the Committee.

 

(d)           As a condition to the grant of Tandem Awards, the Manager shall be
required to agree that so long as such Tandem Awards remain outstanding, it will
not exercise any Stock Options under any designated Manager Award that are
related to the options under such outstanding Tandem Awards. If Stock Options
under a Tandem Award are forfeited, expire

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or are cancelled without being exercised, the related Stock Options under the
designated Manager Award shall again become exercisable in accordance with its
terms. Upon the exercise of Stock Options under a Tandem Award, the related
Stock Options under the designated Manager Award shall terminate.

 

(e)           The terms and conditions of each such Tandem Awards (e.g., the per
share exercise price, the schedule of vesting, exercisability and form of
settlement, etc.) shall be determined by the Committee or the Manager, as the
case may be, in its sole discretion and shall be included in an Award Agreement,
provided, that the term of such award may not be greater than the term of its
related Manager Award.

 

(f)           Other Awards. The Committee may, from time to time, grant such
Awards to the Manager as the Committee deems advisable in order to provide
additional incentive to the Manager to enhance the value of the Company’s Stock;
provided, however, that no Award shall be awarded to the Manager (or its
designee) in connection with any equity issuance by the Company which relates
to, or provides for the acquisition of, a number of equity securities in excess
of ten percent (10%) of the maximum number of equity securities then being
proposed to be issued by the Company.

 

(g)           Change in Control and Termination Provisions. Notwithstanding
anything herein, unless otherwise provided in any Award Agreement to the
contrary, upon a Change in Control or a termination of the Manager’s services to
the Company for any reason, all Awards granted to the Manager pursuant to this
Plan shall become immediately and fully exercisable, and all Tandem Awards shall
be governed by the terms and conditions of the applicable Award Agreements.

 

(h)           Registration Rights Agreement. The Company shall, upon the
Manager’s reasonable request, (i) use commercially reasonable efforts to
register under the Securities Act of 1933, as amended (the “Securities Act”) the
securities that may be issued and sold under the Plan or the resale of such
securities issued and sold pursuant to the Plan or (ii) enter into a
registration rights agreement with the Manager on terms to be mutually agreed
upon between the parties.

 

5.6           Automatic Non-Officer Director Awards.

 

(a)           Initial Grant of Non-Officer Director Stock Options. Each
Non-Officer Director shall be granted a Stock Option, which shall be fully
vested as of the date of the grant, relating to 5,000 shares of Stock (each, a
“Non-Officer Director Stock Option”), upon the date of the first Board of
Director’s meeting attended by such Non-Officer Director. The option price per
share of Stock under the Non-Officer Director Stock Option shall be one hundred
percent (100%) of the Fair Market Value of the Stock on the date of grant.

 

(b)           Stock Availability. In the event that the number of shares of
Stock available for grant under the Plan is not sufficient to accommodate the
Awards of Non-Officer Director Stock Options, then the remaining shares of Stock
available for such automatic awards shall be granted to each Non-Officer
Director who is to receive such an award on a pro-rata basis. No further grants
shall be made until such time, if any, as additional shares of Stock

10

 

become available for grant under the Plan through action of the Board or the
stockholders of the Company to increase the number of shares of Stock that may
be issued under the Plan or through cancellation or expiration of Awards
previously granted hereunder.

 

(c)           Term; Method of Exercise of Non-Officer Director Stock Option.
Each Non-Officer Director Stock Option shall cease to be exercisable no later
than the date that is ten (10) years following the date of grant. If settled in
shares of Stock, the exercise price of such Stock Options may be paid in cash or
its equivalent, as determined by the Committee. As determined by the Committee,
in its sole discretion, payment in whole or in part may also be made (i) by
means of any cashless exercise procedure approved by the Committee (including
the withholding of shares of Stock otherwise issuable on exercise), or (ii) in
the form of unrestricted Stock already owned by the Non-Officer Director which
has a Fair Market Value on the date of surrender equal to the aggregate option
price of the Stock as to which such Stock Option shall be exercised. No
fractional shares of Stock will be issued or accepted.

 

(d)           Award Agreements. Each recipient of a Non-Officer Director Stock
Option shall enter into an Award Agreement with the Company, which agreement
shall set forth, among other things, the exercise price, the term and provisions
regarding exercisability and form of settlement of the Non-Officer Director
Stock Option, which provisions shall not be inconsistent with the terms of this
Section 5.6 and Section 6.1. The Award Agreement with respect to such
Non-Officer Director Stock Option shall also set forth such other terms and
conditions with respect to Awards to the Non-Officer Director as the Committee
may determine.

 

5.7           Other Awards.

 

The Committee may from time to time grant to its Non-Officer Directors or any
other Participants shares of Stock, other Stock-based and non-Stock-based Awards
under the Plan, including without limitation those Awards pursuant to which
shares of Stock are or may in the future be acquired, Awards denominated in
Stock, securities convertible into Stock, phantom securities, dividend
equivalents and cash. The Committee shall determine the terms and conditions of
such other Stock, Stock-based and non-Stock-based Awards provided that such
Awards shall not be inconsistent with the terms and purposes of this Plan.

 

SECTION 6

AWARD AGREEMENTS

 

Each Award under this Plan shall be evidenced by an Award Agreement setting
forth the number of shares of Stock or other securities, and such other terms
and conditions applicable to the Award (and not inconsistent with this Plan) as
are determined by the Committee.

 

6.1           Terms of Award Agreements. Award Agreements may include the
following terms:

 

(a)           Term. The term of each Award (as determined by the Committee);
provided that, no Award shall be exercisable more than ten years after the date
such Award is granted.

 

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(b)           Exercise Price. The exercise price per share of Stock purchasable
under an Award (as determined by the Committee in its sole discretion at the
time of grant); provided that, the exercise price shall not be less than the par
value of the Stock provided, further, that Awards intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the
Code, or exempt from application of Section 409A of the Code under Section
1.409A-1(b)(5)(A), shall not be less than one hundred percent (100%) of the Fair
Market Value of the Stock on such date.

 

(c)           Exercisability. Provisions regarding the exercisability of Awards
(which shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at or after grant).

 

(d)           Method of Exercise. Provisions describing the method of exercising
Awards.

 

(e)           Delivery. Provisions regarding the timing of the delivery of Stock
subject to Awards. The Award Agreements may provide that such delivery will be
delayed to the extent required to avoid the imposition of a tax under Section
409A of the Code.

 

(f)           Termination of Employment or Service. Provisions describing the
treatment of an Award in the event of Disability, death or other termination of
a Participant’s employment or service with the Company, including but not
limited to, terms relating to the vesting, time for exercise, forfeiture and
cancellation of an Award in such circumstances.

 

(g)           Rights as Stockholder. A provision that a Participant shall have
no rights as a stockholder with respect to any securities covered by an Award
until the date the Participant becomes the holder of record. Except as provided
in Section 3.3 hereof, no adjustment shall be made for dividends or other
rights, unless the Award Agreement specifically requires such adjustment, in
which case, grants of dividend equivalents or similar rights shall not be
considered to be a grant of any other stockholder right.

 

(h)           Nontransferability. A provision that except under the laws of
descent and distribution or as otherwise permitted by the Committee, in its sole
discretion, or, in respect of Manager Awards, grants of Tandem Awards, the
Participant shall not be permitted to sell, transfer, pledge or assign any
Award, and all Awards shall be exercisable, during the Participant’s lifetime,
only by the Participant; provided, however, that the Participant shall be
permitted to transfer one or more Stock Options to a trust controlled by the
Participant during the Participant’s lifetime for estate planning purposes.

 

(i)           Other Terms. Such other terms as are necessary and appropriate to
effectuate an Award to the Participant, including but not limited to, (1)
vesting provisions, (2) deferral elections, (3) any requirements for continued
employment or service with the Company, (4) any requirement to execute a general
release of claims in a form acceptable to the Company prior to the lapse of any
restrictions or conditions on such Award or such Award becoming exercisable, (5)
any other restrictions or conditions (including performance requirements) on the
Award and the method by which restrictions or conditions lapse, (6) effect on
the Award of a Change in Control, (7) the right of the Company and such other
Persons as the Committee shall

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designate (“Designees”) to repurchase from a Participant, and such Participant’s
permitted transferees, all shares of Stock issued or issuable to such
Participant in connection with an Award in the event of such Participant’s
termination of employment or service, (8) rights of first refusal granted to the
Company and Designees, if any, (9) holdback and other registration right
restrictions in the event of a public registration of any equity securities of
the Company and (10) any other terms and conditions which the Committee shall
deem necessary and desirable.

 

SECTION 7

 

LOANS

 

To the extent permitted by applicable law, including the Sarbanes-Oxley Act of
2002, the Company or any parent or subsidiary of the Company may make loans
available to Stock Option holders in connection with the exercise of outstanding
Stock Options that are settled in shares of Stock, as the Committee, in its
discretion, may determine. Such loans shall (i) be evidenced by promissory notes
entered into by the Stock Option holders in favor of the Company or any parent
or subsidiary of the Company, (ii) be subject to the terms and conditions set
forth in this Section 7 and such other terms and conditions, not inconsistent
with the Plan, as the Committee shall determine, (iii) bear interest, if any, at
such rate as the Committee shall determine, and (iv) be subject to Board
approval (or to approval by the Committee to the extent the Board may delegate
such authority). In no event may the principal amount of any such loan exceed
the sum of (x) the exercise price less the par value of the shares of Stock
covered by the Stock Option, or portion thereof, exercised by the holder, and
(y) any federal, state, and local income tax attributable to such exercise. The
initial term of the loan, the schedule of payments of principal and interest
under the loan, the extent to which the loan is to be with or without recourse
against the holder with respect to principal or interest and the conditions upon
which the loan will become payable in the event of the holder’s termination of
employment or service shall be determined by the Committee. Unless the Committee
determines otherwise, when a loan is made, shares of Stock having a Fair Market
Value at least equal to the principal amount of the loan shall be pledged by the
holder to the Company as security for payment of the unpaid balance of the loan,
and such pledge shall be evidenced by a pledge agreement, the terms of which
shall be determined by the Committee, in its discretion; provided that, each
loan shall comply with all applicable laws, and all regulations and rules of the
Board of Governors of the Federal Reserve System and of the U.S. Securities and
Exchange Commission and any other governmental agency having jurisdiction.

 

SECTION 8

 

AMENDMENT AND TERMINATION

 

The Board may at any time and from time-to-time alter, amend, suspend, or
terminate the Plan in whole or in part; provided that, no amendment which
requires stockholder approval in order for the Plan to comply with a rule or
regulation deemed applicable by the Committee, shall be effective unless the
same shall be approved by the requisite vote of the stockholders of the Company
entitled to vote thereon. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Participant, without such
Participant’s consent, under any Award or Loan theretofore granted under the
Plan.

 

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SECTION 9

 

UNFUNDED STATUS OF PLAN

 

The Plan is intended to constitute an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

 

SECTION 10

 

GENERAL PROVISIONS

 

10.1          Securities Laws Compliance. Shares of Stock shall not be issued
pursuant to the exercise of any Award granted hereunder unless the exercise of
such Award and the issuance and delivery of such shares of Stock pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act and the requirements of any
stock exchange upon which the Stock may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

 

10.2          Representation. If a Stock Option is settled in shares of Stock,
the Committee may require each Person purchasing shares pursuant to such Stock
Option to represent to and agree with the Company in writing that such Person is
acquiring the Stock subject thereto without a view to distribution thereof.

 

10.3          Transfer Restrictions. All shares of Stock delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable federal or state securities law.

 

10.4          Company Actions; No Right to Employment. Nothing contained in the
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is necessary and
desirable; and such arrangements may be either generally applicable or
applicable only in specific cases. The adoption of the Plan shall not confer
upon any employee, consultant, service provider or advisor of the Company any
right to continued employment or service with the Company, as the case may be,
nor shall it interfere in any way with the right of the Company to terminate the
employment or service of any of its employees, consultants or advisors at any
time.

 

10.5          Section 409A of the Code. The intent of the parties is that
payments and benefits under the Plan be exempt from, or comply with Section 409A
of the Code to the extent subject thereto, and, accordingly, to the maximum
extent permitted, the Plan shall be interpreted and be administered to be in
compliance therewith. Any payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A of the Code shall not be
treated as deferred compensation unless applicable law requires otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent required in
order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, amounts that would otherwise be payable

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and benefits that would otherwise be provided pursuant to the Plan or any other
agreement between the Company and the Participant during the six (6) month
period immediately following the Participant’s termination of employment shall
instead be paid on the first business day after the date that is six (6) months
following the Participant’s separation from service (or upon the Participant’s
death, if earlier). In addition, for purposes of the Plan, each amount to be
paid or benefit to be provided to the Participant pursuant to the Plan, which
constitute deferred compensation subject to Section 409A of the Code, shall be
construed as a separate identified payment for purposes of Section 409A of the
Code.

 

10.6          Payment of Taxes. Each Participant shall, no later than the date
as of which the value of an Award first becomes includible in the gross income
of the Participant for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any federal,
state, or local taxes of any kind required by law to be withheld with respect to
the Award. The obligations of the Company under the Plan shall be conditional on
the making of such payments or arrangements, and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.

 

10.7          Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law of such state.

 

SECTION 11

 

EFFECTIVE DATE OF PLAN

 

The Plan became effective (the “Effective Date”) on October 16, 2014, the date
the Board formally approved the Plan.

 

SECTION 12

 

TERM OF PLAN

 

No Award shall be granted pursuant to the Plan on or after the tenth anniversary
of the Effective Date, but Awards theretofore granted may extend beyond that
date.

 

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