Exhibit 10.5


 


PHILLIPS EDISON – ARC GROCERY CENTER
REIT II, INC.


 


2013 LONG-TERM INCENTIVE PLAN


 




    	 



    	 



    

 


PHILLIPS EDISON – ARC GROCERY CENTER
REIT II, INC.


LONG-TERM INCENTIVE PLAN


 


	ARTICLE 1 PURPOSE	 	1
	 	 	 
	1.1	 	General	 	1
	 	 	 	 	 
	ARTICLE 2 DEFINITIONS	 	1
	 	 	 
	2.1	 	Definitions	 	1
	 	 	 	 	 
	ARTICLE 3 EFFECTIVE TERM OF PLAN	 	4
	 	 	 
	3.1	 	Effective Date	 	4
	 	 	 	 	 
	3.2	 	Term of Plan	 	4
	 	 	 	 	 
	ARTICLE 4 ADMINISTRATION	 	4
	 	 	 
	4.1	 	Committee	 	4
	 	 	 	 	 
	4.2	 	Actions and Interpretations by the Committee	 	5
	 	 	 	 	 
	4.3	 	Authority of Committee	 	5
	 	 	 	 	 
	4.4	 	Award Certificates	 	6
	 	 	 	 	 
	ARTICLE 5 SHARES SUBJECT TO THE PLAN	 	6
	 	 	 
	5.1	 	Number of Shares	 	6
	 	 	 	 	 
	5.2	 	Share Counting	 	6
	 	 	 	 	 
	5.3	 	Stock Distributed	 	6
	 	 	 	 	 
	ARTICLE 6 ELIGIBILITY	 	7
	 	 	 
	6.1	 	General	 	7
	 	 	 	 	 
	ARTICLE 7 STOCK OPTIONS	 	7
	 	 	 
	7.1	 	General	 	7
	 	 	 	 	 
	7.2	 	Incentive Stock Options	 	7
	 	 	 	 	 
	ARTICLE 8 STOCK APPRECIATION RIGHTS	 	8
	 	 	 
	8.1	 	Grant of Stock Appreciation Rights	 	8
	 	 	 	 	 
	ARTICLE 9 PERFORMANCE AWARDS	 	8
	 	 	 
	9.1	 	Grant of Performance Awards	 	8
	 	 	 	 	 
	9.2	 	Performance Goals	 	8
	 	 	 	 	 
	9.3	 	Right to Payment	 	8
	 	 	 	 	 
	9.4	 	Other Terms	 	9
	 	 	 	 	 
	ARTICLE 10 RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS	 	9
	 	 	 
	10.1	 	Grant of Restricted Stock and Restricted Stock Units	 	9
	 	 	 	 	 
	10.2	 	Issuance and Restrictions	 	9


 




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	10.3	 	Forfeiture	 	9
	 	 	 	 	 
	10.4	 	Delivery of Restricted Stock	 	9
	 	 	 	 	 
	ARTICLE 11 DEFERRED STOCK UNITS	 	9
	 	 	 
	11.1	 	Grant of Deferred Stock Units	 	9
	 	 	 	 	 
	ARTICLE 12 DIVIDEND EQUIVALENTS	 	10
	 	 	 
	12.1	 	Grant of Dividend Equivalents	 	10
	 	 	 	 	 
	ARTICLE 13 STOCK OR OTHER STOCK-BASED AWARDS	 	10
	 	 	 
	13.1	 	Grant of Stock or Other Stock-Based Awards	 	10
	 	 	 	 	 
	ARTICLE 14 PROVISIONS APPLICABLE TO AWARDS	 	10
	 	 	 
	14.1	 	Stand-Alone and Tandem Awards	 	10
	 	 	 	 	 
	14.2	 	Term of Awards	 	10
	 	 	 	 	 
	14.3	 	Form of Payment of Awards	 	10
	 	 	 	 	 
	14.4	 	Limits on Transfer	 	10
	 	 	 	 	 
	14.5	 	Beneficiaries	 	11
	 	 	 	 	 
	14.6	 	Stock Certificates	 	11
	 	 	 	 	 
	14.7	 	Acceleration Upon Death or Disability	 	11
	 	 	 	 	 
	14.8	 	Treatment upon a Change in Control	 	11
	 	 	 	 	 
	14.9	 	Acceleration For Any Reason	 	12
	 	 	 	 	 
	14.10	 	Termination of Employment	 	12
	 	 	 	 	 
	14.11	 	Forfeiture Events	 	12
	 	 	 	 	 
	14.12	 	Substitute Awards	 	12
	 	 	 	 	 
	ARTICLE 15 CHANGES IN CAPITAL STRUCTURE	 	13
	 	 	 
	15.1	 	Mandatory Adjustments	 	13
	 	 	 	 	 
	15.2	 	Discretionary Adjustments	 	13
	 	 	 	 	 
	15.3	 	General	 	13
	 	 	 	 	 
	ARTICLE 16 AMENDMENT, MODIFICATION AND TERMINATION	 	13
	 	 	 
	16.1	 	Amendment, Modification and Termination	 	13
	 	 	 	 	 
	16.2	 	Awards Previously Granted	 	14
	 	 	 	 	 
	ARTICLE 17 GENERAL PROVISIONS	 	14
	 	 	 
	17.1	 	No Rights to Awards; Non-Uniform Determinations	 	14
	 	 	 	 	 
	17.2	 	No Shareholder Rights	 	14
	 	 	 	 	 
	17.3	 	Withholding	 	14
	 	 	 	 	 
	17.4	 	No Right to Continued Service	 	14


 




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	17.5	 	Unfunded Status of Awards	 	14
	 	 	 	 	 
	17.6	 	Relationship to Other Benefits	 	15
	 	 	 	 	 
	17.7	 	Expenses	 	15
	 	 	 	 	 
	17.8	 	Titles and Headings	 	15
	 	 	 	 	 
	17.9	 	Gender and Number	 	15
	 	 	 	 	 
	17.10	 	Fractional Shares	 	15
	 	 	 	 	 
	17.11	 	Government and Other Regulations	 	15
	 	 	 	 	 
	17.12	 	Governing Law	 	15
	 	 	 	 	 
	17.13	 	Additional Provisions	 	15
	 	 	 	 	 
	17.14	 	No Limitations on Rights of Company	 	15
	 	 	 	 	 
	17.15	 	Indemnification	 	16
	 	 	 	 	 
	17.16	 	Special Provisions Related to Section 409A of the Code	 	16



 






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PHILLIPS EDISON – ARC GROCERY
CENTER REIT II, INC. 


2013 LONG-TERM INCENTIVE PLAN


 


ARTICLE 1 


PURPOSE


 


1.1. GENERAL. The purpose of the
Phillips Edison – ARC Grocery Center REIT II, Inc. 2013 Long-Term Incentive Plan (the “Plan”) is to promote
the success, and enhance the value, of Phillips Edison – ARC Grocery Center REIT II, Inc. (the “Company”),
by linking the personal interests of employees, officers and consultants of the Company or any Affiliate (as defined below) to
those of Company stockholders and by providing such persons with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers
and consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from time to time to selected employees, officers and
consultants of the Company and its Affiliates.


 


ARTICLE 2 


DEFINITIONS


 


2.1. DEFINITIONS. When a word or
phrase appears in this Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word
or phrase shall generally be given the meaning ascribed to it in this Section or in Section 1.1, unless a clearly different
meaning is required by the context. The following words and phrases shall have the following meanings:


 


(a) “Affiliate”
means (i) any Subsidiary or Parent, (ii) American Realty Capital PECO II Advisors, LLC, (iii) Phillips Edison NTR II LLC or
(iv) an entity that directly or through one or more intermediaries controls, is controlled by or is under common control with,
the Company, as determined by the Committee.


 


(b) “Award”
means any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Deferred Stock Unit Award, Performance
Award, Dividend Equivalent Award, Other Stock-Based Award, Performance-Based Cash Awards, or any other right or interest relating
to Stock or cash, granted to a Participant under the Plan.


 


(c) “Award Certificate”
means a written document, in such form as the Committee prescribes from time to time, setting forth the terms and conditions of
an Award. Award Certificates may be in the form of individual award agreements or certificates or a program document describing
the terms and provisions of an Awards or series of Awards under the Plan.


 


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


 


(e) “Cause”
as a reason for a Participant’s termination of employment shall have the meaning assigned such term in the employment, severance
or similar agreement, if any, between such Participant and the Company or an Affiliate, provided, however that if there is no such
employment, severance or similar agreement in which such term is defined, and unless otherwise defined in the applicable Award
Certificate, “Cause” shall mean any of the following acts by the Participant, as determined by the Committee
or the Board: (i) the willful and continued failure of the Participant to perform his or her required duties as an officer
or employee of the Company or any Affiliate, (ii) any action by the Participant that involves willful misfeasance or gross
negligence, (iii) the requirement of or direction by a federal or state regulatory agency that has jurisdiction over the Company
or any Affiliate to terminate the employment of the Participant, (iv) the conviction of the Participant of the commission
of any criminal offense that involves dishonesty or breach of trust, or (v) any intentional breach by the Participant of a
material term, condition or covenant of any agreement between the Participant and the Company or any Affiliate.


 


(f) “Change in Control”
means and includes the occurrence of any one of the following events but shall specifically exclude a Public Offering:


 


(i) individuals who, on the Effective
Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority
of such Board, provided that any person becoming a director after the Effective Date and whose election or nomination for election
was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be an Incumbent Director; provided,
however , that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened
election contest with respect to the election or removal of directors (“Election Contest”) or other actual or
threatened solicitation of proxies or consents by or on behalf of any Person other than the Board ( “Proxy Contest”
), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent
Director; or


 




    	 



    	 



    

 


(ii) any person becomes a “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of either (A) 25% or more of the then-outstanding
shares of common stock of the Company ( “Company Common Stock” ) or (B) securities of the Company representing
25% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of
directors (the “Company Voting Securities” ); provided, however, that for purposes of this subsection
(ii), the following acquisitions of Company Common Stock or Company Voting Securities shall not constitute a Change in Control:
(w) an acquisition directly from the Company, (x) an acquisition by the Company or a Subsidiary of the Company, (y) an
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary of the Company,
or (z) an acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection (iii) below); or


 


(iii) the consummation of a reorganization,
merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or a Subsidiary
(a “Reorganization”), or the sale or other disposition of all or substantially all of the Company’s assets
(a “Sale”) or the acquisition of assets or stock of another corporation (an “Acquisition”),
unless immediately following such Reorganization, Sale or Acquisition: (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the outstanding Company Common Stock and outstanding Company Voting Securities
immediately prior to such Reorganization, Sale or Acquisition beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the corporation resulting from such Reorganization, Sale or
Acquisition (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets or stock either directly or through one or more subsidiaries, the “Surviving Corporation”)
in substantially the same proportions as their ownership, immediately prior to such Reorganization, Sale or Acquisition, of the
outstanding Company Common Stock and the outstanding Company Voting Securities, as the case may be, and (B) no person (other
than (x) the Company or any Subsidiary of the Company, (y) the Surviving Corporation or its ultimate parent corporation,
or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing is the beneficial owner,
directly or indirectly, of 25% or more of the total common stock or 25% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Surviving Corporation, and (C) at least a majority of the members of the board
of directors of the Surviving Corporation were Incumbent Directors at the time of the Board’s approval of the execution of
the initial agreement providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition which satisfies
all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);
or


 


(iv) approval by the stockholders
of the Company of a complete liquidation or dissolution of the Company.


 


(g) “Code” means
the Internal Revenue Code of 1986, as amended from time to time, and includes a reference to the underlying final regulations.


 


(h) “Committee”
means the committee of the Board described in Article 4.


 


(i) “Company”
means Phillips Edison – ARC Grocery Center REIT II, Inc., a Maryland corporation, or any successor corporation.


 


(j) “Continuous Status
as a Participant” means the absence of any interruption or termination of service as an employee, officer or consultant
of the Company or any Affiliate, as applicable; provided, however, that for purposes of an Incentive Stock Option, or a Stock Appreciation
Right issued in tandem with an Incentive Stock Option, “Continuous Status as a Participant” means the absence
of any interruption or termination of service as an employee of the Company or any Parent or Subsidiary, as applicable, pursuant
to applicable tax regulations. Continuous Status as a Participant shall continue to the extent provided in a written severance
or employment agreement during any period for which severance compensation payments are made to an employee, officer or consultant
and shall not be considered interrupted in the case of any short-term disability or leave of absence authorized in writing by the
Company prior to its commencement; provided, however, that for purposes of Incentive Stock Options, no such leave may exceed 90
days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of
a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any Incentive Stock Option held
by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option.


 


(k) “Deferred Stock Unit”
means a right granted to a Participant under Article 11.


 




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(l) “Disability”
or “Disabled” has the same meaning as provided in the long-term disability plan or policy maintained by the
Company or if applicable, most recently maintained, by the Company or if applicable, an Affiliate, for the Participant, whether
or not such Participant actually receives disability benefits under such plan or policy. If no long-term disability plan or policy
was ever maintained on behalf of Participant or if the determination of Disability relates to an Incentive Stock Option, or a Stock
Appreciation Right issued in tandem with an Incentive Stock Option, Disability means Permanent and Total Disability as defined
in Section 22(e)(3) of the Code. In the event of a dispute, the determination whether a Participant is Disabled will be made
by the Committee and may be supported by the advice of a physician competent in the area to which such Disability relates.


 


(m) “Dividend Equivalent”
means a right granted to a Participant under Article 12.


 


(n) “Effective Date”
has the meaning assigned such term in Section 3.1.


 


(o) “Eligible Participant”
means an employee, officer or consultant of the Company or any Affiliate.


 


(p) “Fair Market Value”,
on any date, means (i) if the Stock is listed on a national securities exchange or is traded on a national market system, the closing
sales price on such exchange or over such system on such date or, in the absence of reported sales on such date, the closing sales
price on the immediately preceding date on which sales were reported, or (ii) if the Stock is not listed on a national securities
exchange or traded on a national market system, the mean between the bid and offered prices as quoted by NASDAQ for such date,
provided that if it is determined that the fair market value is not properly reflected by such NASDAQ quotations or bid and offered
prices for the Shares are not quoted by NASDAQ, Fair Market Value will be determined by such other method as the Committee determines
in good faith to be reasonable.


 


(q) “Full Value Award”
means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Stock.


 


(r) “Good Reason”
(or similar term) has the meaning assigned such term in the Award Certificate or agreement referred to in Section 14.8(b).


 


(s) “Grant Date”
of an Award means the first date on which all necessary corporate action has been taken to approve the grant of the Award as provided
in the Plan, or such later date as is determined and specified as part of that authorization process. Notice of the grant shall
be provided to the grantee within a reasonable time after the Grant Date.


 


(t) “Incentive Stock Option”
means an Option that is intended to be an incentive stock option and meets the requirements of Section 422 of the Code or
any successor provision thereto.


 


(u) “Independent Director”
means a director of the Company who is not a common law employee of the Company or an Affiliate.


 


(v) “Nonstatutory Stock
Option” means an Option that is not an Incentive Stock Option.


 


(w) “Option”
means a right granted to a Participant under Article 7 of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.


 


(x) “Other Stock-Based
Award” means a right, granted to a Participant under Article 13, that relates to or is valued by reference to Stock or
other Awards relating to Stock.


 


(y) “Parent”
means a corporation, limited liability company, partnership or other entity which owns or beneficially owns a majority of the outstanding
voting stock or voting power of the Company. Notwithstanding the above, with respect to an Incentive Stock Option, Parent shall
mean a “parent corporation” within the meaning set forth in Section 424(e) of the Code.


 


(z) “Participant”
means a person who, as an employee, officer or consultant of the Company or any Affiliate, has been granted an Award under the
Plan; provided that in the case of the death of a Participant, the term “Participant” refers to a beneficiary
designated pursuant to Section 14.5 or the legal guardian or other legal representative acting in a fiduciary capacity on
behalf of the Participant under applicable state law and court supervision.


 


(aa) “Performance Award”
means Performance Shares or Performance Units or Performance-Based Cash Awards granted pursuant to Article 9.


 


(bb) “Performance-Based
Cash Award” means a right granted to a Participant under Article 9 to a cash award to be paid upon achievement of such
performance goals as the Committee establishes with regard to such Award.


 




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(cc) “Performance Share”
means any right granted to a Participant under Article 9 to a unit to be valued by reference to a designated number of Shares to
be paid upon achievement of such performance goals as the Committee establishes with regard to such Performance Share.


 


(dd) “Performance Unit”
means a right granted to a Participant under Article 9 to a unit valued by reference to a designated amount of cash or property
other than Shares to be paid to the Participant upon achievement of such performance goals as the Committee establishes with regard
to such Performance Unit.


 


(ee) “Person”
means any individual, entity or group, within the meaning of Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3)
or 14(d)(2) of the 1934 Act.


 


(ff) “Plan”
means the Phillips Edison – ARC Grocery Center REIT II, Inc. 2013 Long-Term Incentive Plan, as amended from time to time.


 


(gg) “Public Offering”
shall occur on the closing date of a firm commitment underwritten public offering of any class or series of the Company’s
equity securities pursuant to a registration statement filed by the Company under the 1933 Act.


 


(hh) “Restricted Stock
Award” means Stock granted to a Participant under Article 10 that is subject to certain restrictions and to risk of forfeiture.


 


(ii) “Restricted Stock
Unit Award” means the right granted to a Participant under Article 10 to receive shares of Stock (or the equivalent value
in cash or other property if the Committee so provides) in the future, which right is subject to certain restrictions and to risk
of forfeiture.


 


(jj) “Shares”
means shares of the Company’s Stock. If there has been an adjustment or substitution pursuant to Section 15.1, the term
“Shares” shall also include any shares of stock or other securities that are substituted for Shares or into which
Shares are adjusted pursuant to Section 15.1.


 


(kk) “Stock”
means the $0.01 par value common stock of the Company and such other securities of the Company as may be substituted for Stock
pursuant to Article 15.


 


(ll) “Stock Appreciation
Right” or “SAR” means a right granted to a Participant under Article 8 to receive a payment equal
to the difference between the Fair Market Value of a Share as of the date of exercise of the SAR over the grant price of the SAR,
all as determined pursuant to Article 8.


 


(mm) “Subsidiary”
means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting stock
or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive
Stock Option, Subsidiary shall mean a “subsidiary corporation” within the meaning set forth in Section 424(f)
of the Code.


 


(nn) “1933 Act”
means the Securities Act of 1933, as amended from time to time.


 


(oo) “1934 Act”
means the Securities Exchange Act of 1934, as amended from time to time.


 


ARTICLE 3 


EFFECTIVE TERM OF PLAN


 


3.1. EFFECTIVE DATE. The Plan shall
be effective as of the date it is approved by the stockholders of the Company (the “Effective Date”).


 


3.2. TERMINATION OF PLAN. The Plan
shall terminate on the tenth anniversary of the Effective Date unless earlier terminated as provided herein. The termination of
the Plan on such date shall not affect the validity of any Award outstanding on the date of termination.


 




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ARTICLE 4 


ADMINISTRATION


 


4.1. COMMITTEE. The Plan shall be
administered by a Committee appointed by the Board (which Committee shall consist of at least two directors) or, at the discretion
of the Board from time to time, the Plan may be administered by the Board. It is intended that at least two of the directors appointed
to serve on the Committee shall be “non-employee directors” (within the meaning of Rule 16b-3 promulgated under the
1934 Act) and that any such members of the Committee who do not so qualify shall abstain from participating in any decision to
make or administer Awards that are made to Eligible Participants who at the time of consideration for such Award are persons subject
to the short-swing profit rules of Section 16 of the 1934 Act. However, the mere fact that a Committee member shall fail to
qualify under the foregoing requirement or shall fail to abstain from such action shall not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan. The members of the Committee shall be appointed by, and may be changed at
any time and from time to time in the discretion of, the Board. The Board may reserve to itself any or all of the authority and
responsibility of the Committee under the Plan or may act as administrator of the Plan for any and all purposes. To the extent
the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan,
it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1)
shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the
actions of the Board shall control.


 


4.2. ACTION AND INTERPRETATIONS BY THE
COMMITTEE. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines
and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with
the Plan, as the Committee may deem appropriate. The Committee’s interpretation of the Plan, any Awards granted under the
Plan, any Award Certificate and all decisions and determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties. 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 any officer or other employee of the Company or any Affiliate, the Company’s or an
Affiliate’s independent certified public accountants, Company counsel or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.


 


4.3. AUTHORITY OF COMMITTEE. Except
as provided below, the Committee has the exclusive power, authority and discretion to:


 


(a) Grant Awards;


 


(b) Designate Participants;


 


(c) Determine the type or types
of Awards to be granted to each Participant;


 


(d) Determine the number of Awards
to be granted and the number of Shares or dollar amount to which an Award will relate;


 


(e) Determine the terms and conditions
of any Award, not inconsistent with the provisions of the Plan, granted under the Plan, including but not limited to, the exercise
price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions
or restrictions on the exercisability of an Award, and accelerations or waivers thereof, based in each case on such considerations
as the Committee in its sole discretion determines;


 


(f) Determine whether, to what
extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock,
other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;


 


(g) Prescribe the form of each
Award Certificate, which need not be identical for each Participant;


 


(h) Decide all other matters that
must be determined in connection with an Award;


 


(i) Establish, adopt or revise
any rules, regulations, guidelines or procedures as it may deem necessary or advisable to administer the Plan;


 


(j) Make all other decisions and
determinations that may be required under the Plan or as the Committee deems necessary or advisable to administer the Plan;


 


(k) Amend the Plan or any Award
Certificate as provided herein; and


 


(l) Adopt such modifications, procedures,
and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company
or any Affiliate may operate, in order to assure the viability of the benefits of Awards granted to participants located in such
other jurisdictions and to meet the objectives of the Plan.


 


Notwithstanding the foregoing, grants of
Awards hereunder shall not be made to Independent Directors in their capacity as such, it being the intention that grants to Independent
Directors shall be made only in accordance with the terms, conditions and parameters of a separate plan, program or policy for
the compensation of Independent Directors as in effect from time to time.


 




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Notwithstanding the above, the Board or
the Committee may, by resolution, expressly delegate to a special committee, consisting of one or more directors who are also officers
of the Company, the authority, within specified parameters, to (i) designate officers, employees and/or consultants of the
Company or any of its Affiliates to be recipients of Awards under the Plan, and (ii) to determine the number of such Awards
to be granted to any such Participants; provided that a limit on the total number or dollar value of Awards to be granted to any
such Participants shall be approved in advance by the Board or the Committee and provided further that such delegation of duties
and responsibilities to such special committee may not be made with respect to the grant of Awards to Eligible Participants who
are subject to Section 16(a) of the 1934 Act at the Grant Date. The acts of such delegates shall be treated hereunder as acts
of the Board and such delegates shall report regularly to the Board and the Committee regarding the delegated duties and responsibilities
and any Awards so granted.


 


4.4. AWARD CERTIFICATES. Each Award
shall be evidenced by an Award Certificate. Each Award Certificate shall include such provisions, not inconsistent with the Plan,
as may be specified by the Committee.


 


ARTICLE 5 


SHARES SUBJECT TO THE PLA N


 


5.1. NUMBER OF SHARES. Subject
to adjustment as provided in Sections 5.2 and 15.1, the aggregate number of Shares reserved and available for issuance pursuant
to Awards granted under the Plan shall be 4,000,000. The maximum number of Shares that may be issued upon exercise of Incentive
Stock Options granted under the Plan shall be 4,000,000. The maximum number of Shares that may be issued (i) upon the exercise
or grant of an Award granted under the Plan and (ii) pursuant to the Company’s 2013 Independent Director Stock Plan, shall
not exceed in the aggregate (including both plans) an amount equal to 5% of the outstanding Shares on the Grant Date.


 


5.2. SHARE COUNTING.


 


(a) To the extent that an Award
is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued Shares from such Award will again be available
for issuance pursuant to Awards granted under the Plan.


 


(b) Shares subject to Awards settled
in cash will again be available for issuance pursuant to Awards granted under the Plan.


 


(c) Shares withheld from
an Award to satisfy minimum tax withholding requirements will again be available for issuance pursuant to Awards granted under
the Plan, but Shares delivered by a Participant (by either actual delivery or attestation) to satisfy tax withholding requirements
shall not be added back to the number of Shares available for issuance under the Plan.


 


(d) If the exercise price of an
Option is satisfied by delivering Shares to the Company (by either actual delivery or attestation), only the net number of Shares
actually issued by the Company shall be considered for purposes of determining the number of Shares remaining available for issuance
pursuant to Awards granted under the Plan.


 


(e) To the extent that the full
number of Shares subject to an Award is not issued for any reason, only the number of Shares issued and delivered shall be considered
for purposes of determining the number of Shares remaining available for issuance pursuant to Awards granted under the Plan. Nothing
in this subsection shall imply that any particular type of cashless exercise of an Option is permitted under the Plan, that decision
being reserved to the Committee or other provisions of the Plan.


 


5.3. STOCK DISTRIBUTED. Any Stock
distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased
on the open market.


 




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ARTICLE 6 


ELIGIBILITY


 


6.1. GENERAL. Awards may be granted
only to Eligible Participants; except that Incentive Stock Options may be granted only to Eligible Participants who are employees
of the Company or a Parent or Subsidiary which constitutes a “parent corporation” or a “subsidiary corporation”
as defined in Section 424(e) and (f) of the Code, respectively.


 


ARTICLE 7 


STOCK OPTIONS


 


7.1. GENERAL. The Committee is authorized
to grant Options to Participants subject to terms and conditions, not inconsistent with the provisions of the Plan, as the Committee
shall establish, including the following:


 


(a) EXERCISE PRICE. The
exercise price per Share under an Option shall be determined by the Committee; provided, however, that the exercise price of an
Option shall not be less than the Fair Market Value as of the Grant Date.


 


(b) TIME AND CONDITIONS OF EXERCISE.
The Committee shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(d).
The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an
Option may be exercised or vested. Except under certain circumstances contemplated by Section 14.8 or 14.9 or as may be set
forth in an Award Certificate with respect to death or Disability of a Participant, Options will not be exercisable before the
expiration of one year from the Grant Date.


 


(c) PAYMENT. The Committee
shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation,
cash, Shares, or other property (including “cashless exercise” arrangements), and the methods by which Shares shall
be delivered or deemed to be delivered to Participants; provided, however, that if Shares are used to pay the exercise price of
an Option, such Shares must have been held by the Participant for at least such period of time, if any, as necessary to avoid the
recognition of an expense under generally accepted accounting principles as a result of the exercise of the Option.


 


(d) EXERCISE TERM. In no
event may any Option be exercisable for more than ten years from the Grant Date.


 


7.2. INCENTIVE STOCK OPTIONS. The
terms of any Incentive Stock Options granted under the Plan must comply with the following additional rules:


 


(a) EXERCISE PRICE. The
exercise price of an Incentive Stock Option shall not be less than the Fair Market Value as of the Grant Date.


 


(b) LAPSE OF OPTION. Subject
to any earlier termination provision contained in the Award Certificate, an Incentive Stock Option shall lapse upon the earliest
of the following circumstances:


 


(1) The expiration date set forth
in the Award Certificate.


 


(2) The tenth anniversary of
the Grant Date.


 


(3) Three months after termination
of the Participant’s Continuous Status as a Participant for any reason other than the Participant’s Disability or death.


 


(4) One year after the termination
of the Participant’s Continuous Status as a Participant by reason of the Participant’s Disability.


 


(5) Two years after the Participant’s
death if the Participant dies while employed or during the three-month period described in paragraph (3) or during the one-year
period described in paragraph (4) and before the Option otherwise lapses.


 


Unless the exercisability of the
Incentive Stock Option is accelerated as provided in Article 14, if a Participant exercises an Option after termination of employment,
the Option may be exercised only with respect to the Shares that were otherwise vested on the Participant’s termination of
employment. Upon the Participant’s death, any exercisable Incentive Stock Options may be exercised by the Participant’s
beneficiary, determined in accordance with Section 14.5.


 


(c) INDIVIDUAL DOLLAR LIMITATION.
The aggregate Fair Market Value (determined as of the Grant Date) of all Shares with respect to which Incentive Stock Options are
first exercisable by a Participant in any calendar year may not exceed $100,000.00.


 




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(d) TEN PERCENT OWNERS.
No Incentive Stock Option shall be granted to any individual who, at the Grant Date, owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary unless the exercise price
per share of such Option is at least 110% of the Fair Market Value per Share at the Grant Date and the Option expires no later
than five years after the Grant Date.


 


(e) EXPIRATION OF AUTHORITY
TO GRANT INCENTIVE STOCK OPTIONS. No Incentive Stock Option may be granted pursuant to the Plan after the day immediately prior
to the tenth anniversary of the Effective Date of the Plan, or the termination of the Plan, if earlier.


 


(f) RIGHT TO EXERCISE. During
a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant or, in the case of the Participant’s
Disability, by the Participant’s guardian or legal representative.


 


(g) ELIGIBLE GRANTEES. The
Committee may not grant an Incentive Stock Option to a person who is not at the Grant Date an employee of the Company or a Parent
or Subsidiary which constitute a “parent corporation” or a “subsidiary corporation” as defined in Section
424(e) and (f) of the Code, respectively.


 


ARTICLE 8 


STOCK APPRECIATION RIGHTS


 


8.1. GRANT OF STOCK APPRECIATION RIGHTS.
The Committee is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:


 


(a) RIGHT TO PAYMENT. Upon
the exercise of a Stock Appreciation Right, the Participant to whom it is granted has the right to receive the excess, if any,
of:


 


(1) The Fair Market Value of
one Share on the date of exercise; over


 


(2) The base price of the Stock
Appreciation Right as determined by the Committee, which shall not be less than the Fair Market Value of one Share on the Grant
Date.


 


(b) OTHER TERMS. All awards
of Stock Appreciation Rights shall be evidenced by an Award Certificate. The terms, methods of exercise, methods of settlement,
form of consideration payable in settlement, and any other terms and conditions of any Stock Appreciation Right shall be determined
by the Committee at the time of the grant of the Award and shall be reflected in the Award Certificate.


 


ARTICLE 9 


PERFORMANCE AWARDS


 


9.1. GRANT OF PERFORMANCE AWARDS.
The Committee is authorized to grant Performance Shares, Performance Units or Performance-Based Cash Awards to Participants on
such terms and conditions as may be selected by the Committee. The Committee shall have the complete discretion to determine the
number of Performance Awards granted to each Participant and to designate the provisions of such Performance Awards as provided
in Section 4.3. All Performance Awards shall be evidenced by an Award Certificate or a written program established by the
Committee, pursuant to which Performance Awards are awarded under the Plan under uniform terms, conditions and restrictions set
forth in such written program.


 


9.2. PERFORMANCE GOALS. The Committee
may establish performance goals for Performance Awards which may be based on any performance criteria selected by the Committee.
Such performance criteria may be described in terms of Company-wide objectives or in terms of objectives that relate to the performance
of the Participant, an Affiliate or a division, region, department or function within the Company or an Affiliate. The length of
a performance period shall be determined by the Committee; provided, however, that a performance period shall not be shorter than
12 months.


 


9.3. RIGHT TO PAYMENT. The grant
of a Performance Share to a Participant will entitle the Participant to receive at a specified later time a specified number of
Shares, or the equivalent cash value, if the performance goals established by the Committee are achieved and the other terms and
conditions thereof are satisfied. The grant of a Performance Unit to a Participant will entitle the Participant to receive at a
specified later time a specified dollar value, which may be settled in cash or other property, including Shares, variable under
conditions specified in the Award, if the performance goals in the Award are achieved and the other terms and conditions thereof
are satisfied. The grant of a Performance-Based Cash Award to a Participant will entitle the Participant to receive at a specified
later time a specified dollar value in cash variable under conditions specified in the Award, if the performance goals in the Award
are achieved and the other terms and conditions thereof are satisfied. The Committee shall set performance goals and other terms
or conditions to payment of the Performance Awards in its discretion which, depending on the extent to which they are met, will
determine the value of the Performance Awards that will be paid to the Participant.


 




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9.4. OTHER TERMS. Performance Awards
may be payable in cash, Stock or other property, and have such other terms and conditions as determined by the Committee and reflected
in the Award Certificate. For purposes of determining the number of Shares to be used in payment of a Performance Award denominated
in cash but payable in whole or in part in Shares or Restricted Stock, the number of Shares to be so paid will be determined by
dividing the cash value of the Award to be so paid by the Fair Market Value of a Share on the date of determination by the Committee
of the amount of the payment under the Award, or, if the Committee so directs, the date immediately preceding the date the Award
is paid.


 


ARTICLE 10 


RESTRICTED STOCK AND RESTRICTED STOCK
UNIT AWARDS


 


10.1. GRANT OF RESTRICTED STOCK AND
RESTRICTED STOCK UNITS. The Committee is authorized to make Awards of Restricted Stock or Restricted Stock Units to Participants
in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Restricted Stock or Restricted
Stock Units shall be evidenced by an Award Certificate setting forth the terms, conditions, and restrictions applicable to the
Award.


 


10.2. ISSUANCE AND RESTRICTIONS.
Restricted Stock or Restricted Stock Units shall be subject to such restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive
dividends on the Restricted Stock or dividend equivalents on the Restricted Stock Units) covering a period of time specified by
the Committee (the “Restriction Period”). These restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter. Except as otherwise provided in an Award Certificate or any special
Plan document governing an Award, the Participant shall have all of the rights of a stockholder with respect to the Restricted
Stock, and the Participant shall have none of the rights of a stockholder with respect to Restricted Stock Units until such time
as Shares of Stock are paid in settlement of the Restricted Stock Units.


 


10.3. FORFEITURE. Except for certain
limited situations (including the death or Disability of the Participant or a Change in Control referred to in Section 14.8),
Restricted Stock Awards and Restricted Stock Unit Awards subject solely to continued employment restrictions shall have a Restriction
Period of not less than three years from the Grant Date (but permitting pro-rata vesting over such time). Except as otherwise determined
by the Committee at the time of the grant of the Award or thereafter, immediately after termination of Continuous Status as a Participant
during the applicable restriction period or upon failure to satisfy a performance goal during the applicable restriction period,
Restricted Stock or Restricted Stock Units that are at that time subject to restrictions shall be forfeited.


 


10.4. DELIVERY OF RESTRICTED STOCK.
Shares of Restricted Stock shall be delivered to the Participant at the time of grant either by book-entry registration or by delivering
to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees)
designated by the Committee, a stock certificate or certificates registered in the name of the Participant. If physical certificates
representing shares of Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.


 


ARTICLE 11 


DEFERRED STOCK UNITS


 


11.1. GRANT OF DEFERRED STOCK UNITS.
The Committee is authorized to grant Deferred Stock Units to Participants subject to such terms and conditions as may be selected
by the Committee. Deferred Stock Units shall entitle the Participant to receive Shares of Stock (or the equivalent value in cash
or other property if so determined by the Committee) at a future time as determined by the Committee, or as determined by the Participant
within guidelines established by the Committee in the case of voluntary deferral elections. An Award of Deferred Stock Units shall
be evidenced by an Award Certificate setting forth the terms and conditions applicable to the Award.


 






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ARTICLE 12 


DIVIDEND EQUIVALENTS


 


12.1. GRANT OF DIVIDEND EQUIVALENTS.
The Committee is authorized to grant Dividend Equivalents to Participants, in connection with other Awards or on a freestanding
basis, subject to such terms and conditions as may be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the number of Shares subject to any Award, as determined
by the Committee. The Committee may provide that Dividend Equivalents be paid or distributed when accrued or be deemed to have
been reinvested in additional Shares or units equivalent to Shares, or otherwise reinvested. 


 


ARTICLE 13 


STOCK OR OTHER STOCK-BASED AWARDS


 


13.1. GRANT OF STOCK OR OTHER STOCK-BASED
AWARDS. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards
that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares or other property,
as deemed by the Committee to be consistent with the purposes of the Plan, including without limitation Shares awarded purely as
a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Shares, and Awards valued by reference to book value of Shares or the value of securities of or
the performance of specified Parents or Affiliates (“Other Stock-Based Awards”). Such Other Stock-Based Awards
shall also be available as a form of payment in the settlement of other Awards granted under the Plan. The Committee shall determine
the terms and conditions of such Other Stock-Based Awards. Except for certain limited situations (including the death or Disability
of the Participant or a Change in Control referred to in Section 14.8), Other Stock-Based Awards subject solely to continued
employment restrictions shall be subject to restrictions imposed by the Committee for a period of not less than three years from
the Grant Date (but permitting pro-rata vesting over such time); provided that such restrictions shall not be applicable to any
substitute awards granted under Section 14.12, grants of Other Stock-Based Awards in payment of Performance Awards pursuant
to Article 9, grants of Other Stock-Based Awards granted in lieu of cash or other compensation, or grants of Other Stock-Based
Awards on a deferred basis.


 


ARTICLE 14 


PROVISIONS APPLICABLE TO AWARDS


 


14.1. STAND-ALONE AND TANDEM AWARDS.
Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with,
any other Award granted under the Plan. Subject to Section 16.2, awards granted in addition to or in tandem with other Awards
may be granted either at the same time as or at a different time from the grant of such other Awards.


 


14.2. TERM OF AWARD. The term of
each Award shall be for the period as determined by the Committee, provided that in no event shall the term of any Incentive Stock
Option or a Stock Appreciation Right granted in tandem with the Incentive Stock Option exceed a period of ten years from its Grant
Date (or, if Section 7.2(d) applies, five years from its Grant Date).


 


14.3. FORM OF PAYMENT FOR AWARDS.
Subject to the terms of the Plan and any applicable law or Award Certificate, payments or transfers to be made by the Company or
an Affiliate on the grant or exercise of an Award may be made in such form as the Committee determines at or after the Grant Date,
including without limitation, cash, Stock, other Awards, or other property, or any combination, and may be made in a single payment
or transfer or in installments, in each case determined in accordance with rules adopted by, and at the discretion of, the Committee.


 




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14.4. LIMITS ON TRANSFER. No right
or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered, or hypothecated to or in favor
of any party other than the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of such Participant
to any other party other than the Company or an Affiliate. No unexercised or restricted Award shall be assignable or transferable
by a Participant other than by will or the laws of descent and distribution or, except in the case of an Incentive Stock Option,
pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award
under the Plan; provided, however, that the Committee may (but need not) permit other transfers where the Committee concludes that
such transferability (i) does not result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive
Stock Option to fail to be described in Code Section 422(b), and (iii) is otherwise appropriate and desirable, taking
into account any factors deemed relevant, including without limitation, state or federal tax or securities laws applicable to transferable
Awards.


 


14.5. BENEFICIARIES. Notwithstanding
Section 14.4, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights
of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary,
legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions
of the Plan and any Award Certificate applicable to the Participant, except to the extent the Plan and Award Certificate otherwise
provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated
or survives the Participant, payment shall be made to the Participant’s estate. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Company.


 


14.6. STOCK CERTIFICATES. All Stock
issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable
to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock certificate or issue
instructions to the transfer agent to reference restrictions applicable to the Stock.


 


14.7. ACCELERATION UPON DEATH OR DISABILITY.
Except as otherwise provided in the Award Certificate or any special Plan document governing an Award, upon the Participant’s
death or Disability during his or her Continuous Status as a Participant, (i) all of such Participant’s outstanding Options,
SARs, and other Awards in the nature of rights that may be exercised shall become fully exercisable, (ii) all time-based vesting
restrictions on the Participant’s outstanding Awards shall lapse, and (iii) the target payout opportunities attainable
under all of such Participant’s outstanding performance-based Awards shall be deemed to have been fully earned as of the
date of termination based upon (A) an assumed achievement of all relevant performance goals at the “target” level
if the date of termination occurs during the first half of the applicable performance period, or (B) the actual level of achievement
of all relevant performance goals against target, if the date of termination occurs during the second half of the applicable performance
period, and, in either such case, there shall be a pro rata payout to the Participant or his or her estate within thirty (30) days
following the date of termination (unless a later date is required by Section 17.16 hereof) based upon the length of time within
the performance period that has elapsed prior to the date of termination. Any Awards shall thereafter continue or lapse in accordance
with the other provisions of the Plan and the Award Certificate. To the extent that this provision causes Incentive Stock Options
to exceed the dollar limitation set forth in Section 7.2(c), the excess Options shall be deemed to be Nonstatutory Stock Options.


 


14.8. TREATMENT UPON A CHANGE IN CONTROL.
The provisions of this Section 14.8 shall apply in the case of a Change in Control, unless otherwise provided in the Award
Certificate or any special Plan document or separate agreement with a Participant governing an Award.


 


(a) Awards not Assumed or Substituted
by Surviving Corporation. Upon the occurrence of a Change in Control, and except with respect to any Awards assumed by the
Surviving Corporation or otherwise equitably converted or substituted in connection with the Change in Control in a manner approved
by the Committee or the Board: (i) outstanding Options, SARs, and other Awards in the nature of rights that may be exercised
shall become fully exercisable, (ii) time-based vesting restrictions on outstanding Awards shall lapse, and (iii) the
target payout opportunities attainable under outstanding performance-based Awards shall be deemed to have been fully earned as
of the effective date of the Change in Control based upon (A) an assumed achievement of all relevant performance goals at
the “target” level if the Change in Control occurs during the first half of the applicable performance period, or (B) the
actual level of achievement of all relevant performance goals against target, if the Change in Control occurs during the second
half of the applicable performance period, and, in either such case, there shall be pro rata payout to Participants within thirty
(30) days following the Change in Control (unless a later date is required by Section 17.16 hereof) based upon the length
of time within the performance period that has elapsed prior to the Change in Control. Any Awards shall thereafter continue or
lapse in accordance with the other provisions of the Plan and the Award Certificate. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(c), the excess Options shall be deemed to be Nonstatutory
Stock Options.


 




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(b) Awards Assumed or Substituted by
Surviving Corporation. With respect to Awards assumed by the Surviving Corporation or otherwise equitably converted or substituted
in connection with a Change in Control: if within two years after the effective date of the Change in Control, a Participant’s
employment is terminated without Cause or the Participant resigns for Good Reason, then (i) all of that Participant’s
outstanding Options, SARs and other Awards in the nature of rights that may be exercised shall become fully exercisable, (ii) all
time-based vesting restrictions on the his or her outstanding Awards shall lapse, and (iii) the target payout opportunities
attainable under all outstanding of that Participant’s performance-based Awards shall be deemed to have been fully earned
as of the date of termination based upon (A) an assumed achievement of all relevant performance goals at the “target”
level if the date of termination occurs during the first half of the applicable performance period, or (B) the actual level
of achievement of all relevant performance goals against target, if the date of termination occurs during the second half of the
applicable performance period, and, in either such case, there shall be pro rata payout to such Participant within thirty (30) days
following the date of termination of employment (unless a later date is required by Section 17.16 hereof) based upon the length
of time within the performance period that has elapsed prior to the date of termination of employment. With regard to each Award,
a Participant shall not be considered to have resigned for Good Reason unless either (i) the Award Certificate includes such
provision or (ii) the Participant is party to an employment, severance or similar agreement with the Company or an Affiliate
that includes provisions in which the Participant is permitted to resign for Good Reason. Any Awards shall thereafter continue
or lapse in accordance with the other provisions of the Plan and the Award Certificate. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Section 7.2(c), the excess Options shall be deemed to
be Nonstatutory Stock Options.


 


14.9. ACCELERATION FOR ANY REASON.
Regardless of whether an event has occurred as described in Section 14.7 or 14.8 above, the Committee may in its sole discretion
at any time determine that all or a portion of a Participant’s Options, SARs, and other Awards in the nature of rights that
may be exercised shall become fully or partially exercisable, that all or a part of the time-based vesting restrictions on all
or a portion of the outstanding Awards shall lapse, and/or that any performance-based criteria with respect to any Awards shall
be deemed to be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole discretion, declare.
The Committee may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant
to this Section 14.9. Notwithstanding anything in the Plan, including this Section 14.9, the Committee may not accelerate
the payment of any Award if such acceleration would violate Section 409A(a)(3) of the Code.


 


14.10. TERMINATION OF EMPLOYMENT.
Whether military, government or other service or other leave of absence shall constitute a termination of employment shall be determined
in each case by the Committee at its discretion, and any determination by the Committee shall be final and conclusive. A Participant’s
Continuous Status as a Participant shall not be deemed to terminate (i) in a circumstance in which a Participant transfers
from the Company to an Affiliate, transfers from an Affiliate to the Company, or transfers from one Affiliate to another Affiliate,
or (ii) in the discretion of the Committee as specified at or prior to such occurrence, in the case of a spin-off, sale or
disposition of the Participant’s employer from the Company or any Affiliate. To the extent that this provision causes Incentive
Stock Options to extend beyond three months from the date a Participant is deemed to be an employee of the Company or a Parent
or Subsidiary which constitutes a “parent corporation” or a “subsidiary corporation” for purposes of Sections
424(e) and 424(f) of the Code, respectively, the Options held by such Participant shall be deemed to be Nonstatutory Stock Options.


 


14.11. FORFEITURE EVENTS. The Committee
may specify in an Award Certificate that the Participant’s rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination
of employment for Cause, violation of material Company or Affiliate policies, breach of non-competition, confidentiality or other
restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business
or reputation of the Company or any Affiliate.


 


14.12. SUBSTITUTE AWARDS. The Committee
may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become
employees of the Company or an Affiliate as a result of a merger or consolidation of the former employing entity with the Company
or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the former employing corporation. The
Committee may direct that the substitute Awards be granted on such terms and conditions as the Committee considers appropriate
in the circumstances.


 




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ARTICLE 15 


CHANGES IN CAPITAL STRUCTURE


 


15.1. MANDATORY ADJUSTMENTS. In
the event of a nonreciprocal transaction between the Company and its shareholders that causes the per-share value of the Stock
to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash
dividend), the authorization limits under Section 5.1 shall be adjusted proportionately, and the Committee shall make such adjustments
to the Plan and Awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately
resulting from such transaction. Action by the Committee may include: (i) adjustment of the number and kind of shares that may
be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of
the exercise price of outstanding Awards or the measure to be used to determine the amount of the benefit payable on an Award;
and (iv) any other adjustments that the Committee determines to be equitable. Notwithstanding the foregoing, the Committee shall
not make any adjustments to outstanding Options or SARs that would constitute a modification or substitution of the stock right
under Treas. Reg. Section 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment
for purposes of Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the outstanding Stock (stock-split),
a declaration of a dividend payable in Shares, or a combination or consolidation of the outstanding Stock into a lesser number
of Shares, the authorization limits under Section 5.1 shall automatically be adjusted proportionately, and the Shares then subject
to each Award shall automatically, without the necessity for any additional action by the Committee, be adjusted proportionately
without any change in the aggregate purchase price therefor.


 


15.2 DISCRETIONARY ADJUSTMENTS.
Upon the occurrence or in anticipation of any corporate event or transaction involving the Company (including, without limitation,
any merger, reorganization, recapitalization, combination or exchange of shares, or any transaction described in Section 15.1),
the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards
will become immediately vested and exercisable and will expire after a designated period of time to the extent not then exercised,
(iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection
with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of
the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise price
of the Award, (v) that performance targets and performance periods for Performance Awards will be modified or (vi) any combination
of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether
or not such Participants are similarly situated.


 


15.3 GENERAL. Any discretionary
adjustments made pursuant to this Article 15 shall be subject to the provisions of Section 16.2. To the extent that any adjustments
made pursuant to this Article 15 cause Incentive Stock Options to cease to qualify as Incentive Stock Options, such Options shall
be deemed to be Nonstatutory Stock Options.


 


ARTICLE 16 


AMENDMENT, MODIFICATION AND TERMINATION


 


16.1. AMENDMENT, MODIFICATION AND TERMINATION.
The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without stockholder approval;
provided, however, that if an amendment to the Plan would, in the reasonable opinion of the Board or the Committee, either (i) materially
increase the number of Shares available under the Plan, (ii) expand the types of awards under the Plan, (iii) materially
expand the class of participants eligible to participate in the Plan, (iv) materially extend the term of the Plan, or (v) otherwise
constitute a material change requiring stockholder approval under applicable laws, policies or regulations or the applicable listing
or other requirements of an exchange, then such amendment shall be subject to stockholder approval; and provided, further, that
the Board or Committee may condition any other amendment or modification on the approval of stockholders of the Company for any
reason, including by reason of such approval being necessary or deemed advisable to (i) permit Awards made hereunder to be
exempt from liability under Section 16(b) of the 1934 Act, (ii) to comply with the listing or other requirements of an
exchange, or (iii) to satisfy any other tax, securities or other applicable laws, policies or regulations.


 




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16.2. AWARDS PREVIOUSLY GRANTED.
At any time and from time to time, the Committee may amend, modify or terminate any outstanding Award without approval of the Participant;
provided, however:


 


(a) Subject to the terms of the
applicable Award Certificate, such amendment, modification or termination shall not, without the Participant’s consent, reduce
or diminish the value of such Award;


 


(b) The original term of an Option
may not be extended without the prior approval of the stockholders of the Company;


 


(c) Except as otherwise provided
in Article 15, the Committee shall not be permitted to (i) lower the exercise price per Share of an Option after it is granted,
(b) cancel an Option when the exercise price per Share exceeds the Fair Market Value of the underlying Shares in exchange
for another Award, or (c) take any other action with respect to an Option that may be treated as a repricing under the rules
and regulations of an exchange, without the prior approval of the stockholders of the Company; and


 


(d) No termination, amendment,
or modification of the Plan shall adversely affect any Award previously granted under the Plan, without the written consent of
the Participant affected thereby.


 


ARTICLE 17 


GENERAL PROVISIONS


 


17.1. NO RIGHTS TO AWARDS; NON-UNIFORM
DETERMINATIONS. No Participant or any Eligible Participant shall have any claim to be granted any Award under the Plan. Neither
the Company, its Affiliates nor the Committee is obligated to treat Participants or Eligible Participants uniformly, and determinations
made under the Plan may be made by the Committee selectively among Eligible Participants who receive, or are eligible to receive,
Awards (whether or not such Eligible Participants are similarly situated).


 


17.2. NO SHAREHOLDER RIGHTS. No
Award gives a Participant any of the rights of a stockholder of the Company unless and until Shares are in fact issued to such
person in connection with such Award.


 


17.3. WITHHOLDING. The Company or
any Affiliate shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required by law
to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. If Shares
are surrendered to the Company to satisfy withholding obligations in excess of the minimum withholding obligation, such Shares
must have been held by the Participant as fully vested shares for such period of time, if any, as necessary to avoid the recognition
of an expense under generally accepted accounting principles. The Company shall have the authority to require a Participant to
remit cash to the Company in lieu of the surrender of Shares for tax withholding obligations if the surrender of Shares in satisfaction
of such withholding obligations would result in the Company’s recognition of expense under generally accepted accounting
principles. With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award
is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by withholding
from the Award Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount)
required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes.


 


17.4. NO RIGHT TO CONTINUED SERVICE.
Nothing in the Plan, any Award Certificate or any other document or statement made with respect to the Plan, shall interfere with
or limit in any way the right of the Company or any Affiliate to terminate any Participant’s employment or status as an officer
or consultant at any time, nor confer upon any Participant any right to continue as an employee, officer or consultant of the Company
or any Affiliate, whether for the duration of a Participant’s Award or otherwise.


 


17.5. UNFUNDED STATUS OF AWARDS.
The Plan is intended to be an “unfunded” plan for incentive and deferred compensation. With respect to any payments
not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the Participant
any rights that are greater than those of a general creditor of the Company or any Affiliate. This Plan is not intended to be subject
to the Employment Retirement Income Security Act of 1974, as amended.


 




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17.6. RELATIONSHIP TO OTHER BENEFITS.
No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit
sharing, group insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in such other plan.


 


17.7. EXPENSES. The expenses of
administering the Plan shall be borne by the Company and, if applicable, its Affiliates. The allocation of expenses among the Company
and its Affiliates shall be as agreed to by the Company and the applicable Affiliates.


 


17.8. TITLES AND HEADINGS. The titles
and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.


 


17.9. GENDER AND NUMBER. Except
where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include
the singular and the singular shall include the plural.


 


17.10. FRACTIONAL SHARES. No fractional
Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional
Shares or whether such fractional Shares shall be eliminated by rounding up or down.


 


17.11. GOVERNMENT AND OTHER REGULATIONS.


 


(a) Notwithstanding any other provision
of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an
affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933
Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933
Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration
requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act.


 


(b) Notwithstanding any other provision
of the Plan, if at any time the Committee shall determine that the registration, listing or qualification of the Shares covered
by an Award upon any exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or
the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such Award unless and
until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition
not acceptable to the Committee. Any Participant receiving or purchasing Shares pursuant to an Award shall make such representations
and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable
legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the
Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event
be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action
in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.


 


17.12. GOVERNING LAW. To the extent
not governed by federal law, the Plan and all Award Certificates shall be construed in accordance with and governed by the laws
of the State of Maryland.


 


17.13. ADDITIONAL PROVISIONS. Each
Award Certificate may contain such other terms and conditions as the Committee may determine; provided that such other terms and
conditions are not inconsistent with the provisions of the Plan.


 


17.14. NO LIMITATIONS ON RIGHTS OF COMPANY.
The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes
in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business
or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards,
other than under the Plan, to or with respect to any person. If the Committee so directs, the Company may issue or transfer Shares
to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Affiliate
will transfer such Shares to a Participant in accordance with the terms of an Award granted to such Participant and specified by
the Committee pursuant to the provisions of the Plan.


 




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17.15. INDEMNIFICATION. Each person
who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated
in accordance with Article 4 shall be indemnified and held harmless by the Company against and from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided
he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes
to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful
misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws,
as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.


 


17.16. SPECIAL PROVISIONS RELATED TO
SECTION 409A OF THE CODE.


 


(a) General. It is intended that the payments
and benefits provided under the Plan and any Award shall either be exempt from the application of, or comply with, the requirements
of Section 409A of the Code. The Plan and all Award Certificates shall be construed in a manner that effects such intent. Nevertheless,
the tax treatment of the benefits provided under the Plan or any Award is not warranted or guaranteed. Neither the Company, its
Affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties
or other monetary amounts owed by any Participant or other taxpayer as a result of the Plan or any Award.


 


(b) Definitional Restrictions. Notwithstanding
anything in the Plan or in any Award Certificate to the contrary, to the extent that any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable,
or a different form of payment (e.g., lump sum or installment) would be effected, under the Plan or any Award Certificate by reason
of the occurrence of a Change in Control, or the Participant’s Disability or separation from service, such amount or benefit
will not be payable or distributable to the Participant, and/or such different form of payment will not be effected, by reason
of such circumstance unless the circumstances giving rise to such Change in Control, Disability or separation from service meet
any description or definition of “change in control event”, “disability” or “separation from service”,
as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that
may be available under such definition). This provision does not prohibit the vesting of any Award upon a Change in Control, Disability
or separation from service, however defined. If this provision prevents the payment or distribution of any amount or benefit, such
payment or distribution shall be made on the next earliest payment or distribution date or event specified in the Award Certificate
that is permissible under Section 409A of the Code. If this provision prevents the application of a different form of payment of
any amount or benefit, such payment shall be made in the same form as would have applied absent such designated event or circumstance.


 


(c) Allocation among Possible Exemptions.
If any one or more Awards granted under the Plan to a Participant could qualify for any separation pay exemption described in Treas.
Reg. Section 1.409A-1(b)(9), but such Awards in the aggregate exceed the dollar limit permitted for the separation pay exemptions,
the Company (acting through the Committee) shall determine which Awards or portions thereof will be subject to such exemptions.


 


(d) Six-Month Delay in Certain Circumstances.
Notwithstanding anything in the Plan or in any Award Certificate to the contrary, if any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable
under this Plan or any Award Certificate by reason of a Participant’s separation from service during a period in which the
Participant is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Committee
under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment
of employment taxes):


 


(i) the amount of such non-exempt deferred
compensation that would otherwise be payable during the six-month period immediately following the Participant’s separation
from service will be accumulated through and paid or provided on the first day of the seventh month following the Participant’s
separation from service (or, if the Participant dies during such period, within 30 days after the Participant’s death) (in
either case, the “Required Delay Period”), and


 




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(ii) the normal payment or distribution
schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.


 


For purposes of this Plan, the term “Specified
Employee” has the meaning given such term in Section 409A of the Code and the final regulations thereunder, provided, however,
that, as permitted in such final regulations, the Company’s Specified Employees and its application of the six-month delay
rule of 409A(a)(2)(B)(i) of the Code shall be determined in accordance with rules adopted by the Board or any committee of the
Board, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Company,
including this Plan.


 


(e) Grants to Employees of Affiliates. Eligible
Participants who are service providers to an Affiliate may be granted Options or SARs under this Plan only if the Company qualifies
as an “eligible issuer of service recipient stock” within the meaning of §1.409A-1(b)(5)(iii)(E) of the final
regulations under Section 409A of the Code.


 


(f) Fair Market Value of Unlisted Stock.
If the Stock is not listed on a securities exchange, the Fair Market Value of the Stock as of any given date shall, for purposes
of the Plan and any Award, be determined by such method as the Committee determines in good faith to be reasonable and in compliance
with Section 409A of the Code.


 


(g) Design Limits on Options and SARs. Notwithstanding
anything in this Plan or any Award Certificate, no Option or SAR granted under this Plan shall (i) provide for Dividend Equivalents
or (ii) have any feature for the deferral of compensation other than the deferral of recognition of income until the exercise or
disposition of the Option or SAR.


 


(h) Timing of Distribution of Dividend Equivalents.
Unless otherwise provided in the applicable Award Certificate, any Dividend Equivalents granted with respect to an Award hereunder
will be paid or distributed no later than the 15th day of the 3rd month following the later of (i) the calendar year in which the
corresponding dividends were paid to shareholders, or (ii) the first calendar year in which the Participant’s right to such
Dividends Equivalents is no longer subject to a substantial risk of forfeiture.


 




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The foregoing is hereby acknowledged as
being the Phillips Edison – ARC Grocery Center REIT II, Inc. 2013 Long-Term Incentive Plan as adopted by the Board on ___________,
2013, approved by the sole stockholder on _________, 2013.


 


	PHILLIPS EDISON – ARC GROCERY CENTER REIT II, INC.	 
	 	 	 
	By:	
	

	Name:	 	 
	Title:	 	 


 




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