Exhibit 10.7

AMENDED AND RESTATED

U.S. WELL SERVICES, INC.

2018 STOCK INCENTIVE PLAN

 

1.

Establishment; Purpose; Eligibility.

 

1.1Establishment.   The name of this plan is the Amended and Restated U.S. Well
Services, Inc. 2018 Stock Incentive Plan (the “Plan”).  U.S. Well Services, Inc.
established the U.S. Well Services, Inc. 2018 Stock Incentive Plan which was
approved by the Company’s shareholders effective as of November 2, 2018, and the
Board has authorized, approved and adopted the amendment and restatement of the
U.S. Well Services, Inc. 2018 Stock Incentive Plan, effective September 21, 2020
(the “Effective Date”) to increase the number of shares of Common Stock
available for grants for Awards under the Plan and to provide such other changes
as provided herein, subject, with respect to the increase in the number of
shares of Common Stock available for grants for Awards under the Plan, to the
approval of the Company’s shareholders on the earlier of the next shareholder’s
meeting following the Effective Date or within twelve (12) months following the
Effective Date.  The Plan shall not extend the term of any Award granted prior
to the Effective Date.

 

1.2Purpose.  The purposes of the Plan are to (a) enable U.S. Well Services,
Inc., a Delaware corporation (the “Company”), and any Affiliate to attract and
retain the types of Employees, Consultants and Directors who will contribute to
the Company’s long range success; (b) provide incentives that align the
interests of Employees, Consultants and Directors with those of the shareholders
of the Company; and (c) promote the success of the Company’s business.

 

1.3Eligible Award Recipients.   The persons eligible to receive Awards are the
Employees, Consultants and Directors of the Company and its Affiliates and such
other individuals designated by the Committee who are reasonably expected to
become Employees, Consultants and Directors after the receipt of Awards.

 

1.4Available Awards.   Awards that may be granted under the Plan include:
(a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock
Appreciation Rights, (d) Restricted Awards, (e) Performance Awards, and
(f) Other Equity-Based Awards.

 

2.

Definitions.

 

“Affiliate” means a corporation or other entity that, directly or through one or
more intermediaries, controls, is controlled by or is under common control with,
the Company.

 

“Applicable Laws” means the requirements related to or implicated by the
administration of the Plan under applicable state corporate law, United States
federal and state securities laws, the Code, any stock exchange or quotation
system on which the shares of Common Stock are listed or quoted, and the
applicable laws of any foreign country or jurisdiction where Awards are granted
under the Plan.

 

 

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“Award” means any right granted under the Plan, including an Incentive Stock
Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted
Award, a Performance Award, or an Other Equity-Based Award.

 

“Award Agreement” means a written agreement, contract, certificate or other
instrument or document evidencing the terms and conditions of an individual
Award granted under the Plan which may, in the discretion of the Company, be
transmitted electronically to any Participant. Each Award Agreement shall be
subject to the terms and conditions of the Plan.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular Person, such Person shall be deemed to have
beneficial ownership of all securities that such Person has the right to acquire
by conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only after the passage of time. The terms
“Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

 

“Board” means the Board of Directors of the Company, as constituted at any time.

 

“Cause” means:

 

(a)   with respect to any Employee or Consultant, unless the applicable Award
Agreement states otherwise:, (i) if the Employee or Consultant is a party to an
employment or service agreement with the Company or its Affiliates and such
agreement provides for a definition of Cause, the definition contained therein;
or (ii) if no such agreement exists, or if such agreement does not define Cause:
(A) the Employee’s or Consultant’s failure or refusal to perform specific
directives from the Company or any of its Affiliates that are consistent with
the scope and nature of the Employee’s or Consultant’s duties and
responsibilities; (B) fraud committed against the Company or any of its
Affiliates, or embezzlement of the funds of the Company or any of its
Affiliates; (C) use of drugs or other substances, which (x) is unlawful or
(y) otherwise interferes with the performance of the Employee’s or Consultant’s
duties and obligations; (D) commission of or pleading guilty or no contest to a
felony or to any crime involving dishonesty or fraud; or (E) any gross or
willful misconduct of the Employee or Consultant resulting in loss to the
Company or any of its Affiliates or damages to the reputation of the Company or
any of its Affiliates.

 

(b)   with respect to any Director, unless the applicable Award Agreement states
otherwise, a determination by a majority of the disinterested Board members that
the Director has engaged in any of the following: (i) malfeasance in office;
(ii) gross misconduct or neglect; (iii) false or fraudulent misrepresentation
inducing the director’s appointment; (iv) willful conversion of corporate funds;
or (v) repeated failure to participate in Board meetings on a regular basis
despite having received proper notice of the meetings in advance.

 

The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to whether a Participant has been discharged for
Cause.

 

“Change in Control” means:

 

 

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(a)   the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of the
Company and its subsidiaries, taken as a whole, other than a transaction which
results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being
converted into voting securities of the Company or the person that, as a result
of the transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Company’s assets or
otherwise succeeds to the business of the Company (the Company or such person,
the “Successor Entity”)) directly or indirectly, at least a majority of the
combined voting power of the Successor Entity’s outstanding voting securities
immediately after the transaction;

 

(b)   the Incumbent Directors cease for any reason to constitute at least a
majority of the Board;

 

(c)   the consummation of a complete liquidation or dissolution of the Company;

 

(d)   the acquisition by any Person of Beneficial Ownership of more than 50% (on
a fully diluted basis) of either (i) the then outstanding shares of Common Stock
of the Company, taking into account as outstanding for this purpose such Common
Stock issuable upon the exercise of options or warrants, the conversion of
convertible stock or debt, and the exercise of any similar right to acquire such
Common Stock (the “Outstanding Company Common Stock”) or (ii) 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 Plan, the following
acquisitions shall not constitute a Change in Control: (A) any acquisition by
the Company or any Affiliate, (B) any acquisition by any employee benefit plan
sponsored or maintained by the Company or any subsidiary, (C) any acquisition
which complies with clauses, (i), (ii) and (iii) of subsection (e) of this
definition or (D) in respect of an Award held by a particular Participant, any
acquisition by the Participant or any group of persons including the Participant
(or any entity controlled by the Participant or any group of persons including
the Participant); or

 

(e)   the consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company
that requires the approval of the Company’s shareholders, whether for such
transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (i) more
than 50% of the total voting power of  (A) the entity resulting from such
Business Combination (the “Surviving Company”), or (B) if applicable, the
ultimate parent entity that directly or indirectly has beneficial ownership of
sufficient voting securities eligible to elect a majority of the members of the
board of directors (or the analogous governing body) of the Surviving Company
(the “Parent Company”), is represented by the Outstanding Company Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which the Outstanding Company
Voting Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the same
proportion as the voting power of the Outstanding Company Voting Securities
among the holders thereof immediately prior to the Business Combination; (ii) no
Person (other than any employee benefit plan sponsored or maintained by the
Surviving Company or the Parent Company) is or becomes the Beneficial Owner,
directly or indirectly, of

 

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50% or more of the total voting power of the outstanding voting securities
eligible to elect members of the board of directors of the Parent Company (or
the analogous governing body) (or, if there is no Parent Company, the Surviving
Company); and (iii) at least a majority of the members of the board of directors
(or the analogous governing body) of the Parent Company (or, if there is no
Parent Company, the Surviving Company) following the consummation of the
Business Combination were Board members at the time of the Board’s approval of
the execution of the initial agreement providing for such Business Combination.

 

Notwithstanding anything herein to the contrary, in no event shall the Company’s
initial business combination or the transactions occurring in connection
therewith constitute a Change in Control and, with respect to any Award (or
portion of any Award) that provides for the deferral of compensation that is
subject to Section 409A of the Code, an event shall not be considered to be a
Change in Control under the Plan for purposes of payment of such Award (or
portion thereof) unless such event is also a “change in ownership,” a “change in
effective control” or a “change in the ownership of a substantial portion of the
assets” of the Company within the meaning of Section 409A of the Code.

 

“Clawback Policy” has the meaning set forth in Section 14.2.

 

“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time. Any reference to a section of the Code shall be deemed to include a
reference to any regulations promulgated thereunder.

 

“Committee” means a committee of one or more members of the Board appointed by
the Board to administer the Plan in accordance with Section 3.3 and Section 3.4;
provided, however, that if the Board has not appointed such a committee to
administer the Plan, references herein to “Committee” shall mean the Board.

 

“Common Stock” means the Class A common stock, $0.0001 par value per share, of
the Company, or such other securities of the Company as may be designated by the
Committee from time to time in substitution thereof.

“Company” means U.S. Well Services, Inc., a Delaware corporation, and any
successor thereto.

 

“Consultant” means any individual or entity which performs bona fide services to
the Company or an Affiliate, other than as an Employee or Director, and who may
be offered securities registerable pursuant to a registration statement on Form
S-8 under the Securities Act.

 

“Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Consultant or Director, is not interrupted or
terminated. The Participant’s Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s Continuous Service; provided further that if any Award is subject
to Section 409A of the Code, this sentence shall only be given effect to the
extent consistent with Section 409A of the Code. For example, a change in status
from an Employee of the Company to a Director of an Affiliate will not
constitute an

 

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interruption of Continuous Service. The Committee or its delegate, in its sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal or family leave of
absence. The Committee or its delegate, in its sole discretion, may determine
whether a Company transaction, such as a sale or spin-off of a division or
subsidiary that employs a Participant, shall be deemed to result in a
termination of Continuous Service for purposes of affected Awards, and such
decision shall be final, conclusive and binding.

 

“Deferred Stock Units (DSUs)” has the meaning set forth in Section 7.2(b)(ii)
hereof.

 

“Director” means a member of the Board.

 

“Disability” means, unless the applicable Award Agreement says otherwise, that
the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment; provided,
however, for purposes of determining the term of an Incentive Stock Option
pursuant to Section 6.9 hereof, the term Disability shall have the meaning
ascribed to it under Section 22(e)(3) of the Code. The determination of whether
an individual has a Disability shall be determined under procedures established
by the Committee. Except in situations where the Committee is determining
Disability for purposes of the term of an Incentive Stock Option pursuant to
Section 6.9 hereof within the meaning of Section 22(e)(3) of the Code, the
Committee may rely on any determination that a Participant is disabled for
purposes of benefits under any long-term disability plan maintained by the
Company or any Affiliate in which a Participant participates.

 

“Disqualifying Disposition” has the meaning set forth in Section 14.11.

 

“Dividend Equivalents” has the meaning set forth in Section 7.2(b)(ii).

 

“Employee” means any person, including an Officer or Director, employed by the
Company or an Affiliate; provided, that, for purposes of determining eligibility
to receive Incentive Stock Options, an Employee shall mean an employee of the
Company or a parent or subsidiary corporation within the meaning of Section 424
of the Code. Mere service as a Director or payment of a director’s fee by the
Company or an Affiliate shall not be sufficient to constitute “employment” by
the Company or an Affiliate.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, as of any date, the value of the Common Stock as
determined below. If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation, the New York
Stock Exchange or the NASDAQ Stock Market, the Fair Market Value shall be the
closing price of a share of Common Stock (or if no sales were reported the
closing price on the date immediately preceding such date) as quoted on such
exchange or system on the day of determination, as reported in the Wall Street
Journal. In the absence of an established market for the Common Stock, the Fair
Market Value shall be determined in good faith by the Committee and such
determination shall be conclusive and binding on all persons.

 

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“Fiscal Year” means the Company’s fiscal year.

 

“Free Standing Rights” has the meaning set forth in Section 7.1(a).

 

“Grant Date” means the date on which the Committee adopts a resolution, or takes
other appropriate action, expressly granting an Award to a Participant that
specifies the key terms and conditions of the Award or, if a later date is set
forth in such resolution, then such date as is set forth in such resolution.

 

“Incentive Stock Option” means an Option that is designated by the Committee as
an incentive stock option within the meaning of Section 422 of the Code and that
meets the requirements set out in the Plan.

 

“Incumbent Directors” means individuals who, on the Effective Date, constitute
the Board, provided that any individual becoming a Director subsequent to such
date whose election or nomination for election to the Board 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 objection to such
nomination) shall be an Incumbent Director. 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 shall be an Incumbent Director.

 

“ISO Limit” has the meaning set forth in Section 4.1.

 

“Non-Employee Director” means a Director who is a “non-employee director” within
the meaning of Rule 16b-3.

 

“Non-qualified Stock Option” means an Option that by its terms does not qualify
or is not intended to qualify as an Incentive Stock Option.

 

“Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

 

“Option” means an Incentive Stock Option or a Non-qualified Stock Option granted
pursuant to the Plan.

 

“Optionholder” means a person to whom an Option is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Option.

 

“Option Exercise Price” means the price at which a share of Common Stock may be
purchased upon the exercise of an Option.

 

“Other Equity-Based Award” means an Award that is not an Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, or Performance
Award that is granted under

 

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Section 7.4 and is payable by delivery of Common Stock and/or which is measured
by reference to the value of Common Stock.

 

“Participant” means an eligible person to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Award.

 

“Performance Goals” means, for a Performance Period, one or more goals
established by the Committee for the Performance Period based upon business
criteria or other performance measures determined by the Committee in its
discretion.

 

“Performance Period” means one or more periods of time (which shall not be less
than one year), 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 Award.

 

“Performance Award” means any Award granted pursuant to Section 7.3 hereof.

 

“Performance Share” means the grant of a right to receive a number of actual
shares of Common Stock or share units based upon the performance of the Company
during a Performance Period, as determined by the Committee.

 

“Permitted Transferee” means: (a) a member of the Optionholder’s immediate
family (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), any person sharing the Optionholder’s household (other than a
tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the Optionholder)
control the management of assets, and any other entity in which these persons
(or the Optionholder) own more than 50% of the voting interests; (b) third
parties designated by the Committee in connection with a program established and
approved by the Committee pursuant to which Participants may receive a cash
payment or other consideration in consideration for the transfer of a
Non-qualified Stock Option; and (c) such other transferees as may be permitted
by the Committee in its sole discretion.

 

“Person” means a person as defined in Section 13(d)(3) of the Exchange Act.

 

“Plan” means this Amended and Restated U.S. Well Services, Inc. 2018 Stock
Incentive Plan, as amended and/or amended and restated from time to time.

 

“Related Rights” has the meaning set forth in Section 7.1(a).

 

“Restricted Award” means any Award granted pursuant to Section 7.2(a).

 

“Restricted Period” has the meaning set forth in Section 7.2(a).

 

“Restricted Stock” has the meaning set forth in Section 7.2(a).

 

 

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“Restricted Stock Units” has the meaning set forth in Section 7.2(a).

 

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stock Appreciation Right” means the right pursuant to an Award granted under
Section 7.1 to receive, upon exercise, an amount payable in cash or shares equal
to the number of shares subject to the Stock Appreciation Right that is being
exercised multiplied by the excess of  (a) the Fair Market Value of a share of
Common Stock on the date the Award is exercised, over (b) the exercise price
specified in the Stock Appreciation Right Award Agreement.

 

“Stock for Stock Exchange” has the meaning set forth in Section 6.3.

 

“Substitute Award” has the meaning set forth in Section 4.5.

 

“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates.

 

“Total Share Reserve” has the meaning set forth in Section 4.1.

 

“Vested Unit” has the meaning set forth in Section 7.2(e).

 

3.

Administration.

 

3.1Authority of Committee.   The Plan shall be administered by the Committee or,
in the Board’s sole discretion, by the Board. Subject to the terms of the Plan,
the Committee’s charter and Applicable Laws, and in addition to other express
powers and authorization conferred by the Plan, the Committee or the Board, as
applicable, shall have the authority:

 

(a)to construe and interpret the Plan and apply its provisions;

 

(b)to promulgate, amend, and rescind rules and regulations relating to the
administration of the Plan;

 

(c)to authorize any person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Plan;

 

(d)to delegate its authority to one or more Officers of the Company with respect
to Awards that do not involve “insiders” within the meaning of Section 16 of the
Exchange Act;

 

(e)to determine when Awards are to be granted under the Plan and the applicable
Grant Date;

 

 

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(f)from time to time to select, subject to the limitations set forth in this
Plan, those eligible Award recipients to whom Awards shall be granted;

 

(g)to determine the number of shares of Common Stock to be made subject to each
Award;

 

(h)to determine whether each Option is to be an Incentive Stock Option or a
Non-qualified Stock Option;

 

(i)to prescribe the terms and conditions of each Award, including, without
limitation, the exercise price and medium of payment and vesting provisions, and
to specify the provisions of the Award Agreement relating to such grant;

 

(j)to determine the target number of Performance Shares to be granted or the
amount of cash payable pursuant to a Performance Award, the performance measures
that will be used to establish the Performance Goals, the Performance Period(s)
and the number of Performance Shares or the amount of cash payments earned by a
Participant;

 

(k)to amend any outstanding Awards, including for the purpose of modifying the
time or manner of vesting, or the term of any outstanding Award; provided,
however, that if any such amendment impairs a Participant’s rights or increases
a Participant’s obligations under his or her Award or creates or increases a
Participant’s federal income tax liability with respect to an Award, such
amendment shall also be subject to the Participant’s consent;

 

(l)to determine the duration and purpose of leaves of absences which may be
granted to a Participant without constituting termination of their employment
for purposes of the Plan, which periods shall be no shorter than the periods
generally applicable to Employees under the Company’s employment policies;

 

(m)to make decisions with respect to outstanding Awards that may become
necessary upon a change in corporate control or an event that triggers
anti-dilution adjustments;

 

(n)to 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; and

 

(o)to exercise discretion to make any and all other determinations which it
determines to be necessary or advisable for the administration of the Plan.

 

(p)The Committee or the Board, as applicable, also may modify the purchase price
or the exercise price of any outstanding Award, provided that if the
modification effects a repricing, shareholder approval shall be required before
the repricing is effective. Except as provided in Sections 6.2 or 12, the terms
of outstanding Awards may not be amended to reduce the exercise price of
outstanding Options or Stock Appreciation Rights or to cancel outstanding
Options or Stock Appreciation Rights in exchange for cash, other Options, Stock
Appreciation Rights or other

 

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Awards with an exercise price that is less than the exercise price of the
original Options or Stock Appreciation Rights without shareholder approval.

 

3.2Committee Decisions Final.   All decisions made by the Committee or the
Board, as applicable, pursuant to the provisions of the Plan shall be final and
binding on the Company and the Participants, unless such decisions are
determined by a court having jurisdiction to be arbitrary and capricious.

 

3.3Delegation.   The Committee or, if no Committee has been appointed, the Board
may delegate administration of the Plan to a committee or committees of one or
more members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. The Committee shall have the
power to delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board or
the Committee shall thereafter be to the committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
The members of the Committee shall be appointed by and serve at the pleasure of
the Board. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall act pursuant to a vote of the
majority of its members or, in the case of a Committee comprised of only two
members, the unanimous consent of its members, whether present or not, or by the
written consent of the majority of its members and minutes shall be kept of all
of its meetings and copies thereof shall be provided to the Board. Subject to
the limitations prescribed by the Plan and the Board, the Committee may
establish and follow such rules and regulations for the conduct of its business
as it may determine to be advisable.

 

3.4Committee Composition.   Except as otherwise determined by the Board, the
Committee shall consist solely of two or more Non-Employee Directors. The Board
shall have discretion to determine whether or not it intends to comply with the
exemption requirements of Rule 16b-3. However, if the Board intends to satisfy
such exemption requirements, with respect to any insider subject to Section 16
of the Exchange Act, the Committee shall be a compensation committee of the
Board that at all times consists solely of two or more Non-Employee Directors.
Within the scope of such authority, the Board or the Committee may delegate to a
committee of one or more members of the Board who are not Non-Employee Directors
the authority to grant Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act. Nothing herein shall create an inference that an
Award is not validly granted under the Plan in the event Awards are granted
under the Plan by a compensation committee of the Board that does not at all
times consist solely of two or more Non-Employee Directors.

 

3.5Indemnification.   In addition to such other rights of indemnification as
they may have as Directors or members of the Committee, and to the extent
allowed by Applicable Laws, the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney’s fees, actually incurred in
connection with any action, suit or proceeding or in connection with any appeal
therein, to which the Committee may be party by reason of any action taken or
failure to act under or in connection with the Plan or any Award granted under
the Plan, and against

 

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all amounts paid by the Committee in settlement thereof  (provided, however,
that the settlement has been approved by the Company, which approval shall not
be unreasonably withheld) or paid by the Committee in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee did not act in good faith and in a manner which such person reasonably
believed to be in the best interests of the Company, or in the case of a
criminal proceeding, had no reason to believe that the conduct complained of was
unlawful; provided, however, that within 60 days after the institution of any
such action, suit or proceeding, such Committee shall, in writing, offer the
Company the opportunity at its own expense to handle and defend such action,
suit or proceeding.

 

4.

Shares Subject to the Plan.

 

4.1Subject to adjustment in accordance with Section 11, no more than 8,160,500
shares of Common Stock or, upon the approval of the Company’s shareholders with
respect to such increase in the number of shares of Common Stock available for
grants for Awards under the Plan, no more than 18,949,674 shares of Common
Stock, shall be available for the grant of Awards under the Plan (as applicable,
the “Total Share Reserve”), and such number shall also be the maximum number of
shares of Common Stock that may be issued in the aggregate pursuant to the
exercise of Incentive Stock Options (the “ISO Limit”). During the terms of the
Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Awards.

 

4.2Shares of Common Stock available for distribution under the Plan may consist,
in whole or in part, of authorized and unissued shares, treasury shares or
shares reacquired by the Company in any manner.

 

4.3The maximum number of shares of Common Stock subject to Awards granted during
a single Fiscal Year to any Director, together with any cash Awards or fees paid
to such Director during the Fiscal Year shall not exceed a total value of 
$500,000 (calculating the value of any Awards based on the grant date fair value
for financial reporting purposes).

 

4.4Any shares of Common Stock subject to an Award that expires or is canceled,
forfeited, or terminated without issuance of the full number of shares of Common
Stock to which the Award related will again be available for issuance under the
Plan. Notwithstanding anything to the contrary contained herein: shares subject
to an Award under the Plan shall not again be made available for issuance or
delivery under the Plan if such shares are (a) shares tendered or withheld in
payment of an Option, (b) shares delivered or withheld by the Company to satisfy
any tax withholding obligation, or (c) shares covered by a stock-settled Stock
Appreciation Right or other Awards that were not issued upon the settlement of
the Award.

 

4.5Awards 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”). Substitute Awards shall not be counted against the Total
Share Reserve; provided, that, Substitute Awards issued in connection with the
assumption of, or in substitution for, outstanding options intended to qualify
as Incentive Stock Options shall be counted against the ISO limit. Subject to
applicable stock

 

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exchange requirements, available shares under a shareholder-approved plan of an
entity directly or indirectly acquired by the Company or with which the Company
combines (as appropriately adjusted to reflect such acquisition or transaction)
may be used for Awards under the Plan and shall not count toward the Total Share
Limit.

 

4.6Awards that by their terms are to be settled solely in cash shall not be
counted against the number of shares of Common Stock available for the issuance
of Awards under the Plan.

 

5.

Eligibility.

 

5.1Eligibility for Specific Awards.   Incentive Stock Options may be granted
only to Employees. Awards other than Incentive Stock Options may be granted to
Employees, Consultants and Directors and those individuals whom the Committee
determines are reasonably expected to become Employees, Consultants and
Directors following the Grant Date.

 

5.2Ten Percent Shareholders.   A Ten Percent Shareholder shall not be granted an
Incentive Stock Option unless the Option Exercise Price is at least 110% of the
Fair Market Value of the Common Stock on the Grant Date and the Option is not
exercisable after the expiration of five years from the Grant Date.

 

5.3Option Provisions.   Each Option granted under the Plan shall be evidenced by
an Award Agreement. Each Option so granted shall be subject to the conditions
set forth in this Section 6, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award Agreement. All Options
shall be separately designated Incentive Stock Options or Non-qualified Stock
Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. Notwithstanding the foregoing, the Company
shall have no liability to any Participant or any other person if an Option
designated as an Incentive Stock Option fails to qualify as such at any time or
if an Option is determined to constitute “nonqualified deferred compensation”
within the meaning of Section 409A of the Code and the terms of such Option do
not satisfy the requirements of Section 409A of the Code. The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the provisions set forth in Section 6.

 

6

Provisions for Options.

 

6.1Term.   Subject to the provisions of Section 5.2 regarding Ten Percent
Shareholders, no Incentive Stock Option shall be exercisable after the
expiration of 10 years from the Grant Date. The term of a Non-qualified Stock
Option granted under the Plan shall be determined by the Committee; provided,
however, no Non-qualified Stock Option shall be exercisable after the expiration
of 10 years from the Grant Date.

 

6.2Exercise Price of an Incentive Stock Option.   Subject to the provisions of
Section 5.2 regarding Ten Percent Shareholders and Incentive Stock Options, the
Option Exercise

 

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Price of each Option shall be not less than 100% of the Fair Market Value of the
Common Stock subject to the Option on the Grant Date. Notwithstanding the
foregoing, an Option may be granted with an Option Exercise Price lower than
that set forth in the preceding sentence if such Option is granted pursuant to
an assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) and/or Section 409A of the Code.

 

6.3Consideration.   The Option Exercise Price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (a) in cash or by certified or bank check at the time the
Option is exercised or (b) in the discretion of the Committee, upon such terms
as the Committee shall approve, the Option Exercise Price may be paid: (i) by
delivery to the Company of other Common Stock, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery equal to the Option
Exercise Price (or portion thereof) due for the number of shares being acquired,
or by means of attestation whereby the Participant identifies for delivery
specific shares of Common Stock that have an aggregate Fair Market Value on the
date of attestation equal to the Option Exercise Price (or portion thereof) and
receives a number of shares of Common Stock equal to the difference between the
number of shares thereby purchased and the number of identified attestation
shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless”
exercise program established with a broker; (iii) by reduction in the number of
shares of Common Stock otherwise deliverable upon exercise of such Option with a
Fair Market Value equal to the aggregate Option Exercise Price at the time of
exercise; (iv) by any combination of the foregoing methods; or (v) in any other
form of legal consideration that may be acceptable to the Committee. Unless
otherwise specifically provided in the Option, the exercise price of Common
Stock acquired pursuant to an Option that is paid by delivery (or attestation)
to the Company of other Common Stock acquired, directly or indirectly from the
Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting purposes).
Notwithstanding the foregoing, during any period for which the Common Stock is
publicly traded (i.e., the Common Stock is listed on any established stock
exchange or a national market system) an exercise by a Director or Officer that
involves or may involve a direct or indirect extension of credit or arrangement
of an extension of credit by the Company, directly or indirectly, in violation
of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with
respect to any Award under this Plan.

 

6.4Transferability of an Incentive Stock Option.   An Incentive Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

 

6.5Transferability of a Non-qualified Stock Option.   A Non-qualified Stock
Option may, in the sole discretion of the Committee, be transferable to a
Permitted Transferee, upon written approval by the Committee to the extent
provided in the Award Agreement. If the Non-qualified Stock Option does not
provide for transferability, then the Non-qualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the

 

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foregoing, the Optionholder may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the
Option.

 

6.6Vesting of Options.   Each Option may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not, be equal.
The Option may be subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on performance or other
criteria) as the Committee may deem appropriate. The vesting provisions of
individual Options may vary. No Option may be exercised for a fraction of a
share of Common Stock. The Committee may, but shall not be required to, provide
for an acceleration of vesting and exercisability in the terms of any Award
Agreement upon the occurrence of a specified event.

 

6.7Termination of Continuous Service.   Unless otherwise provided in an Award
Agreement or in an employment agreement the terms of which have been approved by
the Committee, in the event an Optionholder’s Continuous Service terminates
(other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (a) the date three months following the
termination of the Optionholder’s Continuous Service or (b) the expiration of
the term of the Option as set forth in the Award Agreement; provided that, if
the termination of Continuous Service is by the Company for Cause, all
outstanding Options (whether or not vested) shall immediately terminate and
cease to be exercisable. If, after termination, the Optionholder does not
exercise his or her Option within the time specified in the Award Agreement, the
Option shall terminate.

 

6.8Extension of Termination Date.   An Optionholder’s Award Agreement may also
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service for any reason would be prohibited at any time
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system,
then the Option shall terminate on the earlier of (a)  the expiration of the
term of the Option in accordance with Section 6.1 or (b) the expiration of a
period after termination of the Participant’s Continuous Service that is
three months after the end of the period during which the exercise of the Option
would be in violation of such registration or other securities law requirements.

 

6.9Disability of Optionholder.   Unless otherwise provided in an Award
Agreement, in the event that an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination), but only within such period of time
ending on the earlier of (a)  the date 12 months following such termination or
(b) the expiration of the term of the Option as set forth in the Award
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein or in the Award Agreement, the Option
shall terminate.

 

 

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6.10Death of Optionholder.   Unless otherwise provided in an Award Agreement, in
the event an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the period ending on the
earlier of  (a) the date 12 months following the date of death or (b) the
expiration of the term of such Option as set forth in the Award Agreement. If,
after the Optionholder’s death, the Option is not exercised within the time
specified herein or in the Award Agreement, the Option shall terminate.

 

6.11Incentive Stock Option $100,000 Limitation.   To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds $100,000, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated
as Non-qualified Stock Options.

 

7

Provisions of Awards Other Than Options.

 

7.1Stock Appreciation Rights.

 

(a)Each Stock Appreciation Right granted under the Plan shall be evidenced by an
Award Agreement. Each Stock Appreciation Right so granted shall be subject to
the conditions set forth in this Section 7.1, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement. Stock Appreciation Rights may be granted alone (“Free Standing
Rights”) or in tandem with an Option granted under the Plan (“Related Rights”).

 

(b)Any Related Right that relates to a Non-qualified Stock Option may be granted
at the same time the Option is granted or at any time thereafter but before the
exercise or expiration of the Option. Any Related Right that relates to an
Incentive Stock Option must be granted at the same time the Incentive Stock
Option is granted.

 

(c)The term of a Stock Appreciation Right granted under the Plan shall be
determined by the Committee; provided, however, no Stock Appreciation Right
shall be exercisable later than the tenth anniversary of the Grant Date.

 

(d)Each Stock Appreciation Right may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not, be equal. The Stock
Appreciation Right may be subject to such other terms and conditions on the time
or times when it may be exercised as the Committee may deem appropriate. The
vesting provisions of individual Stock Appreciation Rights may vary. No Stock
Appreciation Right may be exercised for a fraction of a share of Common Stock.
The Committee may, but shall not be required to, provide for an acceleration of
vesting and exercisability in the terms of any Stock Appreciation Right upon the
occurrence of a specified event.

 

 

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(e)Upon exercise of a Stock Appreciation Right, the holder shall be entitled to
receive from the Company an amount equal to the number of shares of Common Stock
subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of  (i) the Fair Market Value of a share of Common Stock on the date
the Award is exercised, over (ii) the exercise price specified in the Stock
Appreciation Right or related Option. Payment with respect to the exercise of a
Stock Appreciation Right shall be made on the date of exercise. Payment shall be
made in the form of shares of Common Stock (with or without restrictions as to
substantial risk of forfeiture and transferability, as determined by the
Committee in its sole discretion), cash or a combination thereof, as determined
by the Committee.

 

(f)The exercise price of a Free Standing Right shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value of one share
of Common Stock on the Grant Date of such Stock Appreciation Right. A Related
Right granted simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the same exercise
price as the related Option, shall be transferable only upon the same terms and
conditions as the related Option, and shall be exercisable only to the same
extent as the related Option; provided, however, that a Stock Appreciation
Right, by its terms, shall be exercisable only when the Fair Market Value per
share of Common Stock subject to the Stock Appreciation Right and related Option
exceeds the exercise price per share thereof and no Stock Appreciation Rights
may be granted in tandem with an Option unless the Committee determines that the
requirements of Section 7.1(b) are satisfied.

 

(g)Upon any exercise of a Related Right, the number of shares of Common Stock
for which any related Option shall be exercisable shall be reduced by the number
of shares for which the Stock Appreciation Right has been exercised. The number
of shares of Common Stock for which a Related Right shall be exercisable shall
be reduced upon any exercise of any related Option by the number of shares of
Common Stock for which such Option has been exercised.

 

7.2Restricted Awards.

 

(a)A Restricted Award is an Award of actual shares of Common Stock (“Restricted
Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a
value equal to the Fair Market Value of an identical number of shares of Common
Stock, which may, but need not, provide that such Restricted Award may not be
sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation or
for any other purpose for such period (the “Restricted Period”) as the Committee
shall determine. Each Restricted Award granted under the Plan shall be evidenced
by an Award Agreement. Each Restricted Award so granted shall be subject to the
conditions set forth in this Section 7.2, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
Agreement.

 

(b)Restricted Stock and Restricted Stock Units.

 

(i)Each Participant granted Restricted Stock shall execute and deliver to the
Company an Award Agreement with respect to the Restricted Stock setting forth
the restrictions and other terms and conditions applicable to such Restricted
Stock. If the

 

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Committee determines that the Restricted Stock shall be held by the Company or
in escrow rather than delivered to the Participant pending the release of the
applicable restrictions, the Committee may require the Participant to
additionally execute and deliver to the Company (A) an escrow agreement
satisfactory to the Committee, if applicable and (B) the appropriate blank stock
power with respect to the Restricted Stock covered by such agreement. If a
Participant fails to execute an agreement evidencing an Award of Restricted
Stock and, if applicable, an escrow agreement and stock power, the Award shall
be null and void. Subject to the restrictions set forth in the Award, the
Participant generally shall have the rights and privileges of a shareholder as
to such Restricted Stock, including the right to vote such Restricted Stock and
the right to receive dividends; provided that, an Award Agreement may provide
that any cash dividends and stock dividends with respect to the Restricted Stock
shall be withheld by the Company for the Participant’s account, and interest may
be credited on the amount of the cash dividends withheld at a rate and subject
to such terms as determined by the Committee. The cash dividends or stock
dividends so withheld by the Committee and attributable to any particular share
of Restricted Stock (and earnings thereon, if applicable) shall be distributed
to the Participant in cash or, at the discretion of the Committee, in shares of
Common Stock having a Fair Market Value equal to the amount of such dividends,
if applicable, upon the release of restrictions on such share and, if such share
is forfeited, the Participant shall have no right to such dividends.

 

(ii)The terms and conditions of a grant of Restricted Stock Units shall be
reflected in an Award Agreement. No shares of Common Stock shall be issued at
the time a Restricted Stock Unit is granted, and the Company will not be
required to set aside funds for the payment of any such Award. A Participant
shall have no voting rights with respect to any Restricted Stock Units granted
hereunder. The Committee may also grant Restricted Stock Units with a deferral
feature, whereby settlement is deferred beyond the vesting date until the
occurrence of a future payment date or event set forth in an Award Agreement
(“Deferred Stock Units”). At the discretion of the Committee, each Restricted
Stock Unit or Deferred Stock Unit (representing one share of Common Stock) may
be credited with an amount equal to the cash and stock dividends paid by the
Company in respect of one share of Common Stock (“Dividend Equivalents”). An
Award Agreement may provide that Dividend Equivalents shall be paid currently
(and in no case later than the end of the calendar year in which the dividend is
paid to the holders of the Common Stock or, if later, the 15th day of the third
month following the date the dividend is paid to holders of the Common Stock).
Alternatively, an Award Agreement may provide that Dividend Equivalents shall be
withheld by the Company and credited to the Participant’s account, and interest
may be credited on the amount of cash Dividend Equivalents credited to the
Participant’s account at a rate and subject to such terms as determined by the
Committee. Dividend Equivalents credited to a Participant’s account and
attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and
earnings thereon, if applicable) shall be distributed in cash or, at the
discretion of the Committee, in shares of Common Stock having a Fair Market
Value equal to the amount of such Dividend Equivalents and earnings, if
applicable, to the Participant upon settlement of such Restricted Stock Unit or
Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is
forfeited, the Participant shall have no right to such Dividend Equivalents.

 

 

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(c)Restrictions.

 

(i)Restricted Stock awarded to a Participant shall be subject to the following
restrictions until the expiration of the Restricted Period, and to such other
terms and conditions as may be set forth in the applicable Award Agreement: (A)
if an escrow arrangement is used, the Participant shall not be entitled to
delivery of the stock certificate; (B) the shares shall be subject to the
restrictions on transferability set forth in the Award Agreement; (C) the shares
shall be subject to forfeiture to the extent provided in the applicable Award
Agreement; and (D) to the extent such shares are forfeited, the stock
certificates shall be returned to the Company, and all rights of the Participant
to such shares and as a shareholder with respect to such shares shall terminate
without further obligation on the part of the Company.

 

(ii)Restricted Stock Units and Deferred Stock Units awarded to any Participant
shall be subject to (A) forfeiture until the expiration of the Restricted
Period, and satisfaction of any applicable Performance Goals during such period,
to the extent provided in the applicable Award Agreement, and to the extent such
Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the
Participant to such Restricted Stock Units or Deferred Stock Units shall
terminate without further obligation on the part of the Company and (B) such
other terms and conditions as may be set forth in the applicable Award
Agreement.

 

(iii)The Committee shall have the authority to remove any or all of the
restrictions on the Restricted Stock, Restricted Stock Units and Deferred Stock
Units whenever it may determine that, by reason of changes in Applicable Laws or
other changes in circumstances arising after the date the Restricted Stock or
Restricted Stock Units or Deferred Stock Units are granted, such action is
appropriate.

 

(d)With respect to Restricted Awards, the Restricted Period shall commence on
the Grant Date and end at the time or times set forth on a schedule established
by the Committee in the applicable Award Agreement. No Restricted Award may be
granted or settled for a fraction of a share of Common Stock. The Committee may,
but shall not be required to, provide for an acceleration of vesting in the
terms of any Award Agreement upon the occurrence of a specified event.

 

(e)Upon the expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in Section 7.2(c) and 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 or her beneficiary, without charge, the stock
certificate evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends credited to the
Participant’s account with respect to such Restricted Stock and the interest
thereon, if any. Upon the expiration of the Restricted Period with respect to
any outstanding Restricted Stock Units, or at the expiration of the deferral
period with respect to any outstanding Deferred Stock Units, the Company shall
deliver to the Participant, or his or her beneficiary, without charge, one

 

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share of Common Stock for each such outstanding vested Restricted Stock Unit or
Deferred Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents
credited with respect to each such Vested Unit in accordance with
Section 7.2(b)(ii) hereof and the interest thereon or, at the discretion of the
Committee, in shares of Common Stock having a Fair Market Value equal to such
Dividend Equivalents and the interest thereon, if any; provided, however, that,
if explicitly provided in the applicable Award Agreement, the Committee may, in
its sole discretion, elect to pay cash or part cash and part Common Stock in
lieu of delivering only shares of Common Stock for Vested Units. If a cash
payment is made in lieu of delivering shares of Common Stock, the amount of such
payment shall be equal to the Fair Market Value of the Common Stock as of the
date on which the Restricted Period lapsed in the case of Restricted Stock
Units, or the delivery date in the case of Deferred Stock Units, with respect to
each Vested Unit.

 

(f)Each certificate representing Restricted Stock awarded under the Plan shall
bear a legend in such form as the Company deems appropriate.

 

7.3Performance Awards.

 

(a)Performance Awards may be granted by the Committee in its sole discretion
awarding cash or Performance Shares or a combination thereof based upon the
achievement of goals as determined by the Committee. Each Performance Award
granted under the Plan shall be evidenced by an Award Agreement. Each
Performance Award so granted shall be subject to the conditions set forth in
this Section 7.3, and to such other conditions not inconsistent with the Plan as
may be reflected in the applicable Award Agreement. The Committee shall have the
discretion to determine: (i) the number of shares of Common Stock or
stock-denominated units subject to a Performance Award granted to any
Participant; (ii) the amount of cash subject to a Performance Award granted to
any Participant; (iii) the Performance Period applicable to any Award; (iv) the
conditions that must be satisfied for a Participant to earn an Award; and (v)
the other terms, conditions and restrictions of the Award.

 

(b)The number of Performance Shares earned by a Participant will depend on the
extent to which the performance goals established by the Committee are attained
within the applicable Performance Period, as determined by the Committee.

 

(c)Performance Awards may be paid in shares of Common Stock, cash or other
consideration or a combination thereof related to such shares, in a single
payment or in installments on such dates as determined by the Committee, all as
specified in the Award Agreement.

 

7.4Other Equity-Based Awards.   The Committee may grant Other Equity-Based
Awards, either alone or in tandem with other Awards, in such amounts and subject
to such conditions as the Committee shall determine in its sole discretion. Each
Other Equity-Based Award shall be evidenced by an Award Agreement and shall be
subject to such conditions, not inconsistent with the Plan, as may be reflected
in the applicable Award Agreement.    

 

8.Securities Law Compliance.   Each Award Agreement shall provide that no shares
of Common Stock shall be purchased or sold thereunder unless and until (a) any
then applicable requirements of state or federal laws and regulatory agencies
have been fully complied with to the

 

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satisfaction of the Company and its counsel and (b) if required to do so by the
Company, the Participant has executed and delivered to the Company a letter of
investment intent in such form and containing such provisions as the Committee
may require. The Company shall use reasonable efforts to seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Awards and to issue and sell shares of
Common Stock upon exercise of the Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Award or any Common Stock issued or issuable pursuant to any such
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell
Common Stock upon exercise of such Awards unless and until such authority is
obtained.

 

9.Use of Proceeds from Stock.   Proceeds from the sale of Common Stock pursuant
to Awards, or upon exercise thereof, shall constitute general funds of the
Company.

 

10.Miscellaneous.

 

10.1Acceleration of Exercisability and Vesting.   The Committee shall have the
power to accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest.

 

10.2Shareholder Rights.   Except as provided in the Plan or an Award Agreement,
no Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to such Award
unless and until such Participant has satisfied all requirements for exercise of
the Award pursuant to its terms and no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions of other rights for which the record date is prior to the date
such Common Stock certificate is issued, except as provided in Section 11
hereof.

 

10.3No Employment or Other Service Rights.   Nothing in the Plan or any
instrument executed or Award granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate (a) the employment of an Employee
with or without notice and with or without Cause or (b) the service of a
Director pursuant to the By-laws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

 

10.4Transfer; Approved Leave of Absence.   For purposes of the Plan, no
termination of employment by an Employee shall be deemed to result from either
(a) a transfer of employment to the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another, or (b) an approved
leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the Employee’s right to reemployment is guaranteed
either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted

 

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or if the Committee otherwise so provides in writing, in either case, except to
the extent inconsistent with Section 409A of the Code if the applicable Award is
subject thereto.

 

10.5Withholding Obligations.   To the extent provided by the terms of an Award
Agreement and subject to the discretion of the Committee, the Participant may
satisfy any federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under an Award by any of the following
means (in addition to the Company’s right to withhold from any compensation paid
to the Participant by the Company) or by a combination of such means:
(a) tendering a cash payment; (b)  authorizing the Company to withhold shares of
Common Stock from the shares of Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common Stock under the
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the maximum amount of tax required to be withheld by law; or
(c) delivering to the Company previously owned and unencumbered shares of Common
Stock of the Company.

 

11.Adjustments Upon Changes in Stock.   In the event of changes in the
outstanding Common Stock or in the capital structure of the Company by reason of
any stock or extraordinary cash dividend, stock split, reverse stock split, an
extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any Award, Awards
granted under the Plan and any Award Agreements, the exercise price of Options
and Stock Appreciation Rights, the Performance Goals to which Performance Awards
are subject, the maximum number of shares of Common Stock subject to all Awards
stated in Section 4 will be equitably adjusted or substituted, as to the number,
price or kind of a share of Common Stock or other consideration subject to such
Awards to the extent necessary to preserve the economic intent of such Award. In
the case of adjustments made pursuant to this Section 11, unless the Committee
specifically determines that such adjustment is in the best interests of the
Company or its Affiliates, the Committee shall, in the case of Incentive Stock
Options, ensure that any adjustments under this Section 11 will not constitute a
modification, extension or renewal of the Incentive Stock Options within the
meaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock
Options, ensure that any adjustments under this Section 11 will not constitute a
modification of such Non-qualified Stock Options within the meaning of
Section 409A of the Code. Any adjustments made under this Section 11 shall be
made in a manner which does not adversely affect the exemption provided pursuant
to Rule 16b-3 under the Exchange Act. The Company shall give each Participant
notice of an adjustment hereunder and, upon notice, such adjustment shall be
conclusive and binding for all purposes.

 

12.Effect of Change in Control.

 

12.1In the event of a Change in Control, the Committee, on such terms and
conditions as it deems appropriate, is hereby authorized to take any one or more
of the following actions that the Committee determines to be appropriate with
respect to any Award, which may vary among individual Participants and which may
vary among Awards held by any individual Participant:

 

(a)Provide for the cancellation of such Award in exchange for either an amount
of cash or other property with a value equal to the amount that could have been
obtained upon the

 

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exercise or settlement of the vested portion of such Award or realization of the
Participant’s rights under the vested portion of such Award, as applicable;
provided that, if the amount that could have been obtained upon the exercise or
settlement of the vested portion of such Award or realization of the
Participant’s rights, in any case, is equal to or less than zero, then the Award
may be terminated without payment;

 

(b)Terminate an outstanding and unexercised Option, Stock Appreciation Right or
Other Equity-Based Award that provides for a Participant elected exercise,
effective as of the date of the Change in Control, by delivering notice of
termination to the Participant at least twenty (20) days prior to the date of
consummation of the Change in Control, in which case during the period from the
date on which such notice of termination is delivered to the consummation of the
Change in Control the Participant shall have the right to exercise in full such
Participant’s Award (without regard to any limitations on exercisability
otherwise contained in the Award Agreement), but any such exercise shall be
contingent on the occurrence of the Change in Control; provided that, if the
Change in Control does not occur within a specified period after giving such
notice for any reason whatsoever, the notice and exercise pursuant thereto shall
be null and void;

 

(c)Provide that:

 

(i)an outstanding Option, Stock Appreciation Right or Other Equity-Based Award
shall become immediately exercisable with respect to 100% of the shares subject
to such Option, Stock Appreciation Right or Other Equity-Based Award, and/or the
Restricted Period shall expire immediately with respect to 100% of the
outstanding shares of an award of Restricted Stock or Restricted Stock Units,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement;

 

(ii)with respect to a Performance Award, (A) any incomplete Performance Period
in respect of such Award in effect on the date the Change in Control occurs
shall end on the date of such change and the Committee shall (i) determine the
extent to which Performance Goals with respect to such Performance Period have
been met based upon such audited or unaudited financial information then
available as it deems relevant and (ii) cause to be paid to the Participant an
amount based upon the Committee’s determination of the degree of attainment of
the Performance Goals, or (B) all Performance Goals or other vesting criteria
will be deemed achieved at 100% of target levels and all other terms and
conditions will be deemed met.

 

(iii)Provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
awards covering the stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and/or applicable exercise or purchase price, in all cases, as determined
by the Committee to provide substantially equivalent value, in a manner
consistent with Section 409A of the Code and the regulations thereunder, and
Treasury Regulation Section 1.424-1, to the extent applicable.

 

(iv)To the extent applicable and practicable, any actions taken by the Committee
under the immediately preceding clauses shall occur in a manner and at a time
which allows affected

 

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Participants the ability to participate in the Change in Control with respect to
the shares of Common Stock subject to their Awards.

 

12.2The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to all or substantially all of the assets and business
of the Company and its Affiliates, taken as a whole.

 

13.

Amendment of the Plan and Awards.

 

13.1Amendment of Plan.   The Board at any time, and from time to time, may amend
or terminate the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock and Section 13.3, no amendment shall be
effective unless approved by the shareholders of the Company to the extent
shareholder approval is necessary to satisfy any Applicable Laws. At the time of
such amendment, the Board shall determine, upon advice from counsel, whether
such amendment will be contingent on shareholder approval.

 

13.2Shareholder Approval.   The Board may, in its sole discretion, submit any
other amendment to the Plan for shareholder approval.

 

13.3Contemplated Amendments.   It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees, Consultants and Directors with the maximum benefits provided
or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options or to the
nonqualified deferred compensation provisions of Section 409A of the Code and/or
to bring the Plan and/or Awards granted under it into compliance therewith.

 

13.4No Impairment of Rights.   Rights under any Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (a) the
Company requests the consent of the Participant and (b) the Participant consents
in writing.

 

13.5Amendment of Awards.   The Committee at any time, and from time to time, may
amend the terms of any one or more Awards; provided, however, that the Committee
may not affect any amendment which would otherwise constitute an impairment of
the rights under any Award unless (a) the Company requests the consent of the
Participant and (b) the Participant consents in writing.

 

14.

General Provisions.

 

14.1Forfeiture Events.   The Committee may specify in an Award Agreement that
the Participant’s rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, in addition to applicable vesting conditions of an
Award. Such events may include, without limitation, breach of non-competition,
non-solicitation, confidentiality, or other restrictive covenants that are
contained in the Award Agreement or otherwise applicable to the Participant, a
termination of the

 

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Participant’s Continuous Service for Cause, or other conduct by the Participant
that is detrimental to the business or reputation of the Company and/or its
Affiliates.

 

14.2Clawback.   Notwithstanding any other provisions in this Plan, the Company
may cancel any Award, require reimbursement of any Award by a Participant, and
effect any other right of recoupment of equity or other compensation provided
under the Plan in accordance with any Company policies that may be adopted
and/or modified from time to time (“Clawback Policy”). In addition, a
Participant may be required to repay to the Company previously paid
compensation, whether provided pursuant to the Plan or an Award Agreement, in
accordance with the Clawback Policy. By accepting an Award, the Participant is
agreeing to be bound by the Clawback Policy, as in effect or as may be adopted
and/or modified from time to time by the Company in its discretion (including,
without limitation, to comply with applicable law or stock exchange listing
requirements).

 

14.3Other Compensation Arrangements.   Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.

 

14.4Sub-Plans.   The Committee may from time to time establish sub-plans under
the Plan for purposes of satisfying securities, tax or other laws of various
jurisdictions in which the Company intends to grant Awards. Any sub-plans shall
contain such limitations and other terms and conditions as the Committee
determines are necessary or desirable. All sub-plans shall be deemed a part of
the Plan, but each sub-plan shall apply only to the Participants in the
jurisdiction for which the sub-plan was designed.

 

14.5Unfunded Plan.   The Plan shall be unfunded. Neither the Company, the Board
nor the Committee shall be required to establish any special or separate fund or
to segregate any assets to assure the performance of its obligations under the
Plan.

 

14.6Recapitalizations.   Each Award Agreement shall contain provisions required
to reflect the provisions of Section 11.

 

14.7Delivery.   Upon exercise of a right granted under this Plan, the Company
shall issue Common Stock or pay any amounts due within a reasonable period of
time thereafter. Subject to any statutory or regulatory obligations the Company
may otherwise have, for purposes of this Plan, 30 days shall be considered a
reasonable period of time.

 

14.8No Fractional Shares.   No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan. The Committee shall determine whether cash,
additional Awards or other securities or property shall be issued or paid in
lieu of fractional shares of Common Stock or whether any fractional shares
should be rounded, forfeited or otherwise eliminated.

 

14.9Other Provisions.   The Award Agreements authorized under the Plan may
contain such other provisions not inconsistent with this Plan, including,
without limitation, restrictions upon the exercise of Awards, as the Committee
may deem advisable.

 

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14.10Section 409A.   The Plan is intended to comply with Section 409A of the
Code to the extent subject thereto, and, accordingly, to the maximum extent
permitted, the Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A of the Code shall not be
treated as deferred compensation unless Applicable Laws require otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent required to
avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to the Plan during the six (6) month period immediately
following the Participant’s termination of Continuous Service shall instead be
paid on the first payroll date after the six-month anniversary of the
Participant’s separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any additional
tax or penalty on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any Participant for such
tax or penalty.

 

14.11Disqualifying Dispositions.   Any Participant who shall make a
“disposition” (as defined in Section 424 of the Code) of all or any portion of
shares of Common Stock acquired upon exercise of an Incentive Stock Option
within two years from the Grant Date of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired upon exercise
of such Incentive Stock Option (a “Disqualifying Disposition”) shall be required
to immediately advise the Company in writing as to the occurrence of the sale
and the price realized upon the sale of such shares of Common Stock.

 

14.12Section 16.   It is the intent of the Company that the Plan satisfy, and be
interpreted in a manner that satisfies, the applicable requirements of
Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that
Participants will be entitled to the benefit of Rule 16b-3, or any other rule
promulgated under Section 16 of the Exchange Act, and will not be subject to
short-swing liability under Section 16 of the Exchange Act. Accordingly, if the
operation of any provision of the Plan would conflict with the intent expressed
in this Section 14.12, such provision to the extent possible shall be
interpreted and/or deemed amended so as to avoid such conflict.

 

14.13Beneficiary Designation.   Each Participant under the Plan may from time to
time name any beneficiary or beneficiaries by whom any right under the Plan is
to be exercised in case of such Participant’s death. Each designation will
revoke all prior designations by the same Participant, shall be in a form
reasonably prescribed by the Committee and shall be effective only when filed by
the Participant in writing with the Company during the Participant’s lifetime.

 

14.14Expenses.   The costs of administering the Plan shall be paid by the
Company.

 

14.15Severability.   If any of the provisions of the Plan or any Award Agreement
is held to be invalid, illegal or unenforceable, whether in whole or in part,
such provision shall be deemed modified to the extent, but only to the extent,
of such invalidity, illegality or unenforceability and the remaining provisions
shall not be affected thereby.

 

 

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14.16Plan Headings.   The headings in the Plan are for purposes of convenience
only and are not intended to define or limit the construction of the provisions
hereof.

 

14.17Non-Uniform Treatment.   The Committee’s determinations under the Plan need
not be uniform and may be made by it selectively among persons who are eligible
to receive, or actually receive, Awards. Without limiting the generality of the
foregoing, the Committee shall be entitled to make non-uniform and selective
determinations, amendments and adjustments, and to enter into non-uniform and
selective Award Agreements.

 

15.Effective Date of Plan.   The Plan shall become effective upon the Effective
Date, provided that the increase in the Total Share Reserve to occur upon the
approval of the Company’s shareholders as provided under Section 4.1 hereof,
shall not become effective until such approval is received.

 

16.Termination or Suspension of the Plan.   The Plan shall terminate
automatically on the tenth anniversary of the earlier of the date the Plan is
adopted by the Board or the date that the Company’s shareholders approve the
Plan. No Award shall be granted pursuant to the Plan after such date, but Awards
theretofore granted may extend beyond that date. The Board may suspend or
terminate the Plan at any earlier date pursuant to Section 13.1 hereof. No
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

 

17.Choice of Law.   The law of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state’s conflict of law rules.

 

18.Subordination.  Notwithstanding anything in this Plan to the contrary, if a
proposed cash payment under any Award Agreement or this Plan would require
approvals under, or conflict with, the terms of (i) the Senior Secured Term Loan
Credit Agreement, dated May 7, 2019, by and among the Company, USWS Holdings,
LLC, U.S. Well Services, LLC, the guarantors and lenders party thereto and CLMG
Corp., as administrative agent and collateral agent, as amended,  (ii) the ABL
Credit Agreement dated as of May 7, 2019 among the Company, USWS Holdings, LLC,
U.S. Well Services, LLC, the lenders party thereto, Bank of America, N.A., as
administrative agent, and the other parties thereto, as amended, or (iii) any
other financing agreement to which the Company is subject from time to time,
then such payment shall in all cases be limited, delayed or otherwise restricted
under this Plan so as to cause the Company to comply in all respects with the
foregoing financing agreements and to not require the Company to obtain any
approvals under such financing agreements.