Moody National REIT II, Inc. S-11 


Exhibit 10.4


 





 






 


FORM OF 


MOODY NATIONAL REIT II, INC. 


2014 INCENTIVE PLAN


 





 






 




    	 



    	 



    

 


MOODY NATIONAL REIT II, INC. 


2014 INCENTIVE PLAN


 





	ARTICLE 1  PURPOSE	1
	1.1	General	1
	ARTICLE 2  DEFINITIONS	1
	2.1	Definitions	1
	ARTICLE 3  EFFECTIVE TERM OF PLAN	6
	3.1	Effective Date	6
	3.2	Term of Plan	6
	ARTICLE 4  ADMINISTRATION	6
	4.1	Committee	6
	4.2	Actions and Interpretations by the Committee	7
	4.3	Authority of Committee	7
	4.4	Delegation of Administrative Duties	8
	4.5	Indemnification	8
	ARTICLE 5  SHARES SUBJECT TO THE PLAN	8
	5.1	Number of Shares	8
	5.2	Share Counting	8
	5.3	Stock Distributed	9
	ARTICLE 6  ELIGIBILITY	9
	6.1	General	9
	ARTICLE 7  STOCK OPTIONS	10
	7.1	General	10
	7.2	Incentive Stock Options	10
	ARTICLE 8  RESTRICTED STOCK AND STOCK UNITS	11
	8.1	Grant of Restricted Stock and Stock Units	11
	8.2	Issuance and Restrictions	11
	8.3	Dividends on Restricted Stock	11
	8.4	Forfeiture	11
	8.5	Delivery of Restricted Stock	11
	ARTICLE 9 PERFORMANCE AWARDS	12
	9.1	Grant of Performance Awards	12
	9.2	Performance Goals	12
	ARTICLE 10  STOCK OR OTHER STOCK-BASED AWARDS	12
	10.1	Grant of Stock or Other Stock-Based Awards	12
	ARTICLE 11  PROVISIONS APPLICABLE TO AWARDS	12
	11.1	Award Certificates	12
	11.2	Form of Payment of Awards	12
	11.3	Limits on Transfer	13
	11.4	Beneficiaries	13
	11.5	Stock Trading Restrictions	13
	11.6	Acceleration for Any Reason	13
	11.7	Forfeiture Events	13
	11.8	Substitute Awards	14
	ARTICLE 12  CHANGES IN CAPITAL STRUCTURE	14
	12.1	Mandatory Adjustments	14







 




    	 



    	 



    

 





	12.2	Discretionary Adjustments	14
	12.3	General	14
	ARTICLE 13  AMENDMENT, MODIFICATION AND TERMINATION	15
	13.1	Amendment, Modification and Termination	15
	13.2	Awards Previously Granted	15
	13.3	Compliance Amendments	15
	ARTICLE 14  GENERAL PROVISIONS	16
	14.1	Rights of Participants	16
	14.2	Withholding	16
	14.3	Special Provisions Related to Section 409A of the Code	16
	14.4	Unfunded Status of Awards	18
	14.5	Relationship to Other Benefits	18
	14.6	Expenses	18
	14.7	Titles and Headings	19
	14.8	Gender and Number	19
	14.9	Fractional Shares	19
	14.10	Government and Other Regulations	19
	14.11	Governing Law	19
	14.12	Severability	19
	14.13	No Limitations on Rights of Company	20




 




    	 



    	 



    

 


MOODY NATIONAL REIT II, INC. 


2014 INCENTIVE PLAN


 


ARTICLE 1 


PURPOSE


 


1.1.        GENERAL.
The purpose of the Moody National REIT II, Inc. 2014 Incentive Plan (the “Plan”) is to promote the success, and enhance
the value, of Moody National REIT II, Inc. (the “Company”), by linking the personal interests of employees, officers,
directors 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, directors 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, directors 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, or (ii) 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 an award of Options, Restricted Stock, Restricted Stock Units,
Deferred Stock Units, Performance Awards, Other Stock-Based Awards, or any other right or interest relating to Stock, 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 Award or series of Awards under
the Plan. The Committee may provide for the use of electronic, internet or other non-paper Award Certificates, and the use of electronic,
internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.



 


		(d)	“Beneficial Owner” shall have the meaning given such term in Rule 13d-3 of the
General Rules and Regulations under the 1934 Act.



 


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



 






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		(f)	“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: gross
neglect of duty, intentionally engaging in activity that is in conflict with or adverse to the business or other interests of the
Company, prolonged absence from duty without the consent of the Company, material breach by the Participant of any published Company
code of conduct or code of ethics; intentionally engaging in activity that is in conflict with or adverse to the business or other
interests of the Company; or willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental
to the Company. The determination of the Committee as to the existence of “Cause” shall be conclusive on the Participant
and the Company.



 


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



 


(i)         during any
consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board of Directors of the Company
(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 beginning of such 12-month period 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, directly or indirectly, of either (A) 40% or more of the then-outstanding shares of common stock of
the Company (“Company Common Stock”) or (B) securities of the Company representing 40% 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, (y) an acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, or (z) an acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection
(iii) below); or


 






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(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 or other entity (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 40% 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 entity resulting from such Reorganization, Sale or Acquisition (including,
without limitation, an entity 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 Entity”) 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, (y) the Surviving Entity or its ultimate parent entity, 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
40% or more of the total common stock or 40% or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of
the Surviving Entity 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”).


 


		(h)	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations
thereunder and any successor or similar provision.



 


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



 


		(j)	“Company” means Moody National REIT II, Inc., a Maryland corporation, or any
successor corporation.



 


		(k)	“Continuous Service” means the absence of any interruption or termination
                                                               of service as an employee, officer, director or consultant of the Company or any Affiliate, as applicable; provided, however,
                                                               that for purposes of an Incentive Stock Option “Continuous Service” 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 Service shall not be considered interrupted in the following cases: (i) a Participant transfers
                                                               employment between the Company and an Affiliate or between Affiliates, 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, (iii) a Participant transfers from being an employee of the Company or an Affiliate to
                                                               being a director of the Company or of an Affiliate, or vice versa, (iv) in the discretion of the Committee as specified at or
                                                               prior to such occurrence, a Participant transfers from being an employee of the Company or an Affiliate to being a consultant
                                                               to the Company or of an Affiliate, or vice versa, or (v) any 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. Whether military, government or other service or other leave of absence shall constitute a termination of
                                                               Continuous Service shall be determined in each case by the Committee at its discretion, and any determination
by the Committee shall be final and conclusive; provided, however, that for purposes of any Award that is subject to Code Section
409A, the determination of a leave of absence must comply with the requirements of a “bona fide leave of absence” as
provided in Treas. Reg. Section 1.409A-1(h).



 




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		(l)	“Deferred Stock Unit” means a right granted to a Participant under Article 8
to receive Shares (or the equivalent value in cash or other property if the Committee so provides) 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.



 


		(m)	“Disability” of a Participant means that 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, receiving income replacement benefits for a period of not less than three months
under an accident or health plan covering employees of the Participant’s employer. If the determination of Disability relates
to 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 of whether a Participant has incurred a Disability 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.



 


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



 


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



 


		(p)	“Exchange” means any national securities exchange on which the Stock may from
time to time be listed or traded.



 


		(q)	“Fair Market Value,” on any date, means (i) if the Stock is listed on a securities
exchange, the closing sales price on the principal such exchange 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
securities exchange, the mean between the bid and offered prices as quoted by the applicable interdealer quotation system for such
date, provided that if the Stock is not quoted on an interdealer quotation system or it is determined that the fair market value
is not properly reflected by such quotations, Fair Market Value will be determined by such other method as the Committee determines
in good faith to be reasonable and in compliance with Code Section 409A.



 


		(r)	“Full-Value Award” means an Award other than in the form of an Option, and which
is settled by the issuance of Stock (or at the discretion of the Committee, settled in cash valued by reference to Stock value).



 


		(s)	“Good Reason” (or a similar term denoting constructive termination) has the
meaning, if any, assigned such term in the employment, consulting, severance or similar agreement, if any, between a Participant
and the Company or an Affiliate; provided, however, that if there is no such employment, consulting, severance or similar agreement
in which such term is defined,
“Good Reason” shall have the meaning, if any, given such term in the applicable Award Certificate. If not defined in
either such document, the term “Good Reason” as used herein shall not apply to a particular Award.



 




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		(t)	“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.



 


		(u)	“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.



 


		(v)	“Independent Director” means a director of the Company who is not a common law
employee of the Company or an Affiliate and who qualifies at any given time as a “non-employee” director under Rule
16b-3 of the 1934 Act.



 


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



 


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



 


		(y)	“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.



 


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



 


		(aa)	“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 have the meaning set forth in Section 424(e) of the Code.



 


		(bb)	“Participant” means an Eligible Participant who 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 11.4 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.



 


		(cc)	“Performance Award” means any award granted under the Plan pursuant to Article
9.



 


		(dd)	“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.



 


		(ee)	“Plan” means the Moody National REIT II, Inc. 2014 Incentive Plan, as amended
from time to time.



 


		(ff)	“Public Offering”
                                         means a 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.



 




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		(gg)	“Restricted Stock” means Stock granted to a Participant under Article 8 that
is subject to certain restrictions and to risk of forfeiture.



 


		(hh)	“Restricted Stock Unit” means the right granted to a Participant under Article
8 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.



 


		(ii)	“Shares” means shares of the Company’s Stock. If there has been an adjustment
or substitution with respect to the Shares (whether or not pursuant to Article 12), the term “Shares” shall also include
any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted.



 


		(jj)	“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 12.



 


		(kk)	“Subsidiary” means any corporation, limited liability company, partnership or
other entity, domestic or foreign, 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 have the meaning
set forth in Section 424(f) of the Code.



 


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



 


		(mm)	“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. Subject
to the approval of the Plan by the Company’s stockholders within 12 months after the Plan’s adoption by the Board,
the Plan will become effective on the date that it is adopted by the Board (the “Effective Date”).


 


3.2.        TERMINATION OF PLAN. Unless
earlier terminated as provided herein, the Plan shall continue in effect until the tenth anniversary of the Effective Date or,
if the stockholders approve an amendment to the Plan that increases the number of Shares subject to the Plan, the tenth anniversary
of the date of such approval. The termination of the Plan on such date shall not affect the validity of any Award outstanding on
the date of termination, which shall continue to be governed by the applicable terms and conditions of the Plan. Notwithstanding
the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the Effective Date.


 


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. 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. It
is intended that at least two of the directors appointed to serve on the Committee shall be Independent Directors 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 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 and protections 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.


 






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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 may correct any defect, supply any omission or reconcile any inconsistency
in the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent of the Plan. 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 or the Committee to assist in the administration
of the Plan. No member of the Committee will be liable for any good faith determination, act or omission in connection with the
Plan or any Award.


 


4.3.        AUTHORITY OF COMMITTEE.
Except as provided in Section 4.1 and 4.5 hereof, 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 granted under the Plan;



 


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



 


		(g)	decide all other matters that must be determined in connection with an Award;



 


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



 


		(i)	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;



 




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		(j)	amend the Plan or any Award Certificate as provided herein; and



 


		(k)	adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with
provisions of the laws of the United States or any 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 the United States or such other jurisdictions
and to further the objectives of the Plan.



 


4.4.        DELEGATION OF
ADMINISTRATIVE DUTIES. The Committee may delegate to one or more of its members or to one or more officers of the Company or
an Affiliate or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee
or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with
respect to any responsibility the Committee or such individuals may have under this Plan.


 


4.5.        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 this 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 charter
or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.


 


ARTICLE 5 


SHARES SUBJECT TO THE PLAN


 


5.1.        NUMBER OF SHARES.
Subject to adjustment as provided in Sections 5.2 and Section 12.1, the aggregate number of Shares reserved and available for issuance
pursuant to Awards granted under the Plan shall be. The maximum number of Shares that may be issued upon exercise of Incentive
Stock Options granted under the Plan shall be 2,000,000. The maximum aggregate number of Shares associated with any Award granted
under the Plan in any 12-month period to any one Non-Employee Director shall be 2,000,000 Shares.
The maximum number of Shares that may be issued upon the exercise or grant of an Award granted under the Plan shall
not exceed, in the aggregate, an amount equal to five percent (5%) of the outstanding Shares on the Grant Date.


 


5.2.        SHARE COUNTING. Shares covered
by an Award shall be subtracted from the Plan share reserve as of the Grant Date as provided in subsection (a) below, but shall
be added back to the Plan share reserve or otherwise treated in accordance with subsections (b) through (i) of this Section 5.2.


 


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



 






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



 


		(c)	Shares withheld or repurchased from an Award or delivered by a Participant to satisfy minimum tax
withholding requirements will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted
under the Plan.



 


		(d)	If the exercise price of an Option is satisfied in whole or in part by delivering Shares to the
Company (by either actual delivery or attestation), the number of Shares so tendered (by delivery or attestation) shall be added
to the Plan share reserve and will be available for issuance pursuant to Awards granted under the Plan.



 


		(e)	To the extent that the full number of Shares subject to an Option is not issued upon exercise of
the Option for any reason, including by reason of net-settlement of the Award, the unissued Shares originally subject to the Award
will be added back to the Plan share reserve and again be available for issuance pursuant to other Awards granted under the Plan.



 


		(f)	To the extent that the full number of Shares subject to a Full-Value Award is not issued for any
reason, including by reason of failure to achieve maximum performance goals, the unissued Shares originally subject to the Award
will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted under the Plan.



 


		(g)	Substitute Awards granted pursuant to Section 11.8 of the Plan shall not count against the Shares
otherwise available for issuance under the Plan under Section 5.1.



 


		(h)	Subject to applicable Exchange requirements, shares available under a stockholder-approved plan
of a company acquired by the Company (as appropriately adjusted to Shares to reflect the transaction) may be issued under the Plan
pursuant to Awards granted to individuals who were not employees of the Company or its Affiliates immediately before such transaction
and will not count against the maximum share limitation specified in Section 5.1.



 


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.


 


ARTICLE 6 


ELIGIBILITY


 


6.1.        GENERAL.
Awards may be granted only to Eligible Participants. Incentive Stock Options may be granted only to Eligible Participants
who are employees of the Company or a Parent or Subsidiary as defined in Section 424(e) and (f) of the Code. Eligible
Participants who are service providers to an Affiliate may be granted Options under this Plan only if the Affiliate qualifies
as an “eligible issuer of service recipient stock” within the meaning of Treas. Reg. Section
1.409A-1(b)(5)(iii)(E).


 






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ARTICLE 7 


STOCK OPTIONS


 


7.1.        GENERAL. The Committee is
authorized to grant Options to Participants on the following terms and conditions:


 


		(a)	Exercise Price. The exercise price per Share under an Option shall be determined by the
Committee, provided that the exercise price for any Option (other than an Option issued as a substitute Award pursuant to Section
11.8) shall not be less than the Fair Market Value as of the Grant Date.



 


		(b)	Prohibition on Repricing. Except as otherwise provided in Article 12, without the prior
approval of stockholders of the Company: (i) the exercise price of an Option may not be reduced, directly or indirectly, (ii) an
Option may not be cancelled in exchange for cash, other Awards, or Options with an exercise price that is less than the exercise
price of the original Option, or otherwise and (iii) the Company may not repurchase an Option for value (in cash or otherwise)
from a Participant if the current Fair Market Value of the Shares underlying the Option is lower than the exercise price per share
of the Option.



 


		(c)	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(e), and may include in the Award Certificate a provision
that an Option that is otherwise exercisable and has an exercise price that is less than the Fair Market Value of the Stock on
the last day of its term will be automatically exercised on such final date of the term by means of a “net exercise,”
thus entitling the optionee to Shares equal to the intrinsic value of the Option on such exercise date, less the number of Shares
required for tax withholding. 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.



 


		(d)	Payment. The Committee shall determine the methods by which the exercise price of an Option
may be paid, the form of payment, and the methods by which Shares shall be delivered or deemed to be delivered to Participants.
As determined by the Committee at or after the Grant Date, payment of the exercise price of an Option may be made, in whole or
in part, in the form of (i) cash or cash equivalents, (ii) delivery (by either actual delivery or attestation) of previously-acquired
Shares based on the Fair Market Value of the Shares on the date the Option is exercised, (iii) withholding of Shares from the Option
based on the Fair Market Value of the Shares on the date the Option is exercised, (iv) broker-assisted market sales, or (iv) any
other “cashless exercise” arrangement.



 


		(e)	Exercise Term. Except for Nonstatutory Options granted to Participants outside the United
States, no Option granted under the Plan shall be exercisable for more than ten years from the Grant Date.



 


		(f)	No Deferral Feature. No Option shall provide for any feature for the deferral of compensation
other than the deferral of recognition of income until the exercise or disposition of the Option.



  


7.2.        INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted under the Plan must comply with the requirements of Section 422 of the Code. Without limiting the foregoing, any Incentive Stock Option granted to a Participant who at the Grant Date owns more than 10% of the voting power of all classes of shares of the Company must have an exercise price per Share of not less than 110% of the Fair Market Value per Share on the Grant Date and an Option term of not more than five years. If all of the requirements of Section 422 of the Code (including the above) are not met, the Option shall automatically become a Nonstatutory Stock Option.




 






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ARTICLE 8 


RESTRICTED STOCK AND STOCK UNITS


 


8.1.         GRANT OF RESTRICTED STOCK AND
STOCK UNITS. The Committee is authorized to make Awards of Restricted Stock, Restricted Stock Units or Deferred 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, Restricted Stock Units or Deferred Stock Units shall be evidenced by an Award Certificate setting forth the terms, conditions
and restrictions applicable to the Award.


 


8.2.         ISSUANCE AND RESTRICTIONS.
Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be subject to such restrictions on transferability and other
restrictions as the Committee may impose (including, for example, limitations on the right to vote Restricted Stock or the right
to receive dividends on the Restricted Stock). 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, a Participant shall have none of the rights of a stockholder with respect to Restricted Stock Units or Deferred
Stock Units until such time as Shares of Stock are paid in settlement of such Awards.


 


8.3          DIVIDENDS ON
RESTRICTED STOCK. In the case of Restricted Stock, the Committee may provide that ordinary cash dividends declared on the Shares
before they are vested will be (i) forfeited, (ii) deemed to have been reinvested in additional Shares or otherwise reinvested
(subject to Share availability under Section 5.1 hereof), (iii) credited by the Company to an account for the Participant and accumulated
without interest until the date upon which the host Award becomes vested, and any dividends accrued with respect to forfeited Restricted
Stock will be reconveyed to the Company without further consideration or any act or action by the Participant, or (iv) paid or
distributed to the Participant as accrued (in which case, such dividends must be paid or distributed no later than the 15th day
of the 3rd month following the later of (A) the calendar year in which the corresponding dividends were paid to stockholders, or
(B) the first calendar year in which the Participant’s right to such dividends is no longer subject to a substantial risk
of forfeiture).


 


8.4.         FORFEITURE. Subject to the
terms of the Award Certificate and except as otherwise determined by the Committee at the time of the grant of the Award or thereafter,
upon termination of Continuous Service 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.


 





8.5.         DELIVERY
OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered to the Participant at the Grant Date 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.


 






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ARTICLE 9 


PERFORMANCE AWARDS


 


9.1.         GRANT OF PERFORMANCE AWARDS.
The Committee is authorized to grant any Award under this Plan with performance-based vesting criteria, on such terms and conditions
as may be selected by the Committee. Any such Awards with performance-based vesting criteria are referred to herein as Performance
Awards. 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 criteria selected by the Committee. Such performance
goals 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. If the Committee determines that
a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company
or an Affiliate conducts its business, or other events or circumstances render performance goals to be unsuitable, the Committee
may modify such performance goals in whole or in part, as the Committee deems appropriate. If a Participant is promoted, demoted
or transferred to a different business unit or function during a performance period, the Committee may determine that the performance
goals or performance period are no longer appropriate and may (i) adjust, change or eliminate the performance goals or the applicable
performance period as it deems appropriate to make such goals and period comparable to the initial goals and period, or (ii) make
a cash payment to the participant in an amount determined by the Committee. 


 


ARTICLE 10 


STOCK OR OTHER STOCK-BASED AWARDS


 


10.1.         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, 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 Subsidiaries. The Committee shall determine the terms and conditions of such Awards.


 


ARTICLE 11 





PROVISIONS APPLICABLE TO AWARDS


 


11.1.         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.


 


11.2.         FORM OF PAYMENT FOR AWARDS.
At the discretion of the Committee, payment of Awards may be made in cash, Stock, a combination of cash and Stock, or any other
form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions
and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions
on transfer and forfeiture provisions. Further, payment of Awards may be made in the form of a lump sum, or in installments, as
determined by the Committee.


 






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11.3.         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; provided, however, that the Committee may (but need
not) permit other transfers (other than transfers for value) 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.


 


11.4.         BENEFICIARIES. Notwithstanding
Section 11.3, 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, any payment due to the Participant shall be made to the Participant’s estate. Subject to the foregoing,
a beneficiary designation may be changed or revoked by a Participant, in the manner provided by the Company, at any time provided
the change or revocation is filed with the Company.


 


11.5.         STOCK TRADING RESTRICTIONS.
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.


 


11.6.         ACCELERATION
FOR ANY REASON. The Committee may in its sole discretion at any time determine that all or a portion of a
Participant’s Options or SARs shall become fully or partially exercisable, that all or a part of the restrictions on
all or a portion of a Participant’s outstanding Awards shall lapse, and/or that any performance-based criteria with
respect to any Awards held by a Participant 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 11.6.


 


11.7.         FORFEITURE
EVENTS. Awards under the Plan shall be subject to any compensation recoupment policy that the Company may adopt from time to
time that is applicable by its terms to the Participant. In addition, 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 may include, but shall not be limited to, (i) termination of employment for cause, (ii) violation of material
Company or Affiliate policies, (iii) breach of noncompetition, confidentiality or other restrictive covenants that may apply to
the Participant, (iv) other conduct by the Participant that is detrimental to the business or reputation of the Company or any
Affiliate, or (v) a later determination that the vesting of, or amount realized from, a Performance Award was based on materially
inaccurate financial statements or any other materially inaccurate performance metric criteria, whether or not the Participant
caused or contributed to such material inaccuracy.


 






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11.8.         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.


 


ARTICLE 12 


CHANGES IN CAPITAL STRUCTURE


 


12.1.         MANDATORY ADJUSTMENTS.
In the event of a nonreciprocal transaction between the Company and its stockholders 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 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 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.


 


12.2         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 12.1), 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 non-forfeitable and exercisable (in whole or in
part) 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.


 


12.3         GENERAL.
Any discretionary adjustments made pursuant to this Article 12 shall be subject to the provisions of Section 13.2. To the extent
that any adjustments made pursuant to this Article 12 cause Incentive Stock Options to cease to qualify as Incentive Stock Options,
such Options shall be deemed to be Nonstatutory Stock Options.


 






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ARTICLE 13 


AMENDMENT, MODIFICATION AND TERMINATION


 


13.1.      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, 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 (i) to comply with the listing or other requirements
of an Exchange, or (ii) to satisfy any other tax, securities or other applicable laws, policies or regulations.


 


13.2.      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 determined as if the Award had been
exercised, vested, cashed in or otherwise settled on the date of such amendment or termination (with the per-share value of an
Option for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination
over the exercise price 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 Section 12.1, the exercise price of an Option may not be reduced,
directly or indirectly, 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. An outstanding Award shall not be deemed
to be “adversely affected” by a Plan amendment if such amendment would not reduce or diminish the value of such Award
determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment (with the per-share
value of an Option for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment
over the exercise price of such Award).



 


13.3.      COMPLIANCE
AMENDMENTS. Notwithstanding anything in the Plan or in any Award Certificate to the contrary, the Board may amend the Plan
or an Award Certificate, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming
the Plan or Award Certificate to any present or future law relating to plans of this or similar nature (including, but not limited
to, Section 409A of the Code), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award
under this Plan, a Participant agrees to any amendment made pursuant to this Section 13.3 to any Award granted under the Plan without
further consideration or action.


 






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ARTICLE 14 


GENERAL PROVISIONS


 


14.1.      RIGHTS OF PARTICIPANTS.


 


		(a)	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).



 


		(b)	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 any Participant’s service as a director or consultant, at any time, nor confer upon
any Participant any right to continue as an employee, officer, director or consultant of the Company or any Affiliate, whether
for the duration of a Participant’s Award or otherwise.



 


		(c)	Neither an Award nor any benefits arising under this Plan shall constitute an employment contract
with the Company or any Affiliate and, accordingly, subject to Article 13, this Plan and the benefits hereunder may be terminated
at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company
or an of its Affiliates.



 


		(d)	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.



 


14.2.      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 or such Affiliate, 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. The obligations of the Company under the Plan will be conditioned on
such payment or arrangements and the Company or such Affiliate will, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Participant. Unless otherwise determined by the Committee at
the time the Award is granted or thereafter, any such withholding requirement may 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. All such elections shall be subject to any restrictions or limitations that the Committee, in its sole
discretion, deems appropriate.


 


14.3.      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 (other than in his or her capacity as a Participant) 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.



 






    	- 16 -



    	 



    

 


		(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 (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable,
or a different form of payment (e.g., lump sum or installment) of such Non-Exempt Deferred Compensation 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 Non-Exempt Deferred Compensation 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 affect the dollar amount or prohibit the vesting of any Non-Exempt Deferred Compensation upon a Change in Control, Disability
or termination of employment, however defined. If this provision prevents the payment or distribution of any Non-Exempt Deferred
Compensation, or the application of a different form of payment, such payment or distribution shall be made at the time and in
the form that would have applied absent the non-409A-conforming event.



 


		(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 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 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



 


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



 






    	- 17 -



    	 



    

 


For purposes of this Plan, the term
“Specified Employee” has the meaning given such term in Code Section 409A and the final regulations thereunder.


 


		(e)	Installment Payments. If, pursuant to an Award, a Participant is entitled to a series of
installment payments, such Participant’s right to the series of installment payments shall be treated as a right to a series
of separate payments and not to a single payment. For purposes of the preceding sentence, the term “series of installment
payments” has the meaning provided in Treas. Reg. Section 1.409A-2(b)(2)(iii) (or any successor thereto).



 


		(f)	Timing of Release of Claims. Whenever an Award conditions a payment or benefit on the Participant’s
execution and non-revocation of a release of claims, such release must be executed and all revocation periods shall have expired
within 60 days after the date of termination of the Participant’s employment; failing which such payment or benefit shall
be forfeited. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment
at any time during such 60-day period. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then, subject to
subsection (c) above, (i) if such 60-day period begins and ends in a single calendar year, the Company may make or commence payment
at any time during such period at its discretion, and (ii) if such 60-day period begins in one calendar year and ends in the next
calendar year, the payment shall be made or commence during the second such calendar year (or any later date specified for such
payment under the applicable Award), even if such signing and non-revocation of the release occur during the first such calendar
year included within such 60-day period. In other words, a Participant is not permitted to influence the calendar year of payment
based on the timing of signing the release.



 


		(g)	Permitted Acceleration. The Company shall have the sole authority to make any accelerated
distribution permissible under Treas. Reg. section 1.409A-3(j)(4) to Participants of deferred amounts, provided that such distribution(s)
meets the requirements of Treas. Reg. section 1.409A-3(j)(4).



 





14.4.      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. In its sole discretion, the Committee
may authorize the creation of grantor trusts or other arrangements to meet the obligations created under the Plan to deliver Shares
or payments in lieu of Shares or with respect to Awards. This Plan is not intended to be subject to ERISA.


 


14.5.      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.
Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only
in specific cases.


 


14.6.      EXPENSES. The expenses
of administering the Plan shall be borne by the Company and its Affiliates.


 






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14.7.      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.


 


14.8.      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.


 


14.9.      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.


 


14.10.    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.









  


14.11.     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.


 


14.12.     SEVERABILITY. In the event
that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all
such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was
not contained herein.


 






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14.13.     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.


 


The foregoing is hereby
acknowledged as being the Moody National REIT II, Inc. 2014 Incentive Plan as adopted by the Board on __________, 2014 and by the
Company’s sole stockholder on _____________, 2014.


 


		MOODY NATIONAL REIT II, INC.
	 	 	 
	 	By:	 
	 	Its: 	 






  


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