Exhibit 10.1

 

ACURA PHARMACEUTICALS INC. 2016 STOCK OPTION PLAN

 

1. Purposes. The Plan described herein, as amended and restated, shall be known
as the “Acura Pharmaceuticals, Inc. 2016 Stock Option Plan” (the “Plan”). The
purposes of the Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants of the Company or its Subsidiaries (as
defined in Section 2 below) to whom Option’s may be granted under this Plan, and
to promote the success of the Company’s business.

 

Options granted hereunder may be either “incentive stock options,” as defined in
Section 422 of the Internal Revenue Code of 1986, as amended, or “Non-ISO’s,” at
the discretion of the Board and as reflected in the terms of the written option
agreement.

 

The Plan is not intended as an agreement or promise of employment. Neither the
Plan, nor any Option granted pursuant to the Plan, shall confer on any person
any right to continue in the employ of the Company. The right of the Company to
terminate an Employee is not limited by the Plan, nor by any Option granted
pursuant to the Plan, unless such right is specifically described by the terms
of any such Option.

 

2. Definitions. As used herein, the following definitions shall apply:

 

(a) “409A Award Agreement” has the meaning set forth in Section 24.1.

 

(b) “Board” shall mean the Committee, if one has been appointed, or the Board of
Directors of the Company, if no Committee is appointed.

 

(c) “Change of Control” shall mean means in one or a series of related
transactions any of the following: (a) the acquisition (other than solely from
the Company) by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) other than the Company (or any entity
of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 , as amended) of more than sixty-six and 2/3 percent
(66.66%) of the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
“Voting Securities”); (b) a reorganization, merger, consolidation, share
exchange, recapitalization, business combination or similar combination
involving the Company or its capital stock (a “Business Combination”), other
than a Business Combination in which more than thirty-three and 1/3 percent
(33.33%) of the combined voting power of the outstanding voting securities of
the surviving or resulting entity immediately following the Business Combination
is held by the persons who, immediately prior to the Business Combination, were
the holders of the Voting Securities; (c) a sale or other transfer (other than
license) of all or substantially all of the Company’s assets (measured by the
value or earning power of the assets), including, without limitation, the sale
by the Company of its rights under license agreements or similar agreements
relating to its technology (including the sale of royalty payment amounts
payable to the Company or its shareholders under such agreements); (d) the
license or similar agreement by the Company to a third party or third parties,
in one or more transactions, of all rights in and to the Company’s technology
and, as a result of such transactions, all or substantially all of the Company’s
activities consist of monitoring such arrangements and collecting fees and
payments due thereunder; or (e) a complete liquidation or dissolution of the
Company.

 

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e) “Committee” shall mean the Committee appointed under Section 4(a) hereof.

 

(f) “Common Stock” shall mean the Common Stock, $.01 par value, of the Company.

 

(g) “Company” shall mean Acura Pharmaceuticals, Inc., a New York corporation.

 

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(h) “Continuous Service or Continuous Status as an Employee” shall mean the
absence of any interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the Board.

 

(i) “Director” shall mean any person serving on the Board of Directors.

 

(j) “Employee” shall mean any person, including officers, employed by the
Company or any Parent or Subsidiary of the Company. The payment of a Director’s
fee by the Company shall not be sufficient to constitute “employment” by the
Company.

 

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

 

(l) “Fair Market Value” shall mean (i) the closing price for a share of the
Common Stock on the exchange or quotation system which reports or quotes the
closing prices for a share of the Common Stock, as accurately reported for any
date (or, if no shares of Common Stock are traded on such date, for the
immediately preceding date on which shares of Common Stock were traded) in The
Wall Street Journal (or if The Wall Street Journal no longer reports such price,
in such other reliable publication (electronic or otherwise) as the Board may
select in its discretion or (ii) if no such price quotation is available, the
price which the Committee acting in good faith determines through any reasonable
valuation method that a share of Common Stock might change hands between a
willing buyer and a willing seller, neither being under any compulsion to buy or
to sell and both having reasonable knowledge of the relevant facts (provided
that such valuation method complies with Treas. Regulation 1.409A-1(b)(5)(iv),
or any successor regulation).

 

(m) “Incentive Stock Option” shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

 

(n) “Non-ISO” shall mean an Option to purchase stock which is not intended by
the Committee to satisfy the requirements of Section 422 of the Code. A Non-ISO”
shall also mean a non-qualified stock option.

 

(o) “Option” shall mean a stock option granted pursuant to the Plan.

 

(p) “Optioned Stock” shall mean the Common Stock subject to an Option.

 

(q) “Optionee” shall mean an Employee, Director or Consultant who receives an
Option.

 

(r) “Parent” shall mean a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code.

 

(s) “Plan” shall mean this Acura Pharmaceuticals, Inc. 2016 Stock Option Plan,
as amended from time to time.

 

(t) “Rule 16b-3” shall mean Rule 16b-3 of the General Rules and Regulations
under the Exchange Act.

 

(u) “Section 409A Award” has the meaning set forth in Section 24.1.

 

(v) “Share” shall mean a share of the Common Stock, as adjusted in accordance
with Section 11 of the Plan.

 

(w) “Subsidiary” shall mean a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

 

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(x) “Ten Percent Shareholder” shall mean a person who owns (after taking into
account the attribution rules of Section 424(d) of the Code) more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or a Subsidiary.

 

3. Stock Authorized.

 

Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of shares which may be Optioned and sold under the Plan is 600,000 shares
of authorized, but unissued, or reacquired Common Stock. The maximum number of
shares underlying Incentive Stock Options which may be Optioned under the Plan
is 600,000. The maximum number of shares which may be subject to Options granted
to any one person in any calendar year (including at fair market value on the
date of grant) shall not exceed 60,000 shares (subject to adjustment under
Section 11 hereof consistent with Section 162(m) of the Code). If the shares
that would be issued or transferred pursuant to any Options are not issued or
transferred and ceased to be issuable or transferable for any reason, the number
of shares subject to such Option will no longer be charged against a limitation
provided for herein and may again be subject to Options. Notwithstanding the
proceeding sentence, with respect to any Option granted to any individual who is
a “covered employee” within the meaning of Section 162(m) of the Code that is
cancelled, the number of shares subject to such Option shall continue to count
against the maximum number of shares which may be the subject of Options granted
to such individual. For purposes of the preceding sentence if, after grant, the
exercise price of an Option is reduced, such reduction shall be treated as a
cancellation of such Option and the grant of a new Option, and both the
cancellation of the Option and the new Option shall reduce the maximum number of
shares for which Options may be granted to the holder of such Option in a
calendar year.

 

If an Option should expire or become unexercisable for any reason without having
been exercised in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, become available for further grant
under the Plan.

 

4. Administration.

 

(a) Procedure. The Company’s Board of Directors may appoint a Committee to
administer the Plan which shall be constituted so as to permit the Plan to
continue to comply with Rule 16b-3, as currently in effect or as hereafter
modified or amended. The Committee appointed by the Board of Directors shall
consist of not less than two members of the Board of Directors, to administer
the Plan on behalf of the Board of Directors, subject to such terms and
conditions as the Board of Directors may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time, the Board of Directors may increase the size of
the Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan; provided, however, that at no time shall a Committee of
less than two members administer the Plan. Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan and to make all
other determinations necessary or advisable for the administration of the Plan.
Notwithstanding anything to the contrary contained herein, no member of the
Committee shall serve as such under this Plan unless such person is a
“Non-Employee Director” within the meaning of Rule 16b-3(b)(3)(i) of the
Exchange Act. A majority vote of the members of the Committee shall be required
for all of its actions.

 

A majority of the entire Committee shall constitute a quorum, and the action of
the majority of the Committee members present at any meeting at which a quorum
is present shall be the action of the Committee. All decisions, determinations,
and interpretations of the Committee shall be final and conclusive on all
persons affected thereby and shall, as to Incentive Stock Options, be consistent
with Section 422 of the Code. The Committee shall have all of the powers and
duties set forth herein, as well as such additional powers and duties as the
Board of Directors may delegate to it; provided, however, that the Board of
Directors expressly retains the right in its sole discretion (i) to elect and to
replace the members of the Committee, and (ii) to terminate or amend this Plan
in any manner consistent with applicable law.

 

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(b) Powers of the Committee. Subject to the provisions of the Plan, the
Committee shall have the authority, in its discretion: (i) to grant Incentive
Stock Options, in accordance with Section 422 of the Code, or to grant
Non-ISO’s; (ii) to determine the Fair Market Value of the Common Stock; (iii) to
determine the exercise price per share of Options to be granted which exercise
price shall be determined in accordance with Section 8 of the Plan; (iv) to
determine the persons to whom (including, without limitation, members of the
Committee) and the time or times at which, Options shall be granted and the
number of Shares to be represented by each Option; (v) to interpret the Plan;
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan;
(vii) to determine the terms and provisions of each Option granted (which need
not be identical) and, with the consent of the holder thereof, modify or amend
each Option; (viii) to accelerate or defer (with the consent of the Optionee)
the exercise date of any Option; (ix) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Board; and (x) to make all other determinations
deemed necessary or advisable for the administration of the Plan.

 

(c) Subject to the provisions of this Plan and compliance with Rule 16b-3 of the
Exchange Act, the Committee may grant options under this Plan to members of the
Company’s Board of Directors, including members of the Committee, and in such
regard may determine:

 

(i) the time at which any such Option shall be granted;

 

(ii) the number of Shares covered by any such Option;

 

(iii) the time or times at which, or the period during which, any such Option
may be exercised or whether it may be exercised in whole or in installments;

 

(iv) the provisions of the agreement relating to any such Option; and

 

(v) the Option Price of Shares subject to an Option granted such Board member.

 

(d) Effect of the Committee’s Decision. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Optionees and
any other holders of any Options granted under the Plan.

 

5. Eligibility. Incentive Stock Options may be granted only to Employees.
Non-ISO’s may be granted to Employees as well as non-employee Directors and
Consultants of the Company as determined by the Board or any Committee. Any
person who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options.

 

Each grant of an Option shall be evidenced by an Option agreement, and each
Option agreement shall (1) specify whether the Option is an Incentive Stock
Option or a Non-ISO and (2) incorporate such other terms and conditions as the
Committee acting in its absolute discretion deems consistent with the terms of
this Plan, including, without limitation, a restriction on the number of shares
of stock subject to the Option which first become exercisable during any
calendar year.

 

To the extent that the aggregate Fair Market Value of the stock of the Company
subject to Incentive Stock Options granted (determined as of the date such an
Incentive Stock Option is granted) which first become exercisable in any
calendar year exceeds $100,000, such Options shall be treated as Non-ISO’s. This
$100,000 limitation shall be administered in accordance with the rules under
Section 422(d) of the Code.

 

6. Effective Date and Term of Plan. The effective date of this Plan (“Effective
Date”) shall be the date it is adopted by the Board, provided the shareholders
of the Company (acting at a duly called meeting of such shareholders or by the
written consent of shareholders) approve this Plan within twelve (12) months
after such Effective Date. The effectiveness of Options granted under this Plan
prior to the date such shareholder approval is obtained shall be contingent on
such shareholder approval.

 

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Subject to the provisions of Section 13 hereof, no Option shall be granted under
this Plan on or after the earlier of

 

(1) the tenth anniversary of the Effective Date of this Plan in which event the
Plan otherwise thereafter shall continue in effect until all outstanding Options
shall have been surrendered or exercised in full or no longer are exercisable,
or

 

(2) the date on which all of the Common Stock reserved for issuance under
Section 3 of this Plan has (as a result of the exercise or expiration of Options
granted under this Plan) been issued or no longer is available for use under
this Plan, in which event the Plan also shall terminate on such date.

 

7. Term of Option. An Option shall expire on the date specified in such Option,
which date shall not be later than the tenth anniversary of the date on which
the Option was granted, except that, if any Employee, at any time an Incentive
Stock Option is granted to him or her, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of Common Stock
(or, under Section 424(d) of the Code is deemed to own stock representing more
than ten percent (10%) of the total combined voting power of all such classes of
Common Stock, by reason of the ownership of such classes of stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or lineal descendant
of such Employee, or by or for any corporation, partnership, state or trust of
which such Employee is a shareholder, partner or beneficiary), the Incentive
Stock Option granted him or her shall not be exercisable after the expiration of
five (5) years from the date of grant or such earlier expiration as provided in
the particular Option agreement.

 

8. Exercise Price and Consideration.

 

(a) The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:

 

(i) In the case of an Incentive Stock Option

 

(A) granted to an Employee who, immediately before the grant of such Incentive
Stock Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.

 

(B) granted to any Employee, the per share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.

 

(ii) In the case of a Non-ISO, the per share exercise price shall be determined
by the Board on the date of grant.

 

(b) The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the Board and
may consist entirely of

 

(i) cash;

 

(ii) check;

 

(iii) subject to section 402 of the Sarbanes-Oxley Act of 2002 as amended from
time to time and subject to such terms and conditions as the Committee may
impose, promissory note, provided such promissory note shall be full recourse as
to principal and interest and shall bear interest at the market rate, which
market rate shall be equal to the rate of interest available to the Optionee in
a third party arms-length loan transaction of similar nature and amount;

 

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(iv) Shares of Common Stock having been held by the Optionee for at least six
(6) months prior to being surrendered as consideration for the Shares to be
issued upon exercise of an Option and having a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, or any combination of such methods of payment; or

 

(v) such other consideration and method of payment for the issuance of Shares to
the extent permitted under New York law.

 

(c) Without limiting Section 8(b), the Option may be exercised though net
exercise, together with other forms of acceptable consideration, such that the
number of Shares of Common Stock issued upon the exercise will be reduced by the
largest number of whole Shares that has a Fair Market Value on the date of
exercise that does not exceed the aggregate exercise price (less the exercise
price paid, if any, with other acceptable forms of consideration) as a result of
such exercise.

 

(d) The Company has the right to require the Optionee upon the exercise of an
Option to pay to the Company the amount of any federal, state and local taxes
which the Company is required to withhold upon the exercise of the Option. In
lieu of requiring cash payment of any such taxes, the Company shall, in its
discretion or at the Optionee’s request, instead withhold from the Shares of
Common Stock to be issued under the Option a number of Shares of Common Stock
whose value is equal to the amount of such taxes. Valuation for this purpose
shall be the Fair Market Value on the date of exercise.

 

9. Exercise of Option.

 

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Committee, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.

 

An Option may not be exercised for a fraction of a Share.

 

An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full
payment may, as authorized by the Board, consist of any consideration and method
of payment allowable under Section 8(b) or 8(c) of the Plan. Until the issuance,
which in no event will be delayed more than thirty (30) days from the date of
the exercise of the Option, (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Plan.

 

Exercise of an Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

 

(b) Termination of Status as an Employee, or Director or Consultant with Respect
to Non-ISO’s. Non-ISO’s granted pursuant to the Plan may be exercised
notwithstanding the termination of the Optionee’s status as an employee, a
non-employee Director or a Consultant, except as provided in the Plan or as
provided by the terms of the Option agreement.

 

(c) Termination of Service as an Employee with Respect to Incentive Stock
Options. If the Continuous Service of any Employee terminates, he or she may,
but only within thirty (30) days (or such other period of time not exceeding
three (3) months as is determined by the Committee) after the date he or she
ceases to be an Employee of the Company, exercise his or her Incentive Stock
Option to the extent that he or she was entitled to exercise it as of the date
of such termination. To the extent that he or she was not entitled to exercise
the Incentive Stock Option at the date of such termination, or if he or she does
not exercise such Option (which he or she was entitled to exercise) within the
time specified herein, the Option shall terminate.

 

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(d) Disability of Optionee. Notwithstanding the provisions of Section 9(c)
above, subject to Section 24 hereof, in the event an Employee is unable to
continue his or her Continued Service with the Company as a result of his or her
total and permanent disability (within the meaning of Section 22(e)(3) of the
Code), he or she may, but only within three (3) months (or such other period of
time not exceeding twelve (12) months as is determined by the Committee) from
the date of disability, exercise his or her Option to the extent he or she was
entitled to exercise it at the date of such disability. To the extent that he or
she was not entitled to exercise the Option at the date of disability, or if he
or she does not exercise such Option (which he or she was entitled to exercise)
within the time specified herein, the Option shall terminate.

 

(e) Death of Optionee. In the event of the death of an Optionee:

 

(i) during the term of the Option who is at the time of his or her death an
Employee of the Company and who shall have been in Continuous Status as an
Employee, a Director or Consultant since the date of grant of the Option, the
Option may be exercised, subject to Section 24 hereof, at any time within twelve
(12) months following the date of death, by the Optionee’s estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent of the right to exercise that would have accrued had the
Optionee continued living one (1) month after the date of death; or

 

(ii) within thirty (30) days (or such other period of time not exceeding three
(3) months as is determined by the Committee) after the termination of
Continuous Status as an Employee, a Director or Consultant, subject to Section
24 hereof, the Option may be exercised, at any time within three (3) months
following the date of death, by the Optionee’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination;
except in the case of a Non-ISO, as otherwise provided in any option agreement
between the Company and the Optionee.

 

10. Transferability of Options.

 

(a) Incentive Stock Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the life time of the
Optionee only by the Optionee.

 

(b) Non-ISOs may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Optionee, only by
the Optionee; provided that the Board, in its sole discretion, may permit
limited transferability, from time to time, on a general or specific basis, and
may impose conditions and limitations on any permitted transferability.
Following transfer, any such Options shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer, provided
that for purposes of determining the rights of exercise under the Option, the
term “Optionee” shall be deemed to refer to the transferee. The termination of
service as an employee, non-employee director or consultant shall continue to be
applied with respect to the original Optionee, following which the options shall
be exercisable by the transferee only to the extent, and for the periods
specified in Section 9 of the Plan and in the Option agreement.

 

11. Adjustments upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
exercise price of shares of Common Stock subject to an Option.

 

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In the event of a Change of Control, the proposed dissolution or liquidation of
the Company, or in the event of a proposed sale of all or substantially all of
the assets of the Company, or the merger of the Company, the Board may, in the
exercise of its sole discretion in such instances, accelerate the vesting of all
or any portion of Options then outstanding.

 

In the event of a Change in Control, the Board may in its discretion and upon at
least 10 days’ advance notice to the affected persons, cancel any outstanding
Options and pay to the holders thereof, in cash or stock, or any combination
thereof, the value of such Options based upon the price per share of Common
Stock received or to be received by other shareholders of the Company in the
Change of Control transaction. In the case of any Option with an exercise price
that equals or exceeds the price paid for a share of Common Stock in connection
with the Change in Control transaction, the Committee may cancel the Option
without consideration therefor.

 

12. Time for Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee,
non-employee Director and Consultant to whom an Option is so granted within a
reasonable time after the date of such grant.

 

13. Amendment and Termination of the Plan. (a) The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the holders of a majority of the outstanding shares of the Company entitled to
vote:

 

(i) any increase in the number of Shares subject to the Plan, other than in
connection with an adjustment under Section 11 of the Plan;

 

(ii) any change in the class of Employees which are eligible participants for
Options under the Plan; or

 

(iii) if shareholder approval of such amendment is required for continued
compliance with Rule 16b-3.

 

(b) Shareholder Approval. Any amendment requiring shareholder approval under
Section 13(a) of the Plan shall be solicited as described in Section 17 of the
Plan.

 

(c) Effect of Amendment or Termination. Any such amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

 

14. Conditions upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

 

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As a condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

 

15. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

16. Option Agreement. Options shall be evidenced by written Option agreements in
such form as the Committee shall approve.

 

17. Shareholder Approval. This Plan shall not be effective until approved by the
affirmative vote of the holders of a majority of the votes cast at a meeting of
shareholders entitled to vote thereon, where a quorum is present. The approval
of such shareholders of the Company shall be (1) solicited substantially in
accordance with Section 14(a) of the Exchange Act and the rules and regulations
promulgated thereunder, or (2) solicited after the Company has furnished in
writing to the holders entitled to vote substantially the same information
concerning the Plan as that which would be required by the rules and regulations
in effect under Section 14(a) of the Exchange Act at the time such information
is furnished.

 

18. Miscellaneous Provisions. An Optionee shall have no rights as a shareholder
with respect to any Shares covered by his Option until the date of the issuance
of a stock certificate to him for such shares.

 

19. Other Provisions. The stock option agreement authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the Option, as the Committee shall deem advisable. Any such
stock option agreement shall contain such limitations and restrictions upon the
exercise of the Option as shall be necessary in order that such option will be
an Incentive Stock Option as defined in Section 422 of the Code if an Incentive
Stock Option is intended to be granted.

 

20. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys’ fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such Board
member is liable for negligence or misconduct in the performance of his duties;
provided that within sixty (60) days after institution of any such action, suit
or proceeding a Board member shall in writing offer the Company the opportunity,
at its own expense, to handle and defend the same.

 

21. Application of Funds. The proceeds received by the Company from the sale of
Common Stock pursuant to Options will be used for general corporate purposes.

 

22. No Obligation to Exercise Option. The granting of an Option shall impose no
obligation upon the Optionee to exercise such Option.

 

23. Other Compensation Plans. The adoption of the Plan shall not affect any
other stock option or incentive or other compensation plans in effect for the
Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and Directors of the Company or any Subsidiary.

 

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24. Compliance with Section 409A of the Code

 

24.1. Options Subject to Code Section 409A. Notwithstanding anything to the
contrary contained in the Plan, any Option that constitutes, or provides for, a
deferral of compensation subject to Section 409A of the Code (a “Section 409A
Award”) shall satisfy the requirements of Section 409A of the Code and this
Section 24, to the extent applicable. The Option agreement with respect to a
Section 409A Award (the “409A Award Agreement”) shall incorporate the terms and
conditions required by Section 409A of the Code and this Section 24.

 

24.2. Distributions under a Section 409A Award.

 

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

 

(i) the Optionee’s separation from service,

 

(ii) the date the Optionee becomes disabled,

 

(iii) the Optionee’s death,

 

(iv) a specified time (or pursuant to a fixed schedule) specified under the 409A
Award Agreement at the date of the deferral of such compensation,

 

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

 

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

 

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

 

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

 

(d) For purposes of this Section 24, the terms specified herein shall have the
respective meanings ascribed thereto under Section 409A of the Code and the
Treasury Regulations thereunder.

 

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

 

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

 

25. Clawback. Notwithstanding any other provision in this Plan, any Option which
is subject to recovery under any law, government regulation or stock exchange
listing requirement, will be subject to such deductions and clawbacks as may be
required to be made pursuant to such law, government regulation or stock
exchange listing requirement (or any policy adopted by the Company pursuant to
such law, government regulation or stock exchange listing requirement).

 

26. Singular, Plural; Gender. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.

 

27. Headings, Etc., No Part of Plan. Headings of Articles and Sections hereof
are inserted for convenience and reference; they constitute no part of the Plan.

 

28. Governing Law. The Plan shall be governed by and construed in accordance
with the laws of the State of New York, except to the extent preempted by
Federal law. The Plan is intended to comply with Rule 16b-3. Any provisions
inconsistent with Rule 16b-3 shall be inoperative and shall not affect the
validity of the Plan, unless the Board of Directors shall expressly resolve that
the Plan is no longer intended to comply with Rule 16b-3.

 

Dated: April 28, 2016

 

 Page 11 of 11