Exhibit 10.18


 


 





ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.


2011 STOCK INCENTIVE PLAN


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Plan Document


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1.           
Introduction. 


 


(a)               
Purpose. By resolution of its Board of Directors approved on _____ ___, 2011, Advanced Environmental Recycling Technologies,
Inc. (the “Company”) hereby establishes this equity-based incentive compensation plan to be known as the “Advanced
Environmental Recycling Technologies, Inc. 2011 Stock Incentive Plan” (the “Plan”), for the following
purposes: (i) to enhance the Company’s ability to attract highly qualified personnel; (ii) to strengthen its retention capabilities;
(iii) to enhance the long-term performance and competitiveness of the Company; and (iv) to align the interests of Plan participants
with those of the Company’s shareholders. This Plan is intended to serve as the sole source for all future equity-based awards
to those eligible for Plan participation.


 


(b)              
Definitions. Terms in the Plan and any Appendix that begin with an initial capital letter have the defined meaning
set forth in Appendix I or elsewhere in this Plan, in either case unless the context of their use clearly indicates a different
meaning.


 


(c)               
Effective Date. This Plan shall become effective on the date (the “Effective Date”) upon which
it has received Board approval; provided that the Plan and any Award made before shareholder approval of the Plan shall be contingent
on its approval by a vote of a majority of the votes cast at a duly held meeting of the Company’s shareholders (or by such
other shareholder vote that the Committee determines to be sufficient for the issuance of Shares and Awards according to the Company’s
governing documents and Applicable Law).


 


(d)              
Effect on Other Plans, Awards, and Arrangements. This Plan is not intended to affect and shall not affect any stock
options, equity-based compensation, or other benefits that the Company or its Affiliates may have provided, or may separately provide
in the future, pursuant to any agreement, plan, or program that is independent of this Plan. Notwithstanding the foregoing, effective
upon shareholder approval of this Plan, no further awards of any kind shall occur under any prior stock award plan of the Company.


 


2.          
Types of Awards. The Plan permits the granting of the following types of
Awards according to the Sections of the Plan listed below:


 


	Section 5	Options
	Section 6	Share Appreciation Rights (“SARs”)
	Section 7	Restricted Shares, Restricted Share Units (“RSUs”), and Unrestricted Shares
	Section 8	Deferred Share Units (“DSUs”)
	Section 9	Performance and Cash-settled Awards
	Section 10	Dividend Equivalent Rights


 



     

     

    




3.          
Shares Available for Awards. 


 


(a)               
Generally. Subject to Section 13 below, a total of [forty million (40,000,000)] Shares shall be available
for issuance under the Plan. The Shares deliverable pursuant to Awards shall be authorized but unissued Shares, or Shares that
the Company otherwise holds in treasury or in trust.


 


(b)              
Replenishment; Counting of Shares. Any Shares reserved for Plan Awards will again be available for future Awards
if the Shares for any reason will never be issued to a Participant or Beneficiary pursuant to an Award (for example, due to its
settlement in cash rather than in Shares, or the Award’s forfeiture, cancellation, expiration, or net settlement through
the issuance of Shares). Further, and to the extent permitted under Applicable Law, the maximum number of Shares available for
delivery under the Plan shall not be reduced by any Shares issued under the Plan through the settlement, assumption, or substitution
of outstanding awards or obligations to grant future awards as a condition of the Company’s or an Affiliate’s acquiring
another entity. On the other hand, Shares that a Person owns and tenders in payment of all or part of the exercise price of an
Award or in satisfaction of applicable Withholding Taxes shall not increase the number of Shares available for future issuance
under the Plan. Shares reacquired by the Company on the open market using Option Proceeds shall be available for Awards. The increase
in Shares available pursuant to the repurchase of Shares with Option Proceeds shall not be greater than the amount of such proceeds
divided by the Fair Market Value of a Share on the date of exercise of the Option giving rise to such Option Proceeds.


 


(c)               
ISO Share Reserve. The number of Shares that are available for ISO Awards shall not exceed 100% of the number of
Shares designated in Section 3(a) above (as adjusted pursuant to Section 13 of the Plan, in accordance with Code Section 422).


 


4.        
   Eligibility.


 


(a)               
General Rule. Subject to the express provisions of the Plan, the Committee shall determine from the class of Eligible
Persons those Persons to whom Awards may be granted. Each Award shall be evidenced by an Award Agreement that sets forth its Grant
Date and all other terms and conditions of the Award, that is signed on behalf of the Company (or delivered by an authorized agent
through an electronic medium), and that, if required by the Committee, is signed by the Eligible Person as an acceptance of the
Award. The grant of an Award shall not obligate the Company or any Affiliate to continue the employment or service of any Eligible
Person, or to provide any future Awards or other remuneration at any time thereafter.


 


(b)              
Option and SAR Limits per Person. During the term of the Plan, no Participant may receive Options and SARs that relate
to more than [ten million (10,000,000)] Shares, as such number may be adjusted pursuant to Section 13 below.


 


(c)               
Replacement Awards. Subject to Applicable Law (including any associated shareholder approval requirements), the Committee
may, in its sole discretion and upon such terms as it deems appropriate, require as a condition of the grant of an Award to a Participant
that the Participant, consent to surrender for cancellation some or all of the Awards or other grants that the Participant has
received under this Plan or otherwise. An Award conditioned upon such surrender may or may not be the same type of Award, may cover
the same (or a lesser or greater) number of Shares as such surrendered Award, may have other terms that are determined without
regard to the terms or conditions of such surrendered Award, and may contain any other terms that the Committee deems appropriate.


 



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		5.	Stock Options.



 






 


(a)               
Grants. Subject to the special rules for ISOs set forth in Section 5(b) below, the Committee may grant Options to
Eligible Persons pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with the Plan, that
may be immediately exercisable or that may become exercisable in whole or in part based on future events or conditions, that may
include vesting or other requirements for the right to exercise the Option, and that may differ for any reason between Eligible
Persons or classes of Eligible Persons, provided in all instances that:


 





	 	(i)	the exercise price for Shares subject to purchase through exercise of an Option shall not be less than 100% of the Fair Market Value of the underlying Shares on the Grant Date (unless the Award replaces a previously issued Option or SAR); and
	 	 	 
	 	(ii)	no Option shall be exercisable for a term ending more than ten years after its Grant Date.



 


(b)              
Special ISO Provisions. The following provisions shall control any grants of Options that are denominated as ISOs;
provided that ISOs may not be awarded unless the Plan receives shareholder approval within twelve (12) months after its Effective
Date, and ISOs may not be granted more than ten (10) years after Board approval of the Plan.


 





	 	(i)	Eligibility.  The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or an Affiliate that is a “parent corporation” or “subsidiary corporation” within the meaning of Code Section 424.  
	 	 	 
	 	(ii)	Documentation.  Each Option that is intended to be an ISO must be designated in the Award Agreement as an ISO, provided that any Option designated as an ISO will be a Non-ISO to the extent the Option fails to meet the requirements of Code Section 422 or the provisions of this Section 5(b).  In the case of an ISO, the Committee shall determine on the Grant Date the acceptable methods of paying the exercise price for Shares, and it shall be included in the applicable Award Agreement.
	 	 	 
	 	(iii)	$100,000 Limit.  To the extent that the aggregate Fair Market Value of Shares with respect to which ISOs first become exercisable by a Participant in any calendar year (under this Plan and any other plan of the Company or any Affiliate) exceeds U.S. $100,000, such excess Options shall be treated as Non-ISOs.  For purposes of determining whether the U.S. $100,000 limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall be determined as of the Grant Date.  In reducing the number of Options treated as ISOs to meet the U.S. $100,000 limit, the most recently granted Options shall be reduced first.  In the event that Code Section 422 is amended to alter the limitation set forth therein, the limitation of this Section 5(b)(iii) shall be automatically
adjusted accordingly.







 



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	 	(i)	Grants to 10% Holders.  In the case of an ISO granted to an Employee who is a Ten Percent Holder on the Grant Date, the ISO’s term shall not exceed five years from the Grant Date, and the exercise price shall be at least 110% of the Fair Market Value of the underlying Shares on the Grant Date.  In the event that Code Section 422 is amended to alter the limitations set forth therein, the limitation of this paragraph shall be automatically adjusted accordingly.
	 	 	 
	 	(ii)	Substitution of Options.  In the event the Company or an Affiliate acquires (whether by purchase, merger, or otherwise) all or substantially all of outstanding capital stock or assets of another corporation or in the event of any reorganization or other transaction qualifying under Code Section 424, the Committee may, in accordance with the provisions of that Code Section, substitute ISOs for ISOs previously granted under the plan of the acquired company provided (A) the excess of the aggregate Fair Market Value of the Shares subject to an ISO immediately after the substitution over the aggregate exercise price of such shares is not more than the similar excess immediately before such substitution, and (B) the new ISO does not give additional benefits to the Participant, including any extension of the exercise period.
	 	 	 
	 	(iii)	Notice of Disqualifying Dispositions.  By executing an ISO Award Agreement, each Participant agrees to notify the Company in writing immediately after the Participant sells, transfers or otherwise disposes of any Shares acquired through exercise of the ISO, if such disposition occurs within the earlier of (A) two years of the Grant Date, or (B) one year after the exercise of the ISO being exercised.  Each Participant further agrees to provide any information about a disposition of Shares as may be requested by the Company to assist it in complying with any applicable tax laws.







 





(c)               
Method of Exercise. Each Option may be exercised, in whole or in part (provided that the Company shall
not be required to issue fractional shares) at any time and from time to time prior to its expiration, but only pursuant to the
terms of the applicable Award Agreement, and subject to the times, circumstances and conditions for exercise contained in the applicable
Award Agreement. Exercise shall occur by delivery of both written notice of exercise to the secretary of the Company, and payment
of the full exercise price for the Shares being purchased. The methods of payment that the Committee may in its discretion accept
or commit to accept in an Award Agreement include:


 


                              
(i)                       
cash or check payable to the Company (in U.S. dollars);


 


                               (ii)                       
other Shares that (A) are owned by the Participant who is purchasing Shares pursuant to an Option, (B) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised, (C)
are all, at the time of such surrender, free and clear of any and all claims, pledges, liens and encumbrances, or any restrictions
which would in any manner restrict the transfer of such shares to or by the Company (other than such restrictions as may have existed
prior to an issuance of such Shares by the Company to such Participant), and (D) are duly endorsed for transfer to the Company;


 



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(iii)                       
a net exercise by surrendering to the Company Shares otherwise receivable upon exercise
of the Option;


 


                             
(iv)                       
a cashless exercise program that the Committee may approve, from time to time in its discretion, pursuant to which a Participant
may elect to concurrently provide irrevocable instructions (A) to such Participant’s broker or dealer to effect the immediate
sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds
to cover the exercise price of the Option plus all applicable taxes required to be withheld by the Company by reason of such exercise,
and (B) to the Company to deliver the certificates for the purchased Shares directly to such broker or dealer in order to complete
the sale; or


 


                             
(v)                       
any combination of the foregoing methods of payment.


 


The Company shall not be required to deliver Shares pursuant to the
exercise of an Option until the Company has received sufficient funds or value to cover the full exercise price due and all applicable
Withholding Taxes required by reason of such exercise.


 


Notwithstanding any other provision of the Plan to the contrary,
no Participant who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of
credit with respect to such payment with a loan from the Company or a loan arranged by the Company, in violation of Section 13(k)
of the Exchange Act.


 


(d)              
Exercise of an Unvested Non-ISOs. The Committee may, in its sole discretion, set forth in an Award Agreement that
a Participant may exercise an unvested Non-ISO, in which case the Shares then issued shall be Restricted Shares having analogous
vesting restrictions to the unvested Option.


 


(e)               
Termination of Continuous Service. The Committee may establish and set forth in the applicable Award Agreement the
terms and conditions on which an Option shall remain exercisable, if at all, following termination of a Participant’s Continuous
Service. The Committee may waive or modify these provisions at any time. To the extent that a Participant is not entitled to exercise
an Option at the date of his or her termination of Continuous Service, or if the Participant (or other Person entitled to exercise
the Option) does not exercise the Option to the extent so entitled within the time specified in the Award Agreement or below (as
applicable), the Option shall terminate and the Shares underlying the unexercised portion of the Option shall revert to the Plan
and become available for future Awards.


 



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The following provisions shall apply to the
extent an Award Agreement does not specify the terms and conditions upon which an Option shall terminate when there is a termination
of a Participant’s Continuous Service:


 


	Reason for terminating Continuous Service	Option Termination Date
	(I) By the Company for Cause, or what would have been Cause if the Company had known all of the relevant facts.	Termination of the Participant’s Continuous Service, or when Cause first existed if earlier.
	(II) Disability of the Participant.	Within one year after termination of the Participant’s Continuous Service.
	(III) Retirement of the Participant.	Within six months after termination of the Participant’s Continuous Service.
	(IV) Death of the Participant during Continuous Service or within 90 days thereafter.	Within one year after termination of the Participant’s Continuous Service.
	(V) Any other reason.	Within 90 days after termination of the Participant’s Continuous Service.


 


If there is a blackout period under any Company insider trading policy
or Applicable Law (or a Committee-imposed blackout period) that prohibits the buying or selling of Shares during any part of the
ten day period before the expiration of any Option based on the termination of a Participant’s Continuous Service (as described
above), the period for exercising the Options shall be extended until ten days beyond when such blackout period ends. Notwithstanding
any provision hereof or within an Award Agreement, no Option shall ever be exercisable after the expiration date of its original
term as set forth in the Award Agreement.


 


(f)                
Anti-dilution for Cash Dividends. If expressly provided in an Award Agreement, the exercise price for Options will
be equitably adjusted (in a manner that is reasonably intended to avoid triggering additional taxes under Section 409A of the Code)
for some or all of the cash dividends or extraordinary capital distributions that the Company pays with respect to its Shares during
the period between the Option’s Grant Date and its exercise date.


 


(g)               
Buyout. Subject to Applicable Law, the Committee may at any time (I) offer to buy out an Option, in exchange for
a payment in cash or Shares, based on such terms and conditions as the Committee shall establish and communicate to the Participant
at the time that such offer is made; and/or (II) unilaterally terminate and cancel the Option if the Fair Market Value for Shares
subject to an Option is more than [33%]% below their exercise price for more than 30 consecutive business days, either (i)
by paying the Participant, in cash or Shares, an amount not less than the Black-Scholes value of the vested portion of the Option
being cancelled, (ii) by irrevocably committing to grant, on any date the Committee designates, a new Award other than an Option
or SAR, or (iii) by irrevocably committing to grant a new Option, on a designated date on or after such termination and cancellation
of such Option (but only if the Participant’s Continuous Service has not terminated prior to such designated date), on substantially
the same terms as the cancelled Option, provided that the per Share exercise price for the new Option shall equal
the per Share Fair Market Value of a Share on the date the new grant occurs.


 



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		6.	SARs.



 


(a)               
Grants. The Committee may grant SARs to Eligible Persons pursuant to Award Agreements setting forth terms and conditions
awarding appreciation-only rights relating to Shares; provided that the
Award Agreement for each SAR shall set forth terms and conditions that are consistent with those for an Option, other than that
settlement of the SAR shall occur pursuant to Section 6(b) below.


 


(b)              
Settlement. Subject to the Plan’s terms, a SAR shall entitle the Participant, upon exercise of the SAR, to
receive Shares having a Fair Market Value on the date of exercise equal to the product of the number of Share as to which the SAR
is being exercised, and the excess of (i) the Fair Market Value, on such date, of the Shares covered by the exercised SAR, over
(ii) an exercise price designated in the SAR Award Agreement. Notwithstanding the foregoing, a SAR Award Agreement may limit the
total settlement value that the Participant will be entitled to receive upon the SAR’s exercise, and may provide for settlement
either in cash or in any combination of cash or Shares that the Committee may authorize pursuant to an Award Agreement. If, on
the date on which a SAR or portion thereof is to expire, the Fair Market Value of the underlying Shares exceeds their aggregate
exercise price of such SAR, then the SAR shall be deemed exercised and the Participant shall within ten days thereafter receive
the Shares and/or cash that would have been issued on such date if the Participant had affirmatively exercised the SAR on that
date.


 


(c)               
Effect on Available Shares. At each time of exercise of a SAR that is settled through the delivery of Shares to the
Participant, only those Shares that are issued or delivered in settlement of the exercise shall be counted against the number of
Shares available for Awards under the Plan.


 


		7.	Restricted Shares, RSUs, and Unrestricted Shares.



 


(a)               
Grant. The Committee may grant Restricted Shares, RSUs, or Unrestricted Shares to Eligible Persons, in all cases
pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with the Plan. The Committee shall establish
as to each Restricted Share or RSU Award the number of Shares deliverable or subject to the Award (which number may be determined
by a written formula), and the period or periods of time (the “Restriction Period”) at the end of which
all or some restrictions specified in the Award Agreement shall lapse, and the Participant shall receive unrestricted Shares (or
cash to the extent provided in the Award Agreement) in settlement of the Award. Such restrictions may include, without limitation,
restrictions concerning voting rights and transferability, and such restrictions may lapse separately or in combination at such
times and pursuant to such circumstances or based on such criteria as selected by the Committee, including, without limitation,
criteria based on the Participant’s duration of Continuous Service, individual, group, or divisional performance criteria,
Company performance, or other criteria selection by the Committee. The Committee may make Restricted Share and RSU Awards with
or without the requirement for payment of cash or other consideration. In addition, the Committee may grant Awards hereunder in
the form of Unrestricted Shares which shall vest in full upon the Grant Date or such other date as the Committee may determine
or which the Committee may issue pursuant to any program under which one or more Eligible Persons (selected by the Committee in
its sole discretion) elect to pay for such Shares or to receive Unrestricted Shares in lieu of cash bonuses that would otherwise
be paid.


 



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(b)              
Vesting and Forfeiture. The Committee shall set forth, in an Award Agreement granting Restricted Shares or RSUs,
the terms and conditions that establish not only a “substantial
risk of forfeiture” within the meaning of Section 83 of the Code, but also when the Participant’s interest
in the Restricted Shares or the Shares subject to RSUs will become vested and non-forfeitable. Except as set forth in the applicable
Award Agreement or as the Committee otherwise determines, upon termination of a Participant’s Continuous Service for any
reason, the Participant shall forfeit his or her Restricted Shares and RSUs to the extent the Participant’s interest therein
has not vested on or before such termination date; provided that if a Participant purchases Restricted Shares and
forfeits them for any reason, the Company shall return the purchase price to the Participant to the extent either set forth in
an Award Agreement or required by Applicable Laws.


 


(c)               
Certificates for Restricted Shares. Unless otherwise provided in an Award Agreement, the Company shall hold certificates
representing Restricted Shares and dividends (whether in Shares or cash) that accrue with respect to them until the restrictions
lapse, and the Participant shall provide the Company with appropriate stock powers endorsed in blank. The Participant’s failure
to provide such stock powers within ten days after a written request from the Company shall entitle the Committee to unilaterally
declare a forfeiture of all or some of the Participant’s Restricted Shares. 


 


(d)              
Section 83(b) Elections. A Participant may make an election under Code Section 83(b) (the “Section 83(b)
Election”) with respect to Restricted Shares. A Participant who has received RSUs may, within ten days after receiving
the RSU Award, provide the Committee with a written notice of his or her desire to make Section 83(b) Election with respect to
the Shares subject to such RSUs. The Committee may in its discretion convert the Participant’s RSUs into Restricted Shares,
on a one-for-one basis, in full satisfaction of the Participant’s RSU Award. The Participant may then make a Section 83(b)
Election with respect to those Restricted Shares; provided that the Participant’s Section 83(b) Election will be invalid
if not filed with the Company and the appropriate U.S. tax authorities within 30 days after the Grant Date of the RSUs that are
thereafter replaced by the Restricted Shares.


 


(e)               
Deferral Elections for RSUs. To the extent specifically provided in an Award Agreement and subject to and in accordance
with Section 8 below, a Participant who is a Director or a member of a select group of management or highly compensated Employees
(within the meaning of ERISA) may irrevocably elect, in accordance with Section 8 below, to defer the receipt of all or a percentage
of the Shares that would otherwise be transferred to the Participant both more than 12 months after the date of the Participant’s
deferral election and upon the vesting of an RSU Award. If the Participant makes this election, the Company shall credit the Shares
subject to the election, and any associated Shares attributable to Dividend Equivalent Rights attached to the Award, to a DSU account
established pursuant to Section 8 below on the date such Shares would otherwise have been delivered to the Participant pursuant
to this Section.


 


(f)                
Issuance of Shares upon Vesting. As soon as practicable after vesting of a Participant’s Restricted Shares
(or of the right to receive Shares underlying RSUs), the Company shall deliver to the Participant, free from vesting restrictions,
one Share for each surrendered and vested Restricted Share (or deliver one Share free of the vesting restriction for each vested
RSU), unless an Award Agreement provides otherwise and subject to Section 11 regarding Withholding Taxes. No fractional Shares
shall be distributed, and cash shall be paid in lieu thereof.


 



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		8.	DSUs.



 


(a)               
Elections to Defer. The Committee may make DSU awards to Eligible Persons pursuant to Award Agreements (regardless
of whether or not there is a deferral of the Eligible Person’s compensation), and may permit select Eligible Persons who
are Directors or members of a select group of management or highly compensated Employees (within the meaning of ERISA) to irrevocably
elect, on a form provided by and acceptable to the Committee (the “Election Form”), to forego the receipt
of cash or other compensation (including the Shares deliverable pursuant to any RSU Award) and in lieu thereof to have the Company
credit to an internal Plan account a number of DSUs having a Fair Market Value equal to the Shares and other compensation deferred.
These credits will be made at the end of each calendar quarter (or other period determined by the Committee) during which compensation
is deferred. Notwithstanding the foregoing sentence, a Participant’s Election Form will be ineffective with respect to any
compensation that the Participant earns before the date on which the Election Form takes effect. For any Participant who is subject
to U.S. income taxation, the Committee shall only authorize deferral elections under this Section 8(a) --(i) pursuant to written
procedures, and using written Election Forms, that satisfy the requirements of Code Section 409A, and (ii) only by Eligible Persons
who are Directors, Consultants, or members of a select group of management or highly compensated Employees (within the meaning
of ERISA).


 


(b)              
Vesting. Unless an Award Agreement expressly provides otherwise, each Participant shall be 100% vested at all times
in any Shares subject to DSUs.


 


(c)               
Issuances of Shares. Unless an Award Agreement expressly provides otherwise, the Company shall settle a Participant’s
DSU Award, by delivering one Share for each DSU, in five substantially equal annual installments that are issued before the last
day of each of the five calendar years that end after the date on which the Participant’s Continuous Service ends for any
reason, subject to –


 


                                        
(i)                       
the Participant’s right to elect a different form of distribution, only on a form provided by and acceptable to the
Committee, that permits the Participant to select any combination of a lump sum and annual installments that are triggered by,
and completed within ten years following, the last day of the Participant’s Continuous Service, and


 


                                      
(ii)                       
the Company’s acceptance of the Participant’s distribution election form executed at the time the Participant
elects to defer the receipt of cash or other compensation pursuant to Section 8(a), provided that the Participant
may change a distribution election through any subsequent election that (A) the Participant delivers to the Company at least one
year before the date on which distributions are otherwise scheduled to commence pursuant to the Participant’s initial distribution
election, and (B) defers the commencement of distributions by at least five years from the originally scheduled distribution commencement
date.


 


Fractional shares shall not be issued, and instead shall be paid out in cash.


 


(d)              
Emergency Withdrawals. In the event that a Participant suffers an unforeseeable emergency within the contemplation
of this Section 8(d), the Participant may apply to the Committee for an immediate distribution of all or a portion of the Participant’s
DSUs. The unforeseeable emergency must result from a sudden and unexpected illness or accident of the Participant, the Participant’s
spouse, or a dependent (within the meaning of Code Section 152) of the Participant, casualty loss of the Participant’s property,
or other similar extraordinary and unforeseeable conditions beyond the control of the Participant. The Committee shall, in its
sole and absolute discretion, determine whether a Participant has a qualifying unforeseeable emergency, may require independent
verification of the emergency, and may determine whether or not to provide the Participant with cash or Shares. Examples of purposes
which are not considered unforeseeable emergencies include post-secondary school expenses or the desire to purchase a residence.
In no event will a distribution be made to the extent the unforeseeable emergency could be relieved through reimbursement or compensation
by insurance or otherwise, or by liquidation of the Participant’s nonessential assets to the extent such liquidation would
not itself cause a severe financial hardship. The amount of any distribution hereunder shall be limited to the amount necessary
to relieve the Participant’s unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution. The number of Shares subject to the Participant’s DSU Award shall be reduced by any Shares distributed
to the Participant and by a number of Shares having a Fair Market Value on the date of the distribution equal to any cash paid
to the Participant pursuant to this Section 8(d). For all DSUs granted to Participants who are U.S. taxpayers, the term “unforeseeable
emergency” shall be interpreted in accordance with Code Section 409A.


 



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(e)               
Termination of Service. For purposes of this Section 8, a Participant’s “Continuous Service” shall
only end when the Participant incurs a “separation from service” within the meaning of Treasury Regulations §
1.409A-1(h). A Participant shall be considered to have experienced a termination of Continuous Service when the facts and circumstances
indicate that either (i) no further services will be performed for the Company or any Affiliate after a certain date, or (ii) that
the level of bona fide services the Participant will perform after such date (whether as an Employee, Director, or Consultant)
are reasonably expected to permanently decrease to no more than 50% of the average level of bona fide services performed by such
Participant (whether as an Employee, Director, or Consultant) over the immediately preceding 36-month period (or full period of
services to the Company and its Affiliates if the Participant has been providing such services for less than 36 months).


 


		9.	Performance and Cash-Settled Awards.



 


(a)               
Performance Units. Subject to the limitations set forth in paragraph (b) hereof, the Committee may in its discretion
grant Performance Awards, including Performance Units to any Eligible Person, including Performance Units that (i) have substantially
the same financial benefits and other terms and conditions as Options, SARs, RSUs, or DSUs, but (ii) are settled only in cash.
All Awards hereunder shall be made pursuant to Award Agreements setting forth terms and conditions that are not inconsistent with
the Plan.


 


(b)              
Performance Compensation Awards. Subject to the limitations set forth herein, the Committee may, at the time of grant
of a Performance Award, designate its as a “Performance Compensation Award” (payable in cash or Shares)
in order that such Award constitutes, “qualified performance-based compensation” under Code Section 162(m), and has
terms and conditions designed to qualify as such. With respect to each such Performance Compensation Award, the Committee shall
establish, in writing within the time required under Code Section 162(m), a “Performance Period,” “Performance
Measure(s)”, and “Performance Formula(e)” (each such term being defined below). Once established
for a Performance Period, the Performance Measure(s) and Performance Formula(e) shall not be amended or otherwise modified to the
extent such amendment or modification would cause the compensation payable pursuant to the Award to fail to constitute qualified
performance-based compensation under Code Section 162(m).


 



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A Participant shall be eligible to receive payment in respect of
a Performance Compensation Award only to the extent that the Performance Measure(s) for such Award is achieved and the Performance
Formula(e) as applied against such Performance Measure(s) determines that all or some portion of such Participant’s Award
has been earned for the Performance Period. As soon as practicable after the close of each Performance Period, the Committee shall
review and certify in writing whether, and to what extent, the Performance Measure(s) for the Performance Period have been achieved
and, if so, determine and certify in writing the amount of the Performance Compensation Award to be paid to the Participant and,
in so doing, may use negative discretion to decrease, but not increase, the amount of the Award otherwise payable to the Participant
based upon such performance


 


(c)               
Limitations on Awards. The maximum Performance Compensation Award that any one Participant may receive for any one
Performance Period, without regard to time of vesting or exercisability, shall not together exceed [ten million (10,000,000)]
Shares, as adjusted pursuant to Section 13 below (or, for Performance Units to be settled in cash, the greater of U.S. [$1,000,000]
or the Fair Market Value of such number of Shares determined on the Grant Date). The Committee shall have the discretion to provide
in any Award Agreement that any amounts earned in excess of these limitations will be credited as DSUs or as deferred cash compensation
under a separate plan of the Company (provided in the latter case that such deferred compensation either bears a reasonable
rate of interest or has a value based on one or more predetermined actual investments). Any amounts for which payment to the Participant
is deferred pursuant to the preceding sentence shall be paid to the Participant in a future year or years not earlier than, and
only to the extent that, the Participant is either not receiving compensation in excess of these limits for a Performance Period,
or is not subject to the restrictions set forth under Code Section 162(b).


 


(d)              
Definitions.


 


(i)“Performance Formula” means,
for a Performance Period, one or more objective formulas or standards established by the Committee for purposes of determining
whether or the extent to which an Award has been earned based on the level of performance attained or to be attained with respect
to one or more Performance Measure(s). Performance Formulae may vary from Performance Period to Performance Period and from Participant
to Participant and may be established on a stand-alone basis, in tandem or in the alternative.


 


(ii)“Performance Measure” means
one or more of the following selected by the Committee to measure Company, Affiliate, and/or business unit performance for a Performance
Period, whether in absolute or relative terms (including, without limitation, terms relative to a peer group or index): basic,
diluted, or adjusted earnings per share; sales or revenue; earnings before interest, taxes, and other adjustments (in total or
on a per share basis); basic or adjusted net income; returns on equity, assets, capital, revenue or similar measure; economic value
added; working capital; total shareholder return; and product development, product market share, research, licensing, litigation,
human resources, information services, mergers, acquisitions, sales of assets of Affiliates or business units. Each such measure
shall be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied
by the Company (or such other standard applied by the Committee) and, if so determined by the Committee, and in the case of a Performance
Compensation Award, to the extent permitted under Code Section 162(m), adjusted to omit the effects of extraordinary items, gain
or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects
of changes in accounting principles. Performance Measures may vary from Performance Period to Performance Period and from Participant
to Participant, and may be established on a stand-alone basis, in tandem or in the alternative.


 



    	 	11	 



     

    




(iii)“Performance Period” means
one or more periods of time (of not less than one fiscal year of the Company), as the Committee may designate, over which the attainment
of one or more Performance Measure(s) will be measured for the purpose of determining a Participant’s rights in respect of
an Award.


 


(e)               
Deferral Elections. At any time prior to the date that is both at least six months before the close of a Performance
Period (or shorter or longer period that the Committee selects) with respect to a Performance Award and at which time vesting or
payment is substantially uncertain to occur, the Committee may permit a Participant who is a member of a select group of management
or highly compensated employees (within the meaning of ERISA) to irrevocably elect, on a form provided by and acceptable to the
Committee, to defer the receipt of all or a percentage of the cash or Shares that would otherwise be transferred to the Participant
upon the vesting of such Award. If the Participant makes this election, the cash or Shares subject to the election, and any associated
interest and dividends, shall be credited to an account established pursuant to Section 8 hereof on the date such cash or Shares
would otherwise have been released or issued to the Participant pursuant to this Section.


 


10.         
Dividend Equivalent Rights. The Committee may grant Dividend Equivalent
Rights to any Eligible Person, and may do either pursuant to an Award Agreement that is independent of any other Award, or through
a provision in another Award that Dividend Equivalent Rights attach to the Shares underlying the Award. For example, and without
limitation, the Committee may grant a Dividend Equivalent Right in respect of each Share subject to a Restricted Stock Award, Restricted
Stock Unit Award, Deferred Share Unit, or Performance Unit Award. 


 


(a)               
Nature of Right. Each Dividend Equivalent Right shall represent the right to receive amounts based on the dividends
declared on Shares as of all dividend payment dates during the term of the Dividend Equivalent Right (as determined by the Committee).
Unless otherwise determined by the Committee, a Dividend Equivalent Right shall expire upon termination of the Participant’s
Continuous Service, provided that a Dividend Equivalent Right that is granted in as part of another Award shall have a term and
an expiration date that coincide with those of the related Award.


 


(b)              
Settlement. Unless otherwise provided in an Award Agreement, Dividend Equivalent Rights shall be paid out on the
(i) on the record date for dividends if the Award occurs on a stand-alone basis, and (ii) on the vesting or later settlement date
(or other date specified in the Award Agreement) for another Award if the Dividend Equivalent Right is granted as part of it. Payment
of all amounts determined in accordance with this Section shall be in Shares, with cash paid in lieu of fractional Shares, provided
that the Committee may instead provide in an Award Agreement for cash settlement of all or part of the Dividend Equivalent Rights.
For DERs settled in Shares, only the Shares actually issued pursuant to Dividend Equivalent Rights shall count against the Share
limits set forth in Section 3 above.


 



    	 	12	 



     

    




(c)               
Other Terms. The Committee may impose such other terms and conditions on the grant of a Dividend Equivalent Right
as it deems appropriate in its discretion as reflected by the terms of the Award Agreement. The Committee may establish a program
under which Dividend Equivalent Rights may be granted in conjunction with other Awards. The Committee may also authorize, for any
Participant or group of Participants, a program under which the payments with respect to Dividend Equivalent Rights may be deferred
pursuant to the terms and conditions determined under Section 8 above.


 


11.        
Taxes; Withholding; Code §409A.


 


(a)              General
Rule. Participants are solely responsible and liable for the satisfaction of all taxes
and penalties that may arise in connection with Awards, and neither the Company, nor any Affiliate, nor any of their employees,
directors, or agents shall have any obligation to mitigate, indemnify, or to otherwise hold any Participant harmless from any or
all of such taxes.


 


(b)             Withholding.
The Company’s obligation to deliver Shares (or to pay cash) to Participants pursuant to
Awards is at all times subject to their prior or coincident satisfaction of all required Withholding Taxes. Except with respect
to non-Employee Directors and as otherwise provided under the Plan or in an Award Agreement, no later than the date as of which
an amount first becomes includible in a Participant’s taxable income for U.S. federal, state, local or non-U.S. income or
social insurance tax purposes with respect to an Award, the Participant shall pay to the Company (or to the Affiliate employing
the Participant), or make arrangements satisfactory to the Company (or such Affiliate) for the payment of any such income, social
insurance, and other taxes of any kind required by law to be withheld with respect to such taxable amount. Notwithstanding the
foregoing, the Company and its Affiliates may, in each of their sole discretion, withhold a sufficient number of Shares that are
otherwise issuable to the Participant pursuant to an Award in order to satisfy the minimum of any such taxes as may be necessary
in the opinion of the Company or the Affiliate to satisfy all obligations for the payment of such taxes. For purposes of the foregoing,
the Committee may establish such rules, regulations and procedures as it deems necessary or appropriate.


 


(c)            U.S. Code Section 409A. To the extent that the Committee
determines that any Award granted under the Plan is subject to Code Section 409A, the Award Agreement evidencing such Award shall
incorporate the terms and conditions required by Code Section 409A. To the extent applicable, the Plan and Award Agreements shall
be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding
any provision of the Plan to the contrary, the Committee may adopt such amendments to the Plan and the applicable Award Agreement
or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other
actions, that the Committee determines are necessary or appropriate (i) to exempt the Award from Code Section 409A and/or preserve
the intended tax treatment of the benefits provided with respect to the Award, or (ii) to comply with the requirements of Code
Section 409A and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.


 



    	 	13	 



     

    




(d)            Unfunded Tax Status. The Plan is intended to be
an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Person pursuant to an
Award, nothing contained in the Plan or any Award Agreement shall give the Person any rights that are greater than those of a general
creditor of the Company or any Affiliate, and a Participant’s rights under the Plan at all times constitute an unsecured
claim against the general assets of the Company for the collection of benefits as they come due. Neither the Participant nor the
Participant’s duly-authorized transferee or Beneficiaries shall have any claim against or rights in any specific assets,
Shares, or other funds of the Company.


 


12.        
Non-Transferability of Awards.


 


(a)               
General. Except as set forth in this Section 12, or as otherwise approved by the Committee, Awards may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution.
The designation of a death Beneficiary by a Participant will not constitute a transfer. An Award may be exercised, during the lifetime
of the holder of an Award, only by such holder, by the duly-authorized legal representative of a holder who is Disabled, or by
a transferee permitted by this Section 12.


 


(b)              
Limited Transferability Rights. The Committee may in its discretion provide in an Award Agreement that an
Award in the form of a Non-ISO, Share-settled SAR, Restricted Shares, or Performance Units may be transferred, on such terms and
conditions as the Committee deems appropriate, either (i) by instrument to the Participant’s “Immediate Family”
(as defined below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed
to the Participant’s designated Beneficiaries, or (iii) by gift to charitable institutions. Any transferee of the Participant’s
rights shall succeed and be subject to all of the terms of the applicable Award Agreement and the Plan. “Immediate Family”
means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, domestic partner, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive
relationships.


 


(c)               
Death. In the event of the death of a Participant, any outstanding Awards issued to the Participant shall automatically
be transferred to the Participant’s Beneficiary (or, if no Beneficiary is designated or surviving, to the person or persons
to whom the Participant’s rights under the Award pass by will or the laws of descent and distribution). 


 


		13.	Change in Capital Structure; Change in Control; Etc.



 


(a)               
Changes in Capitalization. The Committee shall equitably adjust the number of Shares covered by each outstanding
Award, and the number of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted
or that have been returned to the Plan upon cancellation, forfeiture, or expiration of an Award, as well as the exercise or other
price per Share covered by each such outstanding Award, to reflect any increase or decrease in the number of issued Shares resulting
from a stock-split, reverse stock-split, stock dividend, combination, recapitalization or reclassification of the Shares, merger,
consolidation, change in organization form, or any other increase or decrease in the number of issued Shares effected without receipt
of consideration by the Company. In addition, the Committee shall be equitably adjust the number of Shares covered by each outstanding
Award, as well as the exercise or other price per Share covered by each such outstanding Award, to reflect accruing dividends of
the Company’s Series E Preferred Stock (if any is outstanding) and their effect on the number of fully-diluted shares of
the Company’s Common Stock. Any adjustment resulting from the accruing dividends of the Company’s Series E Preferred
Stock (if any is outstanding) shall be made (or deemed made) as of January 1st of each year. In the event of any such transaction
or event, the Committee may provide in substitution for any or all outstanding Awards such alternative consideration (including
cash or securities of any surviving entity) as it may in good faith determine to be equitable under the circumstances and may require
in connection therewith the surrender of all Awards so replaced. In any case, such substitution of cash or securities shall not
require the consent of any Person who is granted Awards pursuant to the Plan. Except as expressly provided herein, or in an Award
Agreement, if the Company issues for consideration shares of stock of any class or securities convertible into shares of stock
of any class, the issuance shall not affect, and no adjustment by reason thereof shall be required to be made with respect to,
the number or price of Shares subject to any Award.


 



    	 	14	 



     

    




(b)              
Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company other than as part of a
Change of Control, each Award will terminate immediately prior to the consummation of such dissolution or liquidation, subject
to the ability of the Committee to exercise any discretion authorized in the case of a Change in Control.


 


(c)               
Change in Control. In the event of a Change in Control but subject to the terms of any Award Agreements or employment-related
agreements between the Company or any Affiliates and any Participant, each outstanding Award shall be assumed or a substantially
equivalent award shall be substituted by the surviving or successor company or a parent or subsidiary of such successor company
(in each case, the “Successor Company”) upon consummation of the transaction. Notwithstanding the foregoing,
instead of having outstanding Awards be assumed or replaced with equivalent awards by the Successor Company, the Committee may
in its sole and absolute discretion and authority, without obtaining the approval or consent of the Company’s shareholders
or any Participant with respect to his or her outstanding Awards, take one or more of the following actions (with respect to any
or all of the Awards, and with discretion to differentiate between individual Participants and Awards for any reason):


 


                                        
(i)                       
accelerate the vesting of Awards so that Awards shall vest (and, to the extent applicable, become exercisable) as to the
Shares that otherwise would have been unvested and provide that repurchase rights of the Company, if any, with respect to Shares
issued pursuant to an Award shall lapse as to the Shares subject to such repurchase right;


 


                                      
(ii)                       
arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction
and cancellation of all or some outstanding Awards (based on the Fair Market Value, on the date of the Change in Control, of the
Award being cancelled, based on any reasonable valuation method selected by the Committee, and with the Committee having full discretion
to cancel either all Awards or only select Awards (such as only those that have vested on or before the Change in Control));


 



    	 	15	 



     

    




                                    
(iii)                       
terminate all or some Awards upon the consummation of the transaction, provided that the Committee shall provide for vesting
of such Awards in full as of a date immediately prior to consummation of the Change in Control. To the extent that an Award is
not exercised, settled, or cancelled prior to consummation of a transaction in which the Award is not being assumed or substituted,
such Award shall terminate upon such consummation;


 


                                    
(iv)                       
make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary
or appropriate, subject however to the terms set forth above.


 


Notwithstanding the above and unless otherwise provided in an Award
Agreement or in any employment-related agreement between the Company or any Affiliate and the Participant, in the event a Participant
is Involuntarily Terminated on or within 12 months (or other period set forth in an Award Agreement) following a Change in Control,
then any Award that is assumed or substituted pursuant to this Section above shall accelerate and become fully vested (and become
exercisable in full in the case of Options and SARs), and any repurchase right applicable to any Shares underlying the Award shall
lapse in full. The acceleration of vesting and lapse of any repurchase rights provided for in the previous sentence shall occur
immediately prior to the effective date of the Participant’s Involuntary Termination.


 


14.        
Termination, Rescission and Recapture of Awards.


 


(a)               
Each Award under the Plan is intended to align the Participant’s long-term interests with those of the Company. Accordingly,
to the extent provided in an Award Agreement, the Company may terminate any outstanding, unexercised, unexpired, unpaid, or deferred
Awards (“Termination”), rescind any exercise, payment or delivery pursuant to the Award (“Rescission”),
or recapture any Shares (whether restricted or unrestricted) or proceeds from the Participant’s sale of Shares issued pursuant
to the Award (“Recapture”), if the Participant does not comply with the conditions of subsections (b), (c),
and (d) hereof (collectively, the “Conditions”).


 


(b)              
A Participant shall not, without the Company’s prior written authorization, disclose to anyone outside the Company,
or use in other than the Company’s business, any proprietary or confidential information or material, as those or other similar
terms are used in any applicable patent, confidentiality, inventions, secrecy, or other agreement between the Participant and the
Company (or policy applicable to the Participant) with regard to any such proprietary or confidential information or material.


 


(c)               
Pursuant to any agreement between the Participant and the Company with regard to intellectual property (including but not
limited to patents, trademarks, copyrights, trade secrets, inventions, developments, improvements, proprietary information, confidential
business and personnel information), a Participant shall promptly disclose and assign to the Company or its designee all right,
title, and interest in such intellectual property, and shall take all reasonable steps necessary to enable the Company to secure
all right, title and interest in such intellectual property in the United States and in any foreign country.


 


(d)              
Upon exercise, payment, or delivery of cash or Shares pursuant to an Award, the Participant shall, if requested in writing
by the Company, certify on a form acceptable to the Company that he or she is in compliance with the terms and conditions of the
Plan and, if a severance of Continuous Service has occurred for any reason, shall state the name and address of the Participant’s
then-current employer or any entity for which the Participant performs business services and the Participant’s title, and
shall identify any organization or business in which the Participant owns a greater-than-five-percent equity interest.


 



    	 	16	 



     

    




(e)               
If the Company determines, in its sole and absolute discretion, that (i) a Participant has violated any of the Conditions
or (ii) during his or her Continuous Service, or within two years after its termination for any reason, a Participant (w) has rendered
services to or otherwise directly or indirectly engaged in or assisted, any organization or business that, in the judgment of the
Company in its sole and absolute discretion, is or is working to become competitive with the Company; (x) has solicited any non-administrative
employee of the Company to terminate employment with the Company; (y) has called on or solicited any customer, supplier, consultant,
licensee, licensor or other business relation of the Company or any of its Affiliates with whom Participant had material contact
during the two years period prior to the termination of his or her Continuous Service; or (z) has engaged in activities
which are materially prejudicial to or in conflict with the interests of the Company, including any breaches of fiduciary duty
or the duty of loyalty, then the Company may, in its sole and absolute discretion, impose a Termination, Rescission, and/or Recapture
with respect to any or all of the Participant’s relevant Awards, Shares, and the proceeds thereof.


 


(f)                
Within ten days after receiving notice from the Company of any such activity described in Section 14(e) above, the Participant
shall deliver to the Company the Shares acquired pursuant to the Award, or, if Participant has sold the Shares, the gain realized,
or payment received as a result of the rescinded exercise, payment, or delivery; provided, that if the Participant
returns Shares that the Participant purchased pursuant to the exercise of an Option (or the gains realized from the sale of such
Common Stock), the Company shall promptly refund the exercise price, without earnings, that the Participant paid for the Shares.
Any payment by the Participant to the Company pursuant to this Section 14 shall be made either in cash or by returning to the Company
the number of Shares that the Participant received in connection with the rescinded exercise, payment, or delivery. It shall not
be a basis for Termination, Rescission or Recapture if after termination of a Participant’s Continuous Service, the Participant
purchases, as an investment or otherwise, stock or other securities of such an organization or business, so long as (i) such stock
or other securities are listed upon a recognized securities exchange or traded over-the-counter, and (ii) such investment does
not represent more than a five percent (5%) equity interest in the organization or business.


 


(g)               
Notwithstanding the foregoing provisions of this Section 14, the Company has sole and absolute discretion not to require
Termination, Rescission and/or Recapture, and its determination not to require Termination, Rescission and/or Recapture with respect
to any particular act by a particular Participant or Award shall not in any way reduce or eliminate the Company’s authority
to require Termination, Rescission and/or Recapture with respect to any other act or Participant or Award. Nothing in this Section
14 shall be construed to impose obligations on the Participant to refrain from engaging in lawful competition with the Company
after the termination of Continuous Service that does not violate the Conditions, other than any obligations that are part of any
separate agreement between the Company and the Participant or that arise under Applicable Law.


 



    	 	17	 



     

    




(h)              
All administrative and discretionary authority given to the Company under this Section shall be exercised by the most senior
human resources executive of the Company or such other person or committee (including without limitation the Committee) as the
Committee may designate from time to time.


 


(i)                
If any provision within this Section 14 is determined to be unenforceable or invalid under any Applicable Law, such provision
will be applied to the maximum extent permitted by Applicable Law, and shall automatically be deemed amended in a manner consistent
with its objectives and any limitations required under Applicable Law.


 


15.        
Recoupment of Awards. Unless otherwise specifically provided in an Award
Agreement, and to the extent permitted by Applicable Law, the Committee may in its sole and absolute discretion, without obtaining
the approval or consent of the Company’s shareholders or of any Participant, require that any Participant reimburse the Company
for all or any portion of any Awards granted under this Plan (“Reimbursement”),
or the Committee may require the Termination or Rescission of, or the Recapture relating to, any Award, if and to the extent—


 


(a)               
the granting, vesting, or payment of such Award was predicated upon the achievement of certain financial results that were
subsequently the subject of a material financial restatement;


 


(b)              
in the Committee’s view the Participant either benefited from a calculation that later proves to be materially inaccurate,
or engaged in fraud or misconduct that caused or partially caused the need for a material financial restatement by the Company
or any Affiliate; and


 


(c)               
a lower granting, vesting, or payment of such Award would have occurred based upon the conduct described in clause (b) of
this Section 15.


 


In each instance, the Committee may,
to the extent practicable and allowable or required under Applicable Laws, require Reimbursement, Termination or Rescission of,
or Recapture relating to, any such Award granted to a Participant; provided that the Company will not seek Reimbursement, Termination
or Rescission of, or Recapture relating to, any such Awards that were paid or vested more than three years prior to the first date
of the applicable restatement period. Notwithstanding any other provision of the Plan, all Awards shall be subject to Reimbursement,
Termination, Rescission, and/or Recapture to the extent required by Applicable Law, including but not limited to Section 10D of
the Exchange Act.


 


16.        
Relationship to other Benefits. No payment pursuant to the Plan shall be
taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare
or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other
plan or an agreement thereunder.


 


17.        
Administration of the Plan.  The Committee shall administer the Plan in
accordance with its terms, provided that the Board may act in lieu of the Committee on any matter. The Committee shall hold meetings
at such times and places as it may determine and may prescribe, amend, and rescind such rules and regulations, and procedures for
the conduct of its business as it deems advisable. In the absence of a duly appointed Committee, the Board shall function as the
Committee for all purposes of the Plan.


 



    	 	18	 



     

    




(a)               
Committee Composition. The Board shall appoint the members of the Committee. If and to the extent permitted by Applicable
Law, the Committee may authorize one or more executive officers to make Awards to Eligible Persons other than themselves. The Board
may at any time appoint additional members to the Committee, remove and replace members of the Committee with or without Cause,
and fill vacancies on the Committee however caused.


 


(b)              
Powers of the Committee. Subject to the provisions of the Plan, the Committee shall have the authority, in its sole
discretion:


 


                                      
(i)                       
to grant Awards and to determine Eligible Persons to whom Awards shall be granted from time to time, and the number of Shares,
units, or dollars to be covered by each Award;


 


                                     
(ii)                       
to determine, from time to time, the Fair Market Value of Shares;


 


                                    
(iii)                       
to determine, and to set forth in Award Agreements, the terms and conditions of all Awards, including any applicable exercise
or purchase price, the installments and conditions under which an Award shall become vested (which may be based on performance),
terminated, expired, cancelled, or replaced, and the circumstances for vesting acceleration or delay, or waiver of forfeiture restrictions,
and other restrictions and limitations;


 


                                    
(iv)                       
to approve the forms of Award Agreements and all other documents, notices and certificates in connection therewith which
need not be identical either as to type of Award or among Participants;


 


                                     (v)              
          to construe and interpret the terms of the Plan and any Award
Agreement, to determine the meaning of their terms, and to prescribe, amend, and rescind rules and procedures relating to the
Plan and its administration;


 


                                    
(vi)                       
to the extent consistent with the purposes of the Plan and without amending the Plan, to modify, to cancel, or to waive
the Company’s rights with respect to any Awards, to adjust or to modify Award Agreements for changes in Applicable Law, and
to recognize differences in foreign law, tax policies, or customs;


 


                                    
(vii)                       
to require, as a condition precedent to the grant, vesting, exercise, settlement, and/or issuance of Shares pursuant to
any Award, that a Participant agree to execute a general release of claims (in any form that the Committee may require, in its
sole discretion, which form may include any other provisions, e.g. confidentiality and restrictions on competition, that
are found in general claims release agreements that the Company utilizes or expects to utilize);


 


                                   
(viii)                       
in the event that the Company establishes, for itself or using the services of a third party, an automated system for the
documentation, granting, settlement, or exercise of Award, such as a system using an internet website or interactive voice response,
to implement paperless documentation, granting, settlement, or exercise of Awards by a Participant may be permitted through the
use of such an automated system; and


 



    	 	19	 



     

    




                                    
(ix)                       
to make all interpretations and to take all other actions that the Committee may consider necessary or advisable to administer
the Plan or to effectuate its purposes.


 


Subject to Applicable Law and the restrictions set forth in the Plan,
the Committee may delegate administrative functions to individuals who are Directors or Employees.


 


(c)              Local Law Adjustments and Sub-plans. To facilitate
the making of any grant of an Award under this Plan, the Committee may adopt rules and provide for such special terms for Awards
to Participants who are located within the United States, foreign nationals, or who are employed by the Company or any Affiliate
outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. Without limiting the foregoing, the Company is specifically authorized to adopt rules and procedures
regarding the conversion of local currency, taxes, withholding procedures and handling of stock certificates which vary with the
customs and requirements of particular countries. The Company may adopt sub-plans and establish escrow accounts and trusts, and
settle Awards in cash in lieu of shares, as may be appropriate, required or applicable to particular locations and countries.


 


(d)              
Action by Committee. Unless otherwise established by the Board or in any charter of the Committee, a majority of
the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present,
and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each
member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member
by an officer or other Employee of the Company or any Affiliate, the Company’s independent certified public accounts, or
any executive compensation Consultant or other professional retained by the Company to assist in the administration of the Plan.


 


(e)               
Deference to Committee Determinations. The Committee shall have the discretion to interpret or construe ambiguous,
unclear, or implied (but omitted) terms in any fashion it deems to be appropriate in its sole discretion, and to make any findings
of fact needed in the administration of the Plan or Award Agreements. The Committee’s prior exercise of its discretionary
authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee’s interpretation and
construction of any provision of the Plan, or of any Award or Award Agreement, and all determination the Committee makes pursuant
to the Plan shall be final, binding, and conclusive. The validity of any such interpretation, construction, decision or finding
of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless
clearly made in bad faith or materially affected by fraud.


 


(f)                
Claims Limitations Period. Any Participant who believes he or she is being denied any benefit or right under the
Plan may file a written claim with the Committee. Any claim must be delivered to the Committee within forty-five (45) days of the
specific event giving rise to the claim. Untimely claims will not be processed and shall be deemed denied. The Committee, or its
designee, will notify the Participant of its decision in writing as soon as administratively practicable. Claims not responded
to by the Committee in writing within one hundred and twenty (120) days of the date the written claim is delivered to the Committee
shall be deemed denied. The Committee’s decision is final and conclusive and binding on all persons. No lawsuit relating
to the Plan may be filed before a written claim is filed with the Committee and is denied or deemed denied, and any lawsuit must
be filed within one year of such denial or deemed denial or be forever barred.


 



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(g)               
No Liability; Indemnification. Neither the Board nor any Committee member, nor any Person acting at the direction
of the Board or the Committee, shall be liable for any act, omission, interpretation, construction or determination made in good
faith with respect to the Plan, any Award or any Award Agreement. The Company shall pay or reimburse any member of the Committee,
as well as any Director, Employee, or Consultant who in good faith takes action on behalf of the Plan, for all expenses incurred
with respect to the Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for
any claims, liabilities, and costs (including reasonable attorney’s fees) arising out of their good faith performance of
duties on behalf of the Plan. The Company and its Affiliates may, but shall not be required to, obtain liability insurance for
this purpose.


 


(h)              
Expenses. The expenses of administering the Plan shall be borne jointly and severally by the Company and its
Affiliates.


 


18.        
Modification of Awards and Substitution of Options.  Within the limitations
of the Plan, the Committee may modify an Award to accelerate the rate at which an Option or SAR may be exercised, to accelerate
the vesting of any Award, to extend or renew outstanding Awards, to accept the cancellation of outstanding Awards to the extent
not previously exercised, or to make any change that the Plan would permit for a new Award. Notwithstanding the foregoing, no modification
of an outstanding Award may materially and adversely affect a Participant’s rights thereunder unless either (i) the Participant
provides written consent to the modification or (ii) before a Change in Control, the Committee determines in good faith that the
modification is not materially adverse to the Participant.


 


19.         
Plan Amendment and Termination. The Board may amend or terminate the Plan
as it shall deem advisable; provided that no change shall be made that increases the total number of Shares reserved for issuance
pursuant to Awards (except pursuant to Section 13 above) unless such change is authorized by the shareholders of the Company. A
termination or amendment of the Plan shall not materially and adversely affect a Participant’s vested rights under an Award
previously granted to him or her, unless the Participant consents in writing to such termination or amendment. Notwithstanding
the foregoing, the Committee may amend the Plan to comply with changes in tax or securities laws or regulations, or in the interpretation
thereof.


 


20.        
Term of Plan. If not sooner terminated by the Board, this Plan shall terminate
at the close of business on the date ten years after the earlier of Board approval of the Plan and its Effective Date. No Awards
shall be made under the Plan after its termination. 


 


21.         
Governing Law. The terms of this
Plan shall be governed by the laws of the State of Delaware, within the United States of America, without regard to the State’s
conflict of laws rules.


 


		22.	Laws and Regulations.



 


(a)           General Rules. This Plan, the granting
of Awards, the exercise of Options and SARs, and the obligations of the Company hereunder (including those to pay cash or to deliver,
sell or accept the surrender of any of its Shares or other securities) shall be subject to all Applicable Law. In the event that
any Shares are not registered under any Applicable Law prior to the required delivery of them pursuant to Awards, the Company may
require, as a condition to their issuance or delivery, that the persons to whom the Shares are to be issued or delivered make any
written representations and warranties (such as that such Shares are being acquired by the Participant for investment for the Participant’s
own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in,
any distribution of such Shares) that the Committee may reasonably require, and the Committee may in its sole discretion include
a legend to such effect on the certificates representing any Shares issued or delivered pursuant to the Plan.


 



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(b)           Black-out Periods. Notwithstanding any contrary terms
within the Plan or any Award Agreement, the Committee shall have the absolute discretion to impose a “blackout” period
on the exercise of any Option or SAR, as well as the settlement of any Award, with respect to any or all Participants (including
those whose Continuous Service has ended) to the extent that the Committee determines that doing so is either desirable or required
in order to comply with applicable securities laws.


 


(c)           Severability; Blue Pencil. In the event that any one
or more of the provisions of this Plan shall be or become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be affected thereby. If, in the opinion of any court
of competent jurisdiction such covenants are not reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce
the remainder of these covenants as so amended.


 


23.          No Shareholder Rights. 
Neither a Participant nor any transferee or Beneficiary of a Participant shall have any rights as a shareholder of the Company
with respect to any Shares underlying any Award until the date of issuance of a share certificate to such Participant, transferee,
or Beneficiary for such Shares in accordance with the Company’s governing instruments and Applicable Law. Prior to the issuance
of Shares or Restricted Shares pursuant to an Award, a Participant shall not have the right to vote or to receive dividends or
any other rights as a shareholder with respect to the Shares underlying the Award (unless otherwise provided in the Award Agreement
for Restricted Shares), notwithstanding its exercise in the case of Options and SARs. No adjustment will be made for a dividend
or other right that is determined based on a record date prior to the date the stock certificate is issued, except as otherwise
specifically provided for in this Plan or an Award Agreement.


 


___________________


 


Appendix I: Definitions


 


___________________


 


As used in the Plan, the following terms have the meanings indicated
when they begin with initial capital letters within the Plan:


 


“Affiliate” means, with respect to any
Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For
the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of such Person or the power to elect directors, whether
through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling”
and “controlled” have meanings correlative to the foregoing.


 



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“Applicable Law” means the legal requirements
relating to the administration of options and share-based plans under any applicable laws of the United States, any other country,
and any provincial, state, or local subdivision, any applicable stock exchange or automated quotation system rules or regulations,
as such laws, rules, regulations and requirements shall be in place from time to time.


 


“Award” means any award made, in writing
or by an electronic medium, pursuant to the Plan, including awards made in the form of an Option, a SAR, a Restricted Share, a
RSU, an Unrestricted Share, a DSU, a Performance Unit, or Dividend Equivalent Rights, or any combination thereof, whether alternative
or cumulative.


 


“Award Agreement” means any written document
setting forth the terms of an Award that has been authorized by the Committee. The Committee shall determine the form or forms
of documents to be used, and may change them from time to time for any reason.


 


“Beneficiary” means the person or entity
designated by the Participant, in a form approved by the Company, to exercise the Participant’s rights with respect to an
Award or receive payment or settlement under an Award after the Participant’s death.


 


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


 


“Cause” will have the meaning set
forth in any unexpired employment agreement between the Company and the Participant. In the absence of such an agreement, “Cause”
will exist if the Participant is terminated from Continuous Service for any of the following reasons: (i) the commission of a felony
or other crime involving moral turpitude or the commission of any other act or omission involving theft, dishonesty, disloyalty
or fraud with respect to the Company or any of its Affiliates or any of their customers or suppliers, (ii) reporting to work intoxicated
or under the influence of illegal drugs, the use of illegal drugs (whether or not at the workplace) or other conduct causing the
Company or any of its Affiliates substantial public disgrace or disrepute or economic harm, (iii) substantial and repeated failure
to perform duties as reasonably directed by the Board which is not cured to the Board’s reasonable satisfaction within
30 days after written notice thereof to Participant, to the extent that such breach is capable of being cured, (iv) breach of fiduciary
duty, gross negligence or willful misconduct with respect to the Company or any of its Affiliates; (v) chronic absenteeism (“chronic
absenteeism” shall be deemed to have occurred if Participant has at least ten absences unrelated to disability, illness or
scheduled vacation in any ten week period); or (vi) the Participant’s material unauthorized use or disclosure of any proprietary
information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a
result of his or her relationship with the Company. The foregoing definition does not in any way limit the Company’s ability
to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be
interpreted herein to include any Affiliate or successor thereto, if appropriate. Furthermore, a Participant’s Continuous
Service shall be deemed to have terminated for Cause within the meaning hereof if, at any time (whether before, on, or after termination
of the Participant’s Continuous Service), facts or circumstances are discovered that would have justified a termination for
Cause.


 


“Change in Control” means unless another
definition is set forth in an Award Agreement, the first of the following to occur after the Effective Date:


 



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(i)                       
Acquisition of Controlling Interest. Any Person (other than H.I.G. AERT, LLC (and its existing direct and indirect
equityholders) or Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner (within
the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company’s then outstanding securities. In applying the preceding sentence,
an agreement to vote securities shall be disregarded unless its ultimate purpose is to cause what would otherwise be Change in
Control, as reasonably determined by the Board.


 


                                      
(ii)                       
Merger. The Company consummates a merger, or consolidation of the Company with any other corporation unless: (a)
the voting securities of the Company outstanding immediately before the merger or consolidation would continue to represent (either
by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined
voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
and (b) no Person (other than H.I.G. AERT, LLC (and its existing direct and indirect equityholders) or Persons who are Employees
at any time more than one year before the transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s then outstanding securities.


 


                                    
(iii)                       
Sale of Assets. The stockholders of the Company approve an agreement for the sale or disposition by the Company of
all, or substantially all, of the Company’s assets.


 


                                    
(iv)                       
Liquidation or Dissolution. The stockholders of the Company approve a plan or proposal for liquidation or dissolution
of the Company.


 


Notwithstanding the foregoing, a “Change in Control”
shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately
following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets
of the Company immediately following such transaction or series of transactions.


 


“Code” means the Internal Revenue
Code of 1986, as amended from time to time.


 


“Committee” means the Compensation Committee
of the Board or its successor, provided that the term “Committee” means (i) the Board when acting at
any time in lieu of the Committee, (ii) with respect to any decision involving an Award intended to satisfy the requirements of
Code Section 162(m), a committee consisting of two or more Directors of the Company who are “outside directors” within
the meaning of Code Section 162(m), and (iii) with respect to any decision relating to a Reporting Person, a committee consisting
solely of two or more Directors who are disinterested within the meaning of Rule 16b-3.


 



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“Company” means Advanced Environmental
Recycling Technologies, Inc., a Delaware corporation; provided that in the event the Company reincorporates to another
jurisdiction, all references to the term “Company” shall refer to the Company in such new jurisdiction.


 


“Company Stock” means Class A Common Stock
of the Company. In the event of a change in the capital structure of the Company affecting the Class A Common Stock (as provided
in Section 13), the Shares resulting from such a change in the Class A Common Stock shall be deemed to be Company Stock within
the meaning of the Plan.


 


“Consultant” means any person (other than
an Employee or Director), including an advisor, who is engaged by the Company or any Affiliate to render services and is compensated
for such services.


 


“Continuous Service” means a Participant’s
period of service in the absence of any interruption or termination, as an Employee, Director, or Consultant. Continuous Service
shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved
by the Committee, provided that such leave is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted
from time to time; (iv) changes in status from Director to advisory director or emeritus status; or (iv) transfers between locations
of the Company or between the Company and its Affiliates. Changes in status between service as an Employee, Director, and a Consultant
will not constitute an interruption of Continuous Service if the individual continues to perform bona fide services for the Company.
The Committee shall have the discretion to determine whether and to what extent the vesting of any Awards shall be tolled during
any paid or unpaid leave of absence; provided, however, that in the absence of such determination, vesting for all Awards shall
be tolled during any such unpaid leave (but not for a paid leave).


 


“Deferred Share Units” or “DSUs”
mean Awards pursuant to Section 8 of the Plan.


 


“Director” means a member of the Board,
or a member of the board of directors of an Affiliate.


 


“Disabled” will have the meaning set forth
for the term “Disabled” or “Disability” in any unexpired employment agreement between the Company and the
Participant. In the absence of such an agreement, “Disabled” means (i) for an ISO, that the Participant is disabled
within the meaning of Code section 22(e)(3), and (ii) for other Awards, a condition under which the Participant –


 


                                    
(i)           is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months, or


 


                                    
(ii)          is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than
12 months, received income replacement benefits for a period of not less than three months under an accident or health plan covering
employees of the Company.


 



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“Dividend Equivalent Rights” means Awards
pursuant to Section 10 of the Plan, which may be attached to other Awards.


 


“Effective Date” means the date determined
in accordance with Section 1(c) of the Plan.


 


“Eligible Person” means any Consultant,
Director, or Employee and includes non-Employees to whom an offer of employment has been or is being extended.


 


“Employee” means any person whom the Company
or any Affiliate classifies as an employee (including an officer) for employment tax purposes, whether or not that classification
is correct. The payment by the Company of a director’s fee to a Director shall not be sufficient to constitute “employment”
of such Director by the Company.


 


“Employer” means the Company and each Subsidiary
and Affiliate that employs one or more Participants.


 


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


 


“Fair Market Value” means the fair market
value of the Company Stock as of such date based on the then prevailing prices of the Company Stock on the New York Stock Exchange,
NASDAQ or such other stocks exchange as the Company Stock is then listed for trading (and, if none, as determined by the Committee
in good faith based on relevant facts and circumstances).


 


“Grant Date” means the later of (i) the
date designated as the “Grant Date” within an Award Agreement, and (ii) the date on which the Committee determines
the key terms of an Award, provided that as soon as reasonably practical thereafter the Committee both notifies
the Eligible Person of the Award and enters into an Award Agreement with the Eligible Person.


 


“Incentive Stock Option” (or “ISO”)
means, an Option that qualifies for favorable income tax treatment under Code Section 422.


 


“Involuntary Termination” means termination
without Cause of a Participant’s Continuous Service by the Company or an Affiliate or successor thereto, on or after a Change
in Control.


 


“Non-ISO” means an Option not intended
to qualify as an Incentive Stock Option, as designated in the applicable Award Agreement. 


 



    	 	26	 



     

    




“Option” ” means any right to buy
Shares that is granted to a Participant pursuant to Section 5 above.


 


“Option Proceeds” shall mean the cash actually
received by the Company for the exercise price in connection with the exercise of Options that are exercised after the Effective
Date of the Plan, plus the maximum tax benefit that could be realized by the Company as a result of the exercise of such Options,
which tax benefit shall be determined by multiplying (i) the amount that is deductible for Federal income tax purposes as a result
of any such Option exercise (currently, equal to the amount upon which the Participant's withholding tax obligation is calculated),
times (ii) the maximum Federal corporate income tax rate for the year of exercise. With respect to Options, to the extent that
a Participant pays the exercise price and/or withholding taxes with Shares, Option Proceeds shall not be calculated with respect
to the amounts so paid in Shares


 


“Option” means a right to purchase Shares
at a price and on terms and conditions determined in accordance with the Plan.


 


“Participant” means any Eligible Person
who holds an outstanding Award.


 


“Performance Awards” mean Awards granted
pursuant to Section 9.


 


“Performance Unit” means an Award granted
pursuant to Section 9(a) of the Plan which may be paid in cash, in Shares, or such combination of cash and Shares as the Committee
in its sole discretion shall determine.


 


“Person” means any natural person, association,
trust, business trust, cooperative, corporation, general partnership, joint venture, joint-stock company, limited partnership,
limited liability company, real estate investment trust, regulatory body, governmental agency or instrumentality, unincorporated
organization or organizational entity.


 


“Plan” means this Advanced Environmental
Recycling Technologies, Inc. 2011 Stock Incentive Plan.


 


“Recapture”, “Rescission”,
“Reimbursement” have the meanings set forth in Section 14 of the Plan.


 


“Recoupment” has the meaning set forth
in Section 15 of the Plan.


 


“Reporting Person” means an Employee, Director,
or Consultant who is required to file reports with the Securities and Exchange Commission pursuant to Section 16(a) of the Exchange
Act and the rules promulgated thereunder.


 


“Restricted Share” means a Share of Company
Stock awarded with restrictions imposed under Section 7.


 


“Restricted Share Unit” or “RSU”
means a right granted to a Participant to receive Shares or cash upon the lapse of restrictions imposed under Section 7.


 


“Retirement” means a Participant’s
termination of Continuous Service after age 65.


 


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


 


“Share” means a share of Common Stock of
the Company, as adjusted in accordance with Section 13 of the Plan.


 


“SAR” or “Share Appreciation
Right” means a right to receive amounts awarded under Section 6.


 



    	 	27	 



     

    




“Ten Percent Holder” means a person who
owns (within the meaning of Code Section 422) stock representing more than ten percent (10%) of the combined voting power of all
classes of stock of the Company.


 


“Termination” has the meaning set forth
in Section 14 of the Plan.


 


“Unrestricted Shares” mean Shares (without
restrictions) awarded to Participants pursuant to Section 7 of the Plan.


 


“Withholding Taxes” means the aggregate
minimum amount of federal, state, local and foreign income, payroll and other taxes that the Company and any Affiliates are required
to withhold in connection with any Award.


 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


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