Exhibit 10.1

 

DRAFTKINGS INC. 2020 INCENTIVE AWARD PLAN

 

1.       Purpose. The purpose of the DraftKings Inc. 2020 Incentive Award Plan
(the “Plan”) is to provide a means through which the Company and its Affiliates
may attract and retain key personnel and to provide a means whereby directors,
officers, employees, consultants and advisors (and prospective directors,
officers, employees, consultants and advisors) of the Company and its Affiliates
can acquire and maintain an equity interest in the Company, or be paid incentive
compensation, which may (but need not) be measured by reference to the value of
Common Shares, thereby strengthening their commitment to the welfare of the
Company and its Affiliates and aligning their interests with those of the
Company’s shareholders.

 

2.       Definitions. The following definitions shall be applicable throughout
the Plan:

 

(a)       “Affiliate” means (i) any person or entity that directly or indirectly
controls, is controlled by or is under common control with the Company and/or
(ii) to the extent provided by the Committee, any person or entity in which the
Company has a significant interest. The term “control” (including, with
correlative meaning, the terms “controlled by” and “under common control with”),
as applied to any person or entity, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting or
other securities, by contract or otherwise.

 

(b)       “Award” means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Stock Bonus Award, and Performance Compensation Award
granted under the Plan.

 

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

 

(d)       “Business Combination” has the meaning given such term in the
definition of “Change in Control.”

 

(e)       “Cause” means, in the case of a particular Award, unless the
applicable Award agreement states otherwise, (i) the Company or an Affiliate
having “cause” to terminate a Participant’s employment or service, as defined in
any employment or consulting or similar agreement between the Participant and
the Company or an Affiliate in effect at the time of such termination or (ii) in
the absence of any such employment or consulting or similar agreement (or the
absence of any definition of “Cause” contained therein), (A) gross misconduct by
the Participant which results in loss, damage or injury to the Company or any of
its Affiliates, its goodwill, business or reputation; (B) the commission or
attempted commission of an act of embezzlement, fraud or breach of fiduciary
duty which results in loss, damage or injury to the Company or any of its
Affiliates, its goodwill, business or reputation; (C) the unauthorized
disclosure or misappropriation of any trade secret or confidential information
of the Company, any of its Affiliate or any third party who has a business
relationship with the Company; (D) the Participant’s conviction of or plea of
nolo contendere to, a felony under any state or federal law which materially
interferes with such Participant’s ability to perform his or her services for
the Company or any of its Affiliates or which results in loss, damage or injury
to the Company or any of its Affiliates, its goodwill, business or reputation;
(E) the violation (or potential violation) by the Participant, in any material
respect, of a non-competition, non-solicitation, non-disclosure or assignment of
inventions covenant between the Participant and the Company or any of its
Affiliates; (F) the Participant’s failure to perform the Participant’s assigned
duties and responsibilities to the reasonable satisfaction of the Company which
failure continues, in the reasonable judgment of the Company, after written
notice given to the Participant by the Company; or (G) the use of controlled
substances, illicit drugs, alcohol or other substances or behavior which
interferes with the Participant’s ability to perform his or her services for the
Company or any of its Affiliates or which otherwise results in loss, damage or
injury to the Company, its goodwill, business or reputation. Any determination
of whether Cause exists shall be made by the Committee in its sole discretion.

 

(f)       “Change in Control” shall, in the case of a particular Award, unless
the applicable Award agreement states otherwise or contains a different
definition of “Change in Control,” be deemed to occur upon:

 

(i)       Any sale, lease, exchange or other transfer (in one or a series of
related transactions) of all or substantially all of the assets of the Company;

 

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(ii)       Any “Person” as such term is used in Section 13(d) and Section 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) becomes,
directly or indirectly, the “beneficial owner” as defined in Rule 13d-3 under
the Exchange Act of securities of the Company that represent more than 50% of
the combined voting power of the Company’s then outstanding voting securities
(the “Outstanding Company Voting Securities”); provided, however, that for
purposes of this Section 2(f)(ii), the following acquisitions shall not
constitute a Change in Control: (I) any acquisition directly from the Company,
(II) any acquisition by the Company, (III) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliate, (IV) any acquisition by any corporation pursuant to a transaction
that complies with Sections 2(f)(iv)(A) and 2(f)(iv)(B), (V) any acquisition
involving beneficial ownership of less than 50% of the then-outstanding Common
Shares (the “Outstanding Company Common Shares”) or the Outstanding Company
Voting Securities that is determined by the Board, based on review of public
disclosure by the acquiring Person with respect to its passive investment
intent, not to have a purpose or effect of changing or influencing the control
of the Company; provided, however, that for purposes of this clause (V), any
such acquisition in connection with (x) 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 or (y) any “Business Combination”
(as defined below) shall be presumed to be for the purpose or with the effect of
changing or influencing the control of the Company;

 

(iii)       During any period of not more than two (2) consecutive years,
individuals who constitute the Board as of the beginning of the period (the
“Incumbent Directors”) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to the
beginning of such period, whose election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without written
objection to such nomination) will be an Incumbent Director; provided, however,
that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation of
proxies by or on behalf of any person other than the Board will be deemed to be
an Incumbent Director;

 

(iv)       Consummation of a merger, amalgamation or consolidation (a “Business
Combination”) of the Company with any other corporation, unless, following such
Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company Common
Shares and the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the then-outstanding shares of common stock (or, for a non-corporate entity,
equivalent securities) and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors (or,
for a non-corporate entity, equivalent governing body), as the case may be, of
the entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns the Company or
all or substantially all of the Company’s assets either directly or through one
or more subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Shares and the Outstanding Company Voting Securities, as the case may be, and
(B) at least a majority of the members of the board of directors (or, for a
non-corporate entity, equivalent governing body) of the entity resulting from
such Business Combination were Incumbent Directors at the time of the execution
of the initial agreement or of the action of the Board providing for such
Business Combination;

 

(v)       Shareholder approval of a plan of complete liquidation of the Company.

 

(g)       “Code” means the Internal Revenue Code of 1986, as amended, and any
successor thereto. Reference in the Plan to any section of the Code shall be
deemed to include any regulations or other interpretative guidance under such
section, and any amendments or successor provisions to such section, regulations
or guidance.

 

(h)       “Committee” means a committee of at least two people as the Board may
appoint to administer the Plan or, if no such committee has been appointed by
the Board, the Board.

 

(i)       “Common Shares” means shares of the Company’s Class A common stock,
par value $0.0001 per share (and any stock or other securities into which such
ordinary shares may be converted or into which they may be exchanged).

 

(j)       “Company” means DraftKings Inc., a Nevada corporation.

 

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(k)       “Date of Grant” means the date on which the granting of an Award is
authorized, or such other date as may be specified in such authorization.

 

(l)       “Effective Date” means the date on which the Plan is approved by the
shareholders of the Company.

 

(m)       “Eligible Director” means a person who is a “non-employee director”
within the meaning of Rule 16b-3 under the Exchange Act.

 

(n)       “Eligible Person” with respect to an Award denominated in Common
Shares, means any (i) individual employed by the Company or an Affiliate;
provided, however, that no such employee covered by a collective bargaining
agreement shall be an Eligible Person unless and to the extent that such
eligibility is set forth in such collective bargaining agreement which includes
rules regarding equity entitlement or in an agreement or instrument relating
thereto; (ii) director of the Company or an Affiliate; (iii) consultant or
advisor to the Company or an Affiliate; provided that if the Securities Act
applies such persons must be eligible to be offered securities registrable on
Form S-8 under the Securities Act; or (iv) prospective employees, directors,
officers, consultants or advisors who have accepted offers of employment or
consultancy from the Company or its Affiliates (and would satisfy the provisions
of clauses (i) through (iii) above once he or she begins employment with or
begins providing services to the Company or its Affiliates); and with respect to
shares of Class B Common Stock issued under the Plan, “Eligible Person” means
the employees, directors, consultants or advisors who are eligible holders of
Class B Common Stock as determined under the Company’s Articles of Incorporation
as in effect from time to time.

 

(o)       “Exchange Act” has the meaning given such term in the definition of
“Change in Control,” and any reference in the Plan to any section of (or rule
promulgated under) the Exchange Act shall be deemed to include any rules,
regulations or other interpretative guidance under such section or rule, and any
amendments or successor provisions to such section, rules, regulations or
guidance.

 

(p)       “Exercise Price” has the meaning given such term in Section 7(b) of
the Plan.

 

(q)       “Fair Market Value” means, as of any date, the value of Common Shares
determined as follows:

 

(i)       If the Common Shares are listed on any established stock exchange or a
national market system will be the closing sales price for such shares (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Committee deems reliable;

 

(ii)       If the Common Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Common
Share will be the mean between the high bid and low asked prices for the Common
Shares on the day of determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

 

(iii)       In the absence of an established market for the Common Shares, the
Fair Market Value will be determined in good faith by the Committee.

 

(r)       “Good Reason” means, if applicable to any Participant in the case of a
particular Award, as defined in the Participant’s employment agreement or the
applicable Award agreement.

 

(s)       “Immediate Family Members” shall have the meaning set forth in Section
15(b).

 

(t)       “Incentive Stock Option” means an Option that is designated by the
Committee as an incentive stock option as described in Section 422 of the Code
and otherwise meets the requirements set forth in the Plan.

 

(u)       “Indemnifiable Person” shall have the meaning set forth in Section
4(e) of the Plan.

 

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(v)       “Mature Shares” means Common Shares owned by a Participant that are
not subject to any pledge or security interest and that have been either
previously acquired by the Participant on the open market or meet such other
requirements, if any, as the Committee may determine are necessary in order to
avoid an accounting earnings charge on account of the use of such shares to pay
the Exercise Price or satisfy a tax or deduction obligation of the Participant.

 

(w)       “Nonqualified Stock Option” means an Option that is not designated by
the Committee as an Incentive Stock Option.

 

(x)       “Option” means an Award granted under Section 7 of the Plan.

 

(y)       “Option Period” has the meaning given such term in Section 7(c) of the
Plan.

 

(z)       “Outstanding Company Common Shares” has the meaning given such term in
the definition of “Change in Control.”

 

(aa) “Outstanding Company Voting Securities” has the meaning given such term in
the definition of “Change in Control.”

 

(bb) “Participant” means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award pursuant to Section
6 of the Plan.

 

(cc) “Performance Compensation Award” shall mean any Award designated by the
Committee as a Performance Compensation Award pursuant to Section 11 of the
Plan.

 

(dd) “Performance Criteria” shall mean the criterion or criteria that the
Committee shall select for purposes of establishing the Performance Goal(s) for
a Performance Period with respect to any Performance Compensation Award under
the Plan.

 

(ee) “Performance Formula” shall mean, for a Performance Period, the one or more
formulae applied against the relevant Performance Goal to determine, with regard
to the Performance Compensation Award of a particular Participant, whether all,
some portion but less than all, or none of the Performance Compensation Award
has been earned for the Performance Period.

 

(ff) “Performance Goals” shall mean, for a Performance Period, the one or more
goals established by the Committee for the Performance Period based upon the
Performance Criteria.

 

(gg) “Performance Period” shall mean the one or more periods of time, as the
Committee may select, over which the attainment of one or more Performance Goals
will be measured for the purpose of determining a Participant’s right to, and
the payment of, a Performance Compensation Award.

 

(hh) “Permitted Transferee” shall have the meaning set forth in Section 15(b) of
the Plan.

 

(ii)       “Person” has the meaning given such term in the definition of “Change
in Control.”

 

(jj) “Plan” means this DraftKings Inc. 2020 Incentive Award Plan, as amended
from time to time.

 

(kk) “Qualifying Termination” means the occurrence of either a termination of a
Participant’s employment by the Company without Cause or for Good Reason, in
either case, occurring on or within the 12-month period (or such other period
specified in the applicable Award Agreement) following the consummation of a
Change in Control.

 

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(ll) “Restricted Period” means the period of time determined by the Committee
during which an Award is subject to restrictions or, as applicable, the period
of time within which performance is measured for purposes of determining whether
an Award has been earned.

 

(mm) “Restricted Stock Unit” means an unfunded and unsecured promise to deliver
Common Shares, cash, other securities or other property, subject to certain
performance or time-based restrictions (including, without limitation, a
requirement that the Participant remain continuously employed or provide
continuous services for a specified period of time), granted under Section 9 of
the Plan.

 

(nn) “Restricted Stock” means Common Shares, subject to certain specified
performance or time-based restrictions (including, without limitation, a
requirement that the Participant remain continuously employed or provide
continuous services for a specified period of time), granted under Section 9 of
the Plan.

 

(oo)       “Retirement” means, in the case of a particular Award, the definition
set forth in the applicable Award Agreement.

 

(pp) “SAR Period” has the meaning given such term in Section 8(b) of the Plan.

 

(qq) “Securities Act” means the Securities Act of 1933, as amended, and any
successor thereto. Reference in the Plan to any section of the Securities Act
shall be deemed to include any rules, regulations or other interpretative
guidance under such section, and any amendments or successor provisions to such
section, rules, regulations or guidance.

 

(rr) “Stock Appreciation Right” or “SAR” means an Award granted under Section 8
of the Plan.

 

(ss) “Stock Bonus Award” means an Award granted under Section 10 of the Plan.

 

(tt) “Strike Price” means, except as otherwise provided by the Committee in the
case of Substitute Awards, (i) in the case of a SAR granted in tandem with an
Option, the Exercise Price of the related Option, or (ii) in the case of a SAR
granted independent of an Option, the Fair Market Value on the Date of Grant.

 

(uu) “Subsidiary” means, with respect to any specified Person:

 

(i)       any corporation, association or other business entity of which more
than 50% of the total voting power of shares (without regard to the occurrence
of any contingency and after giving effect to any voting agreement or
shareholders’ agreement that effectively transfers voting power) is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and

 

(ii)       any partnership (or any comparable foreign entity (a) the sole
general partner (or functional equivalent thereof) or the managing general
partner of which is such Person or Subsidiary of such Person or (b) the only
general partners (or functional equivalents thereof) of which are that Person or
one or more Subsidiaries of that Person (or any combination thereof).

 

(vv) “Substitute Award” has the meaning given such term in Section 5(e).

 

3.       Effective Date; Duration. The Plan shall be effective as of the
Effective Date. The expiration date of the Plan, on and after which date no
Awards may be granted hereunder, shall be the tenth anniversary of the Effective
Date; provided, however, that such expiration shall not affect Awards then
outstanding, and the terms and conditions of the Plan shall continue to apply to
such Awards.

 

4.       Administration. (a) The Committee shall administer the Plan. To the
extent required to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act (if the Board is not acting as the Committee under the Plan),
it is intended that each member of the Committee shall, at the time he takes any
action with respect to an Award under the Plan, be an Eligible Director.
However, the fact that a Committee member shall fail to qualify as an Eligible
Director shall not invalidate any Award granted by the Committee that is
otherwise validly granted under the Plan.

 

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(b)       Subject to the provisions of the Plan and applicable law, the
Committee shall have the sole and plenary authority, in addition to other
express powers and authorizations conferred on the Committee by the Plan, to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to a Participant; (iii) determine the number of Common Shares or shares
of Class B Common Stock to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with, Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in cash,
Common Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances the delivery of cash, Common
Shares, other securities, other Awards or other property and other amounts
payable with respect to an Award shall be deferred either automatically or at
the election of the Participant or of the Committee; (vii) interpret,
administer, reconcile any inconsistency in, correct any defect in and/or supply
any omission in the Plan and any instrument or agreement relating to, or Award
granted under, the Plan; (viii) establish, amend, suspend, or waive any rules
and regulations and appoint such agents as the Committee shall deem appropriate
for the proper administration of the Plan; (ix) accelerate the vesting or
exercisability of, payment for or lapse of restrictions on, Awards; and (x) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

 

(c)       The Committee may delegate to one or more officers of the Company or
any Affiliate the authority to act on behalf of the Committee with respect to
any matter, right, obligation, or election that is the responsibility of or that
is allocated to the Committee herein, and that may be so delegated as a matter
of law, except for grants of Awards to persons subject to Section 16 of the
Exchange Act.

 

(d)       Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award or any documents evidencing Awards granted pursuant to the
Plan shall be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all persons or entities,
including, without limitation, the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, and any shareholder of the Company.

 

(e)       No member of the Board, the Committee, delegate of the Committee or
any employee or agent of the Company (each such person, an “Indemnifiable
Person”) shall be liable for any action taken or omitted to be taken or any
determination made in good faith with respect to the Plan or any Award
hereunder. Each Indemnifiable Person shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense (including
attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable
Person in connection with or resulting from any action, suit or proceeding to
which such Indemnifiable Person may be a party or in which such Indemnifiable
Person may be involved by reason of any action taken or omitted to be taken
under the Plan or any Award agreement and against and from any and all amounts
paid by such Indemnifiable Person with the Company’s approval, in settlement
thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in
any such action, suit or proceeding against such Indemnifiable Person, provided
that the Company shall have the right, at its own expense, to assume and defend
any such action, suit or proceeding and once the Company gives notice of its
intent to assume the defense, the Company shall have sole control over such
defense with counsel of the Company’s choice. The foregoing right of
indemnification shall not be available to an Indemnifiable Person to the extent
that a final judgment or other final adjudication (in either case not subject to
further appeal) binding upon such Indemnifiable Person determines that the acts
or omissions of such Indemnifiable Person giving rise to the indemnification
claim resulted from such Indemnifiable Person’s bad faith, fraud or willful
criminal act or omission or that such right of indemnification is otherwise
prohibited by law or by the Company’s Articles of Incorporation or Bylaws. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such Indemnifiable Persons may be entitled under the
Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any other power that the Company may have to indemnify such Indemnifiable
Persons or hold them harmless.

 

(f)       Notwithstanding anything to the contrary contained in the Plan, the
Board may, in its sole discretion, at any time and from time to time, grant
Awards and administer the Plan with respect to such Awards. In any such case,
the Board shall have all the authority granted to the Committee under the Plan.

 

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5.       Grant of Awards; Shares Subject to the Plan; Limitations. (b) The
Committee may, from time to time, grant Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Stock Bonus Awards and/or Performance
Compensation Awards to one or more Eligible Persons.

 

(b)       Subject to Section 12 of the Plan, Awards granted under the Plan shall
be subject to the following limitations: (i) the Committee is authorized to
deliver under the Plan an aggregate of 52,870,000 Common Shares; provided, that
total number of Common Shares that will be reserved, and that may be issued,
under the Plan will automatically increase on the first trading day of each
calendar year, beginning with calendar year 2021, by a number of Common Shares
equal to five percent (5%) of the total outstanding Common Shares on the last
day of the prior calendar year (subject to a maximum annual increase of
33,000,000 Common Shares), and (ii) the maximum number of Common Shares that may
be granted under the Plan during any single fiscal year to any Participant who
is a non-employee director, when taken together with any cash fees paid to such
non-employee director during such year in respect of his or her service as a
non-employee director (including service as a member or chair of any committee
of the Board), shall not exceed $750,000 in total value (calculating the value
of any such Awards based on the grant date fair value of such Awards for
financial reporting purposes); provided that the non-employee directors who are
considered independent (under the rules of The NASDAQ Stock Market or other
securities exchange on which the Common Shares are traded) may make exceptions
to this limit for a non-executive chair of the Board, if any, in which case the
non-employee Director receiving such additional compensation may not participate
in the decision to award such compensation. Notwithstanding the automatic annual
increase set forth in (i) above, the Board may act prior to January 1st of a
given year to provide that there will be no such increase in the share reserve
for such year or that the increase in the share reserve for such year will be a
lesser number of Common Shares than would otherwise occur pursuant to the
stipulated percentage.

 

(c)       In the event that (i) any Option or other Award granted hereunder is
exercised through the tendering of Common Shares (either actually or by
attestation) or by the withholding of Common Shares by the Company, or (ii) tax
or deduction liabilities arising from such Option or other Award are satisfied
by the tendering of Common Shares (either actually or by attestation) or by the
withholding of Common Shares by the Company, then in each such case the Common
Shares so tendered or withheld shall be added to the Common Shares available for
grant under the Plan on a one-for-one basis. Shares underlying Awards under this
Plan that are forfeited, cancelled, expire unexercised, or are settled in cash
are available again for Awards under the Plan.

 

(d)       Common Shares delivered by the Company in settlement of Awards may be
authorized and unissued shares, shares held in the treasury of the Company,
shares purchased on the open market or by private purchase, or a combination of
the foregoing.

 

(e)       Awards may, in the sole discretion of the Committee, be granted under
the Plan in assumption of, or in substitution for, outstanding awards previously
granted by an entity acquired by the Company or with which the Company combines
(“Substitute Awards”). The number of Common Shares underlying any Substitute
Awards shall not be counted against the aggregate number of Common Shares
available for Awards under the Plan.

 

(f)       In addition to the Common Shares that may be delivered pursuant to
this Section 5, the Committee is authorized to deliver under the Plan an
aggregate of 52,870,000 shares of the Company’s Class B common stock, par value
$0.0001 per share (and any stock or other securities into which such shares of
Class B common stock may be converted or into which they may be exchanged)
(“Class B Common Stock”) to Eligible Persons; provided, that the total number of
shares of Class B Common Stock that will be reserved, and that may be issued,
under the Plan will automatically increase on the first trading day of each
calendar year, beginning with calendar year 2021, by a number of shares of Class
B Common Stock equal to five percent (5%) of the total outstanding shares of
Class B Common Stock on the last day of the prior calendar year (subject to a
maximum annual increase of 33,000,000 shares of Class B Common Stock).
Notwithstanding the automatic annual increase set forth above, the Board may act
prior to January 1st of a given year to provide that there will be no such
increase in the share reserve for such year or that the increase in the share
reserve for such year will be a lesser number of shares of Class B Common Stock
than would otherwise occur pursuant to the stipulated percentage. Shares of
Class B Common Stock delivered by the Company under the Plan may be authorized
and unissued shares, shares held in the treasury of the Company, shares
purchased by private purchase, or a combination of the foregoing.

 

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6.       Eligibility. Participation shall be limited to Eligible Persons who
have entered into an Award agreement or who have received written notification
from the Committee, or from a person designated by the Committee, that they have
been selected to participate in the Plan.

 

7.       Options.

 

(a)       Generally. Each Option granted under the Plan shall be evidenced by an
Award agreement (whether in paper or electronic medium (including email or the
posting on a web site maintained by the Company or a third party under contract
with the Company)). Each Option so granted shall be subject to the conditions
set forth in this Section 7, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award agreement. All Options
granted under the Plan shall be Nonqualified Stock Options unless the applicable
Award agreement expressly states that the Option is intended to be an Incentive
Stock Option. The maximum aggregate number of Common Shares that may be issued
through the exercise of Incentive Stock Options granted under the Plan is
52,870,000 Common Shares. Incentive Stock Options shall be granted only to
Eligible Persons who are employees of the Company and its Affiliates, and no
Incentive Stock Option shall be granted to any Eligible Person who is ineligible
to receive an Incentive Stock Option under the Code. No Option shall be treated
as an Incentive Stock Option unless the Plan has been approved by the
shareholders of the Company in a manner intended to comply with the stockholder
approval requirements of Section 422(b)(1) of the Code; provided that any Option
intended to be an Incentive Stock Option shall not fail to be effective solely
on account of a failure to obtain such approval, but rather such Option shall be
treated as a Nonqualified Stock Option unless and until such approval is
obtained. In the case of an Incentive Stock Option, the terms and conditions of
such grant shall be subject to and comply with such rules as may be prescribed
by Section 422 of the Code. If for any reason an Option intended to be an
Incentive Stock Option (or any portion thereof) shall not qualify as an
Incentive Stock Option, then, to the extent of such nonqualification, such
Option or portion thereof shall be regarded as a Nonqualified Stock Option
appropriately granted under the Plan.

 

(b)       Exercise Price. Except with respect to Substitute Awards, the exercise
price (“Exercise Price”) per Common Share for each Option shall not be less than
100% of the Fair Market Value of such share determined as of the Date of Grant;
provided, however, that in the case of an Incentive Stock Option granted to an
employee who, at the time of the grant of such Option, owns shares representing
more than 10% of the total combined voting power of all classes of shares of the
Company or any related corporation (as determined in accordance with Treasury
Regulation Section 1.422-2(f)), the Exercise Price per share shall not be less
than 110% of the Fair Market Value per share on the Date of Grant and provided
further, that, notwithstanding any provision herein to the contrary, the
Exercise Price shall not be less than the par value per Common Share.

 

(c)       Vesting and Expiration. Options shall vest and become exercisable in
such manner and on such date or dates determined by the Committee and shall
expire after such period, not to exceed ten years, as may be determined by the
Committee (the “Option Period”); provided, however, that the Option Period shall
not exceed five years from the Date of Grant in the case of an Incentive Stock
Option granted to a Participant who on the Date of Grant owns shares
representing more than 10% of the total combined voting power of all classes of
shares of the Company or any related corporation (as determined in accordance
with Treasury Regulation Section 1.422-2(f)); provided, further, that
notwithstanding any vesting dates set by the Committee, the Committee may, in
its sole discretion, accelerate the exercisability of any Option, which
acceleration shall not affect the terms and conditions of such Option other than
with respect to exercisability. Unless otherwise provided by the Committee in an
Award agreement: (i) the unvested portion of an Option shall expire upon
termination of employment or service of the Participant granted the Option, and
the vested portion of such Option shall remain exercisable for (A) two years
following termination of employment or service by reason of such Participant’s
death or disability (as determined by the Committee), but not later than the
expiration of the Option Period or (B) 90 days following termination of
employment or service for any reason other than such Participant’s death or
disability, and other than such Participant’s termination of employment or
service for Cause, but not later than the expiration of the Option Period; and
(ii) both the unvested and the vested portion of an Option shall expire upon the
termination of the Participant’s employment or service by the Company for Cause.
If the Option would expire at a time when the exercise of the Option would
violate applicable securities laws, the expiration date applicable to the Option
will be automatically extended to a date that is thirty (30) calendar days
following the date such exercise would no longer violate applicable securities
laws (so long as such extension shall not violate Section 409A of the Code);
provided, that in no event shall such expiration date be extended beyond the
expiration of the Option Period.

 

 8 

 

 

(d)       Method of Exercise and Form of Payment. No Common Shares shall be
delivered pursuant to any exercise of an Option until payment in full of the
Exercise Price therefor is received by the Company and the Participant has paid
to the Company an amount equal to any taxes required to be withheld or paid.
Options that have become exercisable may be exercised by delivery of written or
electronic notice of exercise to the Company in accordance with the terms of the
Option accompanied by payment of the Exercise Price. The Exercise Price shall be
payable (i) in cash, check, cash equivalent and/or Common Shares valued at the
fair market value at the time the Option is exercised (including, pursuant to
procedures approved by the Committee, by means of attestation of ownership of a
sufficient number of Common Shares in lieu of actual delivery of such shares to
the Company); provided that such Common Shares are not subject to any pledge or
other security interest and are Mature Shares and; (ii) by such other method as
the Committee may permit in accordance with applicable law, in its sole
discretion, including without limitation: (A) in other property having a fair
market value on the date of exercise equal to the Exercise Price or (B) if there
is a public market for the Common Shares at such time, by means of a
broker-assisted “cashless exercise” pursuant to which the Company is delivered a
copy of irrevocable instructions to a stockbroker to sell the Common Shares
otherwise deliverable upon the exercise of the Option and to deliver promptly to
the Company an amount equal to the Exercise Price or (C) by a “net exercise”
method whereby the Company withholds from the delivery of the Common Shares for
which the Option was exercised that number of Common Shares having a fair market
value equal to the aggregate Exercise Price for the Common Shares for which the
Option was exercised. No fractional Common Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu of
any fractional Common Shares, or whether such fractional Common Shares or any
rights thereto shall be canceled, terminated or otherwise eliminated.

 

(e)       Notification upon Disqualifying Disposition of an Incentive Stock
Option. Each Participant awarded an Incentive Stock Option under the Plan shall
notify the Company in writing immediately after the date he makes a
disqualifying disposition of any Common Shares acquired pursuant to the exercise
of such Incentive Stock Option. A disqualifying disposition is any disposition
(including, without limitation, any sale) of such Common Shares before the later
of (A) two years after the Date of Grant of the Incentive Stock Option or (B)
one year after the date of exercise of the Incentive Stock Option. The Company
may, if determined by the Committee and in accordance with procedures
established by the Committee, retain possession of any Common Shares acquired
pursuant to the exercise of an Incentive Stock Option as agent for the
applicable Participant until the end of the period described in the preceding
sentence.

 

(f)       Compliance With Laws, etc. Notwithstanding the foregoing, in no event
shall a Participant be permitted to exercise an Option in a manner that the
Committee determines would violate the Sarbanes-Oxley Act of 2002, if
applicable, or any other applicable law or the applicable rules and regulations
of the Securities and Exchange Commission or the applicable rules and
regulations of any securities exchange or inter-dealer quotation system on which
the securities of the Company are listed or traded.

 

8.       Stock Appreciation Rights.

 

(a)       Generally. Each SAR granted under the Plan shall be evidenced by an
Award agreement (whether in paper or electronic medium (including email or the
posting on a web site maintained by the Company or a third party under contract
with the Company)). Each SAR so granted shall be subject to the conditions set
forth in this Section 8, and to such other conditions not inconsistent with the
Plan as may be reflected in the applicable Award agreement. Any Option granted
under the Plan may include tandem SARs. The Committee also may award SARs to
Eligible Persons independent of any Option.

 

(b)       Exercise Price. The Exercise Price per Common Share for each SAR shall
not be less than 100% of the Fair Market Value of such share determined as of
the Date of Grant.

 

(c)       Vesting and Expiration. A SAR granted in connection with an Option
shall become exercisable and shall expire according to the same vesting schedule
and expiration provisions as the corresponding Option. A SAR granted independent
of an Option shall vest and become exercisable and shall expire in such manner
and on such date or dates determined by the Committee and shall expire after
such period, not to exceed ten years, as may be determined by the Committee (the
“SAR Period”); provided, however, that notwithstanding any vesting dates set by
the Committee, the Committee may, in its sole discretion, accelerate the
exercisability of any SAR, which acceleration shall not affect the terms and
conditions of such SAR other than with respect to exercisability. Unless
otherwise provided by the Committee in an Award agreement: (i) the unvested
portion of a SAR shall expire upon termination of employment or service of the
Participant granted the SAR, and the vested portion of such SAR shall remain
exercisable for (A) two years following termination of employment or service by
reason of such Participant’s death or disability (as determined by the
Committee), but not later than the expiration of the SAR Period or (B) 90 days
following termination of employment or service for any reason other than such
Participant’s death or disability, and other than such Participant’s termination
of employment or service for Cause, but not later than the expiration of the SAR
Period; and (ii) both the unvested and the vested portion of a SAR shall expire
upon the termination of the Participant’s employment or service by the Company
for Cause. If the SAR would expire at a time when the exercise of the SAR would
violate applicable securities laws, the expiration date applicable to the SAR
will be automatically extended to a date that is thirty (30) calendar days
following the date such exercise would no longer violate applicable securities
laws (so long as such extension shall not violate Section 409A of the Code);
provided, that in no event shall such expiration date be extended beyond the
expiration of the SAR Period.

 

 9 

 

 

(d)       Method of Exercise. SARs that have become exercisable may be exercised
by delivery of written or electronic notice of exercise to the Company in
accordance with the terms of the Award, specifying the number of SARs to be
exercised and the date on which such SARs were awarded. Notwithstanding the
foregoing, if on the last day of the Option Period (or in the case of a SAR
independent of an option, the SAR Period), the fair market value exceeds the
Strike Price, the Participant has not exercised the SAR or the corresponding
Option (if applicable), and neither the SAR nor the corresponding Option (if
applicable) has expired, such SAR shall be deemed to have been exercised by the
Participant on such last day and the Company shall make the appropriate payment
therefor.

 

(e)       Payment. Upon the exercise of a SAR, the Company shall pay to the
Participant an amount equal to the number of shares subject to the SAR that are
being exercised multiplied by the excess, if any, of the fair market value of
one Common Share on the exercise date over the Strike Price, less an amount
equal to any taxes required to be withheld or paid. The Company shall pay such
amount in cash, in Common Shares valued at fair market value, or any combination
thereof, as determined by the Committee. No fractional Common Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid or
transferred in lieu of any fractional Common Shares, or whether such fractional
Common Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.

 

9.       Restricted Stock and Restricted Stock Units. (c) Generally. Each grant
of Restricted Stock and Restricted Stock Units shall be evidenced by an Award
agreement (whether in paper or electronic medium (including email or the posting
on a web site maintained by the Company or a third party under contract with the
Company)). Each such grant shall be subject to the conditions set forth in this
Section 9, and to such other conditions not inconsistent with the Plan as may be
reflected in the applicable Award agreement.

 

(b)       Restricted Accounts; Escrow or Similar Arrangement. Upon the grant of
Restricted Stock, a book entry in a restricted account shall be established in
the Participant’s name at the Company’s transfer agent and, if the Committee
determines that the Restricted Stock shall be held by the Company or in escrow
rather than held in such restricted account pending the release of the
applicable restrictions, the Committee may require the Participant to
additionally execute and deliver to the Company (i) an escrow agreement
satisfactory to the Committee, if applicable, and (ii) the appropriate share
power (endorsed in blank) with respect to the Restricted Stock covered by such
agreement. If a Participant shall fail to execute an agreement evidencing an
Award of Restricted Stock and, if applicable, an escrow agreement and blank
share power within the amount of time specified by the Committee, the Award
shall be null and void. Subject to the restrictions set forth in this Section 9
and the applicable Award agreement, the Participant generally shall have the
rights and privileges of a shareholder as to such Restricted Stock, including
without limitation the right to vote such Restricted Stock and the right to
receive dividends, if applicable. To the extent shares of Restricted Stock are
forfeited, any share certificates issued to the Participant evidencing such
shares shall be returned to the Company, and all rights of the Participant to
such shares and as a shareholder with respect thereto shall terminate without
further obligation on the part of the Company.

 

(c)       Vesting; Acceleration of Lapse of Restrictions. Unless otherwise
provided by the Committee in an Award agreement the unvested portion of
Restricted Stock and Restricted Stock Units shall terminate and be forfeited
upon termination of employment or service of the Participant granted the
applicable Award.

 

 10 

 

 

(d)       Delivery of Restricted Stock and Settlement of Restricted Stock Units.
(i) Upon the expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in the applicable Award agreement
shall be of no further force or effect with respect to such shares, except as
set forth in the applicable Award agreement. If an escrow arrangement is used,
upon such expiration, the Company shall deliver to the Participant, or his
beneficiary, without charge, the share certificate evidencing the shares of
Restricted Stock that have not then been forfeited and with respect to which the
Restricted Period has expired (rounded down to the nearest full share).
Dividends, if any, that may have been withheld by the Committee and attributable
to any particular share of Restricted Stock shall be distributed to the
Committee and attributable to any particular share of Restricted Stock shall be
distributed to the Participant in cash or, at the sole discretion of the
Committee, in Common Shares having a fair market value equal to the amount of
such dividends, upon the release of restrictions on such share and, if such
share is forfeited, the Participant shall have no right to such dividends
(except as otherwise set forth by the Committee in the applicable Award
agreement).

 

(i)       Unless otherwise provided by the Committee in an Award agreement, upon
the expiration of the Restricted Period with respect to any outstanding
Restricted Stock Units, the Company shall deliver to the Participant, or his
beneficiary, without charge, one Common Share for each such outstanding
Restricted Stock Unit; provided, however, that the Committee may, in its sole
discretion, elect to (i) pay cash or part cash and part Common Share in lieu of
delivering only Common Shares in respect of such Restricted Stock Units or (ii)
defer the delivery of Common Shares (or cash or part Common Shares and part
cash, as the case may be) beyond the expiration of the Restricted Period if such
delivery would result in a violation of applicable law until such time as is no
longer the case. If a cash payment is made in lieu of delivering Common Shares,
the amount of such payment shall be equal to the fair market value of the Common
Shares as of the date on which the Restricted Period lapsed with respect to such
Restricted Stock Units, less an amount equal to any taxes required to be
withheld or paid.

 

10.       Stock Bonus Awards. The Committee may issue unrestricted Common
Shares, shares of Class B Common Stock or other Awards denominated in Common
Shares or shares of Class B Common Stock, under the Plan to Eligible Persons,
either alone or in tandem with other awards, in such amounts as the Committee
shall from time to time in its sole discretion determine. Each Stock Bonus Award
granted under the Plan shall be evidenced by an Award agreement (whether in
paper or electronic medium (including email or the posting on a web site
maintained by the Company or a third party under contract with the Company)).
Each Stock Bonus Award so granted shall be subject to such conditions not
inconsistent with the Plan as may be reflected in the applicable Award
agreement.

 

11.       Performance Compensation Awards. (d) Generally. The Committee shall
have the authority, at the time of grant of any Award described in Sections 7
through 10 of the Plan, to designate such Award as a Performance Compensation
Award. The Committee shall have the authority to make an award of a cash bonus
to any Participant and designate such Award as a Performance Compensation Award.
Unless otherwise determined by the Committee, all Performance Compensation
Awards shall be evidenced by an Award agreement.

 

(b)       Discretion of Committee with Respect to Performance Compensation
Awards. The Committee shall have the discretion to establish the terms,
conditions and restrictions of any Performance Compensation Award. With regard
to a particular Performance Period, the Committee shall have sole discretion to
select the length of such Performance Period, the type(s) of Performance
Compensation Awards to be issued, the Performance Criteria that will be used to
establish the Performance Goal (s), the kind(s) and/or level(s) of the
Performance Goals(s) that is (are) to apply and the Performance Formula.

 

(c)       Performance Criteria. The Committee may establish Performance Criteria
that will be used to establish the Performance Goal(s) for Performance
Compensation Awards which may be based on the attainment of specific levels of
performance of the Company (and/or one or more Affiliates, divisions, business
segments or operational units, or any combination of the foregoing) and may
include, without limitation, any of the following: (i) net earnings or net
income (before or after taxes); (ii) basic or diluted earnings per share (before
or after taxes); (iii)  revenue or revenue growth (measured on a net or gross
basis); (iv) gross profit or gross profit growth; (v) operating profit (before
or after taxes); (vi) return measures (including, but not limited to, return on
assets, capital, invested capital, equity, or sales); (vii) cash flow
(including, but not limited to, operating cash flow, free cash flow, net cash
provided by operations and cash flow return on capital); (viii) financing and
other capital raising transactions (including, but not limited to, sales of the
Company’s equity or debt securities); (ix) earnings before or after taxes,
interest, depreciation and/or amortization; (x) gross or operating margins;
(xi) productivity ratios; (xii) share price (including, but not limited to,
growth measures and total shareholder return); (xiii) expense targets;
(xiv) margins; (xv) productivity and operating efficiencies; (xvi)  customer
satisfaction; (xvii) customer growth; (xviii) working capital targets;
(xix) measures of economic value added; (xx) inventory control; (xxi) enterprise
value; (xxii) sales; (xxiii) debt levels and net debt; (xxiv) combined ratio;
(xxv) timely launch of new facilities; (xxvi) client retention; (xxvii) employee
retention; (xxviii) timely completion of new product rollouts; (xxix) cost
targets; (xxx) reductions and savings; (xxxi) productivity and efficiencies;
(xxxii) strategic partnerships or transactions; and (xxxiii) personal targets,
goals or completion of projects. Any one or more of the Performance Criteria may
be used on an absolute or relative basis to measure the performance of the
Company and/or one or more Affiliates as a whole or any business unit(s) of the
Company and/or one or more Affiliates or any combination thereof, as the
Committee may deem appropriate, or any of the above Performance Criteria may be
compared to the performance of a selected group of comparison or peer companies,
or a published or special index that the Committee, in its sole discretion,
deems appropriate, or as compared to various stock market indices. The Committee
also has the authority to provide for accelerated vesting of any Award based on
the achievement of Performance Goals pursuant to the Performance Criteria
specified in this paragraph. Any Performance Criteria that are financial
metrics, may be determined in accordance with United States Generally Accepted
Accounting Principles (“GAAP”) or may be adjusted when established to include or
exclude any items otherwise includable or excludable under GAAP.

 

 11 

 

 

(d)       Modification of Performance Goal(s). The Committee is authorized at
any time to adjust or modify the calculation of a Performance Goal for such
Performance Period, based on and in order to appropriately reflect any specified
circumstance or event that occurs during a Performance Period, including but not
limited to the following: (i) asset write-downs; (ii) litigation or claim
judgments or settlements; (iii) the effect of changes in tax laws, accounting
principles, or other laws or regulatory rules affecting reported results; (iv)
any reorganization and restructuring programs; (v) unusual and/or infrequently
occurring items as described in Accounting Principles Board Opinion No. 30 (or
any successor pronouncement thereto) and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to shareholders for the applicable year; (vi)
acquisitions or divestitures; (vii) discontinued operations; (viii) any other
specific unusual or infrequently occurring or non-recurring events, or
objectively determinable category thereof; (ix) foreign exchange gains and
losses; and (x) a change in the Company’s fiscal year.

 

(e)       Terms and Condition to Receipt of Payment. Unless otherwise provided
in the applicable Award agreement, a Participant must be employed by the Company
on the last day of a Performance Period to be eligible for payment in respect of
a Performance Compensation Award for such Performance Period. A Participant
shall be eligible to receive payment in respect of a Performance Compensation
Award only to the extent that: (A) the Performance Goals for such period are
achieved; and (B) all or some of the portion of such Participant’s Performance
Compensation Award has been earned for the Performance Period based on the
application of the Performance Formula to such achieved Performance Goals.
Following the completion of a Performance Period, the Committee shall determine
whether, and to what extent, the Performance Goals for the Performance Period
have been achieved and, if so, calculate the amount of the Performance
Compensation Awards earned for the period based upon the Performance Formula.
The Committee shall then determine the amount of each Participant’s Performance
Compensation Award actually payable for the Performance Period.

 

(f)       Timing of Award Payments. Except as provided in an Award agreement,
Performance Compensation Awards granted for a Performance Period shall be paid
to Participants as soon as administratively practicable following the
Committee’s determination in accordance with Section 11(e).

 

12.       Changes in Capital Structure and Similar Events. In the event of (i)
any dividend (other than ordinary cash dividends) or other distribution (whether
in the form of cash, Common Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
amalgamation, consolidation, spin-off, split-up, split-off, combination,
repurchase or exchange of Common Shares or other securities of the Company,
issuance of warrants or other rights to acquire Common Shares or other
securities of the Company, or other similar corporate transaction or event
(including, without limitation, a Change in Control) that affects the Common
Shares (or with respect to Awards of Class B Common Stock, Class B Common
Stock), or (ii) unusual or infrequently occurring events (including, without
limitation, a Change in Control) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or changes in applicable
rules, rulings, regulations or other requirements of any governmental body or
securities exchange or inter-dealer quotation system, accounting principles or
law, such that in either case an adjustment is determined by the Committee in
its sole discretion to be necessary or appropriate, then the Committee shall
make any such adjustments in such manner as it may deem equitable, including
without limitation any or all of the following:

 

 12 

 

 

(a)       adjusting any or all of (A) the number of Common Shares or other
securities of the Company (or number and kind of other securities or other
property) that may be delivered in respect of Awards or with respect to which
Awards may be granted under the Plan (including, without limitation, adjusting
any or all of the limitations under Section 5 of the Plan) and (B) the terms of
any outstanding Award, including, without limitation, (1) the number of Common
Shares or other securities of the Company (or number and kind of other
securities or other property) subject to outstanding Awards or to which
outstanding Awards relate, (2) the Exercise Price or Strike Price with respect
to any Award or (3) any applicable performance measures (including, without
limitation, Performance Criteria and Performance Goals);

 

(b)       providing for a substitution or assumption of Awards in a manner that
substantially preserves the applicable terms of such Awards;

 

(c)       accelerating the exercisability or vesting of, lapse of restrictions
on, or termination of, Awards or providing for a period of time for exercise
prior to the occurrence of such event;

 

(d)       modifying the terms of Awards to add events, conditions or
circumstances (including termination of employment within a specified period
after a Change in Control) upon which the exercisability or vesting of or lapse
of restrictions thereon will accelerate;

 

(e)       deeming any performance measures (including, without limitation,
Performance Criteria and Performance Goals) satisfied at target, maximum or
actual performance through closing or such other level determined by the
Committee in its sole discretion, or providing for the performance measures to
continue (as is or as adjusted by the Committee) after closing;

 

(f)       providing that for a period prior to the Change in Control determined
by the Committee in its sole discretion, any Options or SARs that would not
otherwise become exercisable prior to the Change in Control will be exercisable
as to all Common Shares subject thereto (but any such exercise will be
contingent upon and subject to the occurrence of the Change in Control and if
the Change in Control does not take place after giving such notice for any
reason whatsoever, the exercise will be null and void) and that any Options or
SARs not exercised prior to the consummation of the Change in Control will
terminate and be of no further force and effect as of the consummation of the
Change in Control; and

 

(g)       canceling any one or more outstanding Awards and causing to be paid to
the holders thereof, in cash, Common Shares, other securities or other property,
or any combination thereof, the value of such Awards, if any, as determined by
the Committee (which if applicable may be based upon the price per Common Share
received or to be received by other shareholders of the Company in such event),
including without limitation, in the case of an outstanding Option or SAR, a
cash payment in an amount equal to the excess, if any, of the fair market value
(as of a date specified by the Committee) of the Common Shares subject to such
Option or SAR over the aggregate Exercise Price or Strike Price of such Option
or SAR, respectively (it being understood that, in such event, any Option or SAR
having a per share Exercise Price or Strike Price equal to, or in excess of, the
fair market value of a Common Share subject thereto may be canceled and
terminated without any payment or consideration therefor); provided, however,
that in the case of any “equity restructuring” (within the meaning of the
Financial Accounting Standards Board Accounting Standards Codification Topic
718), the Committee shall make an equitable or proportionate adjustment to
outstanding Awards to reflect such equity restructuring. The Company shall give
each Participant notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.

 

13.       Amendments and Termination.

 

(a)       Amendment and Termination of the Plan. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any time;
provided that (i) no amendment to Section 13(b) (to the extent required by the
proviso in such Section 13(b)) shall be made without shareholder approval and
(ii) no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement applicable to the Plan (including,
without limitation, as necessary to comply with any rules or requirements of any
securities exchange or inter-dealer quotation system on which the Common Shares
may be listed or quoted); provided, further, that any such amendment,
alteration, suspension, discontinuance or termination that would materially and
adversely affect the rights of any Participant or any holder or beneficiary of
any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant, holder or beneficiary.

 

 13 

 

 

(b)       Amendment of Award Agreements. The Committee may, to the extent
consistent with the terms of any applicable Award agreement, waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted or the associated Award
agreement, prospectively or retroactively; provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would materially and adversely affect the rights of any Participant with
respect to any Award theretofore granted shall not to that extent be effective
without the consent of the affected Participant; provided, further, that without
shareholder approval, except as otherwise permitted under Section 12 of the
Plan, (i) no amendment or modification may reduce the Exercise Price of any
Option or the Strike Price of any SAR, (ii) the Committee may not cancel any
outstanding Option or SAR where the Fair Market Value of the Common Shares
underlying such Option or SAR is less than its Exercise Price and replace it
with a new Option or SAR, another Award or cash and (iii) the Committee may not
take any other action that is considered a “repricing” for purposes of the
shareholder approval rules of the applicable securities exchange or inter-dealer
quotation system on which the Common Shares are listed or quoted.

 

14.       General. (e) Award Agreements. Each Award under the Plan shall be
evidenced by an Award agreement, which shall be delivered to the Participant
(whether in paper or electronic medium (including email or the posting on a web
site maintained by the Company or a third party under contract with the
Company)) and shall specify the terms and conditions of the Award and any rules
applicable thereto, including without limitation, the effect on such Award of
the death, disability or termination of employment or service of a Participant,
or of such other events as may be determined by the Committee.

 

(b)       Nontransferability. (i) Each Award shall be exercisable only by a
Participant during the Participant’s lifetime, or, if permissible under
applicable law, by the Participant’s legal guardian or representative. No Award
may be assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant other than by will or by the laws of descent and
distribution and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the
Company or an Affiliate; provided that the designation of a beneficiary shall
not constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.

 

(ii)       Notwithstanding the foregoing, the Committee may, in its sole
discretion, permit Awards (other than Incentive Stock Options) to be transferred
by a Participant, without consideration, subject to such rules as the Committee
may adopt consistent with any applicable Award agreement to preserve the
purposes of the Plan, to: (A) any person who is a “family member” of the
Participant, as such term is used in the instructions to Form S-8 under the
Securities Act (collectively, the “Immediate Family Members”); (B) a trust
solely for the benefit of the Participant and his or her Immediate Family
Members; (C) a partnership or limited liability company whose only partners or
stockholders are the Participant and his or her Immediate Family Members; or
(D) any other transferee as may be approved either (I) by the Board or the
Committee in its sole discretion, or (II) as provided in the applicable Award
agreement. (each transferee described in clauses (A), (B), (C) and (D) above is
hereinafter referred to as a “Permitted Transferee”); provided that the
Participant gives the Committee advance written notice describing the terms and
conditions of the proposed transfer and the Committee notifies the Participant
in writing that such a transfer would comply with the requirements of the Plan.

 

(iii)       The terms of any Award transferred in accordance with the
immediately preceding sentence shall apply to the Permitted Transferee and any
reference in the Plan, or in any applicable Award agreement, to a Participant
shall be deemed to refer to the Permitted Transferee, except that (A) Permitted
Transferees shall not be entitled to transfer any Award, other than by will or
the laws of descent and distribution; (B) Permitted Transferees shall not be
entitled to exercise any transferred Option unless there shall be in effect a
registration statement on an appropriate form covering the Common Shares to be
acquired pursuant to the exercise of such Option if the Committee determines,
consistent with any applicable Award agreement, that such a registration
statement is necessary or appropriate; (C) the Committee or the Company shall
not be required to provide any notice to a Permitted Transferee, whether or not
such notice is or would otherwise have been required to be given to the
Participant under the Plan or otherwise; and (D) the consequences of the
termination of the Participant’s employment by, or services to, the Company or
an Affiliate under the terms of the Plan and the applicable Award agreement
shall continue to be applied with respect to the Participant, including, without
limitation, that an Option shall be exercisable by the Permitted Transferee only
to the extent, and for the periods, specified in the Plan and the applicable
Award agreement.

 

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(c)       Tax Withholding and Deductions. (ii) A Participant shall be required
to pay to the Company or any Affiliate, and the Company or any Affiliate shall
have the right and is hereby authorized to deduct and withhold, from any cash,
Common Shares, other securities or other property deliverable under any Award or
from any compensation or other amounts owing to a Participant, the amount (in
cash, Common Shares, other securities or other property) of any required taxes
(up to the maximum statutory rate under applicable law as in effect from time to
time as determined by the Committee) and deduction in respect of an Award, its
grant, vesting or exercise, or any payment or transfer under an Award or under
the Plan and to take such other action as may be necessary in the opinion of the
Committee or the Company to satisfy all obligations for the payment of such
taxes.

 

(ii)       Without limiting the generality of clause (i) above, the Committee
may, in its sole discretion, permit a Participant to satisfy, in whole or in
part, the foregoing tax and deduction liability by (A) the delivery of Common
Shares (which are not subject to any pledge or other security interest and are
Mature Shares, except as otherwise determined by the Committee) owned by the
Participant having a fair market value equal to such liability or (B) having the
Company withhold from the number of Common Shares otherwise issuable or
deliverable pursuant to the exercise or settlement of the Award a number of
shares with a fair market value equal to such liability.

 

(d)       No Claim to Awards; No Rights to Continued Employment; Waiver. No
employee of the Company or an Affiliate, or other person, shall have any claim
or right to be granted an Award under the Plan or, having been selected for the
grant of an Award, to be selected for a grant of any other Award. There is no
obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards. The terms and conditions of Awards and the Committee’s
determinations and interpretations with respect thereto need not be the same
with respect to each Participant and may be made selectively among Participants,
whether or not such Participants are similarly situated. Neither the Plan nor
any action taken hereunder shall be construed as giving any Participant any
right to be retained in the employ or service of the Company or an Affiliate,
nor shall it be construed as giving any Participant any rights to continued
service on the Board. The Company or any of its Affiliates may at any time
dismiss a Participant from employment or discontinue any consulting
relationship, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or any Award agreement. By accepting an
Award under the Plan, a Participant shall thereby be deemed to have waived any
claim to continued exercise or vesting of an Award or to damages or severance
entitlement related to non-continuation of the Award beyond the period provided
under the Plan or any Award agreement, notwithstanding any provision to the
contrary in any written employment contract or other agreement between the
Company and its Affiliates and the Participant, whether any such agreement is
executed before, on or after the Date of Grant.

 

(e)       International Participants. With respect to Participants who reside or
work outside of the United States of America, the Committee may in its sole
discretion amend the terms of the Plan or outstanding Awards with respect to
such Participants in order to conform such terms with the requirements of local
law or to obtain more favorable tax or other treatment for a Participant, the
Company or its Affiliates.

 

(f)       Designation and Change of Beneficiary. Each Participant may file with
the Committee a written designation of one or more persons as the
beneficiary(ies) who shall be entitled to receive the amounts payable with
respect to an Award, if any, due under the Plan upon his death. A Participant
may, from time to time, revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new designation with the Committee.
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Participant’s death,
and in no event shall it be effective as of a date prior to such receipt. If no
beneficiary designation is filed by a Participant, the beneficiary shall be
deemed to be his or her spouse or, if the Participant is unmarried at the time
of death, his or her estate.

 

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(g)       Termination of Employment/Service. Unless determined otherwise by the
Committee at any point following such event: (i) neither a temporary absence
from employment or service due to illness, vacation or leave of absence nor a
transfer from employment or service with the Company to employment or service
with an Affiliate (or vice-versa) shall be considered a termination of
employment or service with the Company or an Affiliate; and (ii) 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 capacity (or vice-versa), such change in status shall not be
considered a termination of employment with the Company or an Affiliate.

 

(h)       No Rights as a Stockholder. Except as otherwise specifically provided
in the Plan or any Award agreement, no person shall be entitled to the
privileges of ownership in respect of Common Shares or other securities that are
subject to Awards hereunder until such shares have been issued or delivered to
that person.

 

(i)       Government and Other Regulations. (iii) The obligation of the Company
to settle Awards in Common Shares or other consideration shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Award to the contrary, the Company shall be under no obligation to offer to sell
or to sell, and shall be prohibited from offering to sell or selling, any Common
Shares or other securities pursuant to an Award unless such shares have been
properly registered for sale pursuant to the Securities Act with the Securities
and Exchange Commission or unless the Company has received an opinion of
counsel, satisfactory to the Company, that such shares may be offered or sold
without such registration pursuant to an available exemption therefrom and the
terms and conditions of such exemption have been fully complied with. The
Company shall be under no obligation to register for sale under the Securities
Act any of the Common Shares or other securities to be offered or sold under the
Plan. The Committee shall have the authority to provide that all certificates
for Common Shares or other securities of the Company or any Affiliate delivered
under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan, the applicable
Award agreement, the federal securities laws, or the rules, regulations and
other requirements of the Securities and Exchange Commission, any securities
exchange or inter-dealer quotation system upon which such shares or other
securities are then listed or quoted and any other applicable federal, state,
local or non-U.S. laws, and, without limiting the generality of Section 9 of the
Plan, the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. Notwithstanding
any provision in the Plan to the contrary, the Committee reserves the right to
add any additional terms or provisions to any Award granted under the Plan that
it in its sole discretion deems necessary or advisable in order that such Award
complies with the legal requirements of any governmental entity to whose
jurisdiction the Award is subject.

 

(ii)       The Committee may cancel an Award or any portion thereof if it
determines, in its sole discretion, that legal or contractual restrictions
and/or blockage and/or other market considerations would make the Company’s
acquisition of Common Shares from the public markets, the Company’s issuance of
Common Shares or other securities to the Participant, the Participant’s
acquisition of Common Shares or other securities from the Company and/or the
Participant’s sale of Common Shares to the public markets, illegal,
impracticable or inadvisable. If the Committee determines to cancel all or any
portion of an Award denominated in Common Shares in accordance with the
foregoing, the Company shall pay to the Participant an amount equal to the
excess of (A) the aggregate fair market value of the Common Shares subject to
such Award or portion thereof canceled (determined as of the applicable exercise
date, or the date that the shares would have been vested or delivered, as
applicable), over (B) the aggregate Exercise Price or Strike Price (in the case
of an Option or SAR, respectively) or any amount payable as a condition of
delivery of Common Shares (in the case of any other Award). Such amount shall be
delivered to the Participant as soon as practicable following the cancellation
of such Award or portion thereof.

 

(j)       Payments to Persons Other Than Participants. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless a prior claim therefor
has been made by a duly appointed legal representative) may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.

 

(k)       Nonexclusivity of the Plan. Neither the adoption of this Plan by the
Board nor the submission of this Plan to the shareholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options or other
equity-based awards otherwise than under this Plan, and such arrangements may be
either applicable generally or only in specific cases.

 

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(l)       No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on the one hand, and a
Participant or other person or entity, on the other hand. No provision of the
Plan or any Award shall require the Company, for the purpose of satisfying any
obligations under the Plan, to purchase assets or place any assets in a trust or
other entity to which contributions are made or otherwise to segregate any
assets, nor shall the Company maintain separate bank accounts, books, records or
other evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Participants shall have no rights under the
Plan other than as unsecured general creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees
under general law.

 

(m)       Reliance on Reports. Each member of the Committee and each member of
the Board shall be fully justified in acting or failing to act, as the case may
be, and shall not be liable for having so acted or failed to act in good faith,
in reliance upon any report made by the independent public accountant of the
Company and its Affiliates and/or any other information furnished in connection
with the Plan by any agent of the Company or the Committee or the Board, other
than himself.

 

(n)       Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company except as
otherwise specifically provided in such other plan.

 

(o)       Governing Law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Nevada applicable to contracts
made and performed wholly within the State of Nevada, without giving effect to
the conflict of laws provisions thereof.

 

(p)       Severability. If any provision of the Plan or any Award or Award
agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any person or entity or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be construed or deemed stricken as to such
jurisdiction, person or entity or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

(q)       Obligations Binding on Successors. The obligations of the Company
under the Plan shall be binding upon any successor corporation or organization
resulting from the merger, amalgamation, consolidation or other reorganization
of the Company, or upon any successor corporation or organization succeeding to
substantially all of the assets and business of the Company.

 

(r)       Code Section 409A.

 

(i)       Notwithstanding any provision of this Plan to the contrary, all Awards
made under this Plan are intended to be exempt from or, in the alternative,
comply with Code Section 409A and the interpretive guidance thereunder,
including the exceptions for stock rights and short-term deferrals. The Plan
shall be construed and interpreted in accordance with such intent. Each payment
under an Award shall be treated as a separate payment for purposes of Code
Section 409A.

 

(ii)       If a Participant is a “specified employee” (as such term is defined
for purposes of Code Section 409A) at the time of his or her termination of
service, no amount that is nonqualified deferred compensation subject to Code
Section 409A and that becomes payable by reason of such termination of service
shall be paid to the Participant (or in the event of the Participant’s death,
the Participant’s representative or estate) before the earlier of (x) the first
business day after the date that is six months following the date of the
Participant’s termination of service, and (y) within 30 days following the date
of the Participant’s death. For purposes of Code Section 409A, a termination of
service shall be deemed to occur only if it is a “separation from service”
within the meaning of Code Section 409A, and references in the Plan and any
Award agreement to “termination of service” or similar terms shall mean a
“separation from service.” If any Award is or becomes subject to Code Section
409A, unless the applicable Award agreement provides otherwise, such Award shall
be payable upon the Participant’s “separation from service” within the meaning
of Code Section 409A. If any Award is or becomes subject to Code Section 409A
and if payment of such Award would be accelerated or otherwise triggered under a
Change in Control, then the definition of Change in Control shall be deemed
modified, only to the extent necessary to avoid the imposition of an excise tax
under Code Section 409A, to mean a “change in control event” as such term is
defined for purposes of Code Section 409A.

 

 17 

 

 

(iii)       Any adjustments made pursuant to Section 12 to Awards that are
subject to Code Section 409A shall be made in compliance with the requirements
of Code Section 409A, and any adjustments made pursuant to Section 12 to Awards
that are not subject to Code Section 409A shall be made in such a manner as to
ensure that after such adjustment, the Awards either (x) continue not to be
subject to Code Section 409A or (y) comply with the requirements of Code Section
409A.

 

(s)       Expenses; Gender; Titles and Headings. The expenses of administering
the Plan shall be borne by the Company and its Affiliates. Masculine pronouns
and other words of masculine gender shall refer to both men and women. The
titles and headings of the sections in the Plan are for convenience of reference
only, and in the event of any conflict, the text of the Plan, rather than such
titles or headings shall control.

 

(t)       Other Agreements. Notwithstanding the above, the Committee may
require, as a condition to the grant of and/or the receipt of Common Shares or
other securities under an Award, that the Participant execute lock-up,
shareholder or other agreements, as it may determine in its sole and absolute
discretion.

 

(u)       Payments. Participants shall be required to pay, to the extent
required by applicable law, any amounts required to receive Common Shares or
other securities under any Award made under the Plan.

 

(v)       Erroneously Awarded Compensation. All Awards shall be subject
(including on a retroactive basis) to (i) any clawback, forfeiture or similar
incentive compensation recoupment policy established from time to time by the
Company, including, without limitation, any such policy established to comply
with the Dodd-Frank Wall Street Reform and Consumer Protection Act, (ii)
applicable law (including, without limitation, Section 304 of the Sarbanes-Oxley
Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act), and/or (iii) the rules and regulations of the applicable securities
exchange or inter-dealer quotation system on which the Common Shares or other
securities are listed or quoted, and such requirements shall be deemed
incorporated by reference into all outstanding Award agreements.

 

* * *

 

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