Exhibit 10.1

 

AKOUSTIS TECHNOLOGIES, inc.

 

2016 stock INCENTIVE PLAN

 

1.Purpose

 

The purposes of the Plan are to encourage and enable selected Employees,
Directors and Consultants of the Company and its Affiliates to acquire or
increase their holdings of Common Stock and other equity-based interests in the
Company and/or to provide other incentive awards in order to promote a closer
identification of their interests with those of the Company and its
stockholders, and to provide flexibility to the Company in its ability to
motivate, attract and retain the services of Participants upon whose judgment,
interest and special effort the successful conduct of its operation largely
depends. These purposes may be carried out through the granting of Awards to
selected Participants.

 

2.Effective Date; Term

 

The Effective Date of the Plan shall be December 15, 2016 (the “Effective
Date”). Awards may be granted on or after the Effective Date, but no Awards may
be granted after December 14, 2026. Awards that are outstanding at the end of
the Plan term (or such earlier termination date as may be established by the
Board pursuant to Section 18(a)) shall continue in accordance with their terms,
unless otherwise provided in the Plan or an Award Agreement.

 

3.Definitions

 

In addition to other terms defined herein or in an Award Agreement, the
following terms shall have the meanings given below:

 

(a)          Administrator means the Board and, upon its delegation of all or
part of its authority to administer the Plan to the Committee, the Committee.

 

(b)         Affiliate means any Parent or Subsidiary of the Company, and also
includes any other business entity which controls, is controlled by or is under
common control with the Company; provided, however, that the term “Affiliate”
shall be construed in a manner in accordance with the registration provisions of
applicable federal securities laws if and to the extent required.

 

(c)          Applicable Law means any applicable laws, rules or regulations (or
similar guidance), including but not limited to the Securities Act, the Exchange
Act, the Code and the listing or other rules of any applicable stock exchange.
References to any applicable laws, rules and regulations, including references
to any sections or other provisions of applicable laws, rules and regulations,
shall also refer to any successor provisions thereto unless the Administrator
determines otherwise.

 

(d)         Award means a grant under the Plan of an Incentive Option; a
Nonqualified Option; a Stock Appreciation Right; a Restricted Stock Award; a
Restricted Stock Unit; a Deferred Stock Unit; a Performance Share; a Performance
Unit; a Phantom Stock Award; an Other Stock-Based Award; a Cash Bonus Award; a
Dividend Equivalent Award; and/or any other award granted under the Plan.

 

(e)          Award Agreement means an award agreement or certificate (which may
be in written or electronic form, in the Administrator’s discretion, and which
includes any amendment or supplement thereto) between the Company and a
Participant, specifying such terms, conditions and restrictions as may be
established by the Administrator with regard to an Award and shares of Common
Stock or any other benefit related to an Award.

 

(f)          Board or Board of Directors means the Board of Directors of the
Company.

 

(g)         Cash Bonus Award means a cash-based Award granted pursuant to
Section 13.

 

 

 

 

(h)          Cause means, unless otherwise provided in an Award Agreement or
determined by the Administrator, a Participant’s termination of employment or
service resulting from the Participant’s (i) termination for “Cause” as defined
under the Participant’s employment agreement, change in control agreement,
consulting agreement or other similar agreement with the Company or an
Affiliate, if any, or (ii) if the Participant has not entered into any such
agreement (or, if any such agreement does not define “Cause”), then the
Participant’s termination shall be for “Cause” if termination results due to the
Participant’s (A) dishonesty; (B) refusal to perform his or her duties for the
Company or an Affiliate; or (C) engaging in fraudulent conduct or conduct that
could be materially damaging to the Company without a reasonable good faith
belief that such conduct was in the best interest of the Company. The
determination of “Cause” shall be made by the Administrator and its
determination shall be final and conclusive. Without in any way limiting the
effect of the foregoing, for purposes of the Plan and an Award, a Participant’s
employment or service shall also be deemed to have terminated for Cause if,
after the Participant’s employment or service has terminated, facts and
circumstances are discovered that would have justified, in the opinion of the
Administrator, a termination for Cause.

 

(i)          A Change of Control shall (except as may be otherwise required, if
at all, under Code Section 409A) be deemed to have occurred on the earliest of
the following dates:

 

(i)          The date any entity or person shall have become the beneficial
owner of, or shall have obtained voting control over, more than fifty percent
(50%) of the total voting power of the Company’s then outstanding voting stock;

 

(ii)         The date of the consummation of (A) a merger, recapitalization,
consolidation or reorganization of the Company (or similar transaction involving
the Company), in which the holders of the Common Stock immediately prior to the
transaction have voting control over less than fifty-one percent (51%) of the
voting securities of the surviving corporation immediately after such
transaction, or (B) the sale or disposition of all or substantially all the
assets of the Company; or

 

(iii)        The date there shall have been a change in a majority of the Board
of Directors of the Company within a 12-month period unless the nomination for
election by the Company’s stockholders or the appointment of each new Director
was approved by the vote of two-thirds of the members of the Board (or a
committee of the Board, if nominations are approved by a Board committee rather
than the Board) then still in office who were in office at the beginning of the
12-month period.

 

For the purposes herein, the term “person” shall mean any individual,
corporation, partnership, group, association or other person, as such term is
defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than
the Company, a Subsidiary of the Company or any employee benefit plan(s)
sponsored or maintained by the Company or any Subsidiary thereof, and the term
“beneficial owner” shall have the meaning given the term in Rule 13d-3 under the
Exchange Act.

 

For the purposes of clarity, a transaction shall not constitute a Change of
Control if its principal purpose is to change the state of the Company’s
incorporation, create a holding company that would be owned in substantially the
same proportions by the persons who held the Company’s securities immediately
before such transaction or is another transaction of other similar effect.

 

Notwithstanding the preceding provisions of this Section 3(i), in the event that
any Awards granted under the Plan are deemed to be deferred compensation subject
to (and not exempt from) the provisions of Code Section 409A, then distributions
related to such Awards to be made upon a Change of Control may be permitted, in
the Administrator's discretion, upon the occurrence of one or more of the
following events (as they are defined and interpreted under Code Section 409A):
(A) a change in the ownership of the Company; (B) a change in effective control
of the Company; or (C) a change in the ownership of a substantial portion of the
assets of the Company.

 

(j)           Code means the Internal Revenue Code of 1986, as amended. Any
reference herein to a specific Code section shall be deemed to include all
related regulations or other guidance with respect to such Code section.

 

(k)          Committee means the Compensation Committee of the Board (or a
subcommittee thereof), or such other committee of the Board which may be
appointed to administer the Plan in whole or in part.

 

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(l)           Common Stock means the common stock of Akoustis Technologies,
Inc., $0.001 par value, or any successor securities thereto.

 

(m)         Company means Akoustis Technologies, Inc., together with any
successor thereto. In the Administrator’s discretion, the term “Company” may
also refer to the Company and any or all of its Affiliates.

 

(n)         Consultant means an independent contractor, consultant or advisor
providing services (other than capital raising services) to the Company or an
Affiliate.

 

(o)         Covered Employee shall have the meaning given the term in Code
Section 162(m).

 

(p)         Deferred Stock Unit means a Restricted Stock Unit, the terms of
which may, in the Administrator’s discretion, provide for delivery of shares of
Common Stock, cash or a combination thereof on a date or dates subsequent to the
date the Award is earned and vested, as provided in Section 9.

 

(q)         Director means a member of the Board.

 

(r)          Disability shall, unless otherwise provided in an Award Agreement
or determined by the Administrator (taking into account any Code Section 409A
considerations), as applied to any Participant, having the meaning given in any
employment agreement, change in control agreement, consulting agreement or other
similar agreement, if any, to which the Participant is a party, or, if there is
no such agreement (or if such agreement does not define “Disability”),
“Disability” shall mean the inability of the Participant 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 which has lasted
or can be expected to last for a continuous period of not less than 12 months.
The Administrator shall have authority to determine if a Disability has
occurred.

 

(s)          Dividend Equivalent Award means a right granted to a Participant
pursuant to Section 14 to receive the equivalent value (in cash or shares of
Common Stock) of dividends paid on Common Stock.

 

(t)          Effective Date means the effective date of the Plan, as provided in
Section 2.

 

(u)         Employee means any person who is an employee of the Company or any
Affiliate (including entities which become Affiliates after the Effective Date).
For this purpose, an individual shall be considered to be an Employee only if
there exists between the individual and the Company or an Affiliate the legal
and bona fide relationship of employer and employee (taking into account Code
Section 409A considerations if and to the extent applicable); provided, however,
that with respect to Incentive Options, “Employee” means any person who is
considered an employee of the Company or any Parent or Subsidiary for purposes
of Treasury Regulation Section 1.421-1(h).

 

(v)         Exchange Act means the Securities Exchange Act of 1934, as amended.

 

(w)         Exercise Price means the price at which an Option or SAR may be
exercised, as provided in Section 7(b) and Section 8(a), respectively.

 

(x)          Fair Market Value per share of the Common Stock shall be
established by the Administrator and, unless otherwise determined by the
Administrator, the Fair Market Value shall be determined in accordance with the
following provisions: (i) if the shares of Common Stock are listed for trading
on the New York Stock Exchange, LLC (“NYSE”), the NASDAQ Stock Market LLC
(“Nasdaq”) or another national or regional stock exchange, the Fair Market Value
shall be the closing sales price per share of the shares on the principal stock
exchange on which such securities are listed on the date an Award is granted or
other determination is made (such date of determination being referred to herein
as a “valuation date”), or, if there is no transaction on such date, then on the
trading date nearest preceding the valuation date for which closing price
information is available, and, provided further, if the shares are not listed
for trading on the NYSE, Nasdaq or another stock exchange but are regularly
quoted on an automated quotation system (including the OTC Bulletin Board and
the quotations published by the OTC Markets Group) or by a recognized securities
dealer, the Fair Market Value shall be the closing sales price for such shares
as quoted on such system or by such securities dealer on the valuation date, but
if selling prices are not reported, the Fair Market Value of a share of Common
Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the valuation date (or, if no such prices were reported on that date,
on the last date such prices were reported), as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; or (ii) if the
shares of Common Stock are not listed or reported in any of the foregoing, then
the Fair Market Value shall be determined by the Administrator based on such
valuation measures or other factors as it deems appropriate. Notwithstanding the
foregoing, (i) with respect to the grant of Incentive Options, the Fair Market
Value shall be determined by the Administrator in accordance with the applicable
provisions of Section 20.2031-2 of the Federal Estate Tax Regulations, or in any
other manner consistent with Code Section 422; and (ii) Fair Market Value shall
be determined in accordance with Code Section 409A if and to the extent
required.

 

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(y)         Full Value Award means an Award, other than in the form of an Option
or SAR, which is settled by the issuance of Common Stock.

 

(z)          Good Reason means, unless otherwise provided in an Award Agreement
or determined by the Administrator, in the context of a Change of Control, a
Participant’s termination of employment or service resulting from the
Participant’s (i) termination for “Good Reason” as defined under the
Participant’s employment agreement, change of control agreement, consulting
agreement or other similar agreement with the Company or an Affiliate, if any,
or (ii) if the Participant has not entered into any agreement (or, if any such
agreement does not define “Good Reason”), then a Participant’s termination shall
be for “Good Reason” if termination results due to any of the following without
the Participant’s consent: (A) a material reduction in the Participant’s base
salary as in effect immediately prior to the date of the Change of Control, (B)
the assignment to the Participant of duties or responsibilities materially
inconsistent with, or a material diminution in, the Participant’s position,
authority, duties or responsibilities as in effect immediately prior to the
Change of Control or (C) the relocation by the Company of the Participant’s
principal place of employment by more than 100 miles from the location at which
the Participant was stationed immediately prior to the Change of Control.
Notwithstanding the foregoing, with respect to Directors, unless the
Administrator determines otherwise, a Director’s termination from service on the
Board shall be for “Good Reason” if the Participant ceases to serve as a
Director, or, if the Company is not the surviving company in the Change of
Control event, a member of the board of directors of the surviving entity, in
either case, due to the Participant’s failure to be nominated to serve as a
director of such entity or the Participant’s failure to be elected to serve as a
director of such entity, but not due to the Participant’s decision not to
continue service on the Board of Directors of the Company or the board of
directors of the surviving entity, as the case may be. An event or condition
that would otherwise constitute “Good Reason” shall constitute Good Reason only
if the Company fails to rescind or cure such event or condition within 30 days
after receipt from the Participant of written notice of the event which
constitutes Good Reason, and Good Reason shall cease to exist for any event or
condition described herein on the 60th day following the later of the occurrence
or the Participant’s knowledge thereof, unless the Participant has given the
Company written notice thereof prior to such date. In the context other than a
Change of Control, “Good Reason” shall be as defined by the Administrator. The
determination of “Good Reason” shall be made by the Administrator and its
determination shall be final and conclusive.

 

(aa)        Incentive Option means an Option that is designated by the
Administrator as an Incentive Option pursuant to Section 7 and intended to meet
the requirements of incentive stock options under Code Section 422.

 

(bb)       Nonqualified Option means an Option granted under Section 7 that is
not intended to qualify as an incentive stock option under Code Section 422.

 

(cc)        Option means a stock option granted under Section 7 that entitles
the holder to purchase from the Company a stated number of shares of Common
Stock at the Exercise Price, and subject to such terms and conditions, as may be
set forth in the Plan or an Award Agreement or established by the Administrator.

 

(dd)       Option Period means the term of an Option, as provided in Section
7(d).

 

(ee)        Other Stock-Based Award means a right, granted to a Participant
under Section 12, that relates to or is valued by reference to shares of Common
Stock or other Awards relating to shares of Common Stock.

 

(ff)         Parent means a “parent corporation,” whether now or hereafter
existing, as defined in Code Section 424(e).

 

(gg)       Participant means an individual who is an Employee employed by, or a
Director or Consultant providing services to, the Company or an Affiliate who
satisfies the requirements of Section 6 and is selected by the Administrator to
receive an Award under the Plan.

 

(hh)       Performance Award means a Performance Share Award and/or a
Performance Unit Award, as provided in Section 10.

 

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(ii)          Performance Measures mean one or more performance factors or
criteria which may be established by the Administrator with respect to an Award.
Performance Measures may be based on such performance factors or criteria as the
Administrator in its discretion may deem appropriate; provided, however, that,
if and to the extent required under Code Section 162(m) with respect to Awards
granted to Covered Employees that are intended to qualify as “performance-based
compensation” under Code Section 162(m), such Performance Measures shall be
objective and shall be based upon one or more of the following criteria (as
determined by the Administrator in its discretion): (i) cash flow; (ii) return
on equity; (iii) return on assets; (iv) earnings per share; (v) operations
expense efficiency milestones; (vi) consolidated earnings before or after taxes
(including earnings before interest, taxes, depreciation and amortization);
(vii) net income; (viii) operating income; (ix) pre-tax income; (x) book value
per share; (xi) return on investment; (xii) return on capital; (xiii)
improvements in capital structure; (xiv) expense management; (xv) profitability
including of an identifiable business unit or service offering; (xvi)
maintenance or improvement of profit margins; (xvii) stock price or total
shareholder return; (xviii) market share; (xix) revenues or sales; (xx) costs;
(xxi) working capital; (xxii) economic wealth created; (xxiii) strategic
business criteria; (xxiv) efficiency ratio(s); (xxv) operating ratio(s); (xxvi)
achievement of division, group, function or corporate financial, strategic or
operational goals; (xxvii) gross margins; (xxviii) product productions or
shipments; and (xxix) comparisons with stock market indices or performance
metrics of peer companies. The Administrator may also apply other performance
factors and criteria, which need not be objective, with respect to Awards that
are not intended to comply with the Code Section 162(m) qualified
performance-based compensation exception. The foregoing criteria may relate to
the Company, one or more of its Subsidiaries or other Affiliates or one or more
of its segments, operating units or groups, divisions, departments,
partnerships, joint ventures or minority investments, facilities, product lines
or products service offerings or any combination of the foregoing. The targeted
level or levels of performance with respect to such business criteria also may
be established at such levels and on such terms as the Administrator may
determine, in its discretion, including but not limited to on an absolute basis,
in relation to performance in a prior performance period, relative to one or
more peer group companies or indices, on a per share and/or share per capita
basis, on a pre-tax or after tax basis and/or any combination thereof.

 

(jj)          Performance Share means an Award granted under Section 10, in an
amount determined by the Administrator and specified in an Award Agreement,
stated with reference to a specified number of shares of Common Stock, that
entitles the holder to receive shares of Common Stock, a cash payment or a
combination of Common Stock and cash (as determined by the Administrator),
subject to the terms of the Plan and the terms and conditions established by the
Administrator.

 

(kk)        Performance Unit means an Award granted under Section 10, in an
amount determined by the Administrator and specified in an Award Agreement, that
entitles the holder to receive shares of Common Stock, a cash payment or a
combination of Common Stock and cash (as determined by the Administrator),
subject to the terms of the Plan and the terms and conditions established by the
Administrator.

 

(ll)          Phantom Stock Award means an Award granted under Section 11,
entitling a Participant to a payment in cash, shares of Common Stock or a
combination of cash and Common Stock (as determined by the Administrator)
following the completion of the applicable vesting period and compliance with
the terms of the Plan and other terms and conditions established by the
Administrator. The unit value of a Phantom Stock Award shall be based on the
Fair Market Value of a share of Common Stock.

 

(mm)      Plan means the Akoustis Technologies, Inc. 2016 Stock Incentive Plan,
as it may be amended and/or restated.

 

(nn)       Prior Plan or means the Akoustis Technologies, Inc. 2015 Equity
Inventive Plan, as it may be amended and/or restated.

 

(oo)       Restricted Award means a Restricted Stock Award, a Restricted Stock
Unit Award and/or a Deferred Stock Unit, as provided in Section.

 

(pp)       Restricted Stock Award means an Award of shares of Common Stock
granted to a Participant under Section 9. Shares of Common Stock subject to a
Restricted Stock Award shall cease to be restricted when, in accordance with the
terms of the Plan and the terms and conditions established by the Administrator,
the shares vest and become transferable and free of substantial risks of
forfeiture.

 

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(qq)       Restricted Stock Unit means an Award granted to a Participant
pursuant to Section 9 which is settled, if at all, (i) by the delivery of one
share of Common Stock for each Restricted Stock Unit, (ii) in cash in an amount
equal to the Fair Market Value of one share of Common Stock for each Restricted
Stock Unit or (iii) in a combination of cash and shares equal to the Fair Market
Value of one share of Common Stock for each Restricted Stock Unit, as determined
by the Administrator. A Restricted Stock Unit represents the unfunded promise of
the Company to deliver shares of Common Stock, cash or a combination thereof, as
applicable, at the end of the applicable restriction period if and only to the
extent the Award vests and ceases to be subject to forfeiture, subject to
compliance with the terms of the Plan and Award Agreement and any performance or
other terms and conditions established by the Administrator.

 

(rr)         Retirement shall, unless otherwise provided in an Award Agreement
or determined by the Administrator (taking into account any Code Section 409A
considerations), as applied to any Participant, have the meaning given in any
employment agreement, change in control agreement, consulting agreement or other
similar agreement, if any, to which the Participant is a party, or, if there is
no such agreement (or if such agreement does not define “Retirement”), then
“Retirement” shall, unless the Administrator determines otherwise, mean
retirement in accordance with the retirement policies and procedures established
by the Company. The Administrator shall have authority to determine if a
Retirement has occurred.

 

(ss)        SAR or Stock Appreciation Right means a stock appreciation right
granted under Section 8 entitling the Participant to receive, with respect to
each share of Common Stock encompassed by the exercise of such SAR, the excess,
if any, of the Fair Market Value on the date of exercise over the Exercise
Price, subject to the terms of the Plan and Award Agreement and any other terms
and conditions established by the Administrator. References to “SARs” include
both Related SARs and Freestanding SARs, unless the context requires otherwise.

 

(tt)         Securities Act means the Securities Act of 1933, as amended.

 

(uu)       Subsidiary means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Code Section 424(f).

 

(vv)       Termination Date means the date of termination of a Participant’s
employment or service for any reason, as determined by the Administrator (taking
into account any Code Section 409A considerations).

 

4.Administration of the Plan

 

(a)          The Plan shall be administered by the Board or, upon its
delegation, by the Committee (or a subcommittee thereof). To the extent required
under Rule 16b-3 adopted under the Exchange Act, the Committee shall be
comprised solely of two or more “non-employee directors,” as such term is
defined in Rule 16b-3, or as may otherwise be permitted under Rule 16b-3.
Further, to the extent required by Code Section 162(m), the Plan shall be
administered by a committee comprised of two or more “outside directors” (as
such term is defined in Code Section 162(m)) or as may otherwise be permitted
under Code Section 162(m). In addition, Committee members shall qualify as
“independent directors” under applicable stock exchange rules if and to the
extent required.

 

(b)         Subject to the provisions of the Plan, the Administrator shall have
full and final authority in its discretion to take any action with respect to
the Plan including, without limitation, the authority to (i) determine all
matters relating to Awards, including selection of individuals to be granted
Awards, the types of Awards, the number of shares of Common Stock, if any,
subject to an Award, and all terms, conditions, restrictions and limitations of
an Award; (ii) prescribe the form or forms of Award Agreements evidencing any
Awards granted under the Plan; (iii) establish, amend and rescind rules and
regulations for the administration of the Plan; (iv) correct any defect, supply
any omission or reconcile any inconsistency in the Plan or in any Award or Award
Agreement; and (v) construe and interpret the Plan, Awards and Award Agreements,
interpret rules and regulations for administering the Plan and make all other
determinations deemed necessary or advisable for administering the Plan. In
addition, (i) the Administrator shall have the authority, subject to the
restrictions contained in Section 4(c) herein, to accelerate the date that any
Award which was not otherwise exercisable, vested or earned shall become
exercisable, vested or earned in whole or in part without any obligation to
accelerate such date with respect to any other Award granted to any recipient;
and (ii) the Administrator may in its sole discretion modify or extend the terms
and conditions for exercise, vesting or earning of an Award (in each case,
taking into account any Code Section 409A considerations). The Administrator’s
authority to grant Awards and authorize payments under the Plan shall not in any
way restrict the authority of the Company to grant compensation to Employees,
Directors or Consultants under any other compensation plan, program or
arrangement of the Company or an Affiliate. In addition, the Administrator shall
have the authority and discretion to establish terms and conditions of Awards
(including but not limited to the establishment of subplans) or other
arrangements as the Administrator determines to be necessary or appropriate to
conform to the applicable requirements or practices of jurisdictions outside of
the United States. In addition to action by meeting in accordance with
Applicable Law, any action of the Administrator with respect to the Plan may be
taken by a written instrument signed by all of the members of the Board or
Committee, as appropriate, and any such action so taken by written consent shall
be as fully effective as if it had been taken by a majority of the members at a
meeting duly held and called. All determinations of the Administrator with
respect to the Plan and any Award or Award Agreement will be final and binding
on the Company and all persons having or claiming an interest in any Award
granted under the Plan.

 

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(c)         Notwithstanding the provisions of Section 4(b), Awards granted to a
Participant under the Plan shall be subject to a minimum vesting period of one
year; provided, however, that (i) the Administrator may provide for acceleration
of vesting of all or a portion of an Award in the event of a Participant's
death, Disability or Retirement, or (to the extent provided pursuant to Section
15 herein) upon the occurrence of a Change of Control of the Company; (ii) the
Administrator may provide for the grant of an Award to any Participant without a
minimum vesting period or may accelerate the vesting of all or a portion of an
Award for any reason, but only with respect to Awards for no more than an
aggregate of five percent (5%) of the total number of shares of Common Stock
authorized for issuance under the Plan pursuant to Section 5(a) herein, upon
such terms and conditions as the Administrator shall determine; and (iii) the
Administrator also may provide for the grant of Awards to Participants that have
different vesting terms in the case of Awards that are substituted for other
equity awards in connection with mergers, consolidations or other similar
transactions, Awards that are granted as an inducement to be employed by the
Company or an Affiliate or to replace forfeited awards from a former employer,
or Awards that are granted in exchange for foregone cash compensation.

 

(d)         The Administrator may adjust or modify Performance Measures or other
performance factors or terms or conditions of Awards due to extraordinary items,
transactions, events or developments, or in recognition of any other unusual or
infrequent events affecting the Company or the financial statements of the
Company, or in response to changes in Applicable Law, accounting principles or
business conditions, in each case as determined by the Administrator (provided
that any adjustment or modification involving Covered Employees for compensation
that is intended to qualify as “performance-based compensation” under Code
Section 162(m) shall be made in an objectively determinable manner and shall be
subject to any applicable Code Section 162(m) restrictions). By way of example
but not limitation, the Administrator may provide with respect to any Award that
any evaluation of performance shall exclude or otherwise adjust for any
specified circumstance or event that occurs during a performance period,
including but not limited to circumstances or events such as the following:
currency fluctuations; discontinued operations; non-cash items, such as
amortization, depreciation or reserves; asset impairment; significant litigation
or claim judgments or settlements; changes in accounting standards; any
recapitalization, restructuring, reorganization, merger, acquisition,
divestiture, consolidation, spin-off, split-up, combination, liquidation,
dissolution, sale of assets or other similar corporate transaction or event
and/or any other specific unusual or infrequent events or objectively
determinable category thereof.

 

(e)         Notwithstanding the other provisions of Section 4, the Board may
delegate to one or more officers of the Company or a special committee
consisting of one or more directors who are also officers of the Company the
authority, within specified parameters, to grant Awards to eligible
Participants, and to make any or all of the determinations reserved for the
Administrator in the Plan and summarized in Section 4(b) with respect to such
Awards (subject to any restrictions imposed by Applicable Law and such terms and
conditions as may be established by the Administrator); provided, however, that,
if and to the extent required by Section 16 of the Exchange Act or Code Section
162(m), the Participant, at the time of said grant or other determination, (i)
is not deemed to be an officer or director of the Company within the meaning of
Section 16 of the Exchange Act; and (ii) is not deemed to be a Covered Employee
as defined under Code Section 162(m). To the extent that the Administrator has
delegated authority to grant Awards pursuant to this Section 4(e) to an
officer(s) and/or a special committee, references to the “Administrator” shall
include references to such officer(s) and/or special committee, subject,
however, to the requirements of the Plan, Rule 16b-3, Code Section 162(m) and
other Applicable Law.

 

5.Shares of Stock Subject to the Plan; Award Limitations

 

(a)          Shares of Stock Subject to the Plan: Subject to adjustments as
provided in this Section 5, the maximum aggregate number of shares of Common
Stock that may be issued pursuant to Awards granted under the Plan shall not
exceed 3,000,000 shares, plus any shares subject to an award granted under the
Prior Plan, which Prior Plan award is at any time forfeited, cancelled,
terminated, expires or lapses for any reason without the issuance of shares or
pursuant to which such shares are forfeited or reacquired by the Company. Shares
delivered under the Plan shall be authorized but unissued shares, treasury
shares or shares purchased on the open market or by private purchase. The
Company hereby reserves sufficient authorized shares of Common Stock to meet the
grant of Awards hereunder.

 

 7 

 

 

(b)         Award Limitations: Notwithstanding any provision in the Plan to the
contrary, the following limitations shall apply to Awards granted under the
Plan, in each case subject to adjustments pursuant to Section 5(d):

 

(i)          The maximum aggregate number of shares of Common Stock that may be
issued under the Plan pursuant to the grant of Incentive Options shall not
exceed 3,000,000 shares of Common Stock.

 

(ii)         In any 12-month period, no Participant may be granted Options and
SARs that are not related to an Option for more than 500,000 shares of Common
Stock (or the equivalent value thereof based on the Fair Market Value per share
of the Common Stock on the date of grant of such an Award).

 

(iii)        In any 12-month period, no Participant may be granted Awards other
than Options or SARs for more than 500,000 shares of Common Stock (or the
equivalent value thereof based on the Fair Market Value per share of the Common
Stock on the date of grant of such an Award).

 

(iv)        Notwithstanding the provisions of Sections 5(b)(ii) and (iii)
herein, with respect to non-employee Directors, in any 12-month period, no such
non-employee Director may be granted Awards for more than 200,000 shares of
Common Stock (or the equivalent value thereof based on the Fair Market Value per
share of Common Stock on the date of grant of such an Award), provided, however,
that any Director cash retainer fees or other fees that are settled in shares of
Common Stock shall not be subject to this limitation.

 

(For purposes of Section 5(b)(ii), (iii) and (iv), an Option and Related SAR
shall be treated as a single award.)

 

(c)          Additional Share Counting Provisions. The following provisions
shall apply with respect to the share limitations of Section 5(a):

 

(i)          For purposes of determining the number of shares of Common Stock to
be counted against the maximum share limit set forth in Section 5(a), each share
of Common Stock subject to an Award shall be counted against the limit as one
share.

 

(ii)         To the extent that an Award is canceled, terminates, expires, is
forfeited or lapses for any reason, any such unissued or forfeited shares
subject to the Award will again be available for issuance pursuant to Awards
granted under the Plan.

 

(iii)        Awards settled in cash shall not be counted against the share
limitations stated in Section 5(a) herein.

 

(iv)        Dividends, including dividends paid in shares, or dividend
equivalents paid in cash in connection with outstanding Awards, will not be
counted towards the share limitations in Section 5(a).

 

(v)         To the extent that the full number of shares subject to an Award
other than an Option or SAR is not issued for any reason, including by reason of
failure to achieve performance factors or criteria, only the number of shares
issued and delivered shall be considered for purposes of determining the number
of shares remaining available for issuance pursuant to Awards granted under the
Plan.

 

(vi)        The following shares of Common Stock may not again be made available
for issuance as Awards under the Plan: (A) shares withheld from an Award or
delivered by a Participant to satisfy tax withholding requirements for Awards;
(B) shares not issued or delivered as a result of the net settlement of an
outstanding Award; (C) shares withheld or delivered to pay the Exercise Price
related to an outstanding Award; and (D) shares repurchased on the open market
with the proceeds of the Exercise Price.

 

(vii)       Further, (A) shares issued under the Plan through the settlement,
assumption or substitution of outstanding awards granted by another entity or
obligations to grant future awards as a condition of or in connection with a
merger, acquisition or similar transaction involving the Company acquiring
another entity shall not reduce the maximum number of shares available for
delivery under the Plan, and (B) available shares under a stockholder approved
plan of an acquired company (as appropriately adjusted to reflect the
transaction) may be used for Awards under the Plan and will not reduce the
maximum number of shares available under the Plan, subject, in the case of both
(A) and (B) herein, to applicable stock exchange listing requirements.

 

 8 

 

 

(d)          Adjustments; Right to Issue Additional Securities: If there is any
change in the outstanding shares of Common Stock because of a merger, change in
control, consolidation, recapitalization or reorganization involving the
Company, or if the Board declares a stock dividend, stock split distributable in
shares of Common Stock or reverse stock split, other distribution (other than
ordinary or regular cash dividends) or combination or reclassification of the
Common Stock, or if there is a similar change in the capital stock structure of
the Company affecting the Common Stock (excluding conversion of convertible
securities by the Company and/or the exercise of warrants by their holders),
then the number and type of shares of Common Stock reserved for issuance under
the Plan shall be correspondingly adjusted, and the Administrator shall make
such adjustments to Awards (such as the number and type of shares subject to an
Award and the Exercise Price of an Award) or to any provisions of this Plan as
the Administrator deems equitable to prevent dilution or enlargement of Awards
or as may otherwise be advisable. Nothing in the Plan, an Award or an Award
Agreement shall limit the ability of the Company to issue additional securities
of any type or class.

 

6.Eligibility

 

An Award may be granted only to an individual who satisfies all of the following
eligibility requirements on the date the Award is granted:

 

(a)         The individual is either (i) an Employee, (ii) a Director or (iii) a
Consultant.

 

(b)         With respect to the grant of Incentive Options, the individual is
otherwise eligible to participate under this Section 6, is an Employee of the
Company or a Parent or Subsidiary and does not own, immediately before the time
that the Incentive Option is granted, stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or a Parent
or Subsidiary. Notwithstanding the foregoing, an Employee who owns more than 10%
of the total combined voting power of all classes of stock of the Company or a
Parent or Subsidiary may be granted an Incentive Option if the Exercise Price is
at least 110% of the Fair Market Value of the Common Stock, and the Option
Period does not exceed five years. For this purpose, an individual will be
deemed to own stock which is attributable to him or her under Code Section
424(d).

 

(c)         With respect to the grant of substitute awards or assumption of
awards in connection with a merger, consolidation, acquisition, reorganization
or similar transaction involving the Company or an Affiliate, the recipient is
otherwise eligible to receive the Award and the terms of the award are
consistent with the Plan and Applicable Law.

 

(d)         The individual, being otherwise eligible under this Section 6, is
selected by the Administrator as an individual to whom an Award shall be granted
(as defined above, a “Participant”).

 

7.          Options

 

(a)         Grant of Options: Subject to the terms of the Plan, the
Administrator may in its discretion grant Options to such eligible Participants
in such numbers, subject to such terms and conditions, and at such times as the
Administrator shall determine. Both Incentive Options and Nonqualified Options
may be granted under the Plan, as determined by the Administrator; provided,
however, that Incentive Options may only be granted to Employees of the Company
or a Parent or Subsidiary. To the extent that an Option is designated as an
Incentive Option but does not qualify as such under Code Section 422, the Option
(or portion thereof) shall be treated as a Nonqualified Option. An Option may be
granted with or without a Related SAR.

 

(b)         Exercise Price: The Exercise Price per share at which an Option may
be exercised shall be established by the Administrator and stated in the Award
Agreement evidencing the grant of the Option; provided, that (i) the Exercise
Price of an Option shall be no less than 100% of the Fair Market Value per share
of the Common Stock as determined on the date the Option is granted (or 110% of
the Fair Market Value with respect to Incentive Options granted to an Employee
who owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or a Parent or Subsidiary, as provided in
Section 6(b)); and (ii) in no event shall the Exercise Price per share of any
Option be less than the par value per share of the Common Stock. Notwithstanding
the foregoing, the Administrator may in its discretion authorize the grant of
substitute or assumed options of an acquired entity with an Exercise Price not
equal to 100% of the Fair Market Value of the stock on the date of grant, if the
terms of such substitution or assumption otherwise comply, to the extent deemed
applicable, with Code Section 409A and/or Code Section 424(a).

 

 9 

 

 

(c)          Date of Grant: An Option shall be considered to be granted on the
date that the Administrator acts to grant the Option, or on such later date as
may be established by the Administrator in accordance with Applicable Law.

 

(d)         Option Period and Limitations on the Right to Exercise Options:

 

(i)          The Option Period shall be determined by the Administrator at the
time the Option is granted and shall be stated in the Award Agreement. The
Option Period shall not extend more than 10 years from the date on which the
Option is granted (or five years with respect to Incentive Options granted to an
Employee who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or a Parent or Subsidiary, as
provided in Section 6(b)). Any Option or portion thereof not exercised before
expiration of the Option Period shall terminate. The period or periods during
which, and the terms and conditions pursuant to which, an Option may vest and
become exercisable shall be determined by the Administrator in its discretion,
subject to the terms of the Plan (including but not limited to the provisions of
Section 4(c) herein).

 

(ii)         An Option may be exercised by giving written notice to the Company
in form acceptable to the Administrator at such place and subject to such
conditions as may be established by the Administrator or its designee. Such
notice shall specify the number of shares to be purchased pursuant to an Option
and the aggregate purchase price to be paid therefor and shall be accompanied by
payment of such purchase price. Unless an Award Agreement provides otherwise,
such payment shall be in the form of cash or cash equivalent; provided that,
except where prohibited by the Administrator or Applicable Law (and subject to
such terms and conditions as may be established by the Administrator), payment
may also be made:

 

(A)         By delivery (by either actual delivery or attestation) of shares of
Common Stock owned by the Participant for such time period, if any, as may be
determined by the Administrator;

 

(B)         By shares of Common Stock withheld upon exercise;

 

(C)         So long as a Public Market exists at the time of exercise of the
Option, by delivery of written notice of exercise to the Company and delivery to
a broker of written notice of exercise and irrevocable instructions to promptly
deliver to the Company the amount of sale or loan proceeds to pay the Exercise
Price;

 

(D)         By such other payment methods as may be approved by the
Administrator and which are acceptable under Applicable Law; and/or

 

(E)         By any combination of the foregoing methods.

 

Shares delivered or withheld in payment on the exercise of an Option shall be
valued at their Fair Market Value on the date of exercise, as determined by the
Administrator or its designee. For the purposes of the Plan, a “Public Market”
for the Common Stock shall be deemed to exist (A) upon consummation of a firm
commitment underwritten public offering of the Common Stock (or successor
securities thereto) pursuant to an effective registration statement under the
Securities Act or (B) if the Administrator otherwise determines that there is an
established public market for the Common Stock.

 

(iii)        The Administrator shall determine the extent, if any, to which a
Participant may have the right to exercise an Option following termination of
the Participant’s employment or service with the Company. Such rights, if any,
shall be subject to the sole discretion of the Administrator, shall be stated in
the individual Award Agreement, need not be uniform among all Options issued
pursuant to this Section 7, and may reflect distinctions based on the reasons
for termination of employment or service.

 

(e)          Notice of Disposition: If shares of Common Stock acquired upon
exercise of an Incentive Option are disposed of within two years following the
date of grant or one year following the transfer of such shares to a Participant
upon exercise, the Participant shall, promptly following such disposition,
notify the Company in writing of the date and terms of such disposition and
provide such other information regarding the disposition as the Administrator
may reasonably require.

 

 10 

 

 

(f)          Limitation on Incentive Options: In no event shall there first
become exercisable by an Employee in any one calendar year Incentive Options
granted by the Company or any Parent or Subsidiary with respect to shares having
an aggregate Fair Market Value (determined at the time an Incentive Option is
granted) greater than $100,000; provided that, if such limit is exceeded, then
the first $100,000 of shares to become exercisable in such calendar year will be
Incentive Options and the Options (or portion thereof) for shares with a value
in excess of $100,000 that first became exercisable in that calendar year will
be Nonqualified Options.

 

8.Stock Appreciation Rights

 

(a)         Grant of SARs: Subject to the terms of the Plan, the Administrator
may in its discretion grant SARs to such eligible Participants, in such numbers,
upon such terms and at such times as the Administrator shall determine. SARs may
be granted to the holder of an Option (a “Related Option”) with respect to all
or a portion of the shares of Common Stock subject to the Related Option (a
“Related SAR”) or may be granted separately to an eligible individual (a
“Freestanding SAR”). The Exercise Price per share of a SAR shall be no less than
100% of the Fair Market Value per share of the Common Stock on the date the SAR
is granted. Notwithstanding the foregoing, the Administrator may in its
discretion authorize the grant of substitute or assumed SARs of an acquired
entity with an Exercise Price per share not equal to at least 100% of the Fair
Market Value of the stock on the date of grant, if the terms of such
substitution or assumption otherwise comply, to the extent deemed applicable,
with Code Section 409A and/or Code Section 424(a). A SAR shall be considered to
be granted on the date that the Administrator acts to grant the SAR, or on such
other date as may be established by the Administrator in accordance with
Applicable Law.

 

(b)         Related SARs: A Related SAR may be granted either concurrently with
the grant of the Related Option or (if the Related Option is a Nonqualified
Option) at any time thereafter prior to the complete exercise, termination,
expiration or cancellation of such Related Option. The Exercise Price of a
Related SAR shall be equal to the Exercise Price of the Related Option. Related
SARs shall be exercisable only at the time and to the extent that the Related
Option is exercisable (and may be subject to such additional limitations on
exercisability as the Administrator may provide in an Award Agreement), and in
no event after the complete termination or full exercise of the Related Option.
Notwithstanding the foregoing, a Related SAR that is related to an Incentive
Option may be exercised only to the extent that the Related Option is
exercisable and only when the Fair Market Value exceeds the Exercise Price of
the Related Option. Upon the exercise of a Related SAR granted in connection
with a Related Option, the Option shall be canceled to the extent of the number
of shares as to which the SAR is exercised, and upon the exercise of a Related
Option, the Related SAR shall be canceled to the extent of the number of shares
as to which the Related Option is exercised or surrendered.

 

(c)          Freestanding SARs: A SAR may be granted without relationship to an
Option (as defined above, a “Freestanding SAR”) and, in such case, will be
exercisable upon such terms and subject to such conditions as may be determined
by the Administrator, subject to the terms of the Plan.

 

(d)         Exercise of SARs:

 

(i)          Subject to the terms of the Plan (including but not limited to
Section 4(c) herein), SARs shall be vested and exercisable in whole or in part
upon such terms and conditions as may be established by the Administrator. The
period during which a SAR may be exercisable shall not exceed 10 years from the
date of grant or, in the case of Related SARs, such shorter Option Period as may
apply to the Related Option. Any SAR or portion thereof not exercised before
expiration of the period established by the Administrator shall terminate.

 

(ii)         SARs may be exercised by giving written notice to the Company in
form acceptable to the Administrator at such place and subject to such terms and
conditions as may be established by the Administrator or its designee. Unless
the Administrator determines otherwise, the date of exercise of a SAR shall mean
the date on which the Company shall have received proper notice from the
Participant of the exercise of such SAR.

 

(iii)        The Administrator shall determine the extent, if any, to which a
Participant may have the right to exercise a SAR following termination of the
Participant’s employment or service with the Company. Such rights, if any, shall
be determined in the sole discretion of the Administrator, shall be stated in
the individual Award Agreement, need not be uniform among all SARs issued
pursuant to this Section 8 and may reflect distinctions based on the reasons for
termination of employment or service.

 

 11 

 

 

(e)          Payment Upon Exercise: Subject to the terms of the Plan, upon the
exercise of a SAR, a Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying (i) the excess, if any, of the
Fair Market Value of a share of Common Stock on the date of exercise of the SAR
over the Exercise Price of the SAR, by (ii) the number of shares of Common Stock
with respect to which the SAR is being exercised. The consideration payable upon
exercise of a SAR shall be paid in cash, shares of Common Stock (valued at Fair
Market Value on the date of exercise of the SAR) or a combination of cash and
shares of Common Stock, as determined by the Administrator.

 

9.Restricted Awards

 

(a)         Grant of Restricted Awards: Subject to the terms of the Plan, the
Administrator may in its discretion grant Restricted Awards to such
Participants, for such numbers of shares of Common Stock, upon such terms and at
such times as the Administrator shall determine. Such Restricted Awards may be
in the form of Restricted Stock Awards, Restricted Stock Units and/or Deferred
Stock Units that are subject to certain conditions, which conditions must be met
in order for the Restricted Award to vest and be earned (in whole or in part)
and no longer subject to forfeiture. Restricted Stock Awards shall be payable in
shares of Common Stock. Restricted Stock Units and Deferred Stock Units shall be
payable in cash or shares of Common Stock, or partly in cash and partly in
shares of Common Stock, in accordance with the terms of the Plan and the
discretion of the Administrator. Subject to the provisions of Section 4(c)
herein, the Administrator shall determine the nature, length and starting date
of the period, if any, during which a Restricted Award may vest and be earned
(the “Restriction Period”), and shall determine the conditions which must be met
in order for a Restricted Award to be granted, vested, earned and/or
distributable (in whole or in part), which conditions may include, but are not
limited to, payment of a stipulated purchase price, attainment of performance
objectives, continued service or employment for a certain period of time, a
combination of attainment of performance objectives and continued service,
Retirement, Disability, death or other termination of employment or service or a
combination of such or other conditions. In the case of Restricted Awards based
in whole or in part upon performance factors or criteria, the Administrator
shall determine the Performance Measures applicable to such Restricted Awards
(subject to Section 3(ii)).

 

(b)         Vesting of Restricted Awards: Subject to the terms of the Plan (and
taking into account any Code Section 409A considerations), the Administrator
shall have sole authority to determine whether and to what degree Restricted
Awards have vested and been earned and are payable and to establish and
interpret the terms and conditions of Restricted Awards.

 

(c)         Termination of Employment or Service; Forfeiture: Unless the
Administrator determines otherwise, if the employment or service of a
Participant shall be terminated for any reason (whether by the Company or the
Participant and whether voluntary or involuntary) and all or any part of a
Restricted Award has not vested or been earned pursuant to the terms of the Plan
and related Award Agreement, such Award, to the extent not then vested or
earned, shall be forfeited immediately upon such termination and the Participant
shall have no further rights with respect thereto.

 

(d)         Share Certificates; Escrow: Unless the Administrator determines
otherwise, a certificate or certificates representing the shares of Common Stock
subject to a Restricted Stock Award shall be issued in the name of the
Participant (or, in the case of uncertificated shares, other written evidence of
ownership in accordance with Applicable Law shall be provided) after the Award
has been granted. Notwithstanding the foregoing, the Administrator may require
that (i) a Participant deliver the certificate(s) (or other instruments) for
such shares to the Administrator or its designee to be held in escrow until the
Restricted Stock Award vests and is no longer subject to a substantial risk of
forfeiture (in which case the shares will be promptly released to the
Participant) or is forfeited (in which case the shares shall be returned to the
Company); and/or (ii) a Participant deliver to the Company a stock power,
endorsed in blank (or similar instrument), relating to the shares subject to the
Restricted Stock Award which are subject to forfeiture. Unless the Administrator
determines otherwise, a certificate or certificate representing shares of Common
Stock issuable pursuant to a Restricted Stock Unit or a Deferred Stock Unit
shall be issued in the name of the Participant (or, in the case of
uncertificated shares, other written evidence of ownership in accordance with
Applicable Law shall be provided) promptly after the Award (or portion thereof)
has vested and been earned and is distributable.

 

 12 

 

 

(e)          Deferred Stock Units: A Deferred Stock Unit represents the unfunded
promise of the Company to deliver shares of Common Stock, cash or a combination
thereof, as applicable, if and to the extent that the Award has vested and is
eligible for distribution (including, by way of example only, distribution upon
termination of employment or service or upon a specified date or dates, and
taking into account any Code Section 409A considerations), subject to compliance
with the terms of the Plan and Award Agreement and any other terms and
conditions established by the Administrator. A Deferred Stock Unit shall be
settled, if at all, (i) by the delivery of one share of Common Stock for each
Deferred Stock Unit, (ii) in cash in an amount equal to the Fair Market Value of
one share of Common Stock for each Deferred Stock Unit or (iii) in a combination
of cash and shares equal to the Fair Market Value of one share of Common Stock
for each Deferred Stock Unit, as determined by the Administrator.

 

10.Performance Awards

 

(a)          Grant of Performance Awards: Subject to the terms of the Plan, the
Administrator may in its discretion grant Performance Awards to such eligible
Participants upon such terms and conditions and at such times as the
Administrator shall determine. Performance Awards may be in the form of
Performance Shares and/or Performance Units. Subject to Section 5(b), the
Administrator shall have discretion to determine the number of Performance Units
and/or Performance Shares granted to any Participant. Subject to the provisions
of Section 4(c) herein, the Administrator shall determine the nature, length and
starting date of the period during which a Performance Award may be earned (the
“Performance Period”), and shall determine the conditions which must be met in
order for a Performance Award to be granted or to vest or be earned (in whole or
in part), which conditions may include but are not limited to payment of a
stipulated purchase price, attainment of performance objectives, continued
service or employment for a certain period of time, a combination of such
conditions or other conditions. Subject to Section 3(ii), the Administrator
shall determine the Performance Measures applicable to such Performance Awards.

 

(b)         Earning of Performance Awards: Subject to the terms of the Plan (and
taking into account any Code Section 409A considerations), the Administrator
shall have sole authority to determine whether and to what degree Performance
Awards have been earned and are payable and to interpret the terms and
conditions of Performance Awards.

 

(c)          Form of Payment: Payment of the amount to which a Participant shall
be entitled upon earning a Performance Award shall be made in cash, shares of
Common Stock or a combination of cash and shares of Common Stock, as determined
by the Administrator in its sole discretion. Payment may be made in a lump sum
or upon such terms as may be established by the Administrator (taking into
account any Code Section 409A considerations).

 

(d)         Termination of Employment or Service; Forfeiture: Unless the
Administrator determines otherwise (taking into account any Code Section 409A
considerations), if the employment or service of a Participant shall terminate
for any reason (whether by the Company or the Participant and whether voluntary
or involuntary) and the Participant has not earned all or part of a Performance
Award pursuant to the terms of the Plan and related Award Agreement, such Award,
to the extent not then earned, shall be forfeited immediately upon such
termination and the Participant shall have no further rights with respect
thereto.

 

11.Phantom Stock Awards

 

(a)          Grant of Phantom Stock Awards: Subject to the terms of the Plan
(including but not limited to Section 4(c) herein), the Administrator may in its
discretion grant Phantom Stock Awards to such eligible Participants, in such
numbers, upon such terms and at such times as the Administrator shall determine.
A Phantom Stock Award is an Award to a Participant of a number of hypothetical
share units with respect to shares of Common Stock, with a value based on the
Fair Market Value of a share of Common Stock.

 

(b)         Vesting of Phantom Stock Awards: Subject to the terms of the Plan
(and taking into account any Code Section 409A considerations), the
Administrator shall have sole authority to determine whether and to what degree
Phantom Stock Awards have vested, been earned and are payable and to interpret
the terms and conditions of Phantom Stock Awards.

 

(c)         Termination of Employment or Service; Forfeiture: Unless the
Administrator determines otherwise (taking into account any Code Section 409A
considerations), if the employment or service of a Participant shall be
terminated for any reason (whether by the Company or the Participant and whether
voluntary or involuntary) and all or any part of a Phantom Stock Award has not
vested and become payable pursuant to the terms of the Plan and related Award
Agreement, such Award, to the extent not then vested and earned, shall be
forfeited immediately upon such termination and the Participant shall have no
further rights with respect thereto.

 

 13 

 

 

(d)          Payment of Phantom Stock Awards: Upon vesting of all or a part of a
Phantom Stock Award and satisfaction of such other terms and conditions as may
be established by the Administrator, the Participant shall be entitled to a
payment of an amount equal to the Fair Market Value of one share of Common Stock
with respect to each such Phantom Stock unit which has vested, been earned and
is payable. Payment may be made, in the discretion of the Administrator, in cash
or in shares of Common Stock valued at their Fair Market Value on the applicable
vesting date or dates (or other date or dates determined by the Administrator),
or in a combination thereof. Payment may be made in a lump sum or upon such
terms as may be established by the Administrator (taking into account any Code
Section 409A considerations).

 

12.Other Stock-Based Awards

 

The Administrator shall have the authority to grant Other Stock-Based Awards to
eligible Participants. Such Other Stock-Based Awards may be valued in whole or
in part by reference to, or otherwise based on or related to, shares of Common
Stock or Awards for shares of Common Stock, including but not limited to Other
Stock-Based Awards granted in lieu of bonus, salary or other compensation, Other
Stock-Based Awards granted with vesting or performance conditions and/or Other
Stock-Based Awards granted without being subject to vesting or performance
conditions (subject to the terms of Section 4(c) herein). Subject to the
provisions of the Plan, the Administrator shall determine the number of shares
of Common Stock to be awarded to a Participant under (or otherwise related to)
such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be
settled in cash, shares of Common Stock, other securities or any other form of
property as the Administrator may determine, or a combination of such forms of
consideration; and the other terms and conditions of such Awards.

 

13.Cash Bonus Awards

 

The Administrator may, in its discretion, grant Cash Bonus Awards under the Plan
to eligible Participants. Cash Bonus Awards shall be subject to performance
conditions as described in Section 3(ii) above and, to the extent such Cash
Bonus Awards are granted to Covered Employees and intended to qualify as
“performance-based compensation” under Code Section 162(m), shall be subject to
the requirements of Code Section 162(m), if and to the extent applicable,
including without limitation, the establishment of Performance Measures and
certification of performance by the Administrator as provided in Section 3(ii)
and Section 21(c). The Administrator also shall have authority to modify, reduce
or eliminate any Cash Bonus Award. In addition, if and to the extent required
under Code Section 162(m), the aggregate amount of compensation granted to any
one Participant in any 12-month period in respect of all Cash Bonus Awards
granted under the Plan and payable only in cash (and exclusive of Restricted
Stock Unit Awards, Phantom Stock Awards, SARs or other equity-based Awards
settled in cash, which are subject to the Award limitations stated in Section
5(b) herein) shall not exceed $1,000,000.

 

14.Dividends and Dividend Equivalent Rights

 

The Administrator may, in its sole discretion, provide that Awards other than
Options and SARs may earn dividends or dividend equivalent rights (or “dividend
equivalents”); provided, however, that dividends and dividend equivalents, if
any, on unearned or unvested performance-based Awards shall not be paid (even if
accrued) unless and until the underlying Award (or portion thereof) has vested
and/or been earned. Such dividends or dividend equivalents may be paid currently
or may be credited to a Participant’s account. Any crediting of dividends or
dividend equivalents may be subject to such additional restrictions and
conditions as the Administrator may establish, including reinvestment in
additional shares of Common Stock or share equivalents. Notwithstanding the
other provisions herein, any dividends or dividend equivalents related to an
Award shall be structured in a manner so as to avoid causing the Award and
related dividends or dividend equivalents to be subject to Code Section 409A or
shall otherwise be structured so that the Award and dividends or dividend
equivalents are in compliance with Code Section 409A.

 

15.Change of Control

 

Notwithstanding any other provision in the Plan to the contrary, the following
provisions shall apply in the event of a Change of Control (except to the
extent, if any, otherwise required under Code Section 409A):

 

(a)          To the extent that the successor or surviving company in the Change
of Control event does not assume or substitute for an Award (or in which the
Company is the ultimate parent corporation and does not continue the Award) on
substantially similar terms or with substantially equivalent economic benefits
(as determined by the Administrator prior to the Change of Control) as Awards
outstanding under the Plan immediately prior to the Change of Control event, (i)
all outstanding Options and SARs shall become fully vested and exercisable,
whether or not then otherwise vested and exercisable; and (ii) any restrictions,
including but not limited to the Restriction Period, Performance Period and/or
performance factors or criteria applicable to any outstanding Awards other than
Options or SARs shall be deemed to have been met, and such Awards shall become
fully vested, earned and payable to the fullest extent of the original grant of
the applicable Award (or, in the case of performance-based Awards the earning of
which is based on attaining a target level of performance, such Awards shall be
deemed earned at the greater of actual performance or target performance).

 

 14 

 

 

(b)          Further, in the event that an Award is substituted, assumed or
continued as provided in Section 15(a) herein, the Award will nonetheless become
vested (and, in the case of Options and SARs, exercisable) in full and any
restrictions, including but not limited to the Restriction Period, Performance
Period and/or performance factors or criteria applicable to any outstanding
Award shall be deemed to have been met, and such Awards shall become fully
vested, earned and payable to the fullest extent of the original award (or, in
the case of performance-based Awards the earning of which is based on attaining
a target level of performance, such Awards shall be deemed earned at the greater
of actual performance or target performance), if the employment or service of
the Participant is terminated within two years after the effective date of a
Change of Control if such termination of employment or service (i) is by the
Company not for Cause or (ii) is by the Participant for Good Reason. For
clarification, for the purposes of this Section 15, the “Company” shall include
any successor to the Company.

 

(c)          Notwithstanding any other provision of the Plan to the contrary, in
the event that a Participant has entered into an employment agreement,
consulting agreement or other similar agreement, plan or policy as of the
Effective Date of the Plan, the Participant shall be entitled to the greater of
the benefits provided upon a change of control of the Company under the Plan or
the respective employment agreement or other arrangement as in effect on the
Plan Effective Date, and such agreement or arrangement shall not be construed to
reduce in any way the benefits otherwise provided to a Participant upon a Change
of Control as defined in the Plan.

 

16.Nontransferability of Awards

 

Incentive Options shall not be transferable (including by sale, assignment,
pledge or hypothecation) other than transfers by will or the laws of intestate
succession or, in the Administrator’s discretion, such transfers as may
otherwise be permitted in accordance with Treasury Regulation Section
1.421-1(b)(2) or Treasury Regulation Section 1.421-2(c). Awards other than
Incentive Options shall not be transferable (including by sale, assignment,
pledge or hypothecation) other than by will or the laws of intestate succession,
except for transfers if and to the extent permitted by the Administrator in a
manner consistent with the registration provisions of the Securities Act. Except
as may be permitted by the preceding, an Option or SAR shall be exercisable
during the Participant’s lifetime only by him or her or by his or her guardian
or legal representative. The designation of a beneficiary in accordance with the
Plan does not constitute a transfer.

 

17.Withholding

 

The Company shall withhold all required local, state, federal, foreign and other
taxes and any other amount required to be withheld by any governmental authority
or law from any amount payable in cash with respect to an Award. Prior to the
delivery or transfer of any certificate for shares or any other benefit
conferred under the Plan, the Company shall require any Participant or other
person to pay to the Company in cash the amount of any tax or other amount
required by any governmental authority to be withheld and paid over by the
Company to such authority for the account of such recipient. Notwithstanding the
foregoing, the Administrator may in its discretion establish procedures to
require or permit a recipient to satisfy such obligations in whole or in part,
and any local, state, federal, foreign or other income tax obligations relating
to such an Award, by delivery to the Company of shares of Common Stock held by
the Participant (which are fully vested and not subject to any pledge or other
security interest) and/or by the Company withholding shares of Common Stock from
the shares to which the recipient is otherwise entitled. The number of shares to
be withheld or delivered shall have a Fair Market Value as of the date that the
amount of tax to be withheld is determined as nearly equal as possible to, but
not exceeding (unless otherwise permitted by the Administrator in a manner in
accordance with Applicable Law and applicable accounting principles), the amount
of such obligations being satisfied. Such withholding obligations shall be
subject to such terms and procedures as may be established by the Administrator.
The Participant shall remain responsible at all times for paying any federal,
state, foreign and/or local income or employment tax due with respect to any
Award, and the Company shall not be liable for any interest or penalty that a
Participant incurs by failing to make timely payments of tax or otherwise.

 

 15 

 

 

18.Amendment and Termination of the Plan and Awards

 

(a)         Amendment and Termination of Plan; Prohibition on Repricing: The
Plan may be amended, altered, suspended and/or terminated at any time by the
Board; provided, that (i) approval of an amendment to the Plan by the
stockholders of the Company shall be required to the extent, if any, that
stockholder approval of such amendment is required by Applicable Law; and (ii)
except for adjustments made pursuant to Section 5(d), the Company may not,
without obtaining stockholder approval, (A) amend the terms of outstanding
Options or SARs to reduce the Exercise Price of such outstanding Options or
SARs; (B) exchange outstanding Options or SARs for cash, for Options or SARs
with an Exercise Price that is less than the Exercise Price of the original
Option or SAR, or for other equity awards at a time when the original Option or
SAR has an Exercise Price above the Fair Market Value of the Common Stock; or
(C) take other action with respect to Options or SARs that would be treated as a
repricing under the rules of the principal stock exchange on which shares of the
Common Stock are listed.

 

(b)          Amendment and Termination of Awards: The Administrator may (subject
to Section 18(a)(ii) herein) amend, alter, suspend and/or terminate any Award
granted under the Plan, prospectively or retroactively, but (except as otherwise
provided in Section 18(c)) such amendment, alteration, suspension or termination
of an Award shall not, without the written consent of a Participant with respect
to an outstanding Award, materially adversely affect the rights of the
Participant with respect to the Award.

 

(c)          Amendments to Comply with Applicable Law: Notwithstanding Section
18(a) and Section 18(b) herein, the following provisions shall apply:

 

(i)          The Administrator shall have unilateral authority to amend the Plan
and any Award (without Participant consent) to the extent necessary to comply
with Applicable Law or changes to Applicable Law (including but in no way
limited to Code Section 409A, Code Section 422 and federal securities laws).

 

(ii)         The Administrator shall have unilateral authority to make
adjustments to the terms and conditions of Awards in recognition of unusual or
nonrecurring events affecting the Company or any Affiliate, or the financial
statements of the Company or any Affiliate, or of changes in Applicable Law, or
accounting principles, if the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or necessary or
appropriate to comply with applicable accounting principles or Applicable Law.

 

19.Restrictions on Awards and Shares; Compliance with Applicable Law

 

(a)          General. As a condition to the issuance and delivery of Common
Stock hereunder, or the grant of any benefit pursuant to the Plan, the Company
may require a Participant or other person at any time and from time to time to
become a party to an Award Agreement, other agreement(s) restricting the
transfer, purchase, repurchase and/or voting of shares of Common Stock of the
Company, and any employment, consulting, non-competition, confidentiality,
non-solicitation, non-disparagement or other agreements or provisions imposing
such restrictions as may be required by the Company. In addition, without in any
way limiting the effect of the foregoing, each Participant or other holder of
shares issued under the Plan shall be permitted to transfer such shares only if
such transfer is in accordance with the Plan, the Award Agreement, any other
applicable agreements and Applicable Law. The acquisition of shares of Common
Stock under the Plan by a Participant or any other holder of shares shall be
subject to, and conditioned upon, the agreement of the Participant or other
holder of such shares to the restrictions described in the Plan, the applicable
Award Agreement, any other applicable agreements and Applicable Law.

 

(b)          Compliance with Applicable Laws, Rules and Regulations. The Company
may impose such restrictions on Awards, shares of Common Stock and any other
benefits underlying Awards hereunder as it may deem advisable, including without
limitation restrictions under the federal securities laws, the requirements of
any stock exchange or similar organization and any blue sky, state or foreign
securities or other laws applicable to such securities. Notwithstanding any
other Plan provision to the contrary, the Company shall not be obligated to
issue, deliver or transfer shares of Common Stock under the Plan, make any other
distribution of benefits under the Plan, or take any other action, unless such
delivery, distribution or action is in compliance with Applicable Law (including
but not limited to the requirements of the Securities Act). The Company will be
under no obligation to register shares of Common Stock or other securities with
the Securities and Exchange Commission or to effect compliance with the
exemption, registration, qualification or listing requirements of any state
securities laws, stock exchange or similar organization, and the Company will
have no liability for any inability or failure to do so. The Company may cause a
restrictive legend or legends to be placed on any certificate issued pursuant to
an Award hereunder in such form as may be prescribed from time to time by
Applicable Law or as may be advised by legal counsel.

 

 16 

 

 

20.No Right or Obligation of Continued Employment or Service or to Awards;
Compliance with the Plan

 

Neither the Plan, an Award, an Award Agreement nor any other action related to
the Plan shall confer upon a Participant any right to continue in the employ or
service of the Company or an Affiliate as an Employee, Director or Consultant,
or interfere in any way with the right of the Company or an Affiliate to
terminate the Participant’s employment or service at any time. Except as
otherwise provided in the Plan, an Award Agreement or as may be determined by
the Administrator, all rights of a Participant with respect to an Award shall
terminate upon the termination of the Participant’s employment or service. In
addition, no person shall have any right to be granted an Award, and the Company
shall have no obligation to treat Participants or Awards uniformly. By
participating in the Plan, each Participant shall be deemed to have accepted all
of the conditions of the Plan and the terms and conditions of any rules and
regulations adopted by the Administrator and shall be fully bound thereby. Any
Award granted hereunder is not intended to be compensation of a continuing or
recurring nature, or part of a Participant’s normal or expected compensation,
and in no way represents any portion of a Participant’s salary, compensation or
other remuneration for purposes of pension benefits, severance, redundancy,
resignation or any other purpose.

 

21.General Provisions

 

(a)         Stockholder Rights: Except as otherwise determined by the
Administrator or provided in the Plan, a Participant and his or her legal
representative, legatees or distributees shall not be deemed to be the holder of
any shares of Common Stock subject to an Award and shall not have any rights of
a stockholder unless and until certificates for such shares have been issued and
delivered to him or her or them under the Plan. A certificate or certificates
for shares of Common Stock acquired upon exercise of an Option or SAR shall be
issued in the name of the Participant or his or her beneficiary and distributed
to the Participant or his or her beneficiary (or, in the case of uncertificated
shares, other written notice of ownership in accordance with Applicable Law
shall be provided) as soon as practicable following receipt of notice of
exercise and, with respect to Options, payment of the Exercise Price (except as
may otherwise be determined by the Company in the event of payment of the
Exercise Price pursuant to Section 7(d)(ii)(C)). Except as otherwise provided in
Section 9(d) regarding Restricted Stock Awards or otherwise determined by the
Administrator, a certificate for any shares of Common Stock issuable pursuant to
a Restricted Award, Performance Award, Phantom Stock Award or Other Stock-Based
Award shall be issued in the name of the Participant or his or her beneficiary
and distributed to the Participant or his or her beneficiary (or, in the case of
uncertificated shares, other written notice of ownership in accordance with
Applicable Law shall be provided) after the Award (or portion thereof) has
vested and been earned and is distributable.

 

(b)         Section 16(b) Compliance: To the extent that any Participants in the
Plan are subject to Section 16(b) of the Exchange Act, it is the general
intention of the Company that transactions under the Plan shall comply with Rule
16b-3 under the Exchange Act and that the Plan shall be construed in favor of
such Plan transactions meeting the requirements of Rule 16b-3. Notwithstanding
anything in the Plan to the contrary, the Administrator, in its sole and
absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Participants who are officers
or directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.

 

 

(c)          Code Section 162(m) Performance-Based Compensation. To the extent
to which Code Section 162(m) is applicable, the Company intends that
compensation payable under the Plan to Covered Employees may, to the extent
practicable, constitute “qualified performance-based compensation” within the
meaning of Code Section 162(m), unless otherwise determined by the
Administrator. Accordingly, Awards granted to Covered Employees which are
intended to qualify for the performance-based exception under Code Section
162(m) shall be deemed to include any such additional terms, conditions,
limitations and provisions as are necessary to comply with the performance-based
compensation exemption of Code Section 162(m), unless the Administrator, in its
discretion, determines otherwise. To the extent that Code Section 162(m) is
applicable, the Administrator shall, within the time periods and in the manner
prescribed by Code Section 162(m), select eligible Participants and define in an
objective fashion the manner of calculating the Performance Measures it selects
to use for Covered Employees during any specific performance period.

 

 17 

 

 

(d)         Unfunded Plan; No Effect on Other Plans:

 

(i)          The Plan shall be unfunded, and the Company shall not be required
to create a trust or segregate any assets that may at any time be represented by
Awards under the Plan. The Plan shall not establish any fiduciary relationship
between the Company and any Participant or other person. Neither a Participant
nor any other person shall, by reason of the Plan, acquire any right in or title
to any assets, funds or property of the Company or any Affiliate, including,
without limitation, any specific funds, assets or other property which the
Company or any Affiliate, in their discretion, may set aside in anticipation of
a liability under the Plan. A Participant shall have only a contractual right to
shares of Common Stock or other amounts, if any, payable under the Plan,
unsecured by any assets of the Company or any Affiliate. Nothing contained in
the Plan shall constitute a guarantee that the assets of such entities shall be
sufficient to pay any benefits to any person.

 

(ii)         The amount of any compensation deemed to be received by a
Participant pursuant to an Award shall not constitute compensation with respect
to which any other employee benefits of such Participant are determined,
including, without limitation, benefits under any bonus, pension, profit
sharing, life insurance or salary continuation plan, except as otherwise
specifically provided by the terms of such plan or as may be determined by the
Administrator.

 

(iii)        Except as otherwise provided in the Plan, the adoption of the Plan
shall not affect any other stock incentive or other compensation plans in effect
for the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of stock incentive or other compensation for
employees or service providers of the Company or any Affiliate.

 

(e)          Governing Law: The Plan and Awards shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of laws provisions of any state, and in accordance with
applicable federal laws of the United States.

 

(f)          Beneficiary Designation: The Administrator may, in its discretion,
permit a Participant to designate in writing a person or persons as beneficiary,
which beneficiary shall be entitled to receive settlement of Awards (if any) to
which the Participant is otherwise entitled in the event of death. In the
absence of such designation by a Participant, and in the event of the
Participant’s death, the estate of the Participant shall be treated as
beneficiary for purposes of the Plan, unless the Administrator determines
otherwise. The Administrator shall have discretion to approve and interpret the
form or forms of such beneficiary designation. A beneficiary, legal guardian,
legal representative or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent that the Plan and/or Award
Agreement provide otherwise, and to any additional restrictions deemed necessary
or appropriate by the Administrator.

 

(g)         Gender and Number: Except where otherwise indicated by the context,
words in any gender shall include any other gender, words in the singular shall
include the plural and words in the plural shall include the singular.

 

(h)         Severability: If any provision of the Plan or an Award Agreement
shall be held illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts of the Plan or the Award Agreement (which
shall be construed or deemed amended to conform to Applicable Law), and the Plan
or Award Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.

 

(i)           Rules of Construction: Headings are given to the sections of the
Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation or other provision of law shall (unless the Administrator
determines otherwise) be construed to refer to any amendment to or successor of
such provision of law.

 

(j)           Successors and Assigns: The Plan shall be binding upon the
Company, its successors and assigns, and Participants, their executors,
administrators and permitted transferees and beneficiaries.

 

(k)          Award Agreement: The grant of any Award under the Plan shall be
evidenced by an Award Agreement between the Company and the Participant. Such
Award Agreement may state terms, conditions and restrictions applicable to the
Award and may state such other terms, conditions and restrictions, including but
not limited to terms, conditions and restrictions applicable to shares of Common
Stock or other benefits subject to an Award, as may be established by the
Administrator.

 

 18 

 

 

(l)           Right of Offset: Notwithstanding any other provision of the Plan
or an Award Agreement, the Company may at any time (subject to any Code Section
409A considerations) reduce the amount of any payment or benefit otherwise
payable to or on behalf of a Participant by the amount of any obligation of the
Participant to or on behalf of the Company or an Affiliate that is or becomes
due and payable.

 

(m)         Uncertificated Shares: Notwithstanding anything in the Plan to the
contrary, to the extent the Plan provides for the issuance of stock certificates
to reflect the issuance of shares of Common Stock, the issuance may, in the
Company’s discretion, be effected on a non-certificated basis, to the extent not
prohibited by the Company’s certificate of incorporation or bylaws or by
Applicable Law.

 

(n)          Income and Other Taxes: Participants are solely responsible and
liable for the satisfaction of all taxes and penalties that may arise in
connection with Awards (including but not limited to any taxes arising under
Code Section 409A), and the Company shall not have any obligation to indemnify
or otherwise hold any Participant harmless from any or all of such taxes. The
Company shall have no responsibility to take or refrain from taking any actions
in order to achieve a certain tax result for a Participant or any other person.

 

(o)          Effect of Certain Changes in Status: Notwithstanding the other
terms of the Plan or an Award Agreement, the Administrator has sole discretion
to determine (taking into account any Code Section 409A considerations), at the
time of grant of an Award or at any time thereafter, the effect, if any, on
Awards (including but not limited to modifying the vesting, exercisability
and/or earning of Awards) granted to a Participant if the Participant’s status
as an Employee, Director or Consultant changes, including but not limited to a
change from full-time to part-time, or vice versa, or if other similar changes
in the nature or scope of the Participant’s employment or service occur.

 

(p)         Stockholder Approval: The Plan is subject to approval by the
stockholders of the Company, which approval must occur, if at all, within 12
months of the Effective Date. Awards granted prior to such stockholder approval
shall be conditioned upon and shall be effective only upon approval of the Plan
by such stockholders on or before such date.

 

(q)          Deferrals: Subject to the provisions of this Section 21(q) and
Section 22, the Administrator may permit or require a Participant to defer such
Participant’s receipt of the payment of cash or the delivery of shares of Common
Stock that would otherwise be payable with respect to an Award. Any such
deferral shall be subject to such terms and conditions as may be established by
the Administrator and to any applicable Code Section 409A requirements.

 

(r)           Fractional Shares: Except as otherwise provided in an Award
Agreement or determined by the Administrator, (i) the total number of shares
issuable pursuant to the exercise, vesting or earning of an Award shall be
rounded down to the nearest whole share, and (ii) no fractional shares shall be
issued. The Administrator may, in its discretion, determine that a fractional
share shall be settled in cash.

 

(s)         Compliance with Recoupment, Ownership and Other Policies or
Agreements: Notwithstanding anything in the Plan or an Award Agreement to the
contrary, the Administrator may, at any time (during or following termination of
employment or service for any reason), determine that a Participant’s rights,
payments and/or benefits with respect to an Award (including but not limited to
any shares issued or issuable and/or cash paid or payable with respect to an
Award) shall be subject to reduction, cancellation, forfeiture or recoupment
upon the occurrence of certain specified events, in addition to any other
conditions applicable to an Award. Such events may include, but shall not be
limited to, termination of employment for Cause, violation of policies of the
Company or an Affiliate, breach of non-solicitation, non-competition,
confidentiality, non-disparagement or other covenants, other conduct by the
Participant that is determined by the Administrator to be detrimental to the
business or reputation of the Company or any Affiliate, and/or other
circumstances where such reduction, cancellation, forfeiture or recoupment is
required by Applicable Law. In addition, without limiting the effect of the
foregoing, as a condition to the grant of an Award or receipt or retention of
shares of Common Stock, cash or any other benefit under the Plan, (i) the
Administrator may, at any time, require that a Participant comply with any
compensation recovery (or “clawback”), stock ownership, stock retention or other
policies or guidelines adopted by the Company or an Affiliate, each as in effect
from time to time and to the extent applicable to the Participant, and (ii) each
Participant shall be subject to such compensation recovery, recoupment,
forfeiture or other similar provisions as may apply under Applicable Law.

 

(t)           Attestation: Wherever in the Plan or any Award Agreement a
Participant is permitted to pay the Exercise Price of an Award or taxes relating
to the exercise, vesting or earning of an Award by delivering shares of Common
Stock, the Participant may, unless the Administrator determines otherwise and
subject to procedures satisfactory to the Administrator, satisfy such delivery
requirement by presenting proof of beneficial ownership of such shares, in which
case the Company shall treat the Award as exercised, vested or earned without
further payment and/or shall withhold such number of shares from the shares
acquired by the exercise, vesting or earning of the Award, as appropriate.

 

 19 

 

 

(u)          Plan Controls: Unless the Administrator determines otherwise, (i)
in the event of a conflict between any term or provision contained in the Plan
and an express term contained in any Award Agreement, the applicable terms and
provisions of the Plan will govern and prevail, and (ii) the terms of an Award
Agreement shall not be deemed to be in conflict or inconsistent with the Plan
merely because they impose greater or additional restrictions, obligations or
duties, or if the Award Agreement provides that such Award Agreement terms apply
notwithstanding the provisions to the contrary in the Plan.

 

(v)          Indemnification: No member of the Board or Committee or its or
their designees or agents, as applicable, shall be liable while acting as
Administrator for any action or determination made in good faith with respect to
the Plan, an Award or an Award Agreement. Members of the Board and the Committee
and officers and employees of the Company or an Affiliate to whom authority to
act for the Board or the Committee is delegated shall be entitled to such
indemnification and other rights as may be provided under the Company’s
certificate of incorporation, bylaws and/or other instrument and/or pursuant to
Applicable Law.

 

22.Compliance with Code Section 409A

 

Notwithstanding any other provision in the Plan or an Award Agreement to the
contrary, if and to the extent that Code Section 409A is deemed to apply to the
Plan or any Award, it is the general intention of the Company that the Plan and
all such Awards shall, to the extent practicable, comply with, or be exempt
from, Code Section 409A, and the Plan and any such Award Agreement shall, to the
extent practicable, be construed in accordance therewith. Deferrals of shares or
any other benefit issuable pursuant to an Award otherwise exempt from Code
Section 409A in a manner that would cause Code Section 409A to apply shall not
be permitted unless such deferrals are in compliance with, or exempt from, Code
Section 409A. In the event that the Company (or a successor thereto) has any
stock which is publicly traded on an established securities market or otherwise,
distributions that are subject to Code Section 409A to any Participant who is a
“specified employee” (as defined under Code Section 409A) upon a “separation
from service” (as defined in Code Section 409A) may only be made following the
expiration of the six-month period after the date of separation from service
(with such distributions to be made during the seventh month following
separation from service), or, if earlier than the end of the six-month period,
the date of death of the specified employee, or as otherwise permitted under
Code Section 409A. For purposes of Code Section 409A, each installment payment
provided under the Plan or an Award Agreement shall be treated as a separate
payment. Without in any way limiting the effect of any of the foregoing, (i) in
the event that Code Section 409A requires that any special terms, provisions or
conditions be included in the Plan or any Award Agreement, then such terms,
provisions and conditions shall, to the extent practicable, be deemed to be made
a part of the Plan or Award Agreement, as applicable, and (ii) terms used in the
Plan or an Award Agreement shall be construed in accordance with Code Section
409A if and to the extent required. Further, in the event that the Plan or any
Award shall be deemed not to comply with Code Section 409A, then neither the
Company, the Administrator nor its or their designees or agents shall be liable
to any Participant or other person for actions, decisions or determinations made
in good faith.

 

 20 

 

 

IN WITNESS WHEREOF, this Akoustis Technologies, Inc. 2016 Stock Incentive Plan
is, by the authority of the Board of Directors of the Company, executed on
behalf of the Company, the 15th day of December, 2016.

 

  AKOUSTIS TECHNOLOGIES, INC.

 

  By:  /s/ Jeffrey B. Shealy   Name:  Jeffrey B. Shealy  
Title:    President and Chief Executive Officer

 

ATTEST:

 

By:  /s/ Cindy C. Payne   Name:  Cindy C. Payne  
Title:    Chief Financial Officer