Exhibit 10.1
 
LIGHTPATH TECHNOLOGIES, INC.
2018 STOCK AND INCENTIVE COMPENSATION PLAN
 
1.       Purpose of the Plan.
 
The purpose of this Plan is to enhance shareholder value by linking the
compensation of officers, directors, key employees and consultants of the
Company to increases in the price of LightPath Technologies, Inc. common stock
and the achievement of other performance objectives, and to encourage ownership
in the Company by key personnel whose long-term employment is considered
essential to the Company’s continued progress and success. The Plan is also
intended to assist the Company in the recruitment of new employees and to
motivate, retain and encourage such employees and directors to act in the
shareholders’ interest and share in the Company’s success.
 
2.       Definitions.
 
As used herein, the following definitions shall apply:
 
(a) “Administrator” means the Board, any Committee or such delegates as shall be
administering the Plan in accordance with Section 4 of the Plan.
 
(b) “Affiliate” means any Subsidiary or other entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator. The
Administrator shall, in its sole discretion, determine which entities are
classified as Affiliates and designated as eligible to participate in this Plan.
 
(c) “Applicable Law” means the requirements relating to the administration of
stock option plans under U.S. federal and state laws, any stock exchange or
quotation system on which the Company has listed or submitted for quotation the
Common Shares to the extent provided under the terms of the Company’s agreement
with such exchange or quotation system and, with respect to Awards subject to
the laws of any foreign jurisdiction where Awards are, or will be, granted under
the Plan, the laws of such jurisdiction.
 
(d) “Award” means a Stock Award, Option, Stock Appreciation Right, Stock Unit,
or Other Stock-Based Award granted in accordance with the terms of the Plan, or
any other property (including cash) granted pursuant to the provisions of the
Plan.
 
(e) “Awardee” means an Employee, Director or Consultant who has been granted an
Award under the Plan.
 
(f) “Award Agreement” means a Stock Award Agreement, Option Agreement, Stock
Appreciation Right Agreement, Restricted Stock Unit Agreement or Other
Stock-Based Award Agreement, which may be in written or electronic format, in
such form and with such terms as may be specified by the Administrator,
evidencing the terms and conditions of an individual Award. Each Award Agreement
is subject to the terms and conditions of the Plan. The Award Agreement shall be
delivered to the Participant receiving such Award upon, or as promptly as is
reasonably practicable following, the grant of such Award. The effectiveness of
an Award shall not be subject to the Award Agreement’s being signed by the
Company and/or the Participant receiving the Award unless specifically so
provided in the Award Agreement.
 
 

 
 
 
(g) “Board” means the Board of Directors of the Company.
 
(h) “Change of Control” shall mean, except as otherwise provided in an Award
Agreement, one of the following shall have taken place after the date of this
Agreement:
 
(i) any one person, or group of owners of another corporation who, acting
together through a merger, consolidation, purchase, acquisition of stock or the
like (a "Group"), acquires ownership of Shares of the Company that, together
with the Shares held by such person or Group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the Shares
of the Company (or other voting securities of the Company then outstanding).
However, if such person or Group is considered to own more than fifty percent
(50%) of the total fair market value or total voting power of the Shares (or
other voting securities of the Company then outstanding) before this transfer of
the Company's Shares (or other voting securities of the Company then
outstanding), the acquisition of additional Shares (or other voting securities
of the Company then outstanding) by the same person or Group shall not be
considered to cause a Change of Control of the Company; or
 
(ii) any one person or Group acquires (or has acquired during the twelve (12)
month period ending on the date of the most recent acquisition by such person or
persons) ownership of Shares (or other voting securities of the Company then
outstanding) of the Company possessing thirty percent (30%) or more of the total
voting power of the Shares (or other voting securities then outstanding) of the
Company where such person or Group is not merely acquiring additional control of
the Company; or
 
(iii) a majority of members of the Company's Board is replaced during any twelve
(12) month period by directors whose appointment or election is not endorsed by
a majority of the members of the Company's Board prior to the date of the
appointment or election (the “Incumbent Board”), but excluding, for purposes of
determining whether a majority of the Incumbent Board has endorsed any candidate
for election to the Board, any individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person or Group other than the
Company’s Board; or
 
(iv) any one person or Group acquires (or has acquired during the twelve (12)
month period ending on the date of the most recent acquisition by such person or
Group) all or substantially all of the assets from the Company that have a total
gross fair market value equal to or more than forty percent (40%) of the total
fair market value of all assets of the Company immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market value means the
value of the assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets. A
transfer of assets by the Company will not result in a Change of Control if the
assets are transferred to:
 
(1) 
a stockholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;
 
(2) 
an entity, fifty percent (50%) or more of the total value or voting power of
which is owned, directly or indirectly, by the Company immediately after the
transfer of assets;
 
 
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(3) 
a person or Group that owns, directly or indirectly, fifty percent (50%) or more
of the total value or voting power of all the outstanding stock of the Company;
or
 
(4) 
an entity, at least fifty percent (50%) of the total value or voting power of
which is owned directly or indirectly, by a person described in subparagraph
(h)(i), above; or
 
(v) Shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company.
 
Notwithstanding the foregoing, if any payment or distribution event applicable
to an Award is subject to the requirements of Section 409A(a)(2)(A) of the Code,
the determination of the occurrence of a Change of Control shall be governed by
applicable provisions of Section 409A(a)(2)(A) of the Code and regulations and
rulings issued thereunder for purposes of determining whether such payment or
distribution may then occur.
 
(i) “Code” means the United States Internal Revenue Code of 1986, as amended,
and any successor thereto, the Treasury Regulations thereunder and other
relevant interpretive guidance issued by the Internal Revenue Service or the
Treasury Department. Reference to any specific section of the Code shall be
deemed to include such regulations and guidance, as well as any successor
provision of the Code.
 
(j) “Committee” means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan or, in the absence of any such special
appointment, the Compensation Committee of the Board.
 
(k) “Common Shares” means the Class A Common Stock of the Company, or any
security of the Company issued in substitution, exchange or lieu thereof.
 
(l) “Company” means LightPath Technologies, Inc., a Delaware corporation, or,
except as utilized in the definition of Change of Control, its successor.
 
(m) “Consultant” means an individual providing services to the Company or any of
its Affiliates as an independent contractor, and includes prospective
consultants who have accepted offers of consultancy for the Company or any of
its Affiliates, so long as such person (i) renders bona fide services that are
not in connection with the offer and sale of the Company’s securities in a
capital-raising transaction, (ii) does not directly or indirectly promote or
maintain a market for the Company’s securities, and (iii) otherwise qualifies as
a consultant under the applicable rules of the SEC for registration of shares of
stock on a Form S-8 registration statement.
 
(n) “Conversion Award” has the meaning set forth in Section 4(b)(xii) of the
Plan.
 
(o) “Director” means a member of the Board. Any Director who does not serve as
an employee of the Company is referred to herein as a “Non-employee Director.”
 
 
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(p) “Disability” means (i) “Disability” as defined in any employment, consulting
or similar agreement to which the Participant is a party, or (ii) if there is no
such agreement or it does not define “Disability,” (A) permanent and total
disability as determined under the Company’s long-term disability plan
applicable to the Participant, or (B) if there is no such plan applicable to the
Participant or the Committee determines otherwise in an applicable Award
Agreement, “Disability” shall mean the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months,
as determined by the Committee. Notwithstanding the above, with respect to an
Incentive Stock Option, Disability shall mean permanent and total disability as
defined in Section 22(e)(3) of the Code and, with respect to any Award that
constitutes “nonqualified deferred compensation” within the meaning of Section
409A of the Code, the foregoing definition shall apply for purposes of vesting
of such Award, provided that such Award shall not be settled until the earliest
of: (x) the Participant’s “disability” within the meaning of Section 409A of the
Code, (y) the Participant’s “separation from service” within the meaning of
Section 409A of the Code and (z) the date such Award would otherwise be settled
pursuant to the terms of the Award Agreement.
 
(q) “Disaffiliation” means a Subsidiary’s or Affiliate’s ceasing to be a
Subsidiary or Affiliate for any reason (including, without limitation, as a
result of a public offering, or a spin-off or sale by the Company, of the stock
of the Subsidiary or Affiliate) or a sale of a division of the Company and its
Affiliates.
 
(r) “Employee” means a regular, active employee of the Company or any Affiliate,
including an Officer or Director who is also a regular, active employee of the
Company or any Affiliate. The Administrator shall determine whether the Chairman
of the Board qualifies as an “Employee.” For any and all purposes under the
Plan, the term “Employee” shall not include a person hired as a leased employee,
Consultant or a person otherwise designated by the Administrator, the Company or
an Affiliate at the time of hire as not eligible to participate in or receive
benefits under the Plan or not on the payroll, even if such ineligible person is
subsequently determined to be a common law employee of the Company or an
Affiliate or otherwise an employee by any governmental or judicial authority.
Unless otherwise determined by the Administrator in its sole discretion, for
purposes of the Plan, an Employee shall be considered to have terminated
employment and to have ceased to be an Employee if his or her employer ceases to
be an Affiliate, even if he or she continues to be employed by such employer.
 
(s) “Exchange Act” means the United States Securities Exchange Act of 1934, as
amended and any successor thereto.
 
(t) “Fair Market Value” means the closing price for the Common Shares reported
on a consolidated basis on the primary national securities exchange on which
such Common Shares are traded on the date of measurement, or if the Common
Shares were not traded on such measurement date, then on the next preceding date
on which Common Shares were traded, all as reported by such source as the
Committee may select. If the Common Shares are not listed on a national
securities exchange, Fair Market Value shall be determined by the Committee in
its good faith discretion, taking into account, to the extent appropriate, the
requirements of Section 409A of the Code.
 
(u) “Grant Date” means, with respect to each Award, the date upon which the
Award is granted to an Awardee pursuant to this Plan, which may be a designated
future date as of which such Award will be effective, as determined by the
Committee.
 
(v) “Incentive Stock Option” means an Option that is identified in the Option
Agreement as intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated thereunder, and that
actually does so qualify.
 
 
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(w) “Nonqualified Stock Option” means an Option that is not an Incentive Stock
Option.
 
(x) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
 
(y) “Option” means a right granted under Section 8 of the Plan to purchase a
number of Shares at such exercise price, at such times, and on such other terms
and conditions as are specified in the agreement or other documents evidencing
the Award (the “Option Agreement”). Both Incentive Stock Options and
Nonqualified Stock Options may be granted under the Plan.
 
(z) “Other Stock-Based Award” means an Award granted pursuant to Section 12 of
the Plan on such terms and conditions as are specified in the agreement or other
documents evidencing the Award (the “Other Stock-Based Award Agreement”).
 
(aa) “Participant” means the Awardee or any person (including any estate) to
whom an Award has been assigned or transferred as permitted hereunder.
 
(bb) “Performance Criteria” shall have the meaning set forth in Section 13(b) of
the Plan.
 
(cc) “Plan” means this 2018 Stock and Incentive Compensation Plan, as set forth
herein and as hereafter amended from time to time.
 
(dd) “Retirement” means, unless the Administrator determines otherwise,
voluntary Termination of Employment by a Participant from the Company and its
Affiliates after attaining age 60 and having completed at least 10 years of
service for the Company and its Affiliates, excluding service with an Affiliate
of the Company prior to the time that such Affiliate became an Affiliate of the
Company.
 
(ee) “Securities Act” means the United States Securities Act of 1933, as
amended.
 
(ff) “Share” means a Common Share, as adjusted in accordance with Section 15 of
the Plan.
 
(gg) “Stock Appreciation Right” means a right granted under Section 10 of the
Plan on such terms and conditions as are specified in the agreement or other
documents evidencing the Award (the “Stock Appreciation Right Agreement”).
 
(hh) “Stock Award” means an award or issuance of Shares made under Section 11 of
the Plan, the grant, issuance, retention, vesting and/or transferability of
which is subject during specified periods of time to such conditions (including,
without limitation, continued employment or performance conditions) and terms as
are expressed in the agreement or other documents evidencing the Award (the
“Stock Award Agreement”).
 
(ii) “Stock Unit” means a bookkeeping entry representing an amount equivalent to
the Fair Market Value of one Share, payable in cash, property or Shares. Stock
Units represent an unfunded and unsecured obligation of the Company, except as
otherwise provided for by the Administrator.
 
(jj) “Stock Unit Award” means an award or issuance of Stock Units made under
Section 12 of the Plan, the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of time to such
conditions (including, without limitation, continued employment or performance
conditions) and terms as are expressed in the agreement or other documents
evidencing the Award (the “Stock Unit Award Agreement”).
 
 
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(kk) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, provided each company in the
unbroken chain (other than the Company) owns, at the time of determination,
stock possessing 50% or more of the total combined voting power of all classes
of stock, in one of the other corporations in such chain.
 
(ll) “Termination for Cause” means, unless otherwise provided in an Award
Agreement, Termination of Employment on account of any act of fraud or
intentional misrepresentation or embezzlement, misappropriation or conversion of
assets of the Company or any Affiliate, or the intentional and repeated
violation of the written policies or procedures of the Company, provided that,
for an Employee who is party to an individual severance or employment agreement
defining Cause, “Cause” shall have the meaning set forth in such agreement
except as may be otherwise provided in such agreement. For purposes of this
Plan, a Participant’s Termination of Employment shall be deemed to be a
Termination for Cause if, after the Participant’s employment has terminated,
facts and circumstances are discovered that would have justified, in the opinion
of the Committee, a Termination for Cause.
 
(mm) “Termination of Employment” means, for purposes of this Plan, unless
otherwise determined by the Administrator, ceasing to be an Employee (as
determined in accordance with Section 3401(c) of the Code and the regulations
promulgated thereunder) of the Company and any of its Subsidiaries or
Affiliates. Unless otherwise determined by the Committee in the terms of an
Award Agreement or otherwise, if a Participant’s employment with the Company and
its Affiliates terminates but such Participant continues to provide services to
the Company and its Affiliates in a Non-employee Director capacity, such change
in status shall not be deemed a Termination of Employment. A Participant
employed by, or performing services for, a Subsidiary or an Affiliate or a
division of the Company and its Affiliates shall be deemed to incur a
Termination of Employment if, as a result of a Disaffiliation, such Subsidiary,
Affiliate, or division ceases to be a Subsidiary, Affiliate or division, as the
case may be, and the Participant does not immediately thereafter become an
Employee of (or service provider for), or member of the board of directors of,
the Company or another Subsidiary or Affiliate. Temporary absences from
employment because of illness, vacation or leave of absence and transfers among
the Company and its Subsidiaries and Affiliates shall not be considered
Terminations of Employment. In addition, Termination of Employment shall mean a
“separation from service” as defined in regulations issued under Code Section
409A whenever necessary to ensure compliance therewith for any payment or
settlement of a benefit conferred under this Plan that is subject to such Code
section, and, for such purposes, shall be determined based upon a reduction in
the bona fide level of services performed to a level equal to twenty percent
(20%) or less of the average level of services performed by the Employee during
the immediately preceding 36-month period.
 
3.       Stock Subject to the Plan.
 
(a) Aggregate Limit. Subject to the provisions of Section 15(a) of the Plan, the
maximum aggregate number of Shares which may be subject to or delivered under
Awards granted under the Plan is 1,650,870 Shares, less one Share for every one
Share granted under any prior plan after June 30, 2018. After the Effective Date
of the Plan (as provided in Section 6), no awards may be granted under any prior
plan. Shares subject to or delivered under Conversion Awards shall not reduce
the aggregate number of Shares which may be subject to or delivered under Awards
granted under this Plan. The Shares issued under the Plan may be either Shares
reacquired by the Company, including Shares purchased in the open market, or
authorized but unissued Shares. Prior plans include the Amended and Restated
LightPath Technologies, Inc. Omnibus Incentive Plan.
 
 
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(b) Code Section 422 Limits; Limit on Awards to Directors. Subject to the
provisions of Section 15(a) of the Plan, the aggregate number of Shares that may
be subject to all Incentive Stock Options granted under the Plan shall not
exceed the total aggregate number of Shares that may be subject to or delivered
under Awards under the Plan, as the same may be amended from time to time.
Notwithstanding any other provision of the Plan to the contrary, the aggregate
grant date fair value (computed as of the date of grant in accordance with
applicable financial accounting rules) of all Awards granted to any Non-employee
Director during any single calendar year shall not exceed one hundred thousand
(100,000) Shares.
 
(c) Share Counting Rules.
 
(i) For purposes of this Section 3 of the Plan, Shares subject to Awards that
have been canceled, expired, settled in cash, or not issued or forfeited for any
reason (in whole or in part) shall not reduce the aggregate number of Shares
which may be subject to or delivered under Awards granted under this Plan and
shall be available for future Awards granted under this Plan. In addition, if
any Shares subject to an award under any prior plan are canceled, expired,
settled in cash, or not issued or forfeited for any reason (in whole or in part)
after June 30, 2018, then such Shares subject to an award under any prior plan
shall, to the extent of such cancellation, expiration, settlement in cash,
non-issuance or forfeiture, again be available for grant under this Plan on a
one-for-one basis.
 
(ii) Shares subject to Awards that have been retained by the Company in payment
or satisfaction of the purchase price of an Award or the tax withholding
obligation of an Awardee, and Shares that have been delivered (either actually
or constructively by attestation) to the Company in payment or satisfaction of
the purchase price of an Award or the tax withholding obligation of an Awardee,
shall be available for grant under the Plan on a one-for-one basis. Similarly,
if any Shares subject to an award under any prior plan are, after December 31,
2017, either retained by the Company in payment or satisfaction of the purchase
price of an award or the tax withholding obligation of an awardee, or if Shares
are delivered (either actually or constructively by attestation) to the Company
in payment or satisfaction of the purchase price of an award or the tax
withholding obligation of an awardee under a prior plan, then such Shares
subject to an award under any prior plan shall, to the extent of such tendering
or withholding, again be available for grant under this Plan on a one-for-one
basis.
 
(iii) Conversion Awards shall not reduce the Shares authorized for grant under
the Plan or the limitations on Awards to a Participant under subsection (b),
above, nor shall Shares subject to a Conversion Award again be available for an
Award under the Plan as provided in this subsection (c).
 
4.       Administration of the Plan.
 
(a) Procedure.
 
(i) Multiple Administrative Bodies. The Plan shall be administered by the Board,
a Committee designated by the Board to so administer this Plan and/or their
respective delegates.
 
 
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(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”),
Awards to Officers and Directors shall be made by the entire Board or a
Committee of two or more “non-employee directors” within the meaning of Rule
16b-3.
 
(iii) Other Administration. To the extent required by the rules of the principal
U.S. national securities exchange on which the Shares are traded, the members of
the Committee shall also qualify as “independent directors” as set forth in such
rules. Except to the extent prohibited by Applicable Law, the Board or a
Committee may delegate to a Committee of one or more Directors or to authorized
officers of the Company the power to approve Awards to persons eligible to
receive Awards under the Plan who are not subject to Section 16 of the Exchange
Act.
 
(iv) Awards to Directors. The Board shall have the power and authority to grant
Awards to Non-employee Directors, including the authority to determine the
number and type of awards to be granted; determine the terms and conditions, not
inconsistent with the terms of this Plan, of any award; and to take any other
actions the Board considers appropriate in connection with the administration of
the Plan.
 
(v) Delegation of Authority for the Day-to-Day Administration of the Plan.
Except to the extent prohibited by Applicable Law, the Administrator may
delegate to one or more individuals the day-to-day administration of the Plan
and any of the functions assigned to it in this Plan. Such delegation may be
revoked at any time.
 
(b) Powers of the Administrator. Subject to the provisions of the Plan and, in
the case of a Committee or delegates acting as the Administrator, subject to the
specific duties delegated to such Committee or delegates, the Administrator
shall have the authority, in its discretion:
 
(i) to select the Non-employee Directors, Consultants and Employees of the
Company or its Affiliates to whom Awards are to be granted hereunder;
 
(ii) to determine the number of Common Shares to be covered by each Award
granted hereunder;
 
(iii) to determine the type of Award to be granted to the selected Employees,
 
Consultants and Non-employee Directors;
 
(iv) to approve forms of Award Agreements;
 
(v) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder. Such terms and conditions include, but
are not limited to, the exercise and/or purchase price, the time or times when
an Award may be exercised (which may or may not be based on Performance
Criteria), the vesting schedule, any vesting and/or exercisability provisions,
terms regarding acceleration of Awards or waiver of forfeiture restrictions, the
acceptable forms of consideration for payment for an Award, the term, and any
restriction or limitation regarding any Award or the Shares relating thereto,
based in each case on such factors as the Administrator, in its sole discretion,
shall determine and may be established at the time an Award is granted or
thereafter;
 
 
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(vi) to correct administrative errors;
 
(vii) to construe and interpret the terms of the Plan (including sub-plans and
Plan addenda) and Awards granted pursuant to the Plan;
 
(viii) to adopt rules and procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local
laws and procedures. Without limiting the generality of the foregoing, the
Administrator is specifically authorized (A) to adopt rules and procedures
regarding the conversion of local currency, the shift of tax liability from
employer to employee (where legally permitted) and withholding procedures and
handling of stock certificates which vary with local requirements, and (B) to
adopt sub-plans and Plan addenda as the Administrator deems desirable, to
accommodate foreign laws, regulations and practice;
 
(ix) to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans and Plan addenda;
 
(x) to modify or amend each Award, including, but not limited to, the
acceleration of vesting and/or exercisability, provided, however, that any such
modification or amendment (A) is subject to the minimum vesting provisions under
the Plan, if any, and the plan amendment provisions set forth in Section 16 of
the Plan, and (B) may not materially impair any outstanding Award unless agreed
to in writing by the Participant, except that such agreement shall not be
required if the Administrator determines in its sole discretion that such
modification or amendment either (Y) is required or advisable in order for the
Company, the Plan or the Award to satisfy any Applicable Law or to meet the
requirements of any accounting standard, or (Z) is not reasonably likely to
significantly diminish the benefits provided under such Award, or that adequate
compensation has been provided for any such diminishment, except following a
Change of Control;
 
(xi) to allow or require Participants to satisfy withholding tax amounts by
electing to have the Company withhold from the Shares to be issued upon exercise
of a Nonqualified Stock Option or vesting of a Stock Award or Stock Unit Award
that number of Shares having a Fair Market Value equal to the amount required to
be withheld. The Fair Market Value of the Shares to be withheld shall be
determined in such manner and on such date that the Administrator shall
determine or, in the absence of provision otherwise, on the date that the amount
of tax to be withheld is to be determined. All elections by a Participant to
have Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may provide;
 
(xii) to authorize conversion or substitution under the Plan of any or all stock
options, stock appreciation rights or other stock awards held by awardees of an
entity acquired by the Company (the “Conversion Awards”). Any conversion or
substitution shall be effective as of the close of the merger or acquisition.
The Conversion Awards may be Nonqualified Stock Options or Incentive Stock
Options, as determined by the Administrator, with respect to options granted by
the acquired entity;
 
(xiii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by the
Administrator;
 
(xiv) to impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resale by a Participant or of
other subsequent transfers by the Participant of any Shares issued as a result
of or under an Award or upon the exercise of an Award, including, without
limitation, (A) restrictions under an insider trading policy, (B) restrictions
as to the use of a specified brokerage firm for such resale or other transfers,
and (C) institution of “blackout” periods on exercises of Awards;
 
 
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(xv) to provide, either at the time an Award is granted or by subsequent action,
that an Award shall contain as a term thereof, a right, either in tandem with
the other rights under the Award or as an alternative thereto, of the
Participant to receive, without payment to the Company, a number of Shares, cash
or a combination thereof, the amount of which is determined by reference to the
value of the Award; and
 
(xvi) to make all other determinations deemed necessary or advisable for
administering the Plan and any Award granted hereunder.
 
(c) Effect of Administrator’s Decision. All questions arising under the Plan or
under any Award shall be decided by the Administrator in its total and absolute
discretion. All decisions, determinations and interpretations by the
Administrator regarding the Plan, any rules and regulations under the Plan and
the terms and conditions of any Award granted hereunder, shall be final and
binding on all Participants. The Administrator shall consider such factors as it
deems relevant, in its sole and absolute discretion, to making such decisions,
determinations and interpretations, including, without limitation, the
recommendations or advice of any officer or other employee of the Company and
such attorneys, consultants and accountants as it may select.
 
(d) Indemnity. To the extent allowable under Applicable Law, each member of the
Committee or of the Board and any person to whom the Committee has delegated any
of its authority under the Plan shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such person in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action or failure to act pursuant to
the Plan, and against and from any and all amounts paid by him or her in
satisfaction of judgment in such action, suit, or proceeding against him or her;
provided he or she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled pursuant to the Company’s Articles of Incorporation or By-laws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
 
5.       Eligibility.
 
Awards may be granted only to Directors, Employees and Consultants of the
Company or any of its Affiliates; provided, however, that Incentive Stock
Options may be granted only to Employees of the Company and its Subsidiaries
(within the meaning of Section 424(f) of the Code).
 
6.       Term of Plan.
 
The Plan shall become effective upon its approval by shareholders of the
Company. It shall continue in effect from the date the Plan is approved by the
shareholders of the Company (the “Effective Date”) until terminated under
Section 16 of the Plan.
 
7.       Term of Award.
 
Subject to the provisions of the Plan, the term of each Award shall be
determined by the Administrator and stated in the Award Agreement, and may
extend beyond the termination of the Plan. In the case of an Option or a Stock
Appreciation Right, the term shall be ten (10) years from the Grant Date or such
shorter term as may be provided in the Award Agreement. Notwithstanding the
foregoing, the term of Awards other than Awards that are structured to qualify
as Incentive Stock Options under Section 9 shall be extended automatically if
the Award would expire at a time when trading in Common Shares is prohibited by
law or the Company’s insider trading policy to the 30th day after the expiration
of the prohibition.
 
 
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8.       Options.
 
The Administrator may grant an Option or provide for the grant of an Option,
either from time to time in the discretion of the Administrator or automatically
upon the occurrence of specified events, including, without limitation, the
achievement of performance goals.
 
(a) Option Agreement. Each Option Agreement shall contain provisions regarding
(i) the number of Shares that may be issued upon exercise of the Option, (ii)
the type of Option, (iii) the exercise price of the Option and the means of
payment of such exercise price, (iv) the term of the Option, (v) such terms and
conditions regarding the vesting and/or exercisability of an Option as may be
determined from time to time by the Administrator, (vi) restrictions on the
transfer of the Option and forfeiture provisions, and (vii) such further terms
and conditions, in each case not inconsistent with this Plan, as may be
determined from time to time by the Administrator.
 
(b) Exercise Price. The per share exercise price for the Shares to be issued
upon exercise of an Option shall be determined by the Administrator, except that
the per Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the Grant Date, except with respect to Conversion Awards.
 
(c) No Option Repricings. Subject to Section 15(a) of the Plan, the exercise
price of an Option may not be reduced without shareholder approval, nor may
outstanding Options be cancelled in exchange for cash, other Awards or Options
with an exercise price that is less than the exercise price of the original
Option without shareholder approval.
 
(d) No Reload Grants. Options shall not be granted under the Plan in
consideration for and shall not be conditioned upon the delivery of Shares to
the Company in payment of the exercise price and/or tax withholding obligation
under any other employee stock option.
 
(e) Vesting Period and Exercise Dates. Options granted under this Plan shall
vest and/or be exercisable at such time and in such installments during the
period prior to the expiration of the Option’s term as determined by the
Administrator and as specified in the Option Agreement. The Administrator shall
have the right to make the timing of the ability to exercise any Option granted
under this Plan subject to continued active employment, the passage of time
and/or such performance requirements as deemed appropriate by the Administrator.
Unless otherwise provided in the Award Agreement, no Option shall vest and be
exercisable sooner than one year after its Grant Date. At any time after the
grant of an Option, the Administrator may reduce or eliminate any restrictions
surrounding any Participant’s right to exercise all or part of the Option.
 
(f) Form of Consideration. The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of payment,
either through the terms of the Option Agreement or at the time of exercise of
an Option. Acceptable forms of consideration may include:
 
 
11

 
 
 
(i) cash;
 
(ii) check or wire transfer (denominated in U.S. Dollars);
 
(iii) subject to any conditions or limitations established by the Administrator,
other Shares which were held for a period of more than six (6) months on the
date of surrender and which have a Fair Market Value on the date of surrender
equal to or greater than the aggregate exercise price of the Shares as to which
said Option shall be exercised (it being agreed that the excess of the Fair
Market Value over the aggregate exercise price, if any, shall be refunded to the
Awardee in cash);
 
(iv) subject to any conditions or limitations established by the Administrator,
the Company withholding Shares otherwise issuable upon exercise of an Option;
 
(v) consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Administrator and in compliance with
Applicable Law;
 
(vi) such other consideration and method of payment for the issuance of Shares
to the extent permitted by Applicable Law; or
 
(vii) any combination of the foregoing methods of payment.
 
(g) Procedure for Exercise; Rights as a Shareholder.
 
(i) Any Option granted hereunder shall be exercisable according to the terms of
the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the applicable Option Agreement.
 
(ii) An Option shall be deemed exercised when (A) the Company receives (1)
written or electronic notice of exercise (in accordance with the Option
Agreement or procedures established by the Administrator) from the person
entitled to exercise the Option and (2) full payment for the Shares with respect
to which the related Option is exercised, and (B) with respect to Nonqualified
Stock Options, provisions acceptable to the Administrator have been made for
payment of all applicable withholding taxes.
 
(iii) Unless provided otherwise by the Administrator or pursuant to this Plan,
until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares subject to an Option, notwithstanding the exercise of
the Option.
 
(iv) The Company shall issue (or cause to be issued) such Shares as soon as
administratively practicable after the Option is exercised. An Option may not be
exercised for a fraction of a Share.
 
 
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9.       Incentive Stock Option Limitations/Terms.
 
(a) Eligibility. Only Employees (who qualify as employees under Section 3401(c)
of the Code and the regulations promulgated thereunder) of the Company or any of
its Subsidiaries may be granted Incentive Stock Options. No Incentive Stock
Option shall be granted to any such Employee who as of the Grant Date owns stock
possessing more than 10% of the total combined voting power of the Company.
 
(b) $100,000 Limitation. Notwithstanding the designation “Incentive Stock
Option” in an Option Agreement, if and to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Awardee during any calendar year (under
all plans of the Company and any of its Subsidiaries) exceeds U.S. $100,000,
such Options shall be treated as Nonqualified Stock Options. For purposes of
this Section 9(b) of the Plan, Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares shall be determined as of the Grant Date.
 
(c) Transferability. The Option Agreement must provide that an Incentive Stock
Option is not transferable by the Awardee otherwise than by will or the laws of
descent and distribution, and, during the lifetime of such Awardee, must not be
exercisable by any other person. If the terms of an Incentive Stock Option are
amended to permit transferability, the Option will be treated for tax purposes
as a Nonqualified Stock Option.
 
(d) Exercise Price. The per Share exercise price of an Incentive Stock Option
shall in no event be inconsistent with the requirements for qualification of the
Incentive Stock Option under Section 422 of the Code.
 
(e) Other Terms. Option Agreements evidencing Incentive Stock Options shall
contain such other terms and conditions as may be necessary to qualify, to the
extent determined desirable by the Administrator, with the applicable provisions
of Section 422 of the Code. If any such terms and conditions, as of the Grant
Date or any later date, do not so comply, the Option will be treated thereafter
for tax purposes as a Nonqualified Stock Option.
 
10.           Stock Appreciation Rights.
 
A “Stock Appreciation Right” or “SAR” is a right that entitles the Awardee to
receive, in cash or Shares (as determined by the Administrator), value equal to
or otherwise based on the excess of (i) the Fair Market Value of a specified
number of Shares at the time of exercise over (ii) the aggregate exercise price
of the right, as established by the Administrator on the Grant Date. All Stock
Appreciation Rights under the Plan shall be granted subject to the same terms
and conditions applicable to Options as set forth in Section 8 of the Plan.
Stock Appreciation Rights may be granted to Awardees either alone
(“freestanding”) or in addition to or in tandem with other Awards granted under
the Plan and may, but need not, relate to a specific Option granted under
Section 8 of the Plan. However, any Stock Appreciation Right granted in tandem
with an Option may be granted at the same time such Option is granted or at any
time thereafter before exercise or expiration of such Option, and shall be based
on the Fair Market Value of one Share on the Grant Date or, if applicable, on
the Grant Date of the Option with respect to a Stock Appreciation Right granted
in exchange for or in tandem with, but subsequent to, the Option (subject to the
requirements of Section 409A of the Code). Subject to the provisions of Section
8 of the Plan, the Administrator may impose such other conditions or
restrictions on any Stock Appreciation Right as it shall deem appropriate.
 
 
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11.           Stock Awards.
 
(a) Stock Award Agreement. Each Stock Award Agreement shall contain provisions
regarding (i) the number of Shares subject to such Stock Award or a formula for
determining such number, (ii) the purchase price of the Shares, if any, and the
means of payment for the Shares, (iii) the Performance Criteria, if any, and
level of achievement versus these criteria that shall determine the number of
Shares granted, issued, retainable and/or vested, (iv) such terms and conditions
on the grant, issuance, vesting and/or forfeiture of the Shares as may be
determined from time to time by the Administrator, (v) restrictions on the
transferability of the Stock Award, and (vi) such further terms and conditions,
in each case not inconsistent with this Plan, as may be determined from time to
time by the Administrator. Unless otherwise provided in the Award Agreement, no
Stock Award shall vest sooner than one year after its Grant Date. The Committee
may, in its sole discretion, waive the vesting restrictions and any other
conditions set forth in any Award Agreement under such terms and conditions as
the Committee shall deem appropriate.
 
(b) Restrictions and Performance Criteria. The grant, issuance, retention and/or
vesting of Stock Awards issued to Employees may be subject to such Performance
Criteria and level of achievement versus these criteria as the Administrator
shall determine, which criteria may be based on financial performance, personal
performance evaluations and/or completion of service by the Awardee. Awards with
vesting conditions that are based upon Performance Criteria and level of
achievement versus such criteria are referred to as “Performance Stock Awards”
and Awards with vesting conditions that are based upon continued employment or
the passage of time are referred to as “Restricted Stock Awards.”
 
(c) Rights as a Shareholder. Unless otherwise provided for by the Administrator,
the Participant shall have the rights equivalent to those of a shareholder and
shall be a shareholder only after Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) to the Participant. Any certificate issued in respect of a
Restricted Stock Award shall be registered in the name of the applicable
Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award. The Committee may require
that the certificates evidencing such Shares be held in custody by the Company
until the restrictions thereon shall have lapsed and that, as a condition of any
Award of Restricted Stock, the applicable Participant shall have delivered a
stock power, endorsed in blank, relating to the Common Shares covered by such
Award. The Participant shall not be permitted to sell, assign, transfer, pledge
or otherwise encumber a Stock Award.
 
12.           Stock Unit Awards and Other Stock-Based Awards.
 
(a) Stock Unit Awards. Each Stock Unit Award Agreement shall contain provisions
regarding (i) the number of Shares subject to such Stock Unit Award or a formula
for determining such number, (ii) the Performance Criteria, if any, and level of
achievement versus these criteria that shall determine the number of Shares
granted, issued, and/or vested, (iii) such terms and conditions on the grant,
issuance, vesting and/or forfeiture of the Shares as may be determined from time
to time by the Administrator, (iv) restrictions on the transferability of the
Stock Unit Award, and (v) such further terms and conditions, in each case not
inconsistent with this Plan, as may be determined from time to time by the
Administrator. Unless otherwise provided in the Award Agreement, no Stock Unit
Award shall vest sooner than one year after its Grant Date. The Committee may,
in its sole discretion, waive the vesting restrictions and any other conditions
set forth in any Award Agreement under such terms and conditions as the
Committee shall deem appropriate.
 
(b) Restrictions and Performance Criteria. The grant, issuance, retention and/or
vesting of Stock Unit Awards issued to Employees may be subject to such
Performance Criteria and level of achievement versus these criteria as the
Administrator shall determine, which criteria may be based on financial
performance, personal performance evaluations and/or completion of service by
the Awardee. Awards with vesting conditions that are based upon Performance
Criteria and level of achievement versus such criteria are referred to as
“Performance Stock Unit Awards” and Awards with vesting conditions that are
based upon continued employment or the passage of time are referred to as
“Restricted Stock Unit Awards.”
 
 
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(c) Rights as a Shareholder. Unless otherwise provided for by the Administrator,
the Participant shall have the rights equivalent to those of a shareholder and
shall be a shareholder only after Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) to the Participant.
 
(d) Other Stock-Based Award. An “Other Stock-Based Award” means any other type
of equity-based or equity-related Award not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted Shares), as
well as any cash based bonus based on the attainment of Performance Criteria as
described in Section 13(b), in such amount and subject to such terms and
conditions as the Administrator shall determine. Such Awards may involve the
transfer of actual Shares to Participants, or payment in cash or otherwise of
amounts based on the value of Shares or pursuant to attainment of a performance
goal. Each Other Stock-Based Award will be evidenced by an Award Agreement
containing such terms and conditions as may be determined by the Administrator.
 
(e) Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be
expressed in terms of Shares or units based on Shares or a target amount of
cash, as determined by the Administrator. The Administrator may establish
Performance Criteria in its discretion. If the Administrator exercises its
discretion to establish Performance Criteria, the number and/or value of Other
Stock-Based Awards that will be paid out to the Participant will depend on the
extent to which the performance goals are met.
 
(f) Payment of Other Stock-Based Awards. Payment, if any, with respect to Other
Stock-Based Awards shall be made in accordance with the terms of the Award, in
cash or Shares as the Administrator determines.
 
13.           Other Provisions Applicable to Awards.
 
(a) Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by beneficiary designation,
will or by the laws of descent or distribution, including but not limited to any
attempted assignment or transfer in connection with the settlement of marital
property or other rights incident to a divorce or dissolution, and any such
attempted sale, assignment or transfer shall be of no effect prior to the date
an Award is vested and settled. The Administrator may only make an Award
transferable to an Awardee’s family member or any other person or entity
provided the Awardee does not receive consideration for such transfer. If the
Administrator makes an Award transferable, either as of the Grant Date or
thereafter, such Award shall contain such additional terms and conditions as the
Administrator deems appropriate, and any transferee shall be deemed to be bound
by such terms upon acceptance of such transfer.
 
(b) Performance Criteria. For purposes of this Plan, the term “Performance
Criteria” shall mean any one or more criteria based on financial performance,
personal performance evaluations and/or completion of service, either
individually, alternatively or in any combination, applied, as applicable, to
either the Company as a whole or to a Subsidiary, business unit, Affiliate or
business segment, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years’ results or to
a designated comparison group, in each case as specified by the Committee in the
Award or by duly adopted resolution. The Administrator may establish specific
performance targets (including thresholds and whether to exclude certain
extraordinary, non-recurring, or similar items) and Award amounts, subject to
the right of the Administrator to exercise discretion to adjust payment amounts,
either up or down, following the conclusion of the performance period on the
basis of such further considerations as the Administrator in its sole discretion
shall determine. Extraordinary, non-recurring items that may be the basis of
adjustment include, but are not limited to, acquisitions or divestitures,
restructurings, discontinued operations, extraordinary items, and other unusual
or non-recurring charges, an event either not directly related to the operations
of the Company, Subsidiary, division, business segment or business unit or not
within the reasonable control of management, the cumulative effects of tax or
accounting changes in accordance with U.S. generally accepted accounting
principles, and foreign exchange gains or losses.
 
(c) Termination of Employment or Board Membership. The Administrator shall
determine as of the Grant Date (subject to modification subsequent to the Grant
Date) the effect a termination from membership on the Board by a Non-employee
Director for any reason or a Termination of Employment due to Disability,
Retirement, death, or otherwise (including Termination for Cause) shall have on
any Award. Unless otherwise provided in the Award Agreement:
 
 
15

 
(i) Upon termination from membership on the Board by a Non-employee Director for
any reason other than Disability or death, any Option or SAR held by such
Director that (1) has not vested and is not exercisable as of the effective date
of such termination from membership on the Board shall be subject to immediate
cancellation and forfeiture, or (2) is vested and exercisable as of the
effective date of such termination shall remain exercisable for one year
thereafter, or the remaining term of the Option or SAR, if less. Any unvested
Stock Award, Stock Unit Award or Other Stock Based Award held by a Non-employee
Director at the time of termination from membership on the Board for a reason
other than Disability or death shall be immediately cancelled and forfeited.
 
(ii) Termination from membership on the Board by a Non-employee Director due to
Disability or death shall result in full vesting of any outstanding Options or
SARs and vesting of a prorated portion of any Stock Award, Stock Unit Award or
Other Stock Based Award based upon the full months of the applicable performance
period, vesting period or other period of restriction elapsed as of the end of
the month in which the termination from membership on the Board by a
Non-employee Director due to Disability or death occurs over the total number of
months in such period. Any Options or SARs that vest upon Disability or death
shall remain exercisable for one year thereafter, or the remaining term of the
Option or SAR, if less. In the case of any Stock Award, Stock Unit Award or
Other Stock Based Award that vests on the basis of attainment of Performance
Criteria, the pro-rata vested amount shall be based upon the target award.
 
(iii) Upon Termination of Employment due to Disability or death, any Option or
SAR held by an Employee shall, if not already fully vested, become fully vested
and exercisable as of the effective date of such Termination of Employment and
shall remain exercisable for one year after such Termination of Employment due
to Disability or death, or, in either case, the remaining term of the Option or
SAR, if less. Termination of Employment due to Disability or death shall result
in vesting of a prorated portion of any Stock Award, Stock Unit Award or Other
Stock Based Award based upon the full months of the applicable performance
period, vesting period or other period of restriction elapsed as of the end of
the month in which the Termination of Employment due to Disability or death
occurs over the total number of months in such period. In the case of any Stock
Award, Stock Unit Award or Other Stock Based Award that vests on the basis of
attainment of Performance Criteria, the pro-rata vested amount shall be based
upon the target award.
 
(iv) Any Option or SAR held by an Awardee at Retirement that occurs at least one
year after the Grant Date of the Option or SAR will remain outstanding for the
remaining term of the Option or SAR and continue to vest; any Stock Award, Stock
Unit Award or Other Stock Based Award held by an Awardee at Retirement that
occurs at least one year after the Grant Date of the Award shall also continue
to vest and remain outstanding for the remainder of the term of the Award.
 
(v) Any other Termination of Employment shall result in immediate cancellation
and forfeiture of all outstanding Awards that have not vested as of the
effective date of such Termination of Employment, and any vested and exercisable
Options and SARs held at the time of such Termination of Employment shall remain
exercisable for ninety (90) days thereafter, or the remaining term of the Option
or SAR, if less. Notwithstanding the foregoing, all outstanding and unexercised
Options and SARs shall be immediately cancelled in the event of a Termination
for Cause.
 
14.            Dividends and Dividend Equivalents.
 
Awards other than Options and Stock Appreciation Rights may provide the Awardee
with the right to receive dividend payments or dividend equivalent payments on
the Shares subject to the Award, whether or not such Award is vested.
Notwithstanding the foregoing, dividends or dividend equivalents shall not be
paid with respect to Stock Awards, Stock Unit Awards or Other Stock-Based Awards
that vest based on the achievement of performance goals prior to the date the
performance goals are satisfied and the Award is earned, and then shall be
payable only with respect to the number of Shares or Stock Units actually earned
under the Award. Such payments may be made in cash, Shares or Stock Units or may
be credited as cash or Stock Units to an Awardee’s account and later settled in
cash or Shares or a combination thereof, as determined by the Administrator.
Such payments and credits may be subject to such conditions and contingencies as
the Administrator may establish.
 
 
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15.           Adjustments upon Changes in Capitalization, Organic Change or
Change of Control.
 
(a) Adjustment Clause. In the event of (i) a stock dividend, extraordinary cash
dividend, stock split, reverse stock split, share combination, or
recapitalization or similar event affecting the capital structure of the Company
(each, a “Share Change”), or (ii) a merger, consolidation, acquisition of
property or shares, separation, spin-off, reorganization, stock rights offering,
liquidation, Disaffiliation, or similar event affecting the Company or any of
its Subsidiaries (each, an “Organic Change”), the Administrator or the Board
shall make such substitutions or adjustments as it deems appropriate and
equitable to (i) the Share limitations set forth in Section 3 of the Plan, (ii)
the number and kind of Shares covered by each outstanding Award, and (iii) the
price per Share subject to each such outstanding Award. In the case of Organic
Changes, such adjustments may include, without limitation, (x) the cancellation
of outstanding Awards in exchange for payments of cash, property or a
combination thereof having an aggregate value equal to the value of such Awards,
as determined by the Administrator or the Board in its sole discretion (it being
understood that in the case of an Organic Change with respect to which
shareholders receive consideration other than publicly traded equity securities
of the ultimate surviving entity, any such determination by the Administrator
that the value of an Option or Stock Appreciation Right shall for this purpose
be deemed to equal the excess, if any, of the value of the consideration being
paid for each Share pursuant to such Organic Change over the exercise price of
such Option or Stock Appreciation Right shall conclusively be deemed valid); (y)
the substitution of other property (including, without limitation, cash or other
securities of the Company and securities of entities other than the Company) for
the Shares subject to outstanding Awards; and (z) in connection with any
Disaffiliation, arranging for the assumption of Awards, or replacement of Awards
with new awards based on other property or other securities (including, without
limitation, other securities of the Company and securities of entities other
than the Company), by the affected Subsidiary, Affiliate, or division or by the
entity that controls such Subsidiary, Affiliate, or division following such
Disaffiliation (as well as any corresponding adjustments to Awards that remain
based upon Company securities). The Committee may adjust in its sole discretion
the Performance Criteria applicable to any Awards to reflect any Share Change
and any Organic Change and any unusual or non-recurring events and other
extraordinary items, impact of charges for restructurings, discontinued
operations, and the cumulative effects of accounting or tax changes, each as
defined by generally accepted accounting principles or as identified in the
Company’s financial statements, notes to the financial statements, management’s
discussion and analysis or the Company’s other SEC filings. Any adjustment under
this Section 15(a) need not be the same for all Participants.
 
(b) Change of Control. In the event of a Change of Control, unless otherwise
determined by the Administrator as of the Grant Date of a particular Award (or
subsequent to the Grant Date), the following acceleration, exercisability and
valuation provisions shall apply:
 
(i) On the date that such Change of Control occurs, any or all Options and Stock
Appreciation Rights awarded under this Plan not previously exercisable and
vested shall, if not assumed, or substituted with a new award, by the successor
to the Company, become fully exercisable and vested, and if the successor to the
Company assumes such Options or Stock Appreciation Rights or substitutes other
awards for such Awards, such Awards (or their substitutes) shall become fully
exercisable and vested if the Participant’s employment is terminated (other than
a Termination for Cause) within two years following the Change of Control.
 
(ii) Except as may be provided in an individual severance or employment
agreement (or severance plan) to which an Awardee is a party, in the event of an
Awardee’s Termination of Employment within two years after a Change of Control
for any reason other than because of the Awardee’s death, Retirement, Disability
or Termination for Cause, each Option and Stock Appreciation Right held by the
Awardee (or a transferee) that is vested following such Termination of
Employment shall remain exercisable until the earlier of the third anniversary
of such Termination of Employment (or any later date until which it would remain
exercisable under such circumstances by its terms) or the expiration of its
original term. In the event of an Awardee’s Termination of Employment more than
two years after a Change of Control, or within two years after a Change of
Control because of the Awardee’s death, Retirement, Disability or Termination
for Cause, the provisions of Section 13(c) of the Plan shall govern (as
applicable).
 
 
 
17

 
 
 
(iii) On the date that such Change of Control occurs, the restrictions and
conditions applicable to any or all Stock Awards, Stock Unit Awards and Other
Stock-Based Awards that are not assumed, or substituted with a new award, by the
successor to the Company shall lapse and such Awards shall be fully vested.
Unless otherwise provided in an Award Agreement at the Grant Date, upon the
occurrence of a Change of Control without assumption or substitution of the
Awards by the successor, any performance based Award shall be deemed fully
earned at the target amount as of the date on which the Change of Control
occurs. All Stock Awards, Stock Unit Awards and Other Stock-Based Awards shall
be settled or paid within thirty (30) days of vesting hereunder. Notwithstanding
the foregoing, if the Change of Control would not qualify as a permissible date
of distribution under Section 409A(a)(2)(A) of the Code, and the regulations
thereunder, the Awardee shall be entitled to receive the Award from the Company
on the date that would have applied absent this provision. If the successor to
the Company does assume (or substitute with a new award) any Stock Awards, Stock
Unit Awards and Other Stock-Based Awards, all such Awards shall become fully
vested if the Participant’s employment is terminated (other than a Termination
for Cause) within two years following the Change of Control, and any performance
based Award shall be deemed fully earned at the target amount effective as of
such Termination of Employment.
 
(iv) The Committee, in its discretion, may determine that, upon the occurrence
of a Change of Control of the Company, each Option and Stock Appreciation Right
outstanding shall terminate within a specified number of days after notice to
the Participant, and/or that each Participant shall receive, with respect to
each Share subject to such Option or Stock Appreciation Right, an amount equal
to the excess of the Fair Market Value of such Share immediately prior to the
occurrence of such Change of Control over the exercise price per Share of such
Option and/or Stock Appreciation Right; such amount to be payable in cash, in
one or more kinds of stock or property (including the stock or property, if any,
payable in the transaction) or in a combination thereof, as the Committee, in
its discretion, shall determine, and if there is no excess value, the Committee
may, in its discretion, cancel such Awards.
 
(v) An Option, Stock Appreciation Right, Stock Award, Stock Unit Award or Other
Stock-Based Award shall be considered assumed or substituted for if following
the Change of Control the Award confers the right to purchase or receive, for
each Share subject to the Option, Stock Appreciation Right, Stock Award, Stock
Unit Award or Other Stock-Based Award immediately prior to the Change of
Control, the consideration (whether stock, cash or other securities or property)
received in the transaction constituting a Change of Control by holders of
Shares for each Share held on the effective date of such transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the transaction constituting a Change of
Control is not solely common stock of the successor company, the Committee may,
with the consent of the successor company, provide that the consideration to be
received upon the exercise or vesting of an Option, Stock Appreciation Right,
Stock Award, Stock Unit Award or Other Stock-Based Award, for each Share subject
thereto, will be solely common stock of the successor company with a fair market
value substantially equal to the per Share consideration received by holders of
Shares in the transaction constituting a Change of Control. The determination of
whether fair market value is substantially equal shall be made by the Committee
in its sole discretion and its determination shall be conclusive and binding.
 
(c) Section 409A. Notwithstanding the foregoing: (i) any adjustments made
pursuant to Section 15(a) of the Plan to Awards that are considered “deferred
compensation” within the meaning of Section 409A of the Code shall be made in
compliance with the requirements of Section 409A of the Code; (ii) any
adjustments made pursuant to Section 15(a) of the Plan to Awards that are not
considered “deferred compensation” subject to Section 409A of the Code shall be
made in such a manner as to ensure that, after such adjustment, the Awards
either continue not to be subject to Section 409A of the Code or comply with the
requirements of Section 409A of the Code; (iii) the Administrator shall not have
the authority to make any adjustments pursuant to Section 15(a) of the Plan to
the extent that the existence of such authority would cause an Award that is not
intended to be subject to Section 409A of the Code to be subject thereto; and
(iv) if any Award is subject to Section 409A of the Code, Section 15(b) of the
Plan shall be applicable only to the extent specifically provided in the Award
Agreement and permitted pursuant to Section 24 of the Plan in order to ensure
that such Award complies with Code Section 409A.
 
 
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16.           Amendment and Termination of the Plan.
 
(a) Amendment and Termination. The Administrator may amend, alter or discontinue
the Plan or any Award Agreement, but any such amendment shall be subject to
approval of the shareholders of the Company in the manner and to the extent
required by Applicable Law. In addition, without limiting the foregoing, unless
approved by the shareholders of the Company and subject to Section 16(b), no
such amendment shall be made that would:
 
(i) increase the maximum aggregate number of Shares which may be subject to
Awards granted under the Plan;
 
(ii) reduce the minimum exercise price for Options or Stock Appreciation Rights
granted under the Plan; or
 
(iii) reduce the exercise price of outstanding Options or Stock Appreciation
Rights, as prohibited by Section 8(c) without shareholder approval.
 
(b) Effect of Amendment or Termination. No amendment, suspension or termination
of the Plan shall impair the rights of any Participant with respect to an
outstanding Award, unless mutually agreed otherwise between the Participant and
the Administrator, which agreement must be in writing and signed by the
Participant and the Company, except that no such agreement shall be required if
the Administrator determines in its sole discretion that such amendment either
(i) is required or advisable in order for the Company, the Plan or the Award to
satisfy any Applicable Law or to meet the requirements of any accounting
standard, or (ii) is not reasonably likely to significantly diminish the
benefits provided under such Award, or that any such diminishment has been
adequately compensated, except that this exception shall not apply following a
Change of Control. Termination of the Plan shall not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.
 
(c) Effect of the Plan on Other Arrangements. Neither the adoption of the Plan
by the Board or a Committee nor the submission of the Plan to the shareholders
of the Company for approval shall be construed as creating any limitations on
the power of the Board or any Committee to adopt such other incentive
arrangements as it or they may deem desirable, including without limitation, the
granting of restricted shares or restricted share units or stock options
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
 
17.           Designation of Beneficiary.
 
(a) An Awardee may file a written designation of a beneficiary who is to receive
the Awardee’s rights pursuant to Awardee’s Awards or the Awardee may include his
or her Awards in an omnibus beneficiary designation for all benefits under the
Plan. To the extent that Awardee has completed a designation of beneficiary
while employed with the Company or an Affiliate, such beneficiary designation
shall remain in effect with respect to any Award hereunder until changed by the
Awardee to the extent enforceable under Applicable Law.
 
(b) Such designation of beneficiary may be changed by the Awardee at any time by
written notice. In the event of the death of an Awardee and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Awardee’s death, the Company shall allow the legal representative of the
Awardee’s estate to exercise the Award.
 
 
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18.           No Right to Awards or to Employment.
 
No person shall have any claim or right to be granted an Award and the grant of
any Award shall not be construed as giving an Awardee the right to continue in
the employ of the Company or its Affiliates. Further, the Company and its
Affiliates expressly reserve the right, at any time, to dismiss any Employee or
Awardee at any time without liability or any claim under the Plan, except as
provided herein or in any Award Agreement entered into hereunder.
 
19.           Legal Compliance.
 
Shares shall not be issued pursuant to an Option, Stock Appreciation Right,
Stock Award, Stock Unit Award or Other Stock-Based Award unless such Option,
Stock Appreciation Right, Stock Award or Other Stock-Based Award and the
issuance and delivery of such Shares shall comply with Applicable Law and shall
be further subject to the approval of counsel for the Company with respect to
such compliance. Unless the Awards and Shares covered by this Plan have been
registered under the Securities Act or the Company has determined that such
registration is unnecessary, each person receiving an Award and/or Shares
pursuant to any Award may be required by the Company to give a representation in
writing that such person is acquiring such Shares for his or her own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
 
20.           Inability to Obtain Authority.
 
To the extent the Company is unable to or the Administrator deems it unfeasible
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be advisable or necessary to the
lawful issuance and sale of any Shares hereunder, the Company shall be relieved
of any liability with respect to the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
 
21.           Reservation of Shares.
 
The Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
 
22.           Notice.
 
Any written notice to the Company required by any provisions of this Plan shall
be addressed to the Secretary of the Company and shall be effective when
received. Any notice to a Participant hereunder shall be addressed to the last
address of record with the Company and shall be effective when sent via first
class mail, courier service, or electronic mail to such last address of record.
 
23.           Governing Law; Interpretation of Plan and Awards.
 
(a) This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the substantive laws, but not the choice of law rules, of
the state of Delaware, except as to matters governed by U.S. federal law.
 
(b) In the event that any provision of the Plan or any Award granted under the
Plan is declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to the
extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of the terms of the Plan and/or Award shall not be
affected except to the extent necessary to reform or delete such illegal,
invalid or unenforceable provision.
 
 
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(c) The headings preceding the text of each section hereof are inserted solely
for convenience of reference, and shall not constitute a part of the Plan, nor
shall they affect its meaning, construction or effect.
 
(d) The terms of the Plan and any Award shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted heirs,
beneficiaries, successors and assigns.
 
24.           Section 409A.
 
It is the intention of the Company that no Award shall be “deferred
compensation” subject to Section 409A of the Code, unless and to the extent that
the Administrator specifically determines otherwise, and the Plan and the terms
and conditions of all Awards shall be interpreted accordingly. The terms and
conditions governing any Awards that the Administrator determines will be
subject to Section 409A of the Code, including any rules for elective or
mandatory deferral of the delivery of cash or Shares pursuant thereto and any
rules regarding treatment of such Awards in the event of a Change of Control,
shall be set forth in the applicable Award Agreement, deferral election forms
and procedures, and rules established by the Administrator, and shall comply in
all respects with Section 409A of the Code. The following rules will apply to
Awards intended to be subject to Section 409A of the Code (“409A Awards”):
 
(a) If a Participant is permitted to elect to defer an Award or any payment
under an Award, such election will be permitted only at times in compliance with
Code Section 409A.
 
(b) The Company shall have no authority to accelerate distributions relating to
409A Awards in excess of the authority permitted under Section 409A.
 
(c) Any distribution of a 409A Award following a Termination of Employment that
would be subject to Code Section 409A(a)(2)(A)(i) as a distribution following a
separation from service of a “specified employee” as defined under Code Section
409A(a)(2)(B)(i), shall occur no earlier than the expiration of the six-month
period following such Termination of Employment.
 
(d) In the case of any distribution of a 409A Award, if the timing of such
distribution is not otherwise specified in the Plan or an Award Agreement or
other governing document, the distribution shall be made not later than the end
of the calendar year during which the settlement of the 409A Award is specified
to occur.
 
(e) In the case of an Award providing for distribution or settlement upon
vesting or the lapse of a risk of forfeiture, if the time of such distribution
or settlement is not otherwise specified in the Plan or an Award Agreement or
other governing document, the distribution or settlement shall be made not later
than March 15 of the year following the year in which the Award vested or the
risk of forfeiture lapsed.
 
(f) Notwithstanding anything herein to the contrary, neither the Company nor the
Administrator makes any representation or guarantee that the Plan or its
administration shall comply with Code Section 409A, and in no event shall the
Company or the Administrator be liable for the payment of, or any gross up
payment in connection with, any taxes or penalties owed by the Participant
pursuant to Code Section 409A.
 
 
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25.           Limitation on Liability.
 
The Company and any Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant, an Employee, an Awardee or any
other persons as to:
 
(a) The Non-Issuance of Shares. The non-issuance or sale of Shares as to which
the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
 
(b) Tax or Exchange Control Consequences. Any tax consequence expected, but not
realized, or any exchange control obligation owed, by any Participant, Employee,
Awardee or other person due to the receipt, exercise or settlement of any Option
or other Award granted hereunder.
 
26.           Unfunded Plan.
 
Insofar as it provides for Awards, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Awardees who are granted
Stock Awards, Stock Unit Awards or Other Stock-Based Awards under this Plan, any
such accounts will be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets which may at any time be
represented by Awards, nor shall this Plan be construed as providing for such
segregation. Neither the Company nor the Administrator shall be deemed to be a
trustee of Shares or cash to be awarded under the Plan. Any liability of the
Company to any Participant with respect to an Award shall be based solely upon
any contractual obligations which may be created by the Plan; no such obligation
of the Company shall be deemed to be secured by any pledge or other encumbrance
on any property of the Company. Neither the Company nor the Administrator shall
be required to give any security or bond for the performance of any obligation
which may be created by this Plan.
 
27.           Foreign Employees and Consultants.
 
Awards may be granted hereunder to Employees and Consultants who are foreign
nationals, who are located outside the United States or who are not compensated
from a payroll maintained in the United States, or who are otherwise subject to
(or could cause the Company to be subject to) legal or regulatory provisions of
countries or jurisdictions outside the United States, on such terms and
conditions different from those specified in the Plan as may, in the judgment of
the Administrator, be necessary or desirable to foster and promote achievement
of the purposes of the Plan, and, in furtherance of such purposes, the
Administrator may make such modifications, amendments, procedures, or subplans
as may be necessary or advisable to comply with such legal or regulatory
provisions.
 
28.           Tax Withholding.
 
Each Participant shall pay to the Company, or make arrangements satisfactory to
the Company regarding the payment of, any federal, state, local or foreign taxes
of any kind required by law to be withheld with respect to any Award under the
Plan no later than the date as of which any amount under such Award first
becomes includible in the gross income of the Participant for any tax purposes
with respect to which the Company has a tax withholding obligation. Unless
otherwise determined by the Company, withholding obligations may be settled with
Shares, including Shares that are part of the Award that gives rise to the
withholding requirement; provided, however, that not more than the maximum
statutory withholding requirement may be settled with Shares that are part of
the Award. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements, and the Company and its Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any vested
Shares or any other payment due to the Participant at that time or at any future
time. The Administrator may establish such procedures as it deems appropriate,
including making irrevocable elections, for the settlement of withholding
obligations with Shares.
 
29. Cancellation of Award; Forfeiture of Gain.
 
Notwithstanding anything to the contrary contained herein, an Award Agreement
may provide that the Award will be cancelled and the Participant will forfeit
the Shares or cash received or payable on the vesting or exercise of the Award,
and that the amount of any proceeds of the sale or gain realized on the vesting
or exercise of the Award must be repaid to the Company, under such conditions as
may be required by Applicable Law or established by the Committee in its sole
discretion.
 
 
 
 
 
 
 
Approved by LightPath shareholders on November 15, 2018.
 
 
 
 
 
 
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