SPARK ENERGY, INC.
AMENDED AND RESTATED LONG TERM INCENTIVE PLAN
1.Purpose. The purpose of the Spark Energy, Inc. Amended and Restated Long Term
Incentive Plan (the “Plan”) is to provide a means through which Spark Energy,
Inc., a Delaware corporation (the “Company”), and its Subsidiaries and Parents
may attract and retain able persons as employees, directors and consultants of
the Company, and its Subsidiaries and Parents, and to provide a means whereby
those persons upon whom the responsibilities of the successful administration
and management of the Company, and its Subsidiaries and Parents, rest, and whose
present and potential contributions to the welfare of the Company, and its
Subsidiaries and Parents, are of importance, can acquire and maintain stock
ownership, or awards the value of which is tied to the performance of the
Company, thereby strengthening their concern for the welfare of the Company, and
its Subsidiaries and Parents, and their desire to remain employed. A further
purpose of this Plan is to provide such employees, directors and consultants
with additional incentive and reward opportunities designed to enhance the
profitable growth of the Company. Accordingly, this Plan primarily provides for
the granting of Incentive Stock Options, options which do not constitute
Incentive Stock Options, Restricted Stock Awards, Restricted Stock Units, Stock
Appreciation Rights, Dividend Equivalents, Bonus Stock, Other Stock-Based
Awards, Annual Incentive Awards, Performance Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular individual
as provided herein. The Plan was amended and restated to expand the sources of
shares of Stock effective as of September 1, 2016.
2.    Definitions. For purposes of this Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:
(a)    “Annual Incentive Award” means a conditional right granted to an Eligible
Person under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified year.
(b)    “Award” means any Option, SAR, Restricted Stock, Restricted Stock Unit,
Bonus Stock, Dividend Equivalent, Other Stock-Based Award, Performance Award or
Annual Incentive Award, together with any other right or interest granted to a
Participant under this Plan.
(c)    “Beneficiary” means one or more persons, trusts or other entities which
have been designated by a Participant, in his or her most recent written
beneficiary designation filed with the Committee, to receive the benefits
specified under this Plan upon such Participant’s death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the persons,
trusts or other entities entitled by will or the laws of descent and
distribution to receive such benefits.
(d)    “Board” means the Company’s Board of Directors.
(e)    “Bonus Stock” means Stock granted as a bonus pursuant to Section 6(f).
(f)    “Business Day” means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the state of Texas are authorized or obligated by
law or executive order to close.
(g)    “Change in Control” means, except as otherwise provided in an Award
agreement, the occurrence of any of the following events:
(i)    The consummation of an agreement to acquire or a tender offer for
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act by any Person, of 50% or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any entity controlled by the Company or (D) any
acquisition by any entity pursuant to a transaction that complies with clauses
(A), (B) and (C) of paragraph (iii) below;
(ii)    Individuals who constitute the Incumbent Board cease for any reason to
constitute at least a majority of the Board;
(iii)    Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company or an
acquisition of assets of another entity (a “Business Combination”), in each
case, unless, following such Business Combination, (A) the Outstanding Company
Voting Securities immediately prior to such Business Combination represent or
are converted into or exchanged for securities that represent or are convertible
into more than 50% of, respectively, the then outstanding shares of common stock
or common equity interests and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors or
other 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), (B) no
Person (excluding any employee benefit plan (or related trust) of the Company or
the entity resulting from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding shares of
common stock or common equity interests of the entity resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors or other
governing body of such entity to the extent that such ownership results solely
from ownership of the Company that existed prior to the Business Combination,
and (C) at least a majority of the members of the board of directors or similar
governing body of the entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv)    Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
Notwithstanding the foregoing, if a Change in Control constitutes a payment
event with respect to any Award that provides for the deferral of compensation
and is subject to the Nonqualified Deferred Compensation Rules, then the
transaction or event described in subsection (i), (ii), (iii) or (iv) above with
respect to such Award must also constitute a “change in control event,” as
defined in Treasury Regulation Section 1.409A-3(i)(5), and as relates to the
holder of such Award, to the extent required to comply with the Nonqualified
Deferred Compensation Rules.
(h)    “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations
thereto.
(i)    “Committee” means a committee of two or more directors designated by the
Board to administer this Plan; provided, however, that, to the extent
administration of this Plan by “outside directors” is required in order to
qualify for tax deductibility under section 162(m) of the Code, the Board may
require that the Committee consist solely of two or more directors who are a
Qualified Members.
(j)    “Covered Employee” means an Eligible Person who is a Covered Employee as
specified in Section 8(e) of this Plan.
(k)    “Dividend Equivalent” means a right, granted to an Eligible Person under
Section 6(g), to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.
(l)    “Effective Date” means July 28, 2014.
(m)    “Eligible Person” means all officers and employees of the Company or of
any of its Subsidiaries or Parents, and other persons who provide services to
the Company or any of its Subsidiaries or Parents, including directors of the
Company. An employee on leave of absence may be considered as still in the
employ of the Company or any of its Subsidiaries or Parents for purposes of
eligibility for participation in this Plan. With respect to the grant of an ISO,
Eligible Person shall mean an employee of the Company or a parent or subsidiary
corporation (within the meaning of sections 424(e) and (f) of the Code) of the
Company.
(n)    “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including rules thereunder and successor provisions and rules
thereto.
(o)    “Fair Market Value” means, as of any specified date, (i) if the Stock is
listed on a national securities exchange, the closing sales price of the Stock,
as reported on the stock exchange composite tape on that date (or if no sales
occur on that date, on the last preceding date on which such sales of the Stock
are so reported) or as determined in such other manner as the Committee deems
appropriate (provided, that, to the extent necessary, such manner is consistent
with the Nonqualified Deferred Compensation Rules); (ii) if the Stock is not
traded on a national securities exchange but is traded over the counter at the
time a determination of its fair market value is required to be made under the
Plan, the average between the reported high and low bid and asked prices of
Stock on the most recent date on which Stock was publicly traded or as
determined in such other manner as the Committee deems appropriate (provided,
that, to the extent necessary, such manner is consistent with the Nonqualified
Deferred Compensation Rules); (iii) in the event Stock is not publicly traded at
the time a determination of its value is required to be made under the Plan, the
amount determined by the Committee in its discretion in such manner as it deems
appropriate, taking into account all factors the Committee deems appropriate
including, without limitation, the Nonqualified Deferred Compensation Rules; or
(iv) on the date of a Qualifying Public Offering of Stock, the offering price
under such Qualifying Public Offering.
(p)    “Incentive Stock Option” or “ISO” means any Option intended to be and
designated as an incentive stock option within the meaning of section 422 of the
Code or any successor provision thereto.
(q)    “Incumbent Board” means the portion of the Board constituted of the
individuals who are members of the Board as of the Effective Date and any other
individual who becomes a director of the Company after the Effective Date and
whose election or appointment by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board, but excluding, for this purpose,
any such 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 other than the Incumbent Board.
(r)    “Nonqualified Deferred Compensation Rules” means the limitations or
requirements of section 409A of the Code and the guidance and regulations
promulgated thereunder.
(s)    “Option” means a right, granted to an Eligible Person under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.
(t)    “Other Stock-Based Awards” means Awards granted to an Eligible Person
under Section 6(i) hereof.
(u)    “Parent” means any corporation or other entity which owns, directly or
indirectly, a majority of the voting power of the voting equity securities or
equity interest of the Company.
(v)    “Participant” means a person who has been granted an Award under this
Plan which remains outstanding, including a person who is no longer an Eligible
Person.
(w)    “Performance Award” means a right, granted to an Eligible Person under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.
(x)    “Person” means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a limited liability company, a trust or other entity; a Person,
together with that Person’s affiliates and associates (as those terms are
defined in Rule 12b-2 under the Exchange Act, provided that “registrant” as used
in Rule 12b-2 shall mean the Company), and any Persons acting as a partnership,
limited partnership, joint venture, association, syndicate or other group
(whether or not formally organized), or otherwise acting jointly or in concert
or in a coordinated or consciously parallel manner (whether or not pursuant to
any express agreement), for the purpose of acquiring, holding, voting or
disposing of securities of the Company with such Person, shall be deemed a
single “Person.”
(y)    “Qualifying Public Offering” means a firm commitment underwritten public
offering of Stock for cash where the shares of Stock registered under the
Securities Act are listed on a national securities exchange.
(z)    “Qualified Member” means a member of the Committee who is a “nonemployee
director” within the meaning of Rule 16b-3(b)(3) and an “outside director”
within the meaning of Treasury Regulation 1.162-27 under section 162(m) of the
Code.
(aa)    “Restricted Stock” means Stock granted to an Eligible Person under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(bb)    “Restricted Stock Unit” means a right, granted to an Eligible Person
under Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral or vesting period.
(cc)    “Rule 16b-3” means Rule 16b-3, promulgated by the Securities and
Exchange Commission under section 16 of the Exchange Act, as from time to time
in effect and applicable to this Plan and Participants.
(dd)    “Securities Act” means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be amended
from time to time.
(ee)    “Stock” means the Company’s Class A Common Stock, par value $0.01 per
share, and such other securities as may be substituted (or resubstituted) for
Stock pursuant to Section 9.
(ff)    “Stock Appreciation Rights” or “SAR” means a right granted to an
Eligible Person under Section 6(c) hereof.
(gg)    “Subsidiary” means with respect to the Company, any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by the Company.
3.    Administration.
(a)    Authority of the Committee. This Plan shall be administered by the
Committee except to the extent the Board elects to administer this Plan, in
which case references herein to the “Committee” shall be deemed to include
references to the “Board.” Subject to the express provisions of the Plan and
Rule 16b-3, the Committee shall have the authority, in its sole and absolute
discretion, to (i) adopt, amend, and rescind administrative and interpretive
rules and regulations relating to the Plan; (ii) determine the Eligible Persons
to whom, and the time or times at which, Awards shall be granted;
(iii) determine the amount of cash and/or the number of shares of Stock, as
applicable Stock Appreciation Rights, Restricted Stock Units, Restricted Stock
Awards, Dividend Equivalents, Bonus Stock, Other Stock-Based Awards, Annual
Incentive Awards, Performance Awards, or any combination thereof, that shall be
the subject of each Award; (iv) determine the terms and provisions of each Award
agreement (which need not be identical), including provisions defining or
otherwise relating to (A) the term and the period or periods and extent of
exercisability of the Options, (B) the extent to which the transferability of
shares of Stock issued or transferred pursuant to any Award is restricted, (C)
except as otherwise provided herein, the effect of termination of employment, or
the service relationship with the Company, of a Participant on the Award, and
(D) the effect of approved leaves of absence (consistent with any applicable
regulations of the Internal Revenue Service); (v) accelerate the time of vesting
or exercisability of any Award that has been granted; (vi) construe the
respective Award agreements and the Plan; (vii) make determinations of the Fair
Market Value of the Stock pursuant to the Plan; (viii) delegate its duties under
the Plan (including, but not limited to, the authority to grant Awards) to such
agents as it may appoint from time to time, provided that the Committee may not
delegate its duties where such delegation would violate state corporate law, or
with respect to making Awards to, or otherwise with respect to Awards granted
to, Eligible Persons who are subject to section 16(b) of the Exchange Act or who
are Covered Employees receiving Awards that are intended to constitute
“performance-based compensation” within the meaning of section 162(m) of the
Code; (ix)  subject to Section 10(f), terminate, modify or amend the Plan; (x)
subject to the limitations set forth herein, amend any Award agreement; and
(xi) make all other determinations, perform all other acts, and exercise all
other powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. Subject to Rule 16b-3 and section 162(m) of the
Code, the Committee may correct any defect, supply any omission, or reconcile
any inconsistency in the Plan, in any Award, or in any Award agreement in the
manner and to the extent it deems necessary or desirable to carry the Plan into
effect, and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Section 3(a) shall be final and conclusive.
(b)    Manner of Exercise of Committee Authority. At any time that a member of
the Committee is not a Qualified Member, any action of the Committee relating to
an Award granted or to be granted to an Eligible Person who is then subject to
section 16 of the Exchange Act in respect of the Company, or relating to an
Award intended by the Committee to qualify as “performance-based compensation”
within the meaning of section 162(m) of the Code and regulations thereunder, may
be taken either (i) by a subcommittee, designated by the Committee, composed
solely of two or more Qualified Members, (ii) by the Board or (iii) by the
Committee but with each such member who is not a Qualified Member abstaining or
recusing himself or herself from such action; provided, however, that, upon such
abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified Member(s), shall
be the action of the Committee for purposes of this Plan. Any action of the
Committee shall be final, conclusive and binding on all Persons, including the
Company, its Subsidiaries, Parents, stockholders, Participants, Beneficiaries,
and transferees under Section 10(b) hereof or other persons claiming rights from
or through a Participant. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to officers or managers of the Company or any of its Subsidiaries, Parents, or
committees thereof, the authority, subject to such terms as the Committee shall
determine, to perform such functions, including administrative functions, as the
Committee may determine, to the extent that such delegation will not result in
the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to
Participants subject to section 16 of the Exchange Act in respect of the Company
and will not cause Awards intended to qualify as “performance-based
compensation” under section 162(m) of the Code to fail to so qualify. The
Committee may appoint agents to assist it in administering the Plan.
(c)    Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the Company or any of its
Subsidiaries or Parents, the Company’s legal counsel, independent auditors,
consultants or any other agents assisting in the administration of this Plan.
Members of the Committee and any officer or employee of the Company or any of
its Subsidiaries or Parents acting at the direction or on behalf of the
Committee shall not be personally liable for any action or determination taken
or made in good faith with respect to this Plan, and shall, to the fullest
extent permitted by law, be indemnified and held harmless by the Company with
respect to any such action or determination.
(d)    No Repricing of Options or Stock Appreciation Rights. Other than pursuant
to Section 9, neither the Board nor the Committee may provide for the repricing
or exchange of underwater Options or SARs for cash consideration, other Awards,
or Options or SARs with an exercise price that is less than the original
exercise price of such underwater Options or SARs, unless such repricing or
exchange receives the approval of a majority of the holders of the Stock.
4.    Stock Subject to Plan.
(a)    Overall Number of Shares Available for Delivery. Subject to adjustment in
a manner consistent with any adjustment made pursuant to Section 9, the total
number of shares of Stock reserved and available for issuance in connection with
Awards under this Plan shall not exceed 1,375,000 shares, and such total will be
available for the issuance of Incentive Stock Options.
(b)    Application of Limitation to Grants of Awards. Subject to Section 4(e),
no Award may be granted if the number of shares of Stock to be delivered in
connection with such Award exceeds the number of shares of Stock remaining
available under this Plan minus the number of shares of Stock issuable in
settlement of or relating to then-outstanding Awards. The Committee may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
(c)    Availability of Shares Not Issued under Awards. Shares of Stock subject
to an Award under this Plan that expire or are canceled, forfeited, exchanged,
settled in cash or otherwise terminated, including (i) shares forfeited with
respect to Restricted Stock, (ii) shares tendered or withheld in payment of any
exercise or purchase price of an Award or taxes relating to an Award and (iii)
shares that were subject to an Option or an SAR and were not issued or delivered
upon the net settlement or net exercise of such Option or SAR, shall be
available again for issuance in connection with Awards under the Plan, except
that if any such shares could not again be available for Awards to a particular
Participant under any applicable law or regulation, such shares shall be
available exclusively for Awards to Participants who are not subject to such
limitation.
(d)    Stock Offered. The shares to be delivered under the Plan shall be made
available from (i) authorized but unissued shares of Stock, (ii) Stock held in
the treasury of the Company, (iii) previously issued shares of Stock reacquired
by the Company, including shares purchased on the open market, or (iv) effective
September 1, 2016, Stock held by any Parent or Subsidiary.
5.    Eligibility. Awards may be granted under this Plan only to Persons who are
Eligible Persons at the time of grant thereof.
6.    Specific Terms of Awards.
(a)    General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 10(f)),
such additional terms and conditions, not inconsistent with the provisions of
this Plan, as the Committee shall determine, including terms requiring
forfeiture of Awards in the event of termination of employment by the
Participant, or termination of the Participant’s service relationship with the
Company, and terms permitting a Participant to make elections relating to his or
her Award. The Committee shall retain full power and discretion to accelerate,
waive or modify, at any time, any term or condition of an Award that is not
mandatory under this Plan; provided, however, that the Committee shall not have
any discretion to accelerate, waive or modify any term or condition of an Award
that is intended to qualify as “performance-based compensation” for purposes of
section 162(m) of the Code if such discretion would cause the Award to not so
qualify or to accelerate the terms of payment of any Award that provides for a
deferral of compensation under the Nonqualified Deferred Compensation Rules if
such acceleration would subject a Participant to additional taxes under the
Nonqualified Deferred Compensation Rules.
(b)    Options. The Committee is authorized to grant Options to Eligible Persons
on the following terms and conditions:
(i)    Exercise Price. The exercise price per share of Stock subject to an
Option shall not be less than the greater of (1) the par value per share of the
Stock and (2) 100% of the Fair Market Value per share of the Stock as of the
date of grant of the Option (or in the case of an ISO granted to an individual
who owns stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or its parent or any subsidiary
corporation (within the meaning of sections 424(e) and (f) of the Code), 110% of
the Fair Market Value per share of the Stock on the date of grant); provided,
however, nothing in this Section 6(b)(i) is intended to limit the ability of the
Company to assume or otherwise grant Options in substitution of awards in
connection with any merger, stock purchase, recapitalization or other corporate
transaction.
(ii)    Time and Method of Exercise. The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the methods by which such Exercise Price may be
paid or deemed to be paid, the form of such payment, including without
limitation cash, Stock, other Awards or awards granted under other plans of the
Company or any Subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants, including, but not limited to, the delivery of
Restricted Stock subject to Section 6(d). In the case of an exercise whereby the
Exercise Price is paid with Stock, such Stock shall be valued as of the date of
exercise. The Award agreement governing each Option shall set forth the last
date that the Option may be exercised (the “Option Expiration Date”) and may
provide (A) for the automatic exercise of such Option on the Option Expiration
Date if the exercise price per share of the Stock under the Option is less than
the Fair Market Value per share of the Stock on the Option Expiration Date and
the Participant has not previously exercised such Option, or (B) except with
respect to an ISO, that in the event trading in the Stock is prohibited by
applicable law, the term of the Option shall automatically be extended until the
date that is 30 days after such prohibition is lifted, to the extent that such
extension does not cause the Participant to become subject to taxation under the
Nonqualified Deferred Compensation Plan Rules.
(iii)    ISOs. The terms of any ISO granted under this Plan shall comply in all
respects with the provisions of section 422 of the Code. Except as otherwise
provided in Section 9, no term of this Plan relating to ISOs (including any SAR
in tandem therewith) shall be interpreted, amended or altered, nor shall any
discretion or authority granted under this Plan be exercised, so as to
disqualify either this Plan or any ISO under section 422 of the Code, unless the
Participant has first requested the change that will result in such
disqualification. ISOs shall not be granted more than ten years after the
earlier of the adoption of this Plan or the approval of this Plan by the
Company’s stockholders. Notwithstanding the foregoing, the Fair Market Value of
shares of Stock subject to an ISO and the aggregate Fair Market Value of shares
of stock of any parent or subsidiary corporation (within the meaning of sections
424(e) and (f) of the Code) subject to any other ISO (within the meaning of
section 422 of the Code)) of the Company or a parent or subsidiary corporation
(within the meaning of sections 424(e) and (f) of the Code) that first becomes
purchasable by a Participant in any calendar year may not (with respect to that
Participant) exceed $100,000, or such other amount as may be prescribed under
section 422 of the Code or applicable regulations or rulings from time to time.
As used in the previous sentence, Fair Market Value shall be determined as of
the date the ISOs are granted. Failure to comply with this provision shall not
impair the enforceability or exercisability of any Option, but shall cause the
excess amount of shares to be reclassified in accordance with the Code.
(iv)    Service Providers to Parents. To the extent an Option is granted to an
Eligible Person who is an employee or service provider to any Parent of the
Company, such Option is intended to be designed in a manner that is intended to
comply with the Nonqualified Deferred Compensation Rules.
(c)    Stock Appreciation Rights. The Committee is authorized to grant SARs to
Eligible Persons on the following terms and conditions:
(i)    Right to Payment. An SAR shall confer on the Participant to whom it is
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise over (B) the grant
price of the SAR as determined by the Committee; provided, however, that the
grant price per share of the Stock under each SAR shall not be less than 100% of
the Fair Market Value of a share of the Stock on the date the SAR is granted.
(ii)    Rights Related to Options. An SAR granted pursuant to an Option shall
entitle a Participant, upon exercise, to surrender that Option or any portion
thereof, to the extent unexercised, and to receive payment of an amount computed
pursuant to Section 6(c)(ii)(B). That Option shall then cease to be exercisable
to the extent surrendered. SARs granted in connection with an Option shall be
subject to the terms of the Award agreement governing the Option, which shall
comply with the following provisions in addition to those applicable to Options:
(A)    An SAR granted in connection with an Option shall be exercisable only at
such time or times and only to the extent that the related Option is exercisable
and shall not be transferable except to the extent that the related Option is
transferable.
(B)    Upon the exercise of an SAR related to an Option, a Participant shall be
entitled to receive payment from the Company of an amount determined by
multiplying:
(1)    the difference obtained by subtracting the Exercise Price with respect to
a share of Stock specified in the related Option from the Fair Market Value of a
share of Stock on the date of exercise of the SAR, by
(2)    the number of shares as to which that SAR has been exercised.
(iii)    Right Without Option. An SAR granted independent of an Option shall be
exercisable as determined by the Committee and set forth in the Award agreement
governing the SAR, which Award agreement shall comply with the following
provisions:
(A)    Each Award agreement shall state the total number of shares of Stock to
which the SAR relates.
(B)    Each Award agreement shall state the time or periods in which the right
to exercise the SAR or a portion thereof shall vest and the number of shares of
Stock for which the right to exercise the SAR shall vest at each such time or
period.
(C)    Each Award agreement shall state the date at which the SARs shall expire
if not previously exercised.
(D)    Each SAR shall entitle a Participant, upon exercise thereof, to receive
payment of an amount determined by multiplying:
(1)    the difference obtained by subtracting the Fair Market Value of a share
of Stock on the date of grant of the SAR from the Fair Market Value of a share
of Stock on the date of exercise of that SAR, by
(2)    the number of shares as to which the SAR has been exercised.
(iv)    Terms. Except as otherwise provided herein, the Committee shall
determine at the date of grant or thereafter, the time or times at which and the
circumstances under which an SAR may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements),
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR.
SARs may be either freestanding or in tandem with other Awards. The Award
Agreement governing each SAR shall set forth the last date that the SAR may be
exercised (the “SAR Expiration Date”), and may provide (A) for the automatic
exercise of such SAR on the SAR Expiration Date if the exercise price per share
of the Stock under the SAR is less than the Fair Market Value per share of the
Stock on the SAR Expiration Date and the Participant has not previously
exercised such SAR, or (B) that in the event trading in the Stock is prohibited
by applicable law, the term of the SAR shall automatically be extended until the
date that is 30 days after such prohibition is lifted, to the extent that such
extension does not cause the Participant to become subject to taxation under the
Nonqualified Deferred Compensation Plan Rules.
(v)    Service Providers to Parents. To the extent an SAR is granted to an
Eligible Person who is an employee or service provider to any Parent of the
Company, such SAR is intended to be designed in a manner that is intended to
comply with the Nonqualified Deferred Compensation Rules.
(d)    Restricted Stock. The Committee is authorized to grant Restricted Stock
to Eligible Persons on the following terms and conditions:
(i)    Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant
or thereafter. During the restricted period applicable to the Restricted Stock,
the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.
(ii)    Certificates for Stock. Restricted Stock granted under this Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.
(iii)    Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require or permit a Participant to elect
that any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock, applied to the purchase of
additional Awards under this Plan or deferred without interest to the date of
vesting of the associated Award of Restricted Stock; provided, that, to the
extent applicable, any such election will be made in a manner intended to comply
with the Nonqualified Deferred Compensation Rules. Unless otherwise determined
by the Committee, Stock distributed in connection with a Stock split or Stock
dividend, and other property (other than cash) distributed as a dividend, shall
be subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has been
distributed.
(e)    Restricted Stock Units. The Committee is authorized to grant Restricted
Stock Units, which are rights to receive Stock or cash (or a combination
thereof) at the end of a specified deferral period (which may or may not be
coterminous with the vesting schedule of the Award), to Eligible Persons,
subject to the following terms and conditions:
(i)    Award and Restrictions. Settlement of an Award of Restricted Stock Units
shall occur upon expiration of the deferral period specified for such Restricted
Stock Unit by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Restricted Stock Units shall be subject to such
restrictions (which may include a risk of forfeiture) as the Committee may
impose, if any, which restrictions may lapse at the expiration of the deferral
period or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine.
Restricted Stock Units shall be satisfied by the delivery of cash or Stock in
the amount equal to the Fair Market Value of the specified number of shares of
Stock covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.
(ii)    Dividend Equivalents. Dividend Equivalents may be granted in connection
with Restricted Stock Units. Unless otherwise determined by the Committee at
date of grant, Dividend Equivalents on the specified number of shares of Stock
covered by an Award of Restricted Stock Units shall be either (A) paid with
respect to such Restricted Stock Units on the dividend payment date in cash or
in shares of unrestricted Stock having a Fair Market Value equal to the amount
of such dividends, or (B) deferred with respect to such Restricted Stock Units
and the amount or value thereof automatically deemed reinvested in additional
Restricted Stock Units other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect (in a manner, to
the extent applicable, that complies with the Nonqualified Deferred Compensation
Rules).
(f)    Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of obligations to pay cash or deliver other property under this Plan or under
other plans or compensatory arrangements, provided that, in the case of
Participants subject to section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards are exempt from liability
under section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall
be subject to such other terms as shall be determined by the Committee. In the
case of any grant of Stock to an officer of the Company or any of its
Subsidiaries or Parents in lieu of salary or other cash compensation, the number
of shares granted in place of such compensation shall be reasonable, as
determined by the Committee.
(g)    Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
(h)    Other Awards. The Committee is authorized, subject to limitations under
applicable law, to grant to Participants such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock, as deemed by the Committee to be
consistent with the purposes of this Plan, including without limitation
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified Subsidiaries
of the Company. The Committee shall determine the terms and conditions of such
other Stock-Based Awards. Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section 6(h) shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards, or other property, as
the Committee shall determine. Cash awards, as an element of or supplement to
any other Award under this Plan, may also be granted pursuant to this Section
6(h).
7.    Certain Provisions Applicable to Awards.
(a)    Termination of Employment. Except as provided herein, the treatment of an
Award upon a termination of employment or any other service relationship by and
between a Participant and the Company or any Subsidiary or Parent shall be
specified in the agreement controlling such Award.
(b)    Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under this Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, or any of its
Subsidiaries or Parents, or of any business entity to be acquired by the Company
or any of its Subsidiaries, or any other right of an Eligible Person to receive
payment from the Company or any of its Subsidiaries or Parents. Such additional,
tandem and substitute or exchange Awards may be granted at any time. If an Award
is granted in substitution or exchange for another Award, the Committee shall
require the surrender of such other Award in consideration for the grant of the
new Award. Awards under this Plan may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any of its Subsidiaries or Parents, in which the value of Stock subject to the
Award is equivalent in value to the cash compensation. Awards granted pursuant
to the preceding sentence are intended to be designed, awarded and settled in a
manner that does not result in additional taxes under the Nonqualified Deferred
Compensation Rules.
(c)    Term of Awards. Except as specified herein, the term of each Award shall
be for such period as may be determined by the Committee; provided, that in no
event shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under section 422 of the
Code).
(d)    Form and Timing of Payment under Awards; Deferrals. Subject to the terms
of this Plan and any applicable Award agreement, payments to be made by the
Company or any of its Subsidiaries or Parents upon the exercise of an Option or
other Award or settlement of an Award may be made in such forms as the Committee
shall determine, including without limitation cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis; provided, however, that any such deferred payment will be
set forth in the agreement evidencing such Award and/or otherwise made in a
manner that is intended not to result in additional taxes under the Nonqualified
Deferred Compensation Rules. Except as otherwise provided herein, the settlement
of any Award may be accelerated, and cash paid in lieu of Stock in connection
with such settlement, in the discretion of the Committee or upon occurrence of
one or more specified events (in addition to a Change in Control). Installment
or deferred payments may be required by the Committee (subject to Section 10(c)
of this Plan, including the consent provisions thereof in the case of any
deferral of an outstanding Award not provided for in the original Award
agreement) or permitted at the election of the Participant on terms and
conditions established by the Committee and intended to be in compliance with
the Nonqualified Deferred Compensation Rules. Payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock. Any deferral shall only be allowed as is provided in a
separate deferred compensation plan adopted by the Company and shall be made
with the intent to comply with the Nonqualified Deferred Compensation Rules.
This Plan shall not constitute an “employee benefit plan” for purposes of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
(e)    Exemptions from Section 16(b) Liability. It is the intent of the Company
that the grant of any Awards to or other transaction by a Participant who is
subject to section 16 of the Exchange Act shall be exempt from such section
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award agreement does not comply with the requirements of Rule
16b-3 as then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
section 16(b) of the Exchange Act.
(f)    Restrictive Covenants. Each Participant to whom an Award is granted under
the Plan may be required to agree in writing, as a condition to the granting of
such Award, to comply with certain non-competition, non-solicitation,
confidentiality, or other restrictive covenants that are contained in the Award
Agreement applicable to such Award or otherwise applicable to the Participant
(a “Restrictive Covenant Agreement”); provided, however, to the extent a legally
binding right to an Award within the meaning of the Nonqualified Deferred
Compensation Rules is created with respect to a Participant, such Restrictive
Covenant Agreement must be entered into by such Participant within 30 days
following the creation of such legally binding right.
8.    Performance and Annual Incentive Awards.
(a)    Performance Conditions. The right of an Eligible Person to receive a
grant, and the right of a Participant to exercise or receive a grant or
settlement of any Award, and the timing thereof, may be subject to such
performance conditions as may be specified by the Committee. The Committee may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any Award subject to
performance conditions, except as limited under Sections 8(b) and 8(c) hereof in
the case of a Performance Award or Annual Incentive Award intended to qualify
under section 162(m) of the Code.
(b)    Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as “performance-based compensation” for purposes of section
162(m) of the Code, the grant, exercise and/or settlement of such Performance
Award may be contingent upon achievement of preestablished performance goals and
other terms set forth in this Section 8(b).
(i)    Performance Goals Generally. The performance goals for such Performance
Awards shall consist of one or more business criteria or individual performance
criteria and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this Section 8(b),
which level may also be expressed in terms of a specified increase or decrease
in the particular criteria compared to a past period. Performance goals shall be
objective and shall otherwise meet the requirements of section 162(m) of the
Code and regulations thereunder (including Treasury Regulation §1.162-27 and
successor regulations thereto), including the requirement that the level or
levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain” at the time the Committee
actually establishes the performance goal or goals. The Committee may determine
that such Performance Awards shall be granted, exercised, and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for Performance Awards
granted to any one Participant or to different Participants.
(ii)    Business and Individual Performance Criteria
(A)    Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified Subsidiaries or business
or geographical units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for such Performance Awards: (1)
earnings per share; (2) increase in revenues; (3) increase in cash flow; (4)
increase in cash flow from operations; (5) increase in cash flow return; (6)
return on net assets; (7) return on assets; (8) return on investment; (9) return
on capital; (10) return on equity; (11) economic value added; (12) operating
margin; (13) contribution margin; (14) net income; (15) net income per share;
(16) pretax earnings; (17) pretax earnings before interest, depreciation and
amortization (“EBITDA”); (18) pretax operating earnings after interest expense
and before incentives, service fees, and extraordinary or special items; (19)
total stockholder return; (20) debt reduction; (21) market share; (22) change in
the Fair Market Value of the Stock; (23) operating income; (24) lease operating
expenses; (25) retail gross margin; (26) adjusted EBITDA; (27) margin under
contract; and (28) any of the above goals determined on an absolute or relative
basis or as compared to the performance of a published or special index deemed
applicable by the Committee including, but not limited to, the Standard & Poor’s
500 Stock Index or a group of comparable companies. One or more of the foregoing
business criteria shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered Employee under Section
8(c) hereof that are intended to qualify as “performance-based compensation”
under section 162(m) of the Code. The Committee may exclude the impact of any of
the following events or occurrences which the Committee determines should
appropriately be excluded: (a) asset write-downs; (b) litigation, claims,
judgments or settlements; (c) the effect of changes in tax law or other such
laws or regulations affecting reported results; (d) accruals for reorganization
and restructuring programs; (e) any extraordinary, unusual or nonrecurring items
as described in the Accounting Standards Codification Topic 225, as the same may
be amended or superseded from time to time; (f) any change in accounting
principles as defined in the Accounting Standards Codification Topic 250, as the
same may be amended or superseded from time to time; (g) any loss from a
discontinued operation as described in the Accounting Standards Codification
Topic 360, as the same may be amended or superseded from time to time; (h)
goodwill impairment charges; (i) operating results for any business acquired
during the calendar year; (j) third party expenses associated with any
acquisition by the Company or any of its Subsidiaries; and (k) to the extent set
forth with reasonable particularity in connection with the establishment of
performance goals, any other extraordinary events or occurrences identified by
the Committee.
(B)    Individual Performance Criteria. The grant, exercise and/or settlement of
Performance Awards may also be contingent upon individual performance goals
established by the Committee. If required for compliance with section 162(m) of
the Code, such criteria shall be approved by the stockholders of the Company.
(iii)    Performance Period; Timing for Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards shall be
measured over a performance period of up to ten years, as specified by the
Committee. Performance goals shall be established not later than 90 days after
the beginning of any performance period applicable to such Performance Awards,
or at such other date as may be required or permitted for “performance-based
compensation” under section 162(m) of the Code.
(iv)    Performance Award Pool. The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring performance of
the Company in connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by the Committee in
accordance with Section 8(b)(iii) hereof. The Committee may specify the amount
of the Performance Award pool as a percentage of any of such criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such criteria.
(v)    Settlement of Performance Awards; Other Terms. After the end of each
performance period, the Committee shall determine the amount, if any, of (A) the
Performance Award pool, and the maximum amount of the potential Performance
Award payable to each Participant in the Performance Award pool, or (B) the
amount of the potential Performance Award otherwise payable to each Participant.
Settlement of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable to a Covered Employee in respect of a Performance Award
subject to this Section 8(b). The Committee shall specify the circumstances in
which such Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a performance
period or settlement of Performance Awards.
(c)    Annual Incentive Awards Granted to Designated Covered Employees. If the
Committee determines that an Annual Incentive Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as “performance-based compensation” for purposes of section
162(m) of the Code, the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(c).
(i)    Potential Annual Incentive Awards. Not later than the end of the 90th day
of each applicable year, or at such other date as may be required or permitted
in the case of Awards intended to be “performance-based compensation” under
section 162(m) of the Code, the Committee shall determine the Eligible Persons
who will potentially receive Annual Incentive Awards, and the amounts
potentially payable thereunder, for that fiscal year, either out of an Annual
Incentive Award pool established by such date under Section 8(c)(i) hereof or as
individual Annual Incentive Awards. The amount potentially payable, with respect
to Annual Incentive Awards, shall be based upon the achievement of a performance
goal or goals based on one or more of the business criteria set forth in Section
8(b)(ii) hereof in the given performance year, as specified by the Committee.
(ii)    Annual Incentive Award Pool. The Committee may establish an Annual
Incentive Award pool, which shall be an unfunded pool, for purposes of measuring
performance of the Company in connection with Annual Incentive Awards. The
amount of such Annual Incentive Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business criteria set
forth in Section 8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Annual Incentive Award pool as a
percentage of any of such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(iii)    Payout of Annual Incentive Awards. After the end of each applicable
year, the Committee shall determine the amount, if any, of (A) the Annual
Incentive Award pool, and the maximum amount of the potential Annual Incentive
Award payable to each Participant in the Annual Incentive Award pool, or (A) the
amount of the potential Annual Incentive Award otherwise payable to each
Participant. The Committee may, in its discretion, determine that the amount
payable to any Participant as a final Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award, including a
determination to make no final Award whatsoever, but may not exercise discretion
to increase any such amount in the case of an Annual Incentive Award intended to
qualify under section 162(m) of the Code. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in
the event of termination of employment by the Participant prior to the end of
the applicable year or settlement of such Annual Incentive Award.
(d)    Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards, the achievement of performance goals
relating to and final settlement of Performance Awards under Section 8(b), the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards, the achievement of performance goals relating to and final
settlement of Annual Incentive Awards under Section 8(c) shall be made in
writing in the case of any Award intended to qualify under section 162(m) of the
Code. The Committee may not delegate any responsibility relating to such
Performance Awards or Annual Incentive Awards.
(e)    Status of Section 8(b) and Section 8(c) Awards under Section 162(m) of
the Code. It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Sections 8(b) and 8(c) hereof granted to Persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of section 162(m) of the Code and the regulations thereunder (including Treasury
Regulation §1.162-27 and successor regulations thereto) shall, if so designated
by the Committee, constitute “performance-based compensation” within the meaning
of section 162(m) of the Code and regulations thereunder. Accordingly, the terms
of Sections 8(b), (c), (d) and (e), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with section 162(m) of the Code and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot determine with certainty
whether a given Eligible Person will be a Covered Employee with respect to a
fiscal year that has not yet been completed, the term Covered Employee as used
herein shall mean only a Person designated by the Committee, at the time of
grant of a Performance Award or an Annual Incentive Award, who is likely to be a
Covered Employee with respect to that fiscal year. If any provision of this Plan
as in effect on the date of adoption of any agreements relating to Performance
Awards or Annual Incentive Awards that are designated as intended to comply with
section 162(m) of the Code does not comply or is inconsistent with the
requirements of section 162(m) of the Code or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements. Notwithstanding anything to the contrary in this
Section 8(e) or elsewhere in this Plan, the Company intends to rely on the
transition relief set forth in Treasury Regulation § 1.162-27(f), and hence the
deduction limitation imposed by section 162(m) of the Code will not be
applicable to the Company until the earliest to occur of (i) the material
modification of the Plan within the meaning of Treasury Regulation §
1.162-27(h)(1)(iii); (ii) the issuance of the number of shares of Stock set
forth in Section 4(a); or (iii) the first meeting of shareholders of the Company
at which directors are to be elected that occurs after December 31, 20__ (the
“Transition Period”), and during the Transition Period, Awards to Covered
Employees shall only be required to comply with the transition relief described
in this Section 8(e).
9.    Subdivision or Consolidation; Recapitalization; Change in Control;
Reorganization.
(a)    Existence of Plans and Awards. The existence of this Plan and the Awards
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities ahead of or affecting Stock or the rights thereof,
the dissolution or liquidation of the Company or any sale, lease, exchange or
other disposition of all or any part of its assets or business or any other
corporate act or proceeding. In no event will any action taken by the Committee
pursuant to this Section 9 result in the creation of deferred compensation
within the meaning of the Nonqualified Deferred Compensation Plan Rules.
(b)    Subdivision or Consolidation of Shares. The terms of an Award and the
number of shares of Stock authorized pursuant to Section 4 for issuance under
the Plan shall be subject to adjustment from time to time, in accordance with
the following provisions:
(i)    If at any time, or from time to time, the Company shall subdivide as a
whole (by reclassification, by a Stock split, by the issuance of a distribution
on Stock payable in Stock, or otherwise) the number of shares of Stock then
outstanding into a greater number of shares of Stock, then, (A)%8. the maximum
number of shares of Stock available for the Plan or in connection with Awards as
provided in Section 4 shall be increased proportionately, and the kind of shares
or other securities available for the Plan shall be appropriately adjusted,
(B)%8. the number of shares of Stock (or other kind of shares or securities)
that may be acquired under any then outstanding Award shall be increased
proportionately, and %8.(C) the price (including the exercise price) for each
share of Stock (or other kind of shares or securities) subject to then
outstanding Awards shall be reduced proportionately, without changing the
aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.
(ii)    If at any time, or from time to time, the Company shall consolidate as a
whole (by reclassification, by reverse Stock split, or otherwise) the number of
shares of Stock then outstanding into a lesser number of shares of Stock, (A)%8.
the maximum number of shares of Stock for the Plan or available in connection
with Awards as provided in Section 4 shall be decreased proportionately, and the
kind of shares or other securities available for the Plan shall be appropriately
adjusted, (B)%8. the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any then outstanding Award shall be
decreased proportionately, and (C)%8. the price (including the exercise price)
for each share of Stock (or other kind of shares or securities) subject to then
outstanding Awards shall be increased proportionately, without changing the
aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.
(iii)    Whenever the number of shares of Stock subject to outstanding Awards
and the price for each share of Stock subject to outstanding Awards are required
to be adjusted as provided in this Section 9(b), the Committee shall promptly
prepare a notice setting forth, in reasonable detail, the event requiring
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the change in price and the number of shares of Stock, other
securities, cash, or property purchasable subject to each Award after giving
effect to the adjustments. The Committee shall promptly provide each affected
Participant with such notice.
(iv)    Adjustments under Sections 9(b)(i) and (ii) shall be made by the
Committee, and its determination as to what adjustments shall be made and the
extent thereof shall be final, binding, and conclusive. No fractional interest
shall be issued under the Plan on account of any such adjustments.
(c)    Corporate Recapitalization. If the Company recapitalizes, reclassifies
its capital stock, or otherwise changes its capital structure (a
“recapitalization”) without the occurrence of a Change in Control, the number
and class of shares of Stock covered by an Option or an SAR theretofore granted
shall be adjusted so that such Option or SAR shall thereafter cover the number
and class of shares of stock and securities to which the holder would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to
the recapitalization, the holder had been the holder of record of the number of
shares of Stock then covered by such Option or SAR and the share limitations
provided in Sections 4 and 5 shall be adjusted in a manner consistent with the
recapitalization and the exercise prices and grant prices of such Awards shall,
to the extent applicable, be adjusted accordingly.
(d)    Additional Issuances. Except as hereinbefore expressly provided, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to Awards theretofore granted
or the purchase price per share, if applicable.
(e)    Change in Control. Upon a Change in Control the Committee, acting in its
sole discretion without the consent or approval of any holder, shall affect one
or more of the following alternatives, which may vary among individual holders
and which may vary among Options or SARs (collectively “Grants”) held by any
individual holder: (i) accelerate the time at which Grants then outstanding may
be exercised so that such Grants may be exercised in full for a limited period
of time on or before a specified date (before or after such Change in Control)
fixed by the Committee, after which specified date all unexercised Grants and
all rights of holders thereunder shall terminate, (ii) require the mandatory
surrender to the Company by selected holders of some or all of the outstanding
Grants held by such holders (irrespective of whether such Grants are then
exercisable under the provisions of this Plan) as of a date, before or after
such Change in Control, specified by the Committee, in which event the Committee
shall thereupon cancel such Grants and pay to each holder an amount of cash (or
other consideration including securities or other property) per share equal to
the excess, if any, of the amount calculated in Section 9(f) (the “Change in
Control Price”) of the shares subject to such Grants over the exercise price(s)
under such Grants for such shares (except that to the extent the exercise price
under any such Grant is equal to or exceeds the Change in Control Price, in
which case no amount shall be payable with respect to such Grant), or (iii) make
such adjustments to Grants then outstanding as the Committee deems appropriate
to reflect such Change in Control; provided, however, that the Committee may
determine in its sole discretion that no adjustment is necessary to Grants then
outstanding; provided, further, however, that the right to make such adjustments
shall include, but not require or be limited to, the modification of Grants such
that the holder of the Grant shall be entitled to purchase or receive (in lieu
of the total number of shares of Stock as to which an Option or SAR is
exercisable (the “Total Shares”) or other consideration that the holder would
otherwise be entitled to purchase or receive under the Grant (the “Total
Consideration”)), the number of shares of stock, other securities, cash or
property to which the Total Consideration would have been entitled to in
connection with the Change in Control (A) (in the case of Options), at an
aggregate exercise price equal to the exercise price that would have been
payable if the Total Shares had been purchased upon the exercise of the Grant
immediately before the consummation of the Change in Control and (B) in the case
of SARs, if the SARs had been exercised immediately before the occurrence of the
Change in Control. Notwithstanding the foregoing, with respect to a Change in
Control that constitutes an “equity restructuring” that would be subject to a
compensation expense pursuant to Accounting Standards Codification Topic 718,
Compensation — Stock Compensation, or any successor accounting standard, the
provisions in Section 9(b) above shall control to the extent they are in
conflict with the discretionary provisions of this Section 9(e); provided,
however, that nothing in this Section 9(e) or in Section 9(b) above shall be
construed as providing any Participant or any beneficiary of an Award any rights
with respect to the “time value,” “economic opportunity” or “intrinsic value” of
an Award or limiting in any manner the Committee’s actions that may be taken
with respect to an Award as set forth in this Section 9(e) or in Section 9(b)
above.
(f)    Change in Control Price. The “Change in Control Price” shall equal the
amount determined in the following clause (i), (ii), (iii), (iv) or (v),
whichever is applicable, as follows: (i) the price per share offered to holders
of Stock in any merger or consolidation, (ii) the per share Fair Market Value of
the Stock immediately before the Change in Control without regard to assets sold
in the Change in Control and assuming the Company has received the consideration
paid for the assets in the case of a sale of the assets, (iii) the amount
distributed per share of Stock in a dissolution transaction, (iv) the price per
share offered to holders of Stock in any tender offer or exchange offer whereby
a Change in Control takes place, or (v) if such Change in Control occurs other
than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of
this Section 9(f), the Fair Market Value per share of the Stock that may
otherwise be obtained with respect to such Grants or to which such Grants track,
as determined by the Committee as of the date determined by the Committee to be
the date of cancellation and surrender of such Grants. In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Section 9(f) or in Section 9(e) consists of anything other
than cash, the Committee shall determine the fair cash equivalent of the portion
of the consideration offered which is other than cash and such determination
shall be binding on all affected Participants to the extent applicable to Awards
held by such Participants.
(g)    Impact of Corporate Events on Awards Generally. In the event of a Change
in Control or changes in the outstanding Stock by reason of a recapitalization,
reorganization, merger, consolidation, combination, exchange or other relevant
change in capitalization occurring after the date of the grant of any Award and
not otherwise provided for by this Section 9, any outstanding Awards and any
Award agreements evidencing such Awards shall be subject to adjustment by the
Committee at its discretion, which adjustment may, in the Committee’s
discretion, be described in the Award agreement and may include, but not be
limited to, adjustments as to the number and price of shares of Stock or other
consideration subject to such Awards, accelerated vesting (in full or in part)
of such Awards, conversion of such Awards into awards denominated in the
securities or other interests of any successor Person, or the cash settlement of
such Awards in exchange for the cancellation thereof. In the event of any such
change in the outstanding Stock, the aggregate number of shares of Stock
available under this Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.
10.    General Provisions.
(a)    Transferability.
(i)    Permitted Transferees. The Committee may, in its discretion, permit a
Participant to transfer all or any portion of any Award, or authorize all or a
portion of an Option or SAR to be granted to an Eligible Person to be on terms
which permit transfer by such Participant; provided that, in either case the
transferee or transferees must be any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, in each case with respect to
the Participant, an individual sharing the Participant’s household (other than a
tenant or employee of the Company), a trust in which any of the foregoing
individuals have more than fifty percent of the beneficial interest, a
foundation in which any of the foregoing individuals (or the Participant)
control the management of assets, and any other entity in which any of the
foregoing individuals (or the Participant) own more than fifty percent of the
voting interests (collectively, “Permitted Transferees”); provided further that,
(X) there may be no consideration for any such transfer and (Y) subsequent
transfers of Awards transferred as provided above shall be prohibited except
subsequent transfers back to the original holder of the Awards and transfers to
other Permitted Transferees of the original holder. Agreements evidencing Awards
with respect to which such transferability is authorized at the time of grant
must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section 10(a)(i).
(ii)    Domestic Relations Orders. An Award may be transferred, to a Permitted
Transferee, pursuant to a domestic relations order entered or approved by a
court of competent jurisdiction upon delivery to the Company of written notice
of such transfer and a certified copy of such order.
(iii)    Other Transfers. Except as expressly permitted by Sections 10(a)(i) and
10(a)(ii), Awards shall not be transferable other than by will or the laws of
descent and distribution. Notwithstanding anything to the contrary in this
Section 10, an Incentive Stock Option shall not be transferable other than by
will or the laws of descent and distribution.
(iv)    Effect of Transfer. Following the transfer of any Award as contemplated
by Sections 10(a)(i), 10(a)(ii) and 10(a)(iii), (A) such Award shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that the term “Participant” shall be deemed to refer to
the Permitted Transferee, the recipient under a qualified domestic relations
order, or the estate or heirs of a deceased Participant or other transferee, as
applicable, to the extent appropriate to enable the Participant to exercise the
transferred Award in accordance with the terms of this Plan and applicable law
and (B) the provisions of the Award relating to exercisability shall continue to
be applied with respect to the original Participant and, following the
occurrence of any applicable events described therein the Awards shall be
exercisable by the Permitted Transferee, the recipient under a qualified
domestic relations order, or the estate or heirs of a deceased Participant, as
applicable, only to the extent and for the periods that would have been
applicable in the absence of the transfer.
(v)    Procedures and Restrictions. Any Participant desiring to transfer an
Award as permitted under Sections 10(a)(i), 10(a)(ii) or 10(a)(iii) shall make
application therefor in the manner and time specified by the Committee and shall
comply with such other requirements as the Committee may require to assure
compliance with all applicable securities laws. The Committee shall not give
permission for such a transfer if (A) it would give rise to short swing
liability under section 16(b) of the Exchange Act or (B) it may not be made in
compliance with all applicable federal, state and foreign securities laws.
(vi)    Registration. To the extent the issuance to any Permitted Transferee of
any shares of Stock issuable pursuant to Awards transferred as permitted in this
Section 10(b) is not registered pursuant to the effective registration statement
of the Company generally covering the shares to be issued pursuant to this Plan
to initial holders of Awards, the Company shall not have any obligation to
register the issuance of any such shares of Stock to any such transferee.
(b)    Taxes. The Company and any of its Subsidiaries or Parents are authorized
to withhold from any Award granted, or any payment relating to an Award under
this Plan, including from a distribution of Stock, amounts of withholding and
other taxes due or potentially payable in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee. Notwithstanding the foregoing, the Company and its
Affiliates may, in its sole discretion and in satisfaction of the foregoing
requirement, withhold or permit the Participant to elect to have the Company
withhold a sufficient number of shares of Stock that are otherwise issuable to
the Participant pursuant to an Award (or allow the surrender of shares of Stock
by the Participant to the Company). The number of shares of Stock that may be so
withheld or surrendered shall be limited to the number of shares of Stock that
have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the applicable minimum statutory
withholding rates for U.S. federal, state, local or non-U.S. income and social
insurance taxes and payroll taxes, as determined by the Committee.
(c)    Changes to this Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate this Plan or the Committee’s authority to grant Awards
under this Plan without the consent of stockholders or Participants, except that
any amendment or alteration to this Plan, including any increase in any share
limitation, shall be subject to the approval of the Company’s stockholders not
later than the annual meeting next following such Board action if such
stockholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the Stock
may then be listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to this Plan to stockholders for
approval; provided, that, without the consent of an affected Participant, no
such Board action may materially and adversely affect the rights of such
Participant under any previously granted and outstanding Award. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue
or terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in this Plan; provided, however, that,
without the consent of an affected Participant, no such Committee action may
materially and adversely affect the rights of such Participant under such Award.
For purposes of clarity, any adjustments made to Awards pursuant to Section 9
will be deemed not to materially and adversely affect the rights of any
Participant under any previously granted and outstanding Award and therefore may
be made without the consent of affected Participants.
(d)    Limitation on Rights Conferred under Plan. Neither this Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or any of its Subsidiaries or Parents, (ii)
interfering in any way with the right of the Company or any of its Subsidiaries
or Parents to terminate any Eligible Person’s or Participant’s employment or
service relationship at any time, (iii) giving an Eligible Person or Participant
any claim to be granted any Award under this Plan or to be treated uniformly
with other Participants and/or employees and/or other service providers, or
(iv) conferring on a Participant any of the rights of a stockholder of the
Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award.
(e)    Unfunded Status of Awards. This Plan is intended to constitute an
“unfunded” plan for certain incentive awards.
(f)    Nonexclusivity of this Plan. Neither the adoption of this Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable, including incentive arrangements and awards which do not qualify
under section 162(m) of the Code. Nothing contained in this Plan shall be
construed to prevent the Company or any of its Subsidiaries or Parents from
taking any corporate action which is deemed by the Company or such Subsidiary or
Parent to be appropriate or in its best interest, whether or not such action
would have an adverse effect on this Plan or any Award made under this Plan. No
employee, beneficiary or other person shall have any claim against the Company
or any of its Subsidiaries or Parents as a result of any such action.
(g)    Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to this Plan or any Award. The Committee shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(h)    Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included herein. If any of the terms or provisions of this Plan or
any Award agreement conflict with the requirements of Rule 16b-3 (as those terms
or provisions are applied to Eligible Persons who are subject to section 16(b)
of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock
Options), then those conflicting terms or provisions shall be deemed inoperative
to the extent they so conflict with the requirements of Rule 16b-3 (unless the
Board or the Committee, as appropriate, has expressly determined that the Plan
or such Award should not comply with Rule 16b-3) or section 422 of the Code.
With respect to Incentive Stock Options, if this Plan does not contain any
provision required to be included herein under section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
further, that, to the extent any Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, that Option (to that extent) shall be
deemed an Option not subject to section 422 of the Code for all purposes of the
Plan.
(i)    Governing Law. All questions arising with respect to the provisions of
the Plan and Awards shall be determined by application of the laws of the State
of Delaware, without giving effect to any conflict of law provisions thereof,
except to the extent Delaware law is preempted by federal law. The obligation of
the Company to sell and deliver Stock hereunder is subject to applicable federal
and state laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale, or delivery of such Stock.
(j)    Conditions to Delivery of Stock. Nothing herein or in any Award granted
hereunder or any Award agreement shall require the Company to issue any shares
with respect to any Award if that issuance would, in the opinion of counsel for
the Company, constitute a violation of the Securities Act or any similar or
superseding statute or statutes, any other applicable statute or regulation, or
the rules of any applicable securities exchange or securities association, as
then in effect. At the time of any exercise of an Option or Stock Appreciation
Right, or at the time of any grant of a Restricted Stock, Restricted Stock Unit,
or other Award the Company may, as a condition precedent to the exercise of such
Option or Stock Appreciation Right or settlement of any Restricted Stock,
Restricted Stock Unit or other Award, require from the Participant (or in the
event of his or her death, his or her legal representatives, heirs, legatees, or
distributees) such written representations, if any, concerning the holder’s
intentions with regard to the retention or disposition of the shares of Stock
being acquired pursuant to the Award and such written covenants and agreements,
if any, as to the manner of disposal of such shares as, in the opinion of
counsel to the Company, may be necessary to ensure that any disposition by that
holder (or in the event of the holder’s death, his or her legal representatives,
heirs, legatees, or distributees) will not involve a violation of the Securities
Act or any similar or superseding statute or statutes, any other applicable
state or federal statute or regulation, or any rule of any applicable securities
exchange or securities association, as then in effect. No Option or Stock
Appreciation Right shall be exercisable and no settlement of any Restricted
Stock or Restricted Stock Unit shall occur with respect to a Participant unless
and until the holder thereof shall have paid cash or property to, or performed
services for, the Company or any of its Subsidiaries or Parents that the
Committee believes is equal to or greater in value than the par value of the
Stock subject to such Award.
(k)    Clawback. The Committee shall have the right to provide, in an Award
Agreement or otherwise, or to require a Participant to agree by separate written
or electronic instrument, that all Awards (including any proceeds, gains or
other economic benefit actually or constructively received by the Participant
upon any receipt or exercise of any Award or upon the receipt or resale of any
shares of Stock underlying the Award) shall be subject to the provisions of any
clawback policy implemented by the Company, including, without limitation, any
clawback policy adopted to comply with the requirements of applicable law,
including without limitation the Dodd Frank Wall Street Reform and Consumer
Protection Act and any rules or regulations promulgated thereunder, to the
extent set forth in such clawback policy and/or in the applicable Award
Agreement.
(l)    Section 409A of the Code. In the event that any Award granted pursuant to
this Plan provides for a deferral of compensation within the meaning of the
Nonqualified Deferred Compensation Rules, it is the general intention, but not
the obligation, of the Company to design such Award to comply with the
Nonqualified Deferred Compensation Rules and such Award should be interpreted
accordingly. Notwithstanding any provision in the Plan or an Award agreement to
the contrary, if any payment or benefit provided for under an Award would be
subject to additional taxes and interest under section 409A of the Code if the
Participant’s receipt of such payment or benefit is not delayed in accordance
with the requirements of section 409A(a)(2)(B)(i) of the Code, then such payment
or benefit shall not be provided to the Participant (or the Participant’s
estate, if applicable) until the earlier of (i) the date of the Participant’s
death or (ii) the date that is six months after the date of the Participant’s
“separation from service” with the Company within the meaning of the
Nonqualified Deferred Compensation Rules.
(m)    Plan Effective Date and Term. This Plan was adopted by the Board and
approved by the sole stockholder of the Company on July 21, 2014, to be
effective on the Effective Date. No Awards may be granted under this Plan on and
after July 21, 2024.

US 4600466v.1

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