Exhibit 10.34

ZIVO BIOSCIENCE, INC.

2019 OMNIBUS LONG-TERM INCENTIVE PLAN

 

ZIVO Bioscience, Inc., a Nevada corporation (the “Company”), sets forth herein
the terms of its 2019 Omnibus Long-Term Incentive Plan (the “Plan”), as follows:

 

Section 1 PURPOSE  

 

The Plan is intended to enhance the ability of the Company and the Subsidiaries
and Affiliates to attract and retain highly qualified Directors, officers, key
employees and other persons and to motivate such persons to serve the Company
and the Subsidiaries of each of them and to improve the business results and
earnings of the Company, by providing to such persons an opportunity to acquire
or increase a direct proprietary interest in the operations and future success
of the Company. To this end, the Plan provides for the grant of options, share
appreciation rights, restricted shares, restricted share units, unrestricted
shares and dividend equivalent rights. Any of these awards may, but need not, be
made as performance incentives to reward attainment of performance goals in
accordance with the terms hereof. Share options granted under the Plan may be
incentive stock options or non-qualified options, as provided herein.

 

Section 2 DEFINITIONS  

 

For purposes of interpreting the Plan and related documents (including Award
Agreements and definitions in a Participant’s written employment agreement), the
following definitions shall apply:

 

2.1 “Affiliate” means a person or entity which controls, is controlled by, or is
under common control with the Company. 

 

2.2 “Award” means a grant of an Option, Share Appreciation Right, Restricted
Shares, Restricted Share Units, Unrestricted Shares, Dividend Equivalent Rights
or cash-based award under the Plan. 

 

2.3 “Award Agreement” means a written or electronic agreement or other
instrument that evidences and sets out the terms and conditions of an Award. 

 

2.4 “Benefit Arrangement” shall have the meaning set forth in Section 14
hereof. 

 

2.5 “Board” means the Board of Directors of the Company. 

 

2.6 “Cause” means, unless otherwise provided in an applicable written employment
agreement between a Participant and the Company, a Subsidiary or an Affiliate
(in which case such other definition shall apply to this Plan for such
Participant), (i) actual dishonesty intended to result in substantial personal
enrichment at the expense of the Company or of any subsidiary of the Company,
(ii) the conviction of a felony, or (iii) repeated willful and deliberate
failure or refusal to perform the duties normally associated with a
Participant’s position which is not remedied in a reasonable period of time
after receipt of written notice from the Company 

 

2.7 “Change in Control” means, unless otherwise provided in an applicable
written employment agreement between a Participant and the Company, a Subsidiary
or an Affiliate (in which case such other definition shall apply to this Plan
for such Participant), the happening of an event, which shall be deemed to have
occurred upon the earliest to occur of the following events: 

 

(i)The dissolution or liquidation of the Company;  

 

(ii)The sale or other disposition of all or substantially all of the assets of
the Company;  

 

(iii)The merger or consolidation of the Company with or into another corporation
or other entity, other than, in either case, a merger or consolidation of the
Company in which holders of shares of the Company’s voting securities
immediately prior to the merger or consolidation will have more than 50% of the
ownership of voting capital stock of the surviving corporation immediately after
the merger or consolidation (on a fully diluted basis), which voting securities
are to be held in the same proportion (on a fully diluted basis) as such holders
ownership of voting capital stock of the Company immediately before the merger
or consolidation;  

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(iv)The date any entity, Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act), other than (i) the Company, or
(ii) any of its Subsidiaries, or (iii) any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its Subsidiaries, or
(iv) any Affiliate (as such term is defined in Rule 405 promulgated under the
Securities Act) of any of the foregoing, shall have acquired beneficial
ownership of, or shall have acquired voting control over, 50% or more of the
outstanding shares of the Company’s voting capital stock (on a fully diluted
basis), unless the transaction pursuant to which such Person, entity or group
acquired such beneficial ownership or control resulted from the original
issuance by the Company of shares of its voting capital stock and was approved
by at least a majority of Directors who were either members of the Board on the
date that this Plan was originally adopted by the Board or members of the Board
for at least twelve (12) months before the date of such approval; or  

 

(v)The first day after the date of this Plan when Directors are elected such
that there is a change in the composition of the Board such that a majority of
Directors have been members of the Board for less than twelve (12) months,
unless the nomination for election of each new Director who was not a Director
at the beginning of such twelve (12) month period was approved by a vote of at
least sixty percent (60%) of the Directors then still in office who were
Directors at the beginning of such period.  

 

Notwithstanding the foregoing, the Board may provide for a different definition
of a Change of Control in an Award Agreement if such Award is subject to the
requirements of Code Section 409A and the Award will become payable on a Change
of Control. Notwithstanding the foregoing, to the extent “Change of Control” is
a payment trigger and not merely a vesting trigger for any payment provided
hereunder that is not exempt from Code Section 409A, “Change of Control” means a
change in the ownership or effective control of the Company, or a change in the
ownership of a substantial portion of the assets of the Company, as described in
Treas, Reg. Section 1.409A-3(i)(5), but replacing the term “Company” for the
term “corporation” in such regulation.

 

2.8 “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended, and the rules and regulations promulgated thereunder. 

 

2.9 “Committee” means the Compensation Committee of the Board, or, if the Board
so elects, a different committee of, and designated from time to time by
resolution of, the Board, which shall be constituted as provided in Section
3.1. 

 

2.10 “Disability” means, unless otherwise provided in an applicable written
employment agreement between a Participant and the Company, a Subsidiary or an
Affiliate (in which case such other definition shall apply to this Plan for such
Participant), a Participant’s physical or mental condition resulting from any
medically determinable physical or mental impairment that renders such
Participant incapable of engaging in any substantial gainful employment and that
can be expected to result in death or that has lasted or can be expected to last
for a continuous period of not less than 365 days. Notwithstanding the
foregoing, a Participant shall not be deemed to be Disabled as a result of any
condition that: 

 

(a)Was contracted, suffered, or incurred while such Participant was engaged in,
or resulted from such Participant having engaged in, a felonious activity; 

 

(b)Resulted from an intentionally self-inflicted injury or an addiction to
drugs, alcohol, or substances which are not administered under the direction of
a licensed physician as part of a medical treatment plan; or 

 

(c)Resulted from service in the Armed Forces of the United States for which such
Participant received or is receiving a disability benefit or pension from the
United States, or from service in the armed forces of any other country
irrespective of any disability benefit or pension. 

 

The Disability of a Participant and the date on which a Participant ceases to be
employed by reason of Disability shall be determined by the Company, in
accordance with uniform principles consistently applied, on the basis of such
evidence as the Committee and the Company deem necessary and desirable, and its
good faith determination shall be conclusive for all purposes of the Plan. The
Committee or the Company shall have the right to require a Participant to submit
to an examination by a physician or physicians and to submit to such
reexaminations as the Committee or the Company shall require in order to make a
determination concerning the Participant’s physical or mental condition;
provided, however, that a Participant may not be required to undergo a medical
examination more often than once each 180 days, nor at any time after the normal
date of the Participant’s Retirement.

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If any Participant engages in any occupation or employment (except for
rehabilitation as determined by the Committee) for remuneration or profit, which
activity would be inconsistent with the finding of Disability, or if the
Committee, on the recommendation of the Company, determines on the basis of a
medical examination that a Participant no longer has a Disability, or if a
Participant refuses to submit to any medical examination properly requested by
the Committee or the Company, then in any such event, the Participant shall be
deemed to have recovered from such Disability. The Committee in its discretion
may revise this definition of “Disability” for any grant, except to the extent
that the Disability is a payment event under a 409A Award.

 

2.11 “Dividend Equivalent Right” means a right, granted to a Participant under
Section 12 hereof, to receive cash, Shares, other Awards or other property equal
in value to dividends paid with respect to a specified number of Shares, or
other periodic payments. 

 

2.12 “Effective Date” means the date that the Plan is approved by the Board. 

 

2.13 “Exchange Act” means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended. 

 

2.14 “Fair Market Value” means the value of a Share, determined as follows: if
on the Grant Date or other determination date the Shares are listed on an
established national or regional share exchange, is admitted to quotation on the
New York Stock Exchange (“NYSE”) or is publicly traded on an established
securities market, the Fair Market Value of a Share shall be the closing price
of the Shares on such exchange or in such market (if there is more than one such
exchange or market the Committee shall determine the appropriate exchange or
market) on the Grant Date or such other determination date (or if there is no
such reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest asked prices or between the high and low sale prices on
such trading day) or, if no sale of Shares is reported for such trading day, on
the next preceding day on which any sale shall have been reported. If the Shares
are not listed on such an exchange, quoted on such system or traded on such a
market, Fair Market Value shall be the value of the Shares as determined by the
Committee in good faith; provided that such valuation with respect to any Award
that the Company intends to be a stock right not providing for the deferral of
compensation under Treas. Reg. Section 1.409A-1(b)(5)(i) (Non-Qualified Options)
shall be determined by the reasonable application of a reasonable valuation
method, as described in Treas. Reg Section 1.409A-1(b)(5)(iv)(B). 

 

2.15 “Family Member” means a person who is a spouse, former spouse, child,
stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships, of the
Participant, any person sharing the Participant’s household (other than a tenant
or employee), a trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any one or more
of these persons (or the Participant) control the management of assets, and any
other entity in which one or more of these persons (or the Participant) own more
than fifty percent of the voting interests. 

 

2.16 “409A Award” means any Award that is treated as a deferral of compensation
subject to the requirements of Code Section 409A. 

 

2.17 “Good Reason” shall mean, unless otherwise provided in an applicable
written employment agreement between a Participant and the Company, a Subsidiary
or an Affiliate (in which case such other definition shall apply to this Plan
for such Participant), the initial existence of one or more of the following
conditions arising without the consent of a Participant provided that such
Participant provides notice to the Company of the existence of such condition
within 90 days of the initial existence of the condition, the Company does not
remedy the condition within 30 days after receiving notice, and such Participant
actually terminates employment with the Company within 30 days following the
Company’s failure to remedy the condition: 

 

(a)A material diminution in a Participant’s base salary in effect immediately
before the date of the Change in Control or as increased from time to time
thereafter; 

 

(b)A material diminution in a Participant’s authority, duties, or
responsibilities; 

 

(c)A material diminution in the authority, duties, or responsibilities of the
supervisor to whom a Participant is required to report, including a requirement
that a Participant report to a corporate officer or employee instead of
reporting directly to the Board; 

 

(d)A material diminution in the budget over which a Participant retains
authority; 

 

(e)A material change in the geographic location at which a Participant must
perform the services related to his or her position; or 

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(f)Any other action or inaction that constitutes a material breach by the
Company of any agreement under which a Participant provides services to the
Company. 

 

2.18 “Grant Date” means the date on which the Committee approves an Award or
such later date as may be specified by the Committee. 

 

2.19 “Incentive Stock Option” means an “incentive stock option” within the
meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time. 

 

2.20 “Non-Qualified Option” means an Option that is not an Incentive Stock
Option. 

 

2.21 “Option” means an option to purchase Shares pursuant to the Plan, which may
either be an Incentive Stock Option or a Non-Qualified Option. 

 

2.22 “Option Price” means the exercise price for each Share subject to an
Option. 

 

2.23 “Other Agreement” shall have the meaning set forth in Section 14 hereof. 

 

2.24 “Outside Director” means a member of the Board who is not an officer or
employee of the Company, or of any Affiliate. 

 

2.25 “Participant” means a person who receives or holds an Award under the
Plan. 

 

2.26 “Performance Award” means an Award made subject to the attainment of
performance goals (as described in Section 13) over a performance period of up
to 10 years. 

 

2.27 “Plan” means the Zivo Bioscience, Inc. 2019 Omnibus Long-Term Incentive
Plan. 

 

2.28 “Reorganization” means any reorganization, merger or consolidation of the
Company with one or more other entities which does not constitute a Change in
Control. 

 

2.29 “Restricted Share” means a Share awarded to a Participant pursuant to
Section 10 hereof. 

 

2.30 “Restricted Share Unit” means a bookkeeping entry representing the
equivalent of a Share awarded to a Participant pursuant to Section 10 hereof. 

 

2.31 “Retirement” means termination of Service with consent of the Committee on
or after age 62, or any other definition established by the Committee, in its
discretion, either in any Award Agreement or in writing after the grant of any
Award, provided that the definition of Retirement with respect to the timing of
payment (and not merely vesting) of any 409A Award cannot be changed after the
Award is granted. 

 

2.32 “SAR Exercise Price” means the per share exercise price of an SAR granted
to a Participant under Section 9 hereof. 

 

2.33 “Securities Act” means the Securities Act of 1933, as now in effect or as
hereafter amended. 

 

2.34 “Service” means service as a Service Provider to the Company or a
Subsidiary or Affiliate. Unless otherwise stated in the applicable Award
Agreement, a Participant’s change in position or duties shall not result in
interrupted or terminated Service, so long as such Participant continues to be a
Service Provider to the Company or a Subsidiary or Affiliate. Subject to the
preceding sentence, whether a termination of Service shall have occurred for
purposes of the Plan shall be determined by the Committee, which determination
shall be final, binding and conclusive. With respect to the timing of payment
(and not merely vesting) of any 409A Award, whether a termination of Service
shall have occurred shall be determined in accordance with the definition of
“Separation from Service” under Treas. Reg. Section 1.409(A)-1(h). 

 

2.35 “Service Provider” means an employee, officer or Director of the Company or
a Subsidiary or Affiliate, or a consultant or adviser providing services to the
Company or a Subsidiary or Affiliate. 

 

2.36 “Share” or “Shares” means the common shares of the Company. 

 

2.37 “Share Appreciation Right” or “SAR” means a right granted to a Participant
under Section 9 hereof. 

 

2.38 “Subsidiary” means any “subsidiary corporation” of the Company within the
meaning of Section 424(f) of the Code. 

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2.39 “Substitute Awards” means Awards granted upon assumption of, or in
substitution for, outstanding awards previously granted by a company or other
entity acquired by the Company or a Subsidiary or Affiliate or with which the
Company or a Subsidiary or Affiliate combines. 

 

2.40 “Ten Percent Shareholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
shares of the Company or any Subsidiary. In determining share ownership, the
attribution rules of Section 424(d) of the Code shall be applied. 

 

2.41 “Termination Date” means the date upon which an Option shall terminate or
expire, as set forth in Section 8.3 hereof. 

 

2.42 “Company” means Zivo Bioscience, Inc., a Nevada corporation. 

 

2.43 “Unrestricted Share Award” means an Award pursuant to Section 11 hereof. 

 

Section 3 ADMINISTRATION OF THE PLAN 

 

3.1 Committee. The Plan shall be administered by or pursuant to the direction of
the Committee. The Committee shall have such powers and authorities related to
the administration of the Plan as are consistent with the governing documents of
the Company and applicable law. The Committee shall have full power and
authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Committee deems to be necessary or appropriate to the
administration of the Plan, any Award or any Award Agreement. Subject to the
governing documents of the Company and applicable law, the Committee may
delegate all or any portion of its authority under the Plan to a subcommittee of
Directors and/or officers of the Company for the purposes of determining or
administering Awards granted to persons who are not then subject to the
reporting requirements of Section 16 of the Exchange Act. The interpretation and
construction by the Committee of any provision of the Plan, any Award or any
Award Agreement shall be final, binding and conclusive. The Committee shall
consist of not less than two (2) members of the Board, which members shall be
“Non-Employee Directors” as defined in Rule 16b-3 under the Exchange Act (or
such greater number of members which may be required by said Rule 16b-3) and
which members shall qualify as “independent” under any applicable stock exchange
rules. 

 

3.2 Terms of Awards. Subject to the other terms and conditions of the Plan, the
Committee shall have full and final authority to: 

 

(i) Designate Participants, 

 

(ii) Determine the type or types of Awards to be made to a Participant, 

 

(iii) Determine the number of Shares to be subject to an Award, 

 

(iv) establish the terms and conditions of each Award (including, but not
limited to, the exercise price of any Option, the nature and duration of any
restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Award or the Shares subject
thereto, and any terms or conditions that may be necessary to qualify Options as
Incentive Stock Options) or to ensure exemption from or compliance with Code
Section 409A, 

 

(v)Prescribe the form of each Award Agreement evidencing an Award, and 

 

(vi)Amend, modify, or supplement the terms of any outstanding Award.
Notwithstanding the foregoing, no amendment, modification or supplement of any
Award shall, without the consent of the Participant, impair the Participant’s
rights under such Award, or subject to the requirements of Code Section 409A any
Award that was excluded from Code Section 409A coverage upon grant, and no
amendment, modification or supplement of any Award that would be treated as
repricing under the rules of the stock exchange or market on which the Shares
are listed or quoted shall be made without approval of the Company’s
shareholders. 

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The Company may retain the right in an Award Agreement to cause a forfeiture of
the gain realized by a Participant on account of actions taken by the
Participant in violation or breach of or in conflict with any employment
agreement, non-competition agreement, any agreement prohibiting solicitation of
employees or others of the Company or a Subsidiary or Affiliate or any
confidentiality obligation with respect to the Company or a Subsidiary or
Affiliate or otherwise in competition with the Company or a Subsidiary or
Affiliate, to the extent specified in such Award Agreement applicable to the
Participant. Furthermore, unless the Committee provides otherwise in the
applicable Award Agreement, the Company may annul an Award if the Participant is
an employee of the Company or a Subsidiary or Affiliate and is terminated for
Cause as defined in the applicable Award Agreement or the Plan, as applicable.

 

Notwithstanding the foregoing, no amendment or modification may be made to an
outstanding Option or SAR which reduces the Option Price or SAR Exercise Price,
either by lowering the Option Price or SAR Exercise Price or by canceling the
outstanding Option or SAR and granting a replacement or substitute Option or SAR
with a lower exercise price, or exchange any outstanding Option or SAR with cash
or other awards, in each case, without the approval of Company’s shareholders,
provided, that, appropriate adjustments may be made to outstanding Options and
SARs pursuant to Section 16.

 

3.3 Deferral Arrangement. The Committee may permit or require the deferral of
any award payment into a deferred compensation arrangement, subject to
compliance with the provisions of Section 17, Code Section 409A, in each case,
where applicable, and such other rules and procedures as it may establish, which
may include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Share equivalents
and restricting deferrals to comply with hardship or unforeseeable emergency
distribution rules affecting 401(k) plans and 409A Awards. Notwithstanding the
foregoing, no deferral shall be allowed if the deferral opportunity would
violate Code Section 409A. 

 

3.4 No Liability. No member of the Board or of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Award or Award Agreement. 

 

3.5 Book Entry. Notwithstanding any other provision of this Plan to the
contrary, the Company or a Subsidiary or Affiliate may elect to satisfy any
requirement under this Plan for the delivery of Share certificates through the
use of book-entry. 

 

3.6 Minimum Vesting. Except as otherwise provided in a Participant’s Award
Agreement or employment agreement, subject to Section 16.3, any Award (or
portion thereof) shall have a minimum vesting period of one year from the Grant
Date; provided, however, that Awards (including any Unrestricted Share Award)
with respect to 5% of the total Shares authorized to be issued under the Plan
pursuant to Section 4 may have a vesting period of less than one year. For the
avoidance of doubt, except as otherwise provided in a Participant’s Award
Agreement or employment agreement, subject to Section 16.3, no installment or
portion of any Award may vest earlier than one year from the Grant Date. 

 

Section 4 SHARES SUBJECT TO THE PLAN 

 

Subject to adjustment as provided in Section 16 hereof, the aggregate number of
Shares available for issuance under the Plan shall be Fifty-Two Million
(52,000,000) to cover two initial grants to two Participants, plus an additional
Fifty Million (50,000,000). Such One Hundred Two Million (102,000,000) Shares
shall also be the aggregate number of Shares in respect of which Incentive Stock
Options may be granted under the Plan. The aggregate number of Shares available
under this Section 4 shall be reduced by one Share for every one Share subject
to an Award under this Plan. Shares issued or to be issued under the Plan shall
be authorized but unissued Shares or issued Shares that have been reacquired by
the Company or a Subsidiary or Affiliate. If any Shares covered by an Award are
not purchased or are forfeited, or if an Award is settled in cash in lieu of
Shares or otherwise terminates without delivery of Shares subject thereto, then
the number of Shares related to such Award and subject to such forfeiture or
termination shall not be counted against the limit set forth above, but shall
again be available for making Awards under the Plan. If an Award (other than a
Dividend Equivalent Right) is denominated in Shares, the number of Shares
covered by such Award, or to which such Award relates, shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan as provided above. Notwithstanding the foregoing,
the following Shares shall not be available for future grant: (a) Shares
tendered or withheld in payment of the exercise price of an Option and (b)
Shares withheld by the Company or otherwise received by the Company to satisfy
tax withholding obligations in connection with an Award. In addition, all Shares
covered by a SAR that were issued under the net settlement or net exercise of
such SAR shall be counted against the number Shares available for issuance under
the Plan and Shares purchased in the open market using Option proceeds shall not
be available for future grant under the Plan.

 

The Committee shall have the right to substitute or assume Awards in connection
with mergers, reorganizations, separations, or other transactions to which
Section 424(a) of the Code or Section 1.409A-1(b)(5)(v)(D) of the Treasury
Regulations applies. The number of Shares reserved pursuant to Section 4 may be
increased by the corresponding number of Awards assumed and, in the case of a
substitution, by the net increase in the number of Shares subject to Awards
before and after the substitution.

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Section 5 EFFECTIVE DATE, DURATION AND AMENDMENTS 

 

5.1 Effective Date. The Plan shall be effective as of the Effective Date. 

 

5.2 Term. The Plan shall terminate automatically ten (10) years after the
Effective Date and may be terminated on any earlier date as provided in
Section 5.3. The termination of the Plan shall not affect any Award outstanding
on the date of such termination. 

 

5.3 Amendment and Termination of the Plan. The Board may, at any time and from
time to time, amend, suspend, or terminate the Plan as to any Shares as to which
Awards have not been made. An amendment shall be contingent on approval of the
Company’s shareholders to the extent stated by the Board, required by applicable
law or required by applicable stock exchange listing requirements. No Awards
shall be made after termination of the Plan. No amendment, suspension or
termination of the Plan shall (i) without the consent of the Participant, impair
rights or obligations under any Award theretofore awarded under the Plan, nor
(ii) accelerate any payment under any 409A Award except as otherwise permitted
by the regulations under Section 409A of the Code. No Awards shall be granted
until the Plan has been approved by the Board, and no Incentive Stock Options
shall be granted until the Plan has been approved by shareholders in accordance
with Code Section 422. 

 

Section 6 AWARD ELIGIBILITY AND LIMITATIONS 

 

6.1 Service Providers and Other Persons. Subject to this Section 6, Awards may
be made under the Plan to: (i) any Service Provider to the Company or a
Subsidiary or Affiliate, including any Service Provider who is an officer or
Director of the Company or a Subsidiary or Affiliate, as the Committee shall
determine and designate from time to time, (ii) any Outside Director and
(iii) any other individual whose participation in the Plan is determined to be
in the best interests of the Company by the Committee. 

 

6.2 Successive Awards and Substitute Awards. An eligible person may receive more
than one Award, subject to such restrictions as are provided herein.
Notwithstanding Sections 8.1 and 9.1, the Option Price of an Option or the grant
price of an SAR that is a Substitute Award may be less than 100% of the Fair
Market Value of a Share on the date of grant of the Substitute Award provided
that the Option Price or grant price is determined in accordance with the
principles of Code Section 424 and the regulations thereunder or the principles
of Treasury Regulation Section 1.409A-1(b)(5)(v)(D). 

 

6.3 Limitation on Shares Subject to Awards. During any time when the Company has
a class of equity security registered under Section 12 of the Exchange Act: 

 

(i) The maximum number of Shares subject to Options or SARs that can be awarded
under the Plan to any person eligible for an Award under this Section 6 is
Thirty Five Million (35,000,000) per calendar year; and 

 

(ii) The maximum number of Shares that can be awarded under the Plan, other than
pursuant to an Option or SARs, to any person eligible for an Award under this
Section 6 is Five Million (5,000,000) per calendar year. 

 

The preceding limitations in this Section 6.3 are subject to adjustment as
provided in Section 16 hereof.

 

Section 7 AWARD AGREEMENT 

 

Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Committee shall from time to time
determine. Award Agreements granted from time to time or at the same time need
not contain similar provisions but shall be consistent with the terms of the
Plan. Each Award Agreement evidencing an Award of Options shall specify whether
such Options are intended to be Non-Qualified Options or Incentive Stock
Options, and in the absence of such specification such options shall be deemed
Non-Qualified Options.

 

Section 8 TERMS AND CONDITIONS OF OPTIONS 

 

8.1 Option Price. The Option Price of each Option shall be fixed by the
Committee and stated in the Award Agreement evidencing such Option. The Option
Price of each Option shall be at least the Fair Market Value on the Grant Date
of a Share; provided, however, that in the event that a Participant is a Ten
Percent Shareholder, the Option Price of an Option granted to such Participant
that is intended to be an Incentive Stock Option shall be not less than 110% of
the Fair Market Value of a Share on the Grant Date. 

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8.2 Vesting. Subject to Sections 8.3, 8.4, 8.5 and 16.3 hereof, each Option
granted under the Plan shall become exercisable at such times and under such
conditions (including based on achievement of performance goals and/or future
service requirements) as shall be determined by the Committee and stated in the
Award Agreement. For purposes of this Section 8.2, fractional numbers of Shares
subject to an Option shall be rounded to the next nearest whole number. 

 

8.3 Term. Each Option granted under the Plan shall terminate, and all rights to
purchase Shares thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Committee
and stated in the Award Agreement relating to such Option (the “Termination
Date”); provided, however, that in the event that the Participant is a Ten
Percent Shareholder, an Option granted to such Participant that is intended to
be an Incentive Stock Option shall not be exercisable after the expiration of
five years from its Grant Date. 

 

8.4 Termination of Service.  

 

(a) Unless the Committee otherwise provides in an Award Agreement or in a
written employment or other agreement with the Participant, upon the termination
of a Participant’s Service, except to the extent that such termination is due to
death, Disability, or Retirement, any Option held by such Participant that has
not vested shall immediately be deemed forfeited and any otherwise vested Option
or unexercised portion thereof shall terminate three (3) months after the date
of such termination of Service, but in no event later than the date of
expiration of the Option.  

 

(b) Unless the Committee otherwise provides in an Award Agreement or in a
written employment or other agreement with the Participant, if a Participant’s
Service is terminated for Cause, the Option or unexercised portion thereof shall
terminate as of the date of such termination.  

 

(c) Unless the Committee otherwise provides in an Award Agreement or in a
written employment agreement with the Participant, if a Participant’s Service is
terminated (i) due to Retirement, any Option held by such Participant that has
not vested shall immediately be deemed forfeited, subject to the Committee’s
discretion to accelerate the vesting of all or part of such Option, and any
vested Option or Option that vests upon the Committee’s exercise of its
discretion shall continue in accordance with its terms and shall expire upon its
normal date of expiration (except that an Incentive Stock Option shall cease to
be an Incentive Stock Option upon the expiration of three (3) months from the
date of the Participant’s Retirement and thereafter shall be a Non-Qualified
Option), (ii) due to Disability, the Option shall become fully vested and shall
continue in accordance with its terms and shall expire upon its normal date of
expiration (except that an Incentive Stock Option shall cease to be an Incentive
Stock Option upon the expiration of twelve (12) months from the termination of
the Participant’s service due to Disability and thereafter shall be a
Non-Qualified Option) or (iii) due to death, any Option of the deceased
Participant shall become fully vested and shall continue in accordance with its
terms and shall expire on its normal date of expiration (except that an
Incentive Stock Option shall cease to be an Incentive Stock Option upon the
expiration of twelve (12) months from the date of the Participant’s death and
thereafter shall be a Non-Qualified Option). Such provisions shall be determined
in the sole discretion of the Committee, need not be uniform among all Options
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination of Service. 

 

8.5 Limitations on Exercise of Option. Notwithstanding any other provision of
the Plan, in no event may any Option be exercised, in whole or in part, after
the occurrence of an event referred to in Section 16 hereof which results in
termination of the Option. 

 

8.6 Method of Exercise. An Option that is exercisable may be exercised by the
Participant’s delivery to the Company of written notice of exercise on any
business day, at the Company’s principal office, on the form specified by the
Committee. Such notice shall specify the number of Shares with respect to which
the Option is being exercised and, except to the extent provided in
Section 8.12.3, Section 8.12.4 or Section 18.3, shall be accompanied by payment
in full of the Option Price of the Shares for which the Option is being
exercised, plus the amount (if any) of federal and/or other taxes which the
Company or an Affiliate may, in its judgment, be required to withhold with
respect to an Award. The minimum number of Shares with respect to which an
Option may be exercised, in whole or in part, at any time shall be the lesser of
(i) 100 Shares or such lesser number set forth in the applicable Award Agreement
and (ii) the maximum number of Shares available for purchase under the Option at
the time of exercise. 

 

8.7 Rights of Holders of Options. A Participant holding or exercising an Option
shall have none of the rights of a shareholder (for example, the right to
receive cash or dividend payments or distributions attributable to the subject
Shares or to direct the voting of the subject Shares) until the Shares covered
thereby are fully paid and issued to the Participant. Except as provided in
Section 16 hereof, no adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date of such issuance. 

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8.8 Delivery of Share Certificates. Promptly after the exercise of an Option to
purchase Shares by a Participant and the payment in full of the Option Price,
unless the Company shall then have uncertificated Shares, such Participant shall
be entitled to the issuance of a Share certificate or certificates evidencing
his/her ownership of the Shares purchased upon such exercise. 

 

8.9 Transferability of Options. Except as provided in Section 8.10, during the
lifetime of a Participant, only the Participant (or, in the event of legal
incapacity or incompetency, the Participant’s guardian or legal representative)
may exercise an Option. Except as provided in Section 8.10, no Option shall be
assignable or transferable by the Participant to whom it is granted, other than
by will or the laws of descent and distribution. Any attempt to transfer an
Option in violation of this Plan shall render such Option null and void. 

 

8.10 Family Transfers. Unless expressly prohibited in the applicable Award
Agreement, a Participant may transfer, not for value, all or part of an Option
which is not an Incentive Stock Option to any Family Members. For the purpose of
this Section 8.10, a “not for value” transfer is a transfer which is (i) a gift
to a trust for the benefit of the participant and/or one or more Family Members,
or (ii) a transfer under a domestic relations order in settlement of marital
property rights. Following a transfer under this Section 8.10, any such Option
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. Subsequent transfers of transferred Options are
prohibited except in accordance with this Section 8.10 or by will or the laws of
descent and distribution. The events of termination of Service of
Section 8.4 hereof shall continue to be applied with respect to the original
Participant, following which the Option shall be exercisable by the transferee
only to the extent, and for the periods specified, in Section 8.4. 

 

8.11 Limitations on Incentive Stock Options. An Option shall constitute an
Incentive Stock Option only (i) if the Participant granted such Option is an
employee of the Company or any Subsidiary of the Company; (ii) to the extent
specifically provided in the related Award Agreement; (iii) to the extent that
the aggregate Fair Market Value (determined at the time the Option is granted)
of the Shares with respect to which all Incentive Stock Options held by such
Participant become exercisable for the first time during any calendar year
(under the Plan and all other plans of the Participant’s employer and its
Affiliates) does not exceed $100,000; and (iv) the Company’s shareholders
approve the Plan within one year of the date of its approval by the Board. This
limitation shall be applied by taking Options into account in the order in which
they were granted. Notwithstanding anything to the contrary contained herein,
any Option designated as an Incentive Stock Option that fails to meet the
requirements of Code Section 422 shall be a Non-Qualified Option. 

 

8.12 Form of Payment. 

 

8.12.1 General Rule. Payment of the Option Price for the Shares purchased
pursuant to the exercise of an Option shall be made in cash or in cash
equivalents acceptable to the Company. 

 

8.12.2 Surrender of Shares. Payment of the Option Price for Shares purchased
pursuant to the exercise of an Option may be made all or in part through the
tender to the Company of Shares, which shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at their
Fair Market Value on the date of exercise or surrender. 

 

8.12.3 Cashless Exercise. To the extent permitted by law, payment of the Option
Price for Shares purchased pursuant to the exercise of an Option and the
applicable tax withholding requirements may be made all or in part by delivery
(on a form acceptable to the Committee) of an irrevocable direction to a
registered securities broker acceptable to the Company to sell Shares and to
deliver all or part of the sales proceeds to the Company in payment of the
Option Price and any withholding taxes described in Section 18.3. 

 

8.12.4 Other Forms of Payment. To the extent permitted by the Committee in its
sole discretion, payment of the Option Price for Shares purchased pursuant to
exercise of an Option may be made in any other form that is consistent with
applicable laws, regulations and rules. 

 

Section 9 TERMS AND CONDITIONS OF SHARE APPRECIATION RIGHTS 

 

9.1 Right to Payment and Grant Price. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one Share on the date of exercise over (B) the
grant price of the SAR as determined by the Committee. The Award Agreement for
an SAR shall specify the grant price of the SAR, which shall be at least the
Fair Market Value of a Share on the Grant Date. SARs may be granted in
conjunction with all or part of an Option granted under the Plan or at any
subsequent time during the term of such Option, in conjunction with all or part
of any other Award or without regard to any Option or other Award. 

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9.2 Other Terms. The Committee shall determine at the Grant Date or thereafter,
the time or times at which and the conditions under which an SAR may be
exercised (including based on achievement of performance goals and/or future
service requirements), the time or times at which SARs shall cease to be or
become exercisable following termination of Service or upon other conditions
(provided that no SAR shall be exercisable following the tenth anniversary of
its Grant Date), the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Shares will be
delivered or deemed to be delivered to Participants, whether or not an SAR shall
be in tandem or in combination with any other Award, and any other terms and
conditions of any SAR. 

 

9.3 Transferability of SARs. Unless the Committee otherwise provides in an Award
Agreement or any amendment or modification thereof, no SAR may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant. Any attempt to transfer a SAR in
violation of this Plan shall render such SAR null and void. 

 

Section 10 TERMS AND CONDITIONS OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS 

 

10.1 Grant of Restricted Shares or Restricted Share Units. Awards of Restricted
Shares or Restricted Share Units may be made to eligible persons. Restricted
Shares or Restricted Share Units may also be referred to as performance shares
or performance share units. If so indicated in the Award Agreement at the time
of grant, a Participant may vest in more than 100% of the number of Restricted
Share Units awarded to the Participant. 

 

10.2 Restrictions. Subject to Section 3.6, at the time an Award of Restricted
Shares or Restricted Share Units is made, the Committee may, in its sole
discretion, establish a period of time (a “Restricted Period”) applicable to
such Restricted Shares or Restricted Share Units, during which a portion of the
Shares related to such Award shall become nonforfeitable or vest, on each
anniversary of the Grant Date or otherwise, as the Committee may deem
appropriate. Each Award of Restricted Shares or Restricted Share Units may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant of Restricted Shares or Restricted Share Units
is made, prescribe restrictions in addition to or other than the expiration of
the Restricted Period, including the satisfaction of corporate or individual
performance conditions, which may be applicable to all or any portion of the
Restricted Shares or Restricted Share Units in accordance with Section 13.1 and
13.2. Neither Restricted Shares nor Restricted Share Units may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Committee with respect to such Restricted Shares or Restricted
Share Units. Each Participant may designate a beneficiary upon his or her death
for the Restricted Shares or Restricted Share Units awarded to him or her under
the Plan. If a Participant fails to designate a beneficiary, the Participant
shall be deemed to have designated his or her estate as his or her beneficiary.
Any attempt to transfer an Award of Restricted Shares or Restricted Share Units
in violation of this Plan shall render such Award null and void. 

 

10.3 Restricted Shares Certificates. The Company shall issue, in the name of
each Participant to whom Restricted Shares have been granted, Share certificates
representing the total number of Restricted Shares granted to the Participant,
as soon as reasonably practicable after the Grant Date. The Committee may
provide in an Award Agreement that either (i) the Company shall hold such
certificates for the Participant’s benefit until such time as the Restricted
Shares are forfeited to the Company or the restrictions lapse, or (ii) such
certificates shall be delivered to the Participant, provided, however, that such
certificates shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement. 

 

10.4 Rights of Holders of Restricted Shares. Unless the Committee otherwise
provides in an Award Agreement, holders of Restricted Shares shall have the
right to vote such Shares and the right to receive any dividends or
distributions declared or paid with respect to such Shares. All distributions,
if any, received by a Participant with respect to Restricted Shares as a result
of any share split, share dividend, combination of shares, or other similar
transaction shall be subject to the restrictions applicable to the original
Award. If any such dividends or distributions are paid in cash, unless otherwise
specified in the Award Agreement, the right to receive such cash payments shall
be subject to the same restrictions on transferability as the Restricted Shares
with respect to which they are paid, and shall be accumulated during the
Restricted Period and paid or forfeited when the Restricted Shares vest or are
forfeited. In no event shall any cash dividend or distribution be paid later
than 2½ months after the end of the tax year in which the applicable Restricted
Period ends. 

 

10.5 Rights of Holders of Restricted Share Units. 

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10.5.1 Dividend Equivalent Rights. Unless the Committee otherwise provides in an
Award Agreement, holders of Restricted Share Units shall have no rights as
shareholders of the Company including the right to direct the voting of the
subject Shares underlying a Restricted Share Unit Award. A holder of a
Restricted Share Units shall not have the right to receive Dividend Equivalent
Rights to the extent such Restricted Share Units are not vested.  

 

10.5.2 Creditor’s Rights. A holder of Restricted Share Units shall have no
rights other than those of a general creditor of the Company. Restricted Share
Units represent an unfunded and unsecured obligation of the Company, subject to
the terms and conditions of the applicable Award Agreement. 

 

10.6 Termination of Service. Unless the Committee otherwise provides in an Award
Agreement or in a written agreement with the Participant after the Award
Agreement is issued, upon the termination of a Participant’s Service, any
Restricted Shares or Restricted Share Units held by such Participant that have
not vested, or with respect to which all applicable restrictions and conditions
have not lapsed, shall immediately be deemed forfeited, except to the extent
that such termination is due to death, Disability, or Retirement. Further, the
Award Agreement may specify that the vested portion of the Award shall continue
to be subject to the terms of any applicable transfer or other restriction.
Unless the Committee otherwise provides in an Award Agreement or in a written
agreement with the Participant after the Award Agreement is issued, if a
Participant’s Service is terminated due to (i) death or Disability, any
outstanding Award of Restricted Shares or Restricted Share Units shall be fully
vested, and the Shares subject to such Awards shall be delivered in accordance
with the terms of Section 10.7 below; or (ii) due to Retirement, any outstanding
Award of Restricted Shares or Restricted Share Units shall be forfeited, subject
to the Committee’s discretion to accelerate all or part of such Award, and the
Shares subject to such Awards that are not forfeited shall be delivered in
accordance with the terms of Section 10.7 below; provided, however, in the case
of any Award relating to Restricted Share Units, the Shares subject to such
Award shall be delivered in accordance with their original vesting schedule.
Upon forfeiture of any Restricted Shares or Restricted Share Units, a
Participant shall have no further rights with respect to such Award, including
but not limited to any right to vote Restricted Shares or any right to receive
dividends with respect to Restricted Shares or Restricted Share Units. 

 

10.7 Delivery of Shares. Except as otherwise specified in an Award Agreement
with respect to a particular Award of Restricted Shares or unless the Company
shall then have uncertificated Shares, within thirty (30) days of the expiration
or termination of the Restricted Period, a certificate or certificates
representing all Shares relating to such Award which have not been forfeited
shall be delivered to the Participant or to the Participant’s beneficiary or
estate, as the case may be. Except as otherwise specified with respect to a
particular Award of Restricted Share Units or unless the Company shall then have
uncertificated Shares, within thirty (30) days of the satisfaction of the
vesting criterion applicable to such Award, a certificate or certificates
representing all Shares relating to such Award which have vested shall be issued
or transferred to the Participant. 

 

Section 11 TERMS AND CONDITIONS OF UNRESTRICTED SHARE AWARDS 

 

The Committee may, in its sole discretion, grant (or sell at such purchase price
determined by the Committee) an Unrestricted Share Award to any Participant
pursuant to which such Participant may receive Shares free of any restrictions
(“Unrestricted Shares”) under the Plan. Unrestricted Share Awards may be granted
or sold as described in the preceding sentence in respect of past services and
other valid consideration, or in lieu of, or in addition to, any cash
compensation due to such Participant.

 

Section 12 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS 

 

12.1 Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash distributions that
would have been paid on the Shares specified in the Dividend Equivalent Right
(or other Award to which it relates) if such Shares had been issued to and held
by the recipient. A Dividend Equivalent Right may be granted hereunder to any
Participant, provided that any Award of Dividend Equivalent Rights shall comply
with, or be exempt from, Code Section 409A. Dividend Equivalent Rights may not
be granted hereunder relating to Shares which are subject to Options or Share
Appreciation Rights. Notwithstanding any other provision of the Plan, no
dividend or Dividend Equivalent Right shall provide for any crediting or payment
on any Award or portion of an Award that is not vested. The terms and conditions
of Dividend Equivalent Rights shall be specified in the Award. Dividend
Equivalent Rights may be settled in cash or Shares or a combination thereof, in
a single installment or installments, all determined in the sole discretion of
the Committee. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
Award, unless such settlement would cause an Award that is otherwise exempt from
Code Section 409A to become subject to and not in compliance with Code
Section 409A (e.g., in the case of a Non-Qualified Option). Such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other Award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other Award. 

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12.2 Termination of Service. Except as may otherwise be provided by the
Committee either in the Award Agreement or in a written agreement with the
Participant after the Award Agreement is issued, a Participant’s rights in all
Dividend Equivalent Rights shall automatically terminate upon the Participant’s
termination of Service for any reason. 

 

Section 13 TERMS AND CONDITIONS OF PERFORMANCE AWARDS 

 

13.1 Performance Conditions. The right of a Participant to exercise or receive a
grant or settlement of any Performance Award, and the timing thereof, may be
subject to such corporate or individual performance conditions as may be
specified by the Committee. The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions. 

 

13.2 Performance Awards. If and to the extent that the Committee determines to
grant a Performance Award to a Participant, the grant, exercise and/or
settlement of such Performance Award may be contingent upon achievement of
pre-established performance goals and other terms set forth in this
Section 13.2. 

 

13.2.1 Performance Goals Generally. The performance goals for such Performance
Awards may consist of one or more business criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 13.2. Performance goals may be objective
and may require that the level or levels of performance targeted by the
Committee result in the achievement of performance goals that are “substantially
uncertain.” The Committee may determine that such Performance Awards shall be
granted, exercised and/or settled upon achievement of any one performance goal
or that two or more of the performance goals must be achieved as a condition to
grant, exercise and/or settlement of such Performance Awards. Performance goals
may differ for Performance Awards granted to any one Participant or to different
Participants. 

 

13.2.2 Business Criteria. One or more of the business criteria for the Company,
on a consolidated basis, and/or specified Subsidiaries or business units of the
Company or the Company (except with respect to the total shareholder return and
earnings per share criteria), may be used by the Committee in establishing
performance goals for such Performance Awards, including without limitation:
(1) total shareholder return (share price appreciation plus dividends), (2) net
income, (3) earnings per share, (4) return on equity, (5) return on assets,
(6) return on invested capital, (7) increase in the market price of Shares or
other securities, (8) revenues, (9) net operating income, (10) operating margin
(operating income divided by revenues), (11) earnings before interest, taxes,
depreciation and amortization (EBITDA) or adjusted EBITDA, (12) the performance
of the Company in any one or more of the items mentioned in clauses (1) through
(11) in comparison to the average performance of the companies used in a
self-constructed peer group for measuring performance under an Award, or
(13) the performance of the Company in any one or more of the items mentioned in
clauses (1) through (11) in comparison to a budget or target for measuring
performance under an Award. Business criteria may be measured on an absolute
basis or on a relative basis (i.e., performance relative to peer companies) and
on a GAAP or non-GAAP basis. 

 

13.2.3 Timing For Establishing Performance Goals. Performance goals shall be
established, in writing, not later than 90 days or such later time after the
beginning of any performance period applicable to such Performance Awards. 

 

13.2.4 Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Shares, other Awards or other property, in
the discretion of the Committee. The Committee may, in its discretion, reduce
the amount of a settlement otherwise to be made in connection with such
Performance Awards. The Committee shall specify in the Award Agreement the
circumstances in which such Performance Awards shall be paid or forfeited in the
event of termination of Service by the Participant prior to the end of a
performance period or settlement of Performance Awards. Notwithstanding the
foregoing, unless the Committee otherwise provides in an Award Agreement, if a
Participant’s service is terminated (i) for any reason other than death,
Disability or Retirement, any unvested and unearned portion of such Award shall
be immediately forfeited; (ii) due to a Participant’s death or Disability, the
Award shall be fully vested and settled at the end of the applicable performance
period based on and if required by the Committee in its discretion following,
certification by the Committee regarding the achievement of the performance
goals applicable to such Award; and (iii) due to a Participant’s Retirement, any
unvested and unearned portion of such Award shall be immediately forfeited
subject to the Committee’s discretion to accelerate the vesting of such Award
based on the actual achievement of any applicable performance goals. 

 

13.3 Committee Determinations. All determinations as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards shall be made by the Committee. 

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13.4 Dividends or Dividend Equivalent Rights for Performance Awards.
Notwithstanding anything to the foregoing, the right to receive dividends,
Dividend Equivalent Rights or distributions with respect to a Performance Award
shall only be granted to a Participant if and to the extent that the underlying
Award is vested and earned by the Participant. 

 

Section 14 PARACHUTE LIMITATIONS.  

 

Notwithstanding any other provision of this Plan or of any other agreement,
contract, or understanding heretofore or hereafter entered into by a Participant
with the Company or a Subsidiary or affiliate, except an agreement, contract,
policy or understanding entered into that expressly references and modifies or
excludes application of this paragraph (an “Other Agreement”), and
notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation to the Participant (including groups or
classes of Participants or beneficiaries of which the Participant is a member),
whether or not such compensation is deferred, is in cash, or is in the form of a
benefit to or for the Participant (a “Benefit Arrangement”), if the Participant
is a “disqualified individual,” as defined in Section 280G(c) of the Code, any
Option, Restricted Shares, Restricted Share Units or Performance Award held by
that Participant and any right to receive any payment or other benefit under
this Plan shall not become exercisable or vested and shall not be settled (i) to
the extent that such right to exercise, vesting, payment, or benefit, taking
into account all other rights, payments, or benefits to or for the Participant
under this Plan, all Other Agreements, and all Benefit Arrangements, would cause
any payment or benefit to the Participant under this Plan to be considered a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code as then
in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a
Parachute Payment, the aggregate after-tax amounts received by the Participant
from the Company under this Plan, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by the Participant without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment, or benefit under this Plan, in conjunction with
all other rights, payments, or benefits to or for the Participant under any
Other Agreement or any Benefit Arrangement would cause the Participant to be
considered to have received a Parachute Payment under this Plan that would have
the effect of decreasing the after-tax amount received by the Participant as
described in clause (ii) of the preceding sentence those rights, payments, or
benefits under this Plan, any Other Agreements, and any Benefit Arrangements
that are to be reduced or eliminated so as to avoid having the payment or
benefit to the Participant under this Plan be deemed to be a Parachute Payment
shall be determined in the following order and priority: first, there shall be
reduced or eliminated any such right, payment or benefit that is excluded from
the coverage of Code Section 409A, and then there shall be reduced or eliminated
any right, payment or benefit that is subject to Code Section 409A (with the
reduction in rights, payments or benefits subject to Code Section 409A occurring
in the reverse chronological order in which such rights, payments or benefits
would otherwise be or become vested, exercisable or settled).

 

Section 15 REQUIREMENTS OF LAW 

 

15.1 General. The Company shall not be required to sell, deliver or cause to be
issued any Shares under any Award if the sale or issuance of such Shares would
constitute a violation by the Participant, any other individual exercising an
Option or receiving the benefit of an Award, or the Company of any provision of
any law or regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations. If at any time
the Company shall determine, in its discretion, that the listing, registration
or qualification of any Shares subject to an Award upon any securities exchange
or under any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of shares
hereunder, no Shares may be issued or sold to the Participant or any other
individual exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the Award. Any
determination in this connection by the Company shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, cause to be
registered any securities covered hereby pursuant to the Securities Act. The
Company shall not be obligated to take any affirmative action in order to cause
the exercise of an Option or the issuance of Shares pursuant to the Plan to
comply with any law or regulation of any governmental authority. 

 

15.2 Rule 16b-3. During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the Company
that Awards pursuant to the Plan and the exercise of Options granted hereunder
will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To
the extent that any provision of the Plan or action by the Committee does not
comply with the requirements of Rule 16b-3, it shall be deemed inoperative to
the extent permitted by law and deemed advisable by the Committee and shall not
affect the validity of the Plan. In the event that Rule 16b-3 is revised or
replaced, the Board may exercise its discretion to modify this Plan in any
respect necessary to satisfy the requirements of, or to take advantage of any
features of, the revised exemption or its replacement. 

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Section 16 EFFECT OF CHANGES IN CAPITALIZATION 

 

16.1 Changes in Shares. If the number of outstanding Shares is increased or
decreased or the Shares are changed into or exchanged for a different number or
kind of shares or other securities of the Company on account of any
recapitalization, reclassification, share split, reverse split, combination of
shares, exchange of shares, share dividend or other distribution payable in
capital stock, or other increase or decrease in such Shares effected without
receipt of consideration by the Company, occurring after the Effective Date, the
number and kinds of Shares for which grants of Options and other Awards may be
made under the Plan shall be adjusted proportionately and accordingly by the
Company. In addition, the number and kind of Shares for which Awards are
outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the Participant immediately following such event
shall, to the extent practicable, be the same as immediately before such event.
Any such adjustment in outstanding Options or SARs shall not change the
aggregate Option Price or SAR Exercise Price payable with respect to Shares that
are subject to the unexercised portion of an outstanding Option or SAR, as
applicable, but shall include a corresponding proportionate adjustment in the
Option Price or SAR Exercise Price per Share; provided, however, that all
adjustments shall be made in compliance with Code Section 409A or Code Section
422, as applicable. The conversion of any convertible securities of the Company
shall not be treated as an increase in Shares effected without receipt of
consideration. Notwithstanding the foregoing, in the event of any distribution
to the Company’s shareholders of securities of any other entity or other assets
(including an extraordinary cash dividend but excluding a non-extraordinary
dividend payable in cash or in shares of the Company) without receipt of
consideration by the Company, the Company may, in such manner as the Company
deems appropriate, adjust (i) the number and kind of Shares subject to
outstanding Awards and/or (ii) the exercise price of outstanding Options and
Share Appreciation Rights to reflect such distribution. 

 

16.2 Reorganization. 

 

16.2.1 Company is the Surviving Entity. Subject to Section 16.3 hereof, if the
Company shall be the surviving entity in any Reorganization, any then
outstanding Option or SAR shall pertain to and apply to the securities to which
a holder of the number of Shares subject to such Option or SAR would have been
entitled immediately following such Reorganization, with a corresponding
proportionate adjustment of the Option Price or SAR Exercise Price per share so
that the aggregate Option Price or SAR Exercise Price thereafter shall be the
same as the aggregate Option Price or SAR Exercise Price of the Shares remaining
subject to the Option or SAR immediately prior to such Reorganization; provided,
however, that all adjustments shall be made in compliance with Code Section
409A. Subject to any contrary language in an Award Agreement, any restrictions
applicable to such Award shall apply as well to any replacement securities
received by the Participant as a result of the Reorganization. In the event of a
Reorganization described in the preceding sentence, any outstanding Restricted
Share Units shall be adjusted so as to apply to the securities that a holder of
the number of Shares subject to the Restricted Share Units would have been
entitled to receive immediately following such transaction; provided, however,
that all adjustments shall be made in compliance with Code Section 409A. 

 

16.2.2 Company is not the Surviving Entity. Subject to Section 16.3 hereof, if
the Company shall not be the surviving entity in the event of any
Reorganization, the Committee in its discretion may provide for the assumption
or continuation of any outstanding Options, SARs, Restricted Shares and
Restricted Share Units, or for the substitution for such Options, SARs,
Restricted Shares and Restricted Share Units of new options, share appreciation
rights, restricted shares and restricted shares units relating to the shares of
stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of shares (disregarding any consideration that is
not common shares) and option and share appreciation right exercise prices, in
which event the outstanding Options, SARs, Restricted Shares and Restricted
Share Units shall continue in the manner and under the terms (assumption or
substitution) so provided. Appropriate adjustments shall be made in compliance
with Code Section 409A, including the provisions of Treas. Reg. Section
1.409A-1(b)(5)(v)(D) regarding substitutions and assumptions of stock rights by
reason of a corporate transaction. Notwithstanding the foregoing, in the event
such successor entity (or a parent or subsidiary thereof) refuses to assume or
substitute Awards as provided above, pursuant to a Reorganization described in
this Section 16.2.2, such nonassumed or nonsubstituted Awards shall have their
vesting accelerate as to all shares subject to such Award, with any Performance
Awards being deemed to have vested at their target levels. 

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16.3 Change in Control. 

 

16.3.1 Accelerated Vesting and Payment. Subject to the provisions of Section
16.3.2 below and except as otherwise provided for in an Award Agreement, in the
event of a Change in Control in which the successor/acquirer company does not
issue Alternative Awards (as defined below) within the meaning of Section
16.3.2, all outstanding Awards shall immediately become vested, with any
Performance Awards being deemed to have vested at their target levels.
Notwithstanding anything to the contrary contained in this Section 16.3, the
treatment of any 409A Award in connection with a Change in Control shall be
governed by Section 17 and the requirements of Code Section 409A. 

 

16.3.2 Alternative Awards. Notwithstanding Section 16.3.1, no cancellation,
acceleration of exercisability, vesting, cash settlement or other payment shall
occur with respect to any Option, Share Appreciation Right, Restricted Share or
Restricted Share Unit if the Committee reasonably determines in good faith prior
to the occurrence of a Change in Control that such Award shall be honored or
assumed, or new rights substituted therefor (such honored, assumed or
substituted award hereinafter called an “Alternative Award”), by a Participant’s
employer (or the parent or an affiliate of such employer) immediately following
the Change in Control; provided that any such Alternative Award must: 

 

(a) Be based on stock which is traded on an established securities market; 

 

(b) Provide such Participant with rights and entitlements substantially
equivalent to or better than the rights, terms and conditions applicable under
such award, including, but not limited to, an identical or better exercise or
vesting schedule and identical or better timing and methods of payment; 

 

(c) Have substantially equivalent economic value to such award (determined at
the time of the Change in Control in accordance with principles applicable under
Section 424 of the Internal Revenue Code); 

 

(d) Have terms and conditions which provide that in the event that a
Participant’s Service is involuntarily terminated by the successor employer
without Cause or by a Participant for Good Reason, in either case within the
one-year period following the Change in Control, all of such Participant’s
Option and/or SARs shall be deemed immediately and fully exercisable, the
Restricted Period shall lapse as to each of such Participant’s outstanding
Restricted Share or Restricted Share Unit Awards, and each such Alternative
Award shall be settled for a payment per each share of stock subject to the
Alternative Award in cash, in immediately transferable, publicly traded
securities or in a combination thereof, in an amount equal to, in the case of an
Option or SAR, the excess of the Fair Market Value of such stock on the date of
the Participant’s termination of Service over the corresponding exercise or base
price per share and, in the case of any Restricted Shares or Restricted Share
Unit award, the Fair Market Value of the number of shares of Common Stock
subject or related thereto; and 

 

(e) Solely with respect to any Performance Awards, be converted into restricted
share awards at the target levels, with any new “restricted period” based on the
remaining performance period previously applicable to such Performance Awards. 

 

16.3.3 No Amendment. Notwithstanding Section 5.3, the provisions of this Section
16.3 may not be amended in any respect for two years following a Change in
Control. 

 

16.4 Adjustments. Adjustments under this Section 16 related to Shares or other
securities of the Company shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. No fractional Shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding down to the nearest whole Share. The Committee shall determine the
effect of a Change in Control upon Awards other than Options, SARs, Restricted
Shares and Restricted Share Units and such effect shall be set forth in the
appropriate Award Agreement. The Committee may provide in the Award Agreements
at the Grant Date, or any time thereafter with the consent of the Participant,
for different provisions to apply to an Award in place of those described in
Sections 16.1, 16.2 and 16.3. 

 

16.5 No Limitations on Company. The making of Awards pursuant to the Plan shall
not affect or limit in any way the right or power of the Company or a Subsidiary
or Affiliate to make adjustments, reclassifications, reorganizations, or changes
of its capital or business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its business or assets. 

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Section 17 CODE SECTION 409A 

 

17.1 Generally. This Plan and any Award granted hereunder is intended to comply
with, or be exempt from, the provisions of Code Section 409A, and shall be
interpreted and administered in a manner consistent with that intention. 

 

17.2 409A Awards. The provisions of this Section 17 shall apply to any 409A
Award or any portion an Award that is or becomes subject to Code Section 409A,
notwithstanding any provision to the contrary contained in the Plan or the Award
Agreement applicable to such Award. 409A Awards include, without limitation: 

 

17.2.1 Any Non-Qualified Option or SAR that permits the deferral of compensation
other than the deferral of recognition of income until the exercise of the
Award; and 

 

17.2.2 Any other Award that either (i) provides by its terms for settlement of
all or any portion of the Award on one or more dates following the Short-Term
Deferral Period (as defined below), or (ii) permits or requires the Participant
to elect one or more dates on which the Award will be settled. 

 

Subject to any applicable U.S. Treasury Regulations promulgated pursuant to
Section 409A or other applicable guidance, the term “Short-Term Deferral Period”
means the period ending on the later of (i) the date that is 2 ½ months from the
end of the Company’s fiscal year in which the applicable portion of the Award is
no longer subject to a “substantial risk of forfeiture”, or (ii) the date that
is 2 ½ months from the end of the Participant’s taxable year in which the
applicable portion of the Award is no longer subject to a substantial risk of
forfeiture. For this purpose, the term “substantial risk of forfeiture” shall
have the meaning set forth in any applicable U.S. Treasury Regulations
promulgated pursuant to Code Section 409A or other applicable guidance.

 

17.3 Deferral and/or Payment Elections. Except as otherwise permitted or
required by Section 409A or any applicable Treasury Regulations promulgated
pursuant to Code Section 409A or other applicable guidance, the following rules
shall apply to any deferral and/or payment elections (each, an “Election”) that
may be permitted or required by the Committee pursuant to a 409A Award: 

 

17.3.1 All Elections must be in writing and specify the amount of the payment in
settlement of an Award being deferred, as well as the time and form of payment
as permitted by this Plan; 

 

17.3.2 All Elections shall be made by the end of the Participant’s taxable year
prior to the year in which services commence for which an Award may be granted
to such Participant; provided, however, that if the Award qualifies as
“performance-based compensation” for purposes of Code Section 409A and is based
on services performed over a period of at least twelve (12) months, then the
Election may be made no later than six (6) months prior to the end of such
period; and 

 

17.3.3 Elections shall continue in effect until a written election to revoke or
change such Election is received by the Company, except that a written election
to revoke or change such Election must be made prior to the last day for making
an Election determined in accordance with Section 17.3.2 above or as permitted
by Section 17.4. 

 

17.4 Subsequent Elections. Any 409A Award in respects to which the Committee
permits a subsequent Election to delay the payment or change the form of payment
in settlement of such Award shall comply with the following requirements: 

 

17.4.1 No subsequent Election may take effect until at least twelve (12) months
after the date on which the subsequent Election is made; 

 

17.4.2 Each subsequent Election related to a payment in settlement of an Award
not described in Section 17.5.2, 17.5.3 or 17.5.6 must result in a delay of the
payment for a period of not less than five (5) years from the date such payment
would otherwise have been made; and 

 

17.4.3 No subsequent Election related to a payment pursuant to Section 17.5.4
shall be made less than twelve (12) months prior to the date of the first
scheduled installment relating to such payment. 

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17.5 Payments Pursuant to Deferral Elections. No payment in settlement of a 409A
Award may commence earlier than: 

 

17.5.1 Separation from service (as determined pursuant to Treasury Regulations
or other applicable guidance); 

 

17.5.2 The date the Participant’s Service terminates due to Disability; 

 

17.5.3 Death; 

 

17.5.4 A specified time (or pursuant to a fixed schedule) that is either (i)
specified by the Committee upon the grant of an Award and set forth in the Award
Agreement evidencing such Award, or (ii) specified by the Participant in an
Election complying with the requirements of Section 17.3 and/or 17.4, as
applicable; 

 

17.5.5 To the extent provided by Treasury Regulations promulgated pursuant to
Code Section 409A or other applicable guidance, a change in the ownership or
effective control or the Company or in the ownership of a substantial portion of
the assets of the Company; or 

 

17.5.6 The occurrence of an Unforeseeable Emergency. 

 

Notwithstanding anything else herein to the contrary, to the extent that a
Participant is a “Specified Employee” (as determined in accordance with the
requirements of Code Section 409A), no payment pursuant to Section 17.5.1 in
settlement of a 409A Award may be made before the date which is six (6) months
after such Participant’s date of Separation from Service, or, if earlier, the
date of the Participant's death.

 

17.6 Unforeseeable Emergency. The Committee shall have the authority to provide
in the Award Agreement evidencing any 409A Award for payment in settlement of
all or a portion of such Award in the event that a Participant establishes, to
the satisfaction of the Committee, the occurrence of an Unforeseeable Emergency
(as defined in Code Section 409A). In such event, the amount(s) distributed with
respect to such Unforeseeable Emergency cannot exceed the amounts necessary to
satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of such payment(s), after taking into account
the extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise, by cancellation of any deferral election
previously made by the Participant or by liquidation of the Participant's assets
(to the extent the liquidation of such assets would not itself cause severe
financial hardship). All payments with respect to an Unforeseeable Emergency
shall be made in a lump sum as soon as practicable following the Committee’s
determination that an Unforeseeable Emergency has occurred. The occurrence of an
Unforeseeable Emergency shall be judged and determined by the Committee. The
Committee’s decision with respect to whether an Unforeseeable Emergency has
occurred and the manner in which, if at all, the payment in settlement of an
Award shall be altered or modified, shall be final, conclusive, and not subject
to approval or appeal. 

 

17.7 No Acceleration of Payments. Notwithstanding anything to the contrary
herein, this Plan does not permit the acceleration of the time or schedule of
any payment under this Plan in settlement of a 409A Award, except as permitted
by Code Section 409A and/or Treasury Regulations promulgated pursuant to Code
Section 409A or other applicable guidance. 

 

Section 18 GENERAL PROVISIONS 

 

18.1 Disclaimer of Rights. No provision in the Plan or in any Award or Award
Agreement shall be construed to confer upon any individual the right to remain
in the employ or service of the Company or a Subsidiary or Affiliate, or to
interfere in any way with any contractual or other right or authority of the
Company or a Subsidiary or Affiliate either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company or a
Subsidiary or Affiliate. In addition, notwithstanding anything contained in the
Plan to the contrary, unless otherwise stated in the applicable Award Agreement,
no Award granted under the Plan shall be affected by any change of duties or
position of the Participant, so long as such Participant continues to be a
Director, officer, consultant or employee of the Company or a Subsidiary or
Affiliate. The obligation of the Company to pay any benefits pursuant to this
Plan shall be interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed herein. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party or otherwise hold any amounts in trust or escrow for
payment to any Participant or beneficiary under the terms of the Plan. 

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18.2 Nonexclusivity of the Plan. Neither the adoption of the Plan nor the
submission of the Plan to the Company’s shareholders for approval shall be
construed as creating any limitations upon the right and authority of the Board
to adopt such other incentive compensation arrangements (which arrangements may
be applicable either generally to a class or classes of individuals or
specifically to a particular individual or particular individuals) as the Board
in its discretion determines desirable, including, without limitation, the
granting of options otherwise than under the Plan. 

 

18.3 Withholding Taxes. The Company or a Subsidiary or Affiliate, as the case
may be, shall have the right to deduct from payments of any kind otherwise due
to a Participant (or require a Participant to pay) any federal, state, or local
taxes of any kind required by law to be withheld with respect to the vesting of
or other lapse of restrictions applicable to an Award or upon the issuance of
any Shares upon the exercise of an Option or pursuant to an Award. At the time
of such vesting, lapse, or exercise, the Participant shall pay to the Company or
a Subsidiary or Affiliate, as the case may be, any amount that the Company or a
Subsidiary or Affiliate may reasonably determine to be necessary to satisfy such
withholding obligation. A Participant may elect to use the cashless exercise
procedure described in Section 8.12.3 to satisfy the applicable withholding
obligation, or the Company may elect to, or may cause a Subsidiary or Affiliate
to withhold Shares otherwise issuable to the Participant in satisfaction of a
Participant’s withholding obligations not to exceed the statutory maximum
withholding rate. The Participant may elect to satisfy such obligations, in
whole or in part, by delivering to the Company or a Subsidiary or Affiliate
Shares already owned by the Participant. Any Shares so delivered or withheld
shall have an aggregate Fair Market Value equal to such withholding obligations
not to exceed the statutory maximum withholding rate. The Fair Market Value of
the Shares used to satisfy such withholding obligation shall be determined by
the Company as of the date that the Shares are withheld. A Participant who is
permitted to make and who has made an election pursuant to this Section 18.3 to
deliver Shares may satisfy his/her withholding obligation only with Shares that
are not subject to any repurchase, forfeiture, unfulfilled vesting, or other
similar requirements. 

 

18.4 Captions. The use of captions in this Plan or any Award Agreement is for
the convenience of reference only and shall not affect the meaning of any
provision of the Plan or such Award Agreement. 

 

18.5 Other Provisions. Each Award granted under the Plan may contain such other
terms and conditions not inconsistent with the Plan as may be determined by the
Committee, in its sole discretion. 

 

18.6 Number and Gender. With respect to words used in this Plan, the singular
form shall include the plural form, the masculine gender shall include the
feminine gender, etc., as the context requires. 

 

18.7 Severability. If any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction. 

 

18.8 Governing Law. The validity and construction of this Plan and the
instruments evidencing the Awards hereunder shall be governed by the laws of the
State of Michigan, other than any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of
any other jurisdiction. 

 

18.9 Compensation Recoupment Policy. Notwithstanding any provision in the Plan,
in any Award, or in any employment, consulting or severance agreement with the
Company or any Subsidiary, all Awards under this Plan shall be subject to any
compensation recoupment, other compensation recovery, or clawback policy of the
Company that may be applicable to any Participant, as in effect from time to
time and as approved by the Committee or the Board. 

 

18.10 Complete Statement of Plan. This document is a complete statement of the
Plan.  

 

As adopted by the Board as of November 20, 2019.

 

 

ZIVO Bioscience, Inc.

 

By:

/s/ Philip M. Rice II

 

Philip M. Rice II

Its:

Chief Financial Officer

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