Document:

Exhibit 10.2

 

EMPLOYMENT
AGREEMENT

 

This
EMPLOYMENT AGREEMENT (the “Agreement”), effective as of April 18, 2017 (the “Effective Date”), by and
between MERIDIAN WASTE SOLUTIONS, INC., a New York corporation, with offices at 12540 Broadwell Road, Suite 2104, Milton, Georgia
30004 (hereinafter called the “Company”), and JOSEPH D’ARELLI, an individual (the “Employee”). The
Company and Employee are also each hereinafter referred to individually as a “Party” and together as the “Parties”

 

W
I T N E S S E T H: 

 

WHEREAS,
the Employee is currently employed by the Company as its Chief Financial Officer;

 

WHEREAS,
prior to his current position, the Employee was employed by the Company as a Corporate Comptroller/SEC Compliance Director;

 

WHEREAS,
in connection with Employee’s prior employment with the Company as its Corporate Comptroller/SEC Compliance Director, the
Company issued to Employee Three Hundred Thousand (300,000) restricted shares of the Company’s common stock (the “Initial
Shares”);

 

WHEREAS,
the Company now desires to employ the Employee to perform services as SEC Compliance Director for the Company, and the Employee
desires to perform such services, on the terms and conditions set forth in this Agreement;

 

NOW,
THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

		1.	EMPLOYMENT

 

The
Company agrees to employ the Employee as the SEC Compliance Director of the Company, and the Employee agrees to serve as the SEC
Compliance Director of the Company upon the terms and conditions hereinafter set forth.

 

		2.	TERM

 

The
term of this Agreement shall begin on the Effective Date and end on November 30, 2018 (the “Initial Term”). This Agreement
is automatically renewable for successive terms of twelve (12) months (each a “Renewal Term”). For purposes of this
Agreement, the Initial Term and any Renewal Term are hereinafter collectively referred to as the “Term.” This Agreement
will automatically renew unless either Party provides the other with written notice of non-renewal at least sixty (60) days before
the end of the Term.

 

	3.	COMPENSATION

 

(a)
Base Salary. Beginning on the Effective Date, the Company agrees to pay the Employee a base salary at the annual rate of
Two Hundred Thousand Dollars ($200,000). All salary, bonus, or other compensation payable to the Employee shall be subject to
the customary withholding, FICA, medical and other tax and other employment taxes and deductions as required by federal, state
and local law with respect to compensation paid by an employer to an employee. The Board of Directors and any committees thereof
may perform an annual review of Employee’s salary based on a review of Employee’s performance of his duties and the
Company’s other compensation policies. 

 

    	 	-1-	 

     

    

 

(b)
Incentive Bonus. In addition to the foregoing salary, Employee shall be eligible for quarterly cash incentive bonuses (each
a “Cash Incentive Bonus”) in the amount of up to Twenty Thousand Dollars ($20,000), with such amount to be determined
by the Compensation Committee of the Board of Directors of the Company, based on the recommendations of the Chief Executive Officer
in evaluating Employee’s performance, taking into account various factors, including the extent to which the Company’s
annual report on Form 10-K or quarterly report on Form 10-Q for such period are filed prior to the applicable deadline.

 

	4.	DUTIES

 

The
Employee is hereby employed as SEC Compliance Director of the Company and shall perform the following services in connection with
the general business of the Company:

 

(a)       Duties
as SEC Compliance Director. Employee shall have such duties, responsibilities and authority as are commensurate and consistent
with the positions of SEC Compliance Director of a company and as may, from time to time, be assigned to him by the Board of Directors,
the Chief Executive Officer, the Chief Financial Officer or the Chief Operating Officer. Employee shall report directly to the
Chief Financial Officer. During the Term, Employee shall devote his full business time and efforts to the performance of his duties
hereunder, except as may be otherwise authorized by the Board. The Employee will comply and be bound by the Company’s written
operating policies, procedures and practices from time to time in effect during Employee’s employment. Employee represents
and warrants that he is free to enter into and fully perform this Agreement and the agreements referred to herein without breach
of any agreement or contract to which he is a party or by which he is bound.

 

(b)       Compliance.
The Employee hereby agrees to observe and comply with such reasonable rules and regulations of the Company as may be duly adopted
from time to time by the Company’s Chief Executive Officer and Board of Directors and otherwise to carry out and perform those
orders, directions and policies stated to him from time to time, either as specified in the minutes of the proceedings of the
Board of Directors of the Company or otherwise in writing that are reasonably necessary and appropriate to carry out his duties
hereunder. Such orders, directions and policies shall be legal and shall be consistent with the Employee’s position SEC Compliance
Director.

 

	5.	EXTENT OF SERVICES 

 

The
Employee agrees to serve the Company faithfully and to the best of his ability and shall devote his full time, attention and energies
to the business of the Company during customary business hours, except as may be otherwise authorized by the Board. The Employee
agrees to carry out his duties in a competent and professional manner and to at all times promote the best interests of the Company.
The Employee shall not, during the Term of his employment hereunder, engage in any other business, whether or not pursued
for profit. Nothing contained herein shall be construed as preventing the Employee from investing in any other business or entity
which is not in competition with the business of the Company. Nothing contained herein shall be construed as preventing the Employee
from (1) engaging in personal business affairs and other personal matters, (2) serving on civic or charitable boards or committees,
or (3) serving on the board of directors of companies that do not compete directly or indirectly with the Company, provided however,
that none of such activities materially interferes with the performance of his duties under this Agreement and provided further
that the Board of Directors approves of each such proposed appointment which approval shall not be unreasonably withheld.

 

    	 	-2-	 

     

    

 

	6.	BENEFITS AND EXPENSES 

 

During
the Term, Employee shall be entitled to, and the Company shall provide, the following benefits in addition to those specified
in Section 3:

 

(a)        Vacation.
The Employee shall be entitled to four (4) weeks’ vacation in each twelve (12) month period during the Term. Vacation may
be taken at such time(s) as Employee may determine, provided that such vacation does not interfere with the Company’s business
operations. The Employee must use his vacation in any event by May 31 of the year next following the year in which the vacation
accrues or such vacation time shall expire. The Employee shall not be entitled to compensation for unused vacation except that,
upon termination of his employment and so long as it is consistent with section 7 herein, the Company shall pay to the Employee
for all of his accrued, unexpired vacation time. The Employee shall accrue 1.66 vacation days per month beginning on the date
hereof.

 

(b)        Expense
Reimbursement. The Company shall reimburse the Employee upon submission of vouchers or receipts for his out-of-pocket expenses
for travel, entertainment, meals and the like reasonably incurred by him pursuant to his employment hereunder in accordance with
the general policy of the Company as adopted by its Board of Directors from time to time.

 

(c)        Health
Insurance. The Company shall provide the Employee with health insurance in the coverages consistent with those provided to
other similarly situated employees of the Company.

 

(d)        Disability
Insurance. If the Company maintains disability insurance, then the Company shall provide a disability policy for the Employee
comparable to the policies in force for other similarly situated employees in the Company.

 

(e)        Other
Benefits. The Company shall provide to the Employee the same benefits it makes available to other similarly situated employees
of the Company as determined from time to time by the Board of Directors.

 

		7.	TERMINATION;
                                         DISABILITY; RESIGNATION; TERMINATION WITHOUT CAUSE

 

(a)         Termination
for Cause. The Company shall have the right to terminate the Employee’s employment hereunder:

 

(1)       For
Cause upon such termination, Employee shall have no further duties or obligations under this Agreement (except as provided in
Section 8) and the obligations of the Company to Employee shall be as set forth below. For purposes of this Agreement, “Cause”
shall mean:

 

 (A) Employee’s indictment or conviction of a felony or any crime involving moral turpitude under federal, state or local law;

 

 (B) Employee’s failure to perform (other than as a result of Employee’s being Disabled), in any material respect, any of his duties or obligations under or in accordance with this Agreement for any reason whatsoever and the Employee fails to cure such failure within ten business days following receipt of notice from the Company;

 

 (C) Employee commits any dishonest, malicious or grossly negligent act which is materially detrimental to the business or reputation of the Company, or the Company’s business relationships, provided, however, that in such event the Company shall give the Employee written notice specifying in reasonable detail the reason for the termination;

 

 

    	 	-3-	 

     

    

 

(D) Any intentional misapplication by Employee of the Company’s funds or other material assets, or any other act of dishonesty injurious to the Company committed by Employee; or

 

 (E) Employee’s use or possession of any controlled substance or chronic abuse of alcoholic beverages, which use or possession the Board of Directors reasonably determines renders Employee unfit to serve in his capacity as a senior employee of the Company.

 

In
the event the Company terminates the Employee’s employment for cause, then the Employee shall be entitled to receive through the
date of termination: (1) his base salary as defined in Section 3(a) hereof; and (2) the benefits provided in Section 6 hereof
including all accrued but unpaid vacation.

 

(b)       Disability.
The Company shall have the right to terminate the Employee’s employment hereunder:

 

(1)        By
reason of the Employee’s becoming Disabled for an aggregate period of ninety (90) days in any consecutive three hundred sixty
(360) day period (the “Disability Period”).

 

 (A) “Disabled” as used in this Agreement means that, by reason of physical or mental incapacity, Employee shall fail or be unable to substantially perform the essential duties of his employment with or without reasonable accommodation.

 

 (B) In the event Employee is Disabled, during the period of such disability he shall continue to receive his base compensation in the amount set forth in Section 3(a) hereof, which base compensation shall be reduced by the amount of all disability benefits he actually receives under any disability insurance program in place with the Company until the first to occur of (1) the cessation of the Disability or (2) the termination of this Agreement by the Company. During the period of Disability and prior to termination, the Employee shall continue to receive the benefits provided in Section 6 hereof.

 

 (C) For the purposes of this Section 7(b), any amounts to be paid to Employee by the Company pursuant to subsection (B) above, shall not be reduced by any disability income insurance proceeds received by him under any disability insurance policies owned or paid for by the Employee.

 

 (D) If the Employee is terminated at the end of the Disability Period, then the Employee shall receive through the date of termination: (1) his base salary as defined in Section 3(a) hereof; and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(c)       Death.
The Company’s employment of the Employee shall terminate upon his death and all payments and benefits shall cease upon such date
provided, however, that under this Agreement the estate of such Employee shall be entitled to receive through the date of termination
(1) his base salary as defined in Section 3(a) hereof and (2) the benefits provided in Section 6 hereof including all accrued
but unpaid vacation.

 

    	 	-4-	 

     

    

 

(d)         Termination
by the Employee for Good Reason.

 

The
Employee may elect, by written notice to the Company, such notice to be effective immediately upon receipt by the Company, to
terminate his employment hereunder if:

 

 (1)         The Company sells all or substantially all of its assets and the Employee is not retained or otherwise has his employment terminated;

 

 (2)       The Company merges or consolidates with another business entity in a transaction immediately following which the holders of all of the outstanding shares of the voting capital stock of the Company own less than a majority of the outstanding shares of the voting capital stock of the resulting entity (whether or not the resulting entity is the Company); provided, however, that the Employee shall not be permitted to terminate his employment under this subsection unless he notifies the Company in writing that he does not approve of the directors selected to serve on the Board after the merger or similar transaction described herein;

 

 (3)         More than fifty (50%) percent of the outstanding shares of the voting capital stock of the Company are acquired by a person or group (as such terms are used in Section 13(d) of the Securities Exchange Act of 1934, as amended), which person or group includes neither the Employee nor the holders of the majority of the outstanding shares of the voting capital stock of the Company on the date hereof; provided, however, that the Employee shall not be permitted to terminate his employment under this subsection unless he notifies the Company in writing that he does not approve of the directors selected to serve on the Board after the merger or similar transaction described herein;

 

(4)
       The Company defaults in making any of the payments required under this Agreement and
said default continues for a one hundred eighty (180) day period after the Employee has given the Company written notice of the
payment default.

 

If
the Employee elects to terminate his employment hereunder pursuant to this Section 7(d), then (1) the Company shall continue to
pay to the Employee his salary as provided in Section 3(a) hereof through the end of the current Term; (2) the Company shall continue
to provide to the Employee the benefits provided in Section 6 hereof through the end of the current Term; and (3) all of the options
granted to the Employee hereunder to purchase shares of the common stock of the Company shall vest immediately and the term of
the option shall continue for the period specified in the option had the employment of the Employee not been so terminated.

 

(e)       Resignation.
If the Employee voluntarily resigns during the Term of this Agreement or any Renewal Term other than pursuant to Section 7(d)
hereof, then all payments and benefits shall cease on the effective date of resignation, provided that under this Agreement the
Employee shall be entitled to receive through the date of such resignation (1) his base salary as defined in Section 3(a) hereof
and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(f)       Termination
Without Cause. The Company may terminate this Agreement at any time, for any reason, or for no reason, effective immediately
upon written notice to Employee. If the Company terminates this Agreement pursuant to this Section 7(f) during the Term of this
Agreement, then the Company shall continue to pay to the Employee his base salary hereunder through the first anniversary of the
date of such termination and the Employee shall receive all the benefits provided in Section 6 hereof.

 

 

    	 	-5-	 

     

    

 

	8.	CONFIDENTIALITY; RESTRICTIVE COVENANTS; NON COMPETITION

 

(a)       Non-Disclosure
of Information.

 

(1)
       The Employee recognizes and acknowledges that by virtue of his position as a senior
employee, he will have access to the lists of the Company’s vendors, suppliers, financing sources, advertisers and customers,
financial records and business procedures, personnel, software, practices, plans, strategy, and other unique business information
and records (collectively “Proprietary Information”), as same may exist from time to time, and that they are valuable,
special and unique assets of the Company’s business. The Employee also may develop on behalf of the Company a personal acquaintance
with the present and potential future clients and customers of the Company, and the Employee’s acquaintance may constitute
the Company’s sole contact with such clients and customers.

 

(2)       The
Employee will not, without the prior written consent of the Company, during the Term of his employment or any time thereafter,
except as may be required by competent legal authority or as required by the Company to be disclosed in the course of performing
Employee’s duties under this Agreement, disclose trade secrets or other confidential information about the Company, including
but not limited to Proprietary Information, to any person, firm, corporation, association or other entity for any reason or any
purpose whatsoever or utilize such Proprietary Information for his own benefit or the benefit of any third party; .provided, however,
that nothing contained herein shall prohibit the Employee from using his personal acquaintance with any clients or customers of
the Company at any time in a manner that is not inconsistent with their remaining as clients or customers of the Company.

 

(3)       All
equipment, records, files, memoranda, computer print-outs and data, reports, correspondence and the like, relating to the business
of the Company which Employee shall use or prepare or come into contact with shall remain the sole property of the Company. The
Employee shall immediately turn over to the Company all such material in Employee’s possession, custody or control at such time
as this Agreement is terminated.

 

(4)       “Proprietary
Information” shall not include information that was a matter of public knowledge on the date of this Agreement or subsequently
becomes public knowledge other than as a result of having been revealed, disclosed or disseminated by Employee, directly or indirectly,
in violation of this Agreement.

 

(b)       Non-Solicitation.
The Employee covenants and agrees that during the term of his employment, and for a two (2) year period immediately following
the end of the Term of or earlier termination of this Agreement, regardless of the reason therefor, the Employee shall not solicit,
induce, aid or suggest to: (1) any employee to leave such employ, (2) any contractor, consultant or other service provider to
terminate such relationship, or (3) any customer, agency, vendor, or supplier of the Company to cease doing business with the
Company.

 

(c)       Non-Competition.
For purposes of this Section 8(c) the parties agree that the “business of the Company” shall be defined to refer to
the solid waste industry, including hauling and landfill operations.

 

The
Employee covenants and agrees that during the Term, Employee shall not engage in any activity or render service in any capacity,
directly or indirectly, (whether as principal, director, officer, investor, employee, consultant or otherwise) for or on behalf
of any person or persons or entity in the United States or anywhere else in the world if such activity or service directly or
indirectly involves or relates to any (1) business which is in competition with the business of the Company or (2) other business
acquired or begun by the Company during the period of the Employee’s employment hereunder but in the latter event only if
the Employee was directly involved in the operation of such other business. It is understood and agreed that nothing herein contained
shall prevent the Employee from engaging in discussions concerning business arrangements to become effective upon the expiration
of the term of this covenant not to compete.

 

    	 	-6-	 

     

    

 

(d)       Enforcement.
In view of the foregoing, the Employee acknowledges and agrees that it is reasonable and necessary for the protection of the good
will, business, trade secrets, confidential information and Proprietary Information of the Company that he makes the covenants
in this Section 8 and that the Company will suffer irreparable injury if the Employee engages in the conduct prohibited by Section
8 (a), (b) or (c) of this Agreement. The Employee agrees that upon a breach, threatened breach or violation by him of any of the
foregoing provisions of this Section 8, the Company, in addition to all other remedies it may have including an action at law
for damages, shall be entitled as a matter of right to injunctive relief, specific performance or any other form of equitable
relief in any court of competent jurisdiction without being required to post bond or other security and without having to prove
the inadequacy of the available remedies at law, to enjoin and restrain the Employee and each and every other person, partnership,
association, corporation or organization acting in concert with the Employee, from the continuance of any action constituting
such breach. The Company shall also be entitled to recover from the Employee all of its reasonable costs incurred in the enforcement
of this Section 8 including its reasonable legal fees. The Employee acknowledges that the terms of Section 8(a), (b) and (c) are
reasonable and enforceable and that, should there be a violation or attempted or threatened violation by the Employee
of any of the provisions contained in these subsections, the Company shall be entitled to relief by way of injunction, specific
performance or other form of equitable relief. In the event that any of the foregoing covenants in Sections 8 (a), (b) or (c)
shall be deemed by any court of competent jurisdiction, in any proceedings in which the Company shall be a party, to be unenforceable
because of its duration, scope, or area, it shall be deemed to be and shall be amended to conform to the scope, period of time
and geographical area which would permit it to be enforced.

 

(e)
       Independent Covenants. The Company and the Employee agree that the covenants
contained in this Section 8 shall each be construed as a separate agreement independent of any of the other terms and conditions
of this Agreement, and the existence of any claim by the Employee against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense by the Employee to the Company’s enforcement of any of the covenants of this Section
8.

 

	9.	DISCLOSURE AND ASSIGNMENT OF RIGHTS.

 

(a)
       Disclosure. The Employee agrees that he will promptly assign to the Company or
its nominee(s) all right, title and interest of the Employee in and to any and all ideas, inventions, discoveries, secret processes,
and methods and improvements, together with any and all patents or other forms of intellectual property protection that may be
obtainable in connection therewith or that may be issued thereon, such as trademarks, service marks and copyrights, in the United
States and in all foreign countries, which the Employee may invent, develop, or improve or cause to be invented developed or improved,
on behalf of the Company while engaged in Company related decisions, during the Term or within six (6) months after the Term or
earlier termination of this Agreement, which are or were related to the scope of the Company’s business or any work carried
on by the Company or to any problems and projects specifically assigned to the Employee. All works and writings which relate to
the Company’s business are works for hire under the Copyright Act, and any and all copyrights therefor shall be placed in
the name of and inure to the benefit of the Company.

 

(b)
     Assignment of Interest. The Employee agrees to disclose immediately to duly authorized
representatives of the Company any ideas, inventions, discoveries, processes, methods and improvements covered by the terms of
this Section 9 and to execute, at the Company’s expense, all documents reasonably required in connection with the Company’s
application for appropriate protection and registration under the federal and foreign patent, trademark, and copyright law and
the assignment thereof to the Company’s nominee (s). The Employee hereby appoints the Company’s Chairman as true and
lawful attorney in fact with full powers of substitution and delegation to execute acknowledge and deliver any such instruments
and assignments, which the Employee shall fail or refuse to execute or deliver.

 

    	 	-7-	 

     

    

 

	10.	INDEMNIFICATION.

 

The
Company shall indemnify the Employee to the maximum extent permitted under the New York Business Corporation Law, or any successor
thereto, and shall promptly advance any expenses incurred by the Employee prior to the final disposition of the proceeding to
which such indemnity relates upon receipt from the Employee of a written undertaking to repay the amount so advanced if it shall
be determined ultimately that the Employee is not entitled to indemnity under the standards set forth in the New York Business
Corporation Law or its successor. The Company shall use commercially reasonable efforts to obtain and maintain throughout the
Term of the employment of the Employee hereunder directors’ and officers’ liability insurance for the benefit of the
Employee. The indemnification obligations of the Company under this Section 10 shall survive the termination of the Term or of
this Agreement for any reason whatsoever unless the Agreement is terminated for cause.

 

	11.	NOTICES.

 

(a)       Any
and all notices or other communications given under this Agreement shall be in writing and shall be deemed to have been duly given
on (1) the date of delivery, if delivered in person to the addressee, (2) the next business day if sent by overnight courier,
or (3) three (3) days after mailing, if mailed within the continental United States, postage prepaid, by certified or registered
mail, return receipt requested, to the party entitled to receive same, at his or its address set forth below.

 

The
Company:

 

Meridian
Waste Solutions, Inc.

12540
Broadwell Road, Suite 2104

Milton,
GA 30004

Attn:
Jeffrey Cosman, CEO

 

If
to the Employee:

 

Joseph
D’Arelli

22401
Martella Avenue

Boca
Raton, FL 33433

 

(b)       The
parties may designate by notice to each other any new address for the purposes of this Agreement as provided in this Section 11.

 

	12.	MISCELLANEOUS PROVISIONS

 

(a)       This
agreement represents the entire Agreement between the parties and supersedes any prior agreement or understanding between them
with respect to the subject matter hereof, including without limitation, that certain Employment Agreement dated May 23, 2016
between the Employee and the Company and that certain Executive Employment Agreement dated November 29, 2016 between the Employee
and the Company, as amended. No provision hereof may be amended, modified, terminated, or revoked except by a writing signed by
all parties hereto.

 

(b)       This
Agreement shall be binding upon parties and their respective heirs, legal representatives, and successors. Subject to the provisions
of Section 7(d) hereof, the rights and interests of Company hereunder may be assigned to (1) a subsidiary or affiliate of the
Company or (2) a successor business or successor business entity that is not a subsidiary or affiliate of the Company without
the Employee’s prior written consent; provided, however, that in either case the assignee continues the same business of the Company.
The rights, interests and obligations of Employee are non-assignable.

 

    	 	-8-	 

     

    

 

(c)       No
waiver of any breach or default hereunder shall be considered valid unless in writing and signed by the party against whom the
waiver is asserted, and no such waiver shall be deemed the waiver of any subsequent breach or default of the same or similar nature.

 

(d)       If
any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall affect only
such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement,
and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

(e)       The
captions and headings contained in this Agreement are for convenience only and shall not be construed as a part of this Agreement.

 

(f)       Wherever
it appears appropriate from the context, each term stated in this the singular or the plural shall include the singular and the
plural.

 

(g)       The
parties hereto agree that they will take such action and execute and deliver such documents as may be reasonably necessary to
fulfill the terms of this Agreement.

 

(h)       The
agreements and covenants set forth in Section 8 above shall survive termination or expiration of this Agreement.

 

(i)       The
Employee represents and warrants that he is not subject to any prohibition or restriction, oral or written, preventing him from
entering into this Agreement and undertaking his duties hereunder.

 

(j)       The
Employee acknowledges that he has consulted with counsel and been advised of his rights in connection with the negotiation, execution
and delivery of this Agreement including in particular Section 8 of this Agreement.

 

13.       Governing
Law. The Agreement shall be construed in accordance with the laws of the State of New Jersey and any dispute under this Agreement
will only be brought in the state and federal courts located in the State of New Jersey.

 

14.       Waiver
of Jury Trail. THE EMPLOYEE HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS AGREEMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN
ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COMPANY ENTERING INTO THIS AGREEMENT. THE COMPANY’S
REASONABLE RELIANCE UPON SUCH INDUCEMENT IS HEREBY ACKNOWLEDGED.

 

[Signatures
Appear on the Following Page]

 

    	 	-9-	 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement on the date first above written.

 

	 	MERIDIAN
    WASTE SOLUTIONS, INC.
	 	 	 
	 	By:	/s/
    Jeffrey Cosman
	 	 	Name:
    Jeffrey Cosman
	 	 	Title:
    Chief Executive Officer
	 	 	 
	 	EMPLOYEE
	 	 	 
	 	 /s/
    JOSEPH D’ARELLI
	 	JOSEPH
    D’ARELLI, an individual

 

 

 

10Exhibit

Exhibit 10.1

Choice Hotels International, Inc. 

2017 Long-Term Incentive Plan

	
				
	 
	TABLE OF CONTENTS
	 

	 
	 
	Page
	

	ARTICLE I
	 PURPOSE AND EFFECTIVE DATE
	1
	

	1.01
	Purpose
	1
	

	1.02
	Effective Date and Duration of Plan
	1
	

	ARTICLE II
	DEFINITIONS
	1
	

	ARTICLE III
	STOCK SUBJECT TO PLAN
	4
	

	3.01
	Stock Subject to Plan
	4
	

	3.02
	Reallocation and Share Usage
	5
	

	ARTICLE IV
	ADMINISTRATION
	5
	

	4.01
	Administration
	5
	

	ARTICLE V
	ELIGIBILITY FOR GRANTS AND AWARDS
	7
	

	5.01
	Eligibility
	7
	

	5.02
	Grants and Awards
	7
	

	5.03
	Grants to Foreign Nationals
	7
	

	ARTICLE VI
	OPTIONS
	8
	

	6.01
	Award
	8
	

	6.02
	Share Price
	8
	

	6.03
	Special Rules for Incentive Stock Options
	8
	

	6.04
	Vesting
	8
	

	6.05
	Maximum Option Period
	8
	

	6.06
	Nontransferability
	9
	

	6.07
	Termination of Employment
	9
	

	6.08
	Exercise
	9
	

	6.09
	Payment
	10
	

	6.10
	Shareholder Rights
	10
	

	6.11
	Disposition of Stock
	10
	

	ARTICLE VII
	STOCK AWARDS
	10
	

	7.01
	Award
	10
	

	7.02
	Vesting
	10
	

	7.03
	Shareholder Rights
	11
	

	ARTICLE VIII
	STOCK UNIT AND SAR AWARDS
	11
	

	 
	 
	 

i

	
				
	 
	TABLE OF CONTENTS
	 

	 
	(continued)
	 

	Page
	 
	 

	8.01
	Award
	11
	

	8.02
	Provisions Applicable to SARs
	12
	

	8.03
	Payment
	12
	

	8.04
	Shareholder Rights
	12
	

	8.05
	Nontransferability
	13
	

	8.06
	Forfeiture of Stock Unit Awards
	13
	

	ARTICLE IX
	QUALIFIED PERFORMANCE-BASED AWARDS
	13
	

	9.01
	Scope and Purpose
	13
	

	9.02
	Applicability
	13
	

	9.03
	Awards
	13
	

	9.04
	Establishment of Performance Goals
	14
	

	ARTICLE X
	DEFERRAL OF PAYMENTS
	15
	

	10.01
	Deferral Elections
	15
	

	10.02
	Deferral Account
	16
	

	10.03
	Applicable Legal Requirements
	16
	

	ARTICLE XI
	ADJUSTMENTS
	16
	

	11.01
	Adjustments for Changes in Capital Structure
	16
	

	ARTICLE XII
	CHANGE IN CONTROL
	17
	

	12.01
	Change of Control
	17
	

	12.02
	Vesting Upon a Change in Control
	17
	

	ARTICLE XIII
	OTHER PROVISIONS FOR GRANTS AND AWARDS
	19
	

	13.01
	Tax Withholding Requirements
	19
	

	13.02
	Withdrawal
	19
	

	13.03
	Forfeiture Upon Termination For Cause
	19
	

	13.04
	Registration, Listing and Qualification of Stock
	19
	

	13.05
	Corporate Restrictions
	20
	

	13.06
	Investment Representations
	20
	

	13.07
	Registration
	21
	

	13.08
	Transferability of Options, Stock Awards and Phantom Shares
	21
	

	13.09
	Applicable Legal Requirements
	21
	

ii

	
				
	 
	TABLE OF CONTENTS
	 

	 
	(continued)
	 

	Page
	 
	 

	ARTICLE XIV
	AMENDMENT AND TERMINATION
	21
	

	14.01
	Amendment
	21
	

	14.02
	Termination
	22
	

	ARTICLE XV
	GENERAL PROVISIONS
	22
	

	15.01
	 Government Regulations
	22
	

	15.02
	Claw-back/Recoupment Policy
	22
	

	15.03
	Unfunded Plan
	22
	

	15.04
	Effect on Employment and Service
	22
	

	15.05
	Costs and Expenses
	22
	

	15.06
	Proceeds from Sale of Stock
	22
	

	15.07
	Governing Law
	23
	

	15.08
	Rules of Construction
	23
	

	15.09
	Invalidity
	23
	

	 
	 
	 

iii

CHOICE HOTELS INTERNATIONAL, INC.  
2017 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.01    Purpose. The purpose of the Choice Hotels International, Inc. 2017 Long-Term Incentive Plan is to provide to eligible employees, officers and directors who are primarily responsible for the continued growth and success of Choice Hotels International, Inc. an opportunity to increase their (or acquire a) proprietary interest in the Company. The Plan also enables the Company to continue to attract, retain and reward the best available talent for the Company’s continued profitable performance.
1.02    Effective Date and Duration of Plan. Unless terminated earlier by the Board, this Plan is effective until April 21, 2025. Any Awards that are made under the Plan prior to the termination date shall continue in effect in accordance with the terms of the Agreement after that date.
ARTICLE II
DEFINITIONS
2.01    Affiliate means any corporation, partnership, limited liability company, limited liability partnership, business trust, or other entity controlling, controlled by or under common control with the Company. Notwithstanding the preceding sentence, except as otherwise provided by the Committee, this term shall not include any entity of which at least fifty percent (50%) of the combined voting power of the entity’s outstanding securities is owned, directly or indirectly, by the Bainum Family Group.
2.02    Agreement means a written or electronic agreement (including any amendment or supplement thereto) between the Company and a Participant, or a notice from the Company to a Participant, specifying the terms and conditions of an Award granted to such Participant.
2.03    Award means any Stock Award, Stock Unit, Option, or SAR granted under the Plan.
2.04    Bainum Family Group means (a) Stewart Bainum, Sr., his wife, their lineal descendants (and their spouses so long as they remain spouses) and the estate of any of the foregoing persons, and (b) any partnership, trust, corporation or other entity to the extent any shares (or their equivalent) of such entity are considered to be beneficially owned by any person or estate referred to in subsection (a) above.
2.05    Board means the Board of Directors of the Company.
2.06    Cause means (i) dishonesty; (ii) gross negligence or willful misconduct; (iii) fraudulent or unethical conduct; (iv) unreasonable neglect or refusal to perform the Participant’s duties; (v) Participant’s unauthorized use for his or her own benefit or transfer to a third-party of any confidential or proprietary information of the Company or any Affiliate, (vi) a breach of the terms of Participant’s employment or other agreement with the Company (or any Affiliate); (vii) a 

1

violation of the established policies of the Company (or any Affiliate); (viii) conduct constituting a felony or other crime involving moral turpitude; or (ix) willful or malicious conduct which causes injury to the Company’s (or an Affiliate’s) business or reputation or otherwise adversely affects the interests of the Company or an Affiliate. If an Employee has an employment or severance agreement that contains a definition of “cause”, that definition shall supersede and replace the foregoing definition.
2.07    Change in Control means the earliest date on which:
(a)    There shall be a change in the ownership or control of the Company effected through either the acquisition, directly or indirectly, by any person or group of persons acting in concert (other than (i) the Company or any Affiliate, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate, or (iii) the Bainum Family Group) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of securities possessing more than fifty (50%) percent of the combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders or otherwise, who do not own fifty percent (50%) on the date this Plan is adopted;
(b)    There is a consolidation or merger of the Company with another entity (other than an Affiliate) in which the Company’s shareholders (determined as of immediately prior to the consummation of the consolidation or merger) own (directly or indirectly) less than fifty percent (50%) of the shares of the surviving entity;
(c)    The complete liquidation or dissolution of the Company;
(d)    The sale or other disposition of all or substantially all of the assets of the Company to another person or entity (other than an Affiliate). 
(e)    The date as of which less than fifty percent (50%) of the Company’s Board is no longer made up of individuals who were, as of the date this Plan was approved by the stockholders, members of that Board (the “Incumbent Board”), provided, however, that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new Director shall, for purposes of the Plan, be considered as a member of the Incumbent Board (excluding any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board). 
Notwithstanding the foregoing, in the event that the Bainum Family Group cease (in the aggregate) to own, directly or indirectly, at least thirty-three percent (33%) of the combined voting power of the Company’s outstanding securities, “fifty percent (50%)” shall be replaced by “thirty-three percent (33%)” wherever it appears in subsection (a) above.
2.08    Code means the Internal Revenue Code of 1986, as amended from time to time.
2.09    Committee means the Committee or Committees referred to in Section 4.01 of the Plan; provided, that the Board may, in its sole discretion consistent with applicable law, act in the place of the Committee in making Awards or taking any other actions hereunder. If at any time no 

2

Committee shall be in office or exist, the functions of the Committee specified in the Plan shall be exercised by the Board.
2.10    Company means Choice Hotels International, Inc., a Delaware corporation, or any successor corporation.
2.11    Covered Employee means an employee who is a “covered employee” within the meaning of Section 162(m) of the Code.
2.12    Director means a member of the Board or the board of directors (or other governing board) of any Subsidiary.
2.13    Disability means total and permanent disability as defined in Section 22(e)(3) of the Code.
2.14    Employee means all persons employed as an employee by the Company or any Subsidiary, whether full-time or part-time.
2.15    Exchange Act means the Securities Exchange Act of 1934, as amended, and in effect.
2.16    Fair Market Value means, on any given date, the value of a Share as determined by the Committee in good faith. Unless otherwise determined by the Committee, the Fair Market Value of a Share as of any date is the amount equal to the closing price reported on the New York Stock Exchange (or on any other national securities exchange, including the Nasdaq National Market, on which the Stock is then listed) for that date or, if no Shares were traded on that date, the mean between the high and low prices as reported for the first day prior thereto in which Shares were traded. Notwithstanding the foregoing, the Committee shall, to extent that Section 409A of the Code applies, use a valuation methodology that meets the requirements of Section 409A.
2.17    Grant Date means the date on which an Award is approved by the Committee or such later date as may be directed by the Committee.
2.18    Incentive Stock Option means any Option granted under this Plan that qualifies as an “incentive stock option” under Section 422 of the Code.
2.19    Nonqualified Stock Option means any Option granted under this Plan that does not qualify as an “incentive stock option” under Section 422 of the Code.
2.20    Option means an option that entitles the holder to purchase from the Company a stated number of Shares at the Option Price set forth in an Agreement.
2.21    Option Price means the per-Share price at which a Share may be purchased under an Option or, in the case of a SAR, the per-Share price specified in the SAR Agreement.
2.22    Participant means an Employee or Director who is selected by the Committee in accordance with Article V to receive an Award.
2.23    Performance Goals means the written goals established by the Committee for a Performance Period as provided in Section 9.04.
2.24    Performance Period means a period of time selected by the Committee over which the attainment of one or more Performance Goals will be measured.

3

2.25    Plan means the Choice Hotels International, Inc. 2017 Long-Term Incentive Plan.
2.26    Prior Plan means the Amended and Restated Choice Hotels International, Inc. 2006 Long-Term Incentive Plan.
2.27    Qualified Performance-Based Awards means those Stock Awards and Stock Unit Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code as provided in Article IX of the Plan.
2.28    Securities Act means the Securities Act of 1933, as amended and in effect. 
2.29    Share means one share of Stock, as adjusted in accordance with Section 11.01. 
2.30    Stock means the common stock of the Company.
2.31    Stock Appreciation Right or SAR means a right to receive payment of the amount by which the Fair Market Value of a Share on the last trading day preceding the date of exercise exceeds the Option Price.
2.32    Stock Award means Stock awarded to a Participant under Article VII.
2.33    Stock Unit means a bookkeeping entry representing the equivalent of one Share.
2.34    Stock Unit Award means Stock Units awarded to a Participant under Article VIII.
2.35    Subsidiary means any entity in which the Company owns directly or indirectly 50% or more of the voting stock or membership interests.
2.36    Ten Percent Shareholder means an individual who owns more than ten percent of the total combined voting power of all classes of stock of the Company or an Affiliate as provided in Section 422(b)(6) of the Code.
ARTICLE III
STOCK SUBJECT TO PLAN
3.01    Stock Subject to Plan.
(a)    Subject to the provisions of Section 11.01, the maximum number of Shares for which Awards may be granted pursuant to this Plan is the sum of (i) two million five hundred thousand (2,500,000) Shares, plus (ii) the number of Shares available for future awards under the Prior Plan as of April 21, 2017, plus (iii) the number of Shares related to awards outstanding under the Prior Plan as of April 21, 2017, that thereafter terminate by expiration or forfeiture, cancellation or otherwise without the issuance of such Shares.
(b)    Subject to the provisions of Section 11.01, the maximum number of Shares that may be issued as Stock Awards or Stock Unit Awards is 2,300,000 Shares.
(c)    Subject to the provisions of Section 11.01, the maximum number of Shares for which Incentive Stock Options may be granted pursuant to this Plan is 1,500,000 Shares.

4

(d)    The Shares that may be issued or delivered under the Plan may, as determined by the Committee from time to time, be authorized but unissued Shares, reacquired Shares or both.
3.02    Reallocation and Share Usage. If (a) an Option or SAR granted under the Plan or the Prior Plan is terminated, in whole or in part, for any reason other than its exercise, (b) any other Award granted under the Plan or Prior Plan is forfeited, in whole or in part, or (c) an Award granted under the Plan or Prior Plan is settled in cash, the number of Shares allocated to the terminated, forfeited or cash-settled Award shall again be available for Awards under this Plan. Notwithstanding anything herein to the contrary, Shares subject to an Award under the Plan or Prior Plan may not again be made available for issuance under Awards if such shares are: (i) shares that were subject to a Stock-settled Stock Appreciation Right or Option and that were not issued upon the net settlement or net exercise of such Stock Appreciation Right or Option, or (ii) shares delivered to or retained by the Company to pay the Option Price or withholding taxes related to an Award. Awards that can only be settled in cash shall not count against the maximum number of shares for which Awards may be granted.
ARTICLE IV
ADMINISTRATION
4.01    Administration.
(a)    The Plan shall be administered by the Compensation Committee of the Board (or other committee or subcommittee designated by the Board from time to time in its sole discretion). Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Committee’s composition may be structured so that (i) Awards to persons who are subject to Section 16 of the Exchange Act are exempt from liability under Section 16(b) of that Act, (ii) Awards to Covered Employees can be structured to qualify as performance-based compensation as provided under Section 162(m) of the Code, and (iii) the members of the Committee meet the New York Stock Exchange requirements for independence.
(b)    Notwithstanding subsection (a), the Board may, at any time, otherwise exercise any of the powers and responsibilities assigned to the Committee under the Plan, and when so acting, all applicable Plan provisions pertaining to the Committee shall apply. Awards to non-employee Directors shall be made solely by non-employee Directors.
(c)    The Committee shall have the authority to grant Awards upon such terms (not inconsistent with the provisions of this Plan), as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the exercisability of all or any part of an Option or SAR or on the exercisability, transferability or forfeitability of a Stock Award or Stock Unit Award. Notwithstanding any such condition, the Committee may accelerate the time at which any Option or SAR may be exercised, or the time at which a Stock Award or Stock Unit Award may become transferable or nonforfeitable or settled.
(d)    The Committee shall hold its meetings at such times and places as may be determined by the Committee Chairman. A majority of the Committee shall constitute a quorum. 

5

All actions of the Committee shall be taken by a majority of the members at a meeting duly called by its Chairman; provided, however, any action taken by a written document signed by a majority of the members of the Committee shall be as effective as action taken by the Committee at a meeting duly called and held.
(e)    Subject to the express provisions of this Plan, the Committee shall have complete authority to (i) interpret all provisions of this Plan; (ii) prescribe the terms of any Agreement (which need not be identical), (iii) adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan, (iv) amend any Agreement, (v) correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Agreement, (vi) determine which persons are Participants, to which of such Participants, if any, Awards shall be granted hereunder and the timing of any such Awards, (vii) grant Awards to Participants and determine the terms and conditions thereof, including the number of Shares subject to Awards and the Option Price for, or purchase price of, such Shares and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events, or other factors, (viii) establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award, (ix) determine whether, and the extent to which, adjustments are required pursuant to Section 11.01 and (x) make all other determinations necessary or advisable in administering this Plan.
(f)    The Committee shall also have the discretion to determine the effect upon an Award and upon an individual’s status as an employee under the Plan (including whether a Participant shall be deemed to have experienced a termination of employment or other change in status) and upon the vesting, expiration or forfeiture of an Award in the case of (i) any individual who is employed by an entity that ceases to be a Subsidiary of the Company, (ii) any leave of absence approved by the Company or a Subsidiary, (iii) any transfer between locations of employment with the Company or a Subsidiary or between the Company and any Subsidiary or between any Subsidiaries, (iv) any change in the Participant’s status from an employee to a consultant or member of the Board of Directors, or vice versa, and (v) at the request of the Company or a Subsidiary, any employee who becomes employed by any partnership, joint venture, corporation or other entity not meeting the requirements of a Subsidiary. Notwithstanding the above, in the event that a payment to an individual is subject to Section 409A and such payment is to be made in connection with a “termination of employment” of such individual, such payment will only be made when and to the extent that the individual has incurred a “separation from service” under Section 409A (and any regulations thereunder).
(g)    The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee under the Plan. Any decision made, or action taken, by the Committee in connection with the administration of this Plan shall be final and conclusive on all affected parties. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select. A Participant or other holder of an Award may contest a decision or action by the Committee with 

6

respect to such person or Award only on the grounds that such decision or action was arbitrary or capricious or was unlawful, and any review of such decision or action shall be limited to determining whether the Committee’s decision or action was arbitrary or capricious or was unlawful. Neither the Committee nor any Employee or Director shall be liable for any act done in good faith with respect to this Plan or any Agreement or Award.
ARTICLE V
ELIGIBILITY FOR GRANTS AND AWARDS
5.01    Eligibility. Any Employee or Director is eligible to receive an Award under this Plan. The Committee shall have full discretionary authority to determine the persons to whom Awards will be made and the time or times at which such grants will be made.
5.02    Grants and Awards.
(a)    The Plan is intended to permit the grant of (i) both Incentive Stock Options and Nonqualified Stock Options, (ii) SARs, (iii) Stock Awards and (iv) Stock Unit Awards; provided, that Incentive Stock Options may only be granted to Employees.
(b)    The grant of an Award under this Plan shall be entirely in the discretion of the Committee and nothing in the Plan shall be construed as giving any Employee, Director or other person any right receive any Award.
(c)    The Committee may accept the cancellation of outstanding Awards and grant new Awards for the same or different number of shares (if applicable) and under the same or different terms and conditions. Notwithstanding the preceding sentence, except as otherwise provided in Section 11.01, the Committee may not, without stockholder approval, either (i) reduce the Option Price of an Option or SAR, (ii) amend or cancel an Option or SAR for the purpose of re-pricing, replacing or re-granting such Option or SAR with an exercise price that is less than the original exercise price of such Option or SAR, (iii) take any other action that (whether in the form or an amendment, cancellation or replacement grant) that has the effect of re-pricing an Option or SAR, or (iv) substitute, replace or exchange an Option for any other Award or cash if the Option Price exceeds Fair Market Value.
(d)    Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of Shares to the Corporation in payment of the exercise price and/or tax withholding obligation under any other employee stock option.
5.03    Grants to Foreign Nationals. The Committee may grant Options or make other Awards under the Plan to eligible individuals who are foreign nationals on such additional or different terms and conditions as may, in the sole judgment of the Committee, be necessary or appropriate to comply with the provisions of any applicable laws of a foreign country.

7

ARTICLE VI
OPTIONS
6.01    Award.
(a)    In accordance with Article V, the Committee may (i) designate each individual to whom an Option is to be granted, (ii) specify the type of Option being granted and the number of Shares covered by each such Award, and (iii) establish the Option Price and such other terms and conditions as it may deem appropriate for each Option consistent with the Plan. The terms and conditions of any Option granted under the Plan shall be set forth in an Agreement.
(b)    Subject to adjustment under Section 11.01, in no event may the number of Shares covered by all Option Awards granted in any calendar year to any one Employee exceed 250,000 or to any one non-Employee Director exceed 10,000.
(c)    No Option that is intended to be an Incentive Stock Option shall be invalid for failure to qualify as such and the Company shall honor any such Option as a Nonqualified Stock Option.
6.02    Share Price. The Option Price shall be determined by the Committee, but shall not be less than the Fair Market Value of a Share as of the Grant Date; provided, however, that the Option Price with respect to an Option that is granted in connection with a merger or other acquisition as a substitute or replacement award for options held by optionees of the acquired entity may be less than the Fair Market Value of the Shares on the date such Option is granted if such Option Price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition. If an Incentive Stock Option is granted to an individual who is a Ten Percent Shareholder on the Grant Date, the purchase price of the Shares subject to such Option shall not be less than 110% of the Fair Market Value as of the Grant Date.
6.03    Special Rules for Incentive Stock Options.
(a)    The aggregate Fair Market Value (determined as of an Option’s Grant Date) for all Incentive Stock Options granted under the Plan (and all other plans of the Company and its Affiliates) that are first exercisable by a Participant in a calendar year shall not exceed $100,000.
6.04    Vesting. Except as otherwise provided in this Plan or by the Committee, a Participant shall only be entitled to exercise an Option at such time or times as set forth in the applicable Agreement. In no event shall an Option vest in full in less than one year from the Grant Date. Unless provided otherwise in the applicable Agreement, to the extent that the Committee determines that an approved leave of absence or employment on a less than full-time basis is not a termination of employment, the vesting period and/or exercisability of an Option may be adjusted by the Committee during or to reflect the effects of any period during which the Participant is on an approved leave of absence or is employed on a less than full-time basis.
6.05    Maximum Option Period. The maximum period during which an Option may be exercised shall be determined by the Committee, except that no Incentive Stock Option or Nonqualified Stock Option shall be exercisable for a period of more than ten years from the date 

8

such Option was granted; provided, that the maximum period in which an Option may be exercised shall be five years in the case of an Incentive Stock Option granted to an individual who on the Grant Date is a Ten Percent Shareholder.
6.06    Nontransferability. Except as provided in Section 13.08, each Option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution and during the lifetime of the Participant to whom the Option is granted, the Option may be exercised only by the Participant (or the Participant’s personal representative). No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant.
6.07    Termination of Employment.
(a)    Except as provided in subsections (b) or (c) below and Section 13.03, in the event a Participant ceases to be an Employee or Director, the Participant may, to the extent he or she was otherwise entitled to exercise any Options at the date of termination, exercise any Options for a period of ninety (90) days (or other period provided in the Agreement or by the Committee) following the date the Participant ceases to be such (but in no event later than the expiration date of such Option as set forth in the Agreement). To the extent that the Participant was not entitled to exercise the Option as of the date he or she ceases to be an Employee or Director, the Option shall (except as otherwise provided in the Agreement or by the Committee) shall automatically terminate at that time.
(b)    In the event a Participant ceases to be an Employee or Director due to Disability, the Participant may, to the extent he or she otherwise was entitled to exercise any Options at the date of such termination, exercise the Option for a period of twelve (12) months (or other period provided in the Agreement or by the Committee) following date he or she ceases to be such (but in no event later than the expiration date of such Option as set forth in the Agreement). To the extent that the Participant was not entitled to exercise the Option at the date of his or her termination as an Employee or Director, the Option shall (except as otherwise provided in the Agreement or by the Committee) automatically terminate at that time.
(c)    In the event that a Participant dies while an Employee or Director, any Options held by the Participant at death may, to the extent the Participant would have otherwise been entitled to exercise the Option at the date of death, be exercised by the Participant’s estate or by any person who acquired the right to exercise the Option by bequest or inheritance (the “Option Beneficiary”) for a period of twelve (12) months (or other period provided in the Agreement or by the Committee) following date of death (but in no event later than the expiration date of such Option as set forth in the Agreement). To the extent that, at the time of death, the Participant was not entitled to exercise the Option, the Option shall (except as otherwise provided in the Agreement or by the Committee) automatically terminate at that time.
6.08    Exercise. Subject to the other provisions of this Plan and the applicable Agreement, an Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as may be set out in the Agreement or established by the Committee. An Option granted under this Plan may be exercised with respect to any number of whole Shares less than the full number for which the Option could be exercised. A partial exercise 

9

of an Option shall not affect the right to exercise the Option from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the Option.
6.09    Payment.
(a)    Except as otherwise provided in the Agreement or by the Committee, payment of the Option Price shall be made in cash or a cash equivalent acceptable to the Committee. To the extent provided in the Agreement or permitted by the Committee, payment of all or part of the Option Price may be made by surrendering Stock to the Company or through withholding of Shares otherwise deliverable upon exercise of the Option. If Stock is used to pay all or part of the Option Price, the sum of the cash (and cash equivalent) and the Fair Market Value (determined as of the last trading day preceding the date of surrender) of the surrendered Shares must not be less than the total Option Price of the Shares for which the Option is being exercised.
(b)    To the extent permitted in the Agreement or by the Committee, an Option may, in accordance with such rules and procedures as may be established by the Committee, be exercised through a cashless exercise procedure involving a broker or dealer to pay the Option Price and/or to satisfy any withholding tax obligations related to the Option.
6.10    Shareholder Rights. No Participant shall have any rights as a shareholder to Shares subject to an Option until the date the Shares for which an Option has been exercised have been issued to the Participant.
6.11    Disposition of Stock. A Participant shall notify the Company of any sale or other disposition of Shares acquired pursuant to an Incentive Stock Option if such sale or disposition occurs (i) within two years of the grant of an Option or (ii) within one year of the issuance of the Stock to the Participant. Such notice shall be in writing and directed to the Secretary of the Company (or the Secretary’s designee).
ARTICLE VII
STOCK AWARDS
7.01    Award.
(a)    In accordance with Article V, the Committee may (i) designate each individual to whom a Stock Award is to be made, (ii) specify the number of Shares covered by each such Award and (iii) establish such other terms and conditions as it may deem appropriate for each Award. If, as a condition for a Stock Award, the Participant is required to make payment for the awarded Shares, such purchase price shall be paid as provided in the Agreement. The terms and conditions of any Stock Award under the Plan shall be set forth in an Agreement.
(b)    Subject to the provisions of Section 11.01, in no event may the number of Shares covered by all Stock Awards granted in any calendar year to any one Employee exceed 250,000 or to any one non-Employee Director exceed 10,000.
7.02    Vesting.
(a)    Except as otherwise provided by the Committee, a Participant’s rights in a Stock Award shall be forfeitable or otherwise restricted for such period of time, until the satisfaction 

10

of such performance conditions or until the satisfaction of such other conditions or requirements as may be set forth in the Agreement.
(b)    Except as provided in the Agreement or by the Committee, a nonvested Stock Award shall terminate and be forfeited as of the date the Participant ceases to be an Employee or Director.
(c)    Stock Awards granted pursuant to this Section 7 and Stock Units granted pursuant to Section 8 that, in either case, vest solely by the passage of time shall not vest in full in less than one (1) year from the Grant Date; provided, however, that (i) up to five percent of the shares available for issuance under this Plan, may be granted pursuant to this Plan without being subject to the foregoing restrictions, and (ii) any dividends or dividend equivalents issues in connection with any Awards granted at any time under this Plan shall not be subject to or counted for either these restrictions or this five percent limit. The foregoing five percent limit shall be subject to the adjustment provisions of Section 11.01 and the share usage rules of Section 3.01 and 3.02.  Stock Awards and Stock Units that in either case vest by achieving performance targets shall not vest in full in less than one (1) year from the Grant Date. If the Board accelerates vesting of Stock Awards or Stock Units, except in the case of: (1) a Participant’s death or disability, or (2) as specified in Article 12, the shares subject to such Stock Award or Stock Units shall be deducted from the five percent limitation.
7.03    Shareholder Rights. Except as otherwise provided in the Agreement, during the period that the Shares granted pursuant to a Stock Award are forfeitable, a Participant shall have all rights of a shareholder with respect to such Shares (unless and until forfeited), including the right to receive dividends and vote the Shares; provided, however, that during such period (i) a Participant may not (except as provided in Section 13.08) sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of Shares granted pursuant to a Stock Award, (ii) the Company shall retain custody of the Shares granted pursuant to a Stock Award, and (iii) the Participant shall deliver to the Company a stock power (endorsed in blank) or take such other actions as may be required by the Committee with respect to each Stock Award. The Committee will determine whether any dividends or distributions for such Shares will be automatically reinvested in additional Shares and subject to the same restrictions on transferability as the Stock Award with respect to which they were distributed or whether such dividends or distributions will be paid in cash. The preceding limitations shall cease to apply as of the date the Shares subject to the Stock Award become transferable and cease to be forfeitable.
ARTICLE VIII
STOCK UNIT AND SAR AWARDS
8.01    Award.
(a)    In accordance with the provisions of Article V, the Committee may (i) designate each individual to whom an Award of Stock Units or SARs is to be made, (ii) specify the number of Shares covered by each such Award and (iii) establish such other terms and conditions as it may deem appropriate for each Award. The terms and conditions of any such award under the Plan shall be set forth in an Agreement. Stock Units shall be subject to the vesting provisions set forth in Section 7.02 above.

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(b)    Subject to the provisions of Section 11.01, in no event may the number of Shares covered by all Stock Unit Awards granted in any calendar year to any one Employee exceed 250,000 or to any one non-Employee Director exceed 10,000 or the number of Shares covered by all SARs granted in any calendar year to any one Employee exceed 250,000 or to any one non-Employee Director exceed 10,000. 
8.02    Provisions Applicable to SARs.
(a)    SARs may be granted to Participants from time to time either in tandem with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted under Section 6.01. Any SAR granted in tandem with an Award may be granted at the same time such Award is granted or at any time thereafter before exercise or expiration of such Award. All tandem SARs shall have the same Option Price, vesting, exercisability, forfeiture and termination provisions as the Award to which they relate.
(b)    Subject to the other provisions of this Plan and the applicable Agreement, a freestanding SAR may be exercised in whole at any time or in part from time to time at such times and in accordance with such requirements as may be set out in the Agreement or established by the Committee; provided that a freestanding SAR may only be exercised when the value of a Share exceeds the per-Share Option Price and in no event shall a freestanding SAR vest in full in less than one year from the Grant Date.
(c)    A freestanding SAR granted under this Plan may be exercised with respect to any number of whole Shares less than the full number for which the freestanding SAR could be exercised. A partial exercise of a freestanding SAR shall not affect the right to exercise the SAR from time to time in accordance with this Plan and the applicable Agreement with respect to the remaining shares subject to the freestanding SAR.
(d)    To the extent not previously exercised, all vested freestanding SARs shall (except as otherwise provided in the Agreement) automatically be exercised on the last trading day prior to expiration, unless the Participant instructs the Company otherwise in writing before that date.
(e)    In addition, all freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Sections 6.02, 6.05 and 6.07.
8.03    Payment. The amount payable under a Stock Unit Award or SAR may be paid or settled (i) by the Company by issuing Stock (in whole Shares) and cash for any fractional Share, (ii) in cash or (iii) in a combination thereof. Unless otherwise deferred pursuant to an election under Article X, the amount payable under a Stock Unit Award shall be paid to a Participant within thirty (30) business days following the date on which the Stock Unit Award became vested. However, if such thirty (30) business day period extends over two calendar years, then the payment of the Performance Share Award will be made in the second such calendar year. 
8.04    Shareholder Rights. No Participant shall, as a result of receiving an Award of Stock Units, have any rights as a shareholder until and to the extent the Shares are issued to a Participant as payment of a Stock Unit Award, except that the Committee may authorize dividend equivalent 

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accruals with respect to such Awards which will only be paid at such time as the underlying Stock Unit Award vests. 
8.05    Nontransferability. Except as provided in Section 13.08, Stock Unit Awards and SARs granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in any Stock Unit Award or SAR shall be liable for, or subject to, any lien, obligation, or liability of such Participant.
8.06    Forfeiture of Stock Unit Awards. Except as provided in the Agreement or by the Committee, a nonvested Stock Unit Award shall terminate and be forfeited as of the date the Participant ceases to be an Employee or Director.
ARTICLE IX
QUALIFIED PERFORMANCE-BASED AWARDS
9.01    Scope and Purpose. The purpose of this Article is to enable the Committee to make Awards that are structured to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the Code; provided, however, that the failure to designate an Award as a Qualified Performance-Based Award shall not mean that such Award does not constitute “performance-based compensation” if the Award otherwise meets the requirements under Section 162(m) or any regulations thereunder. The Committee shall establish such additional terms and conditions as it may deem appropriate for such an Award. Notwithstanding anything herein to the contrary, Awards that are not intended to be structured to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the Code may nevertheless be subject to such performance-based vesting and other conditions as the Committee may determine in addition to or separate from those described in this Article.
9.02    Applicability. Grants may be made under this Article to Covered Employees or to those Employees who the Committee determines may become Covered Employees in the period covered by an Award.
9.03    Awards.
(a)    The Committee shall establish the applicable Performance Period and Performance Goal(s) for each Award. The Committee may establish (i) different Performance Periods for different Participants and (ii) concurrent or overlapping Performance Periods.
(b)    A Participant will, as determined by the Committee, be entitled to the grant made under a Qualified Performance-Based Award only if (and to the extent) the applicable Performance Goal(s) are achieved within the applicable Performance Period; provided that the Committee may reduce or eliminate a Qualified Performance-Based Award to the extent it deems necessary or appropriate.
(c)    The maximum Qualified Performance-Based Award payment to any one Participant under the Plan for a Performance Period shall be the Share limit set forth in Sections 6.01(b), 7.01(b) or 8.01(b), whichever is applicable.

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(d)    No adjustment of any Qualified Performance-Based Award pursuant to Section 11.01 shall be made except on such basis, if any, as will not cause such Award to cease to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code.
9.04    Establishment of Performance Goals.
(a)    All Performance Goals shall (i) be objective, (ii) be established not later than ninety (90) days after the beginning of any applicable Performance Period (or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m)) and (iii) otherwise meet the requirements of Section 162(m) of the Code, including the requirement that the outcome of the Performance Goals be substantially uncertain at the time established.
(b)    The Committee shall establish the applicable Performance Goals for a Performance Period based upon the applicable performance criteria set forth in subsection (c) below. After the end of the applicable Performance Period, the Committee shall certify (in writing) the extent to which any such Performance Goals have been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding satisfaction of any Performance Goals, the number of Shares issued under or the amount paid under an award may be reduced by the Committee on the basis of such further considerations as the Committee shall determine.
(c)    For purposes of this Article, “performance criteria” shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) profit/loss or profit margin; (ix) working capital; (x) return on equity or capital; (xi) earnings per share; (xii) stock price; (xiii) price/earnings ratio; (xiv) debt or debt-to-equity; (xv) balance sheet measurements; (xvi) cash or assets; (xvii) liquidity; (xviii) economic value added (“EVA”); (xix) operations; (xx) mergers and acquisitions or divestitures; and/or (xxi) franchisee operations and other industry-specific factors (such as average daily room rates, room occupancy rates, room turnover, customer satisfaction, revenue and/or royalties per available room, executed franchise contracts, number of franchises and like factors).
(d)    To the extent consistent with Section 162(m) of the Code, the Committee (i) may appropriately establish performance criteria that either disregards or takes into account the effects of, among other things, charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment of a business or related to a change in accounting principle all as determined in accordance with standards established by opinion No. 30 of the Accounting Principles Board or other applicable or successor accounting provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with generally accepted accounting principles or identified in the Company’s financial statements or notes to the financial 

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statements, and (ii) may appropriately establish performance criteria that either includes or excludes, among other things, gains and losses related to any of the following events that occurs during a performance period: (A) the sale of assets, (B) litigation, claims, judgments or settlements, (C) the effect of changes in tax law or other such laws or provisions affecting reported results, (D) accruals for reorganization and restructuring programs, (E) accruals of any amounts for payment under this Plan or any other compensation arrangement maintained by the Company, and (F) investments in or expenses related to new lines of business or non-core business initiatives that were unbudgeted at the time the performance criteria were established.
ARTICLE X
DEFERRAL OF PAYMENTS
10.01    Deferral Elections.
(a)    To the extent permitted in the Agreement or by the Committee, a Participant may elect to defer payment of all or any portion of a Stock Award. Such election shall be made at such time and upon such terms as the Committee may establish in accordance with Section 409A of the Code (and any regulations thereunder). Notwithstanding the terms of any Agreement to the contrary, such an election may only be made in the following circumstances:
(i)    A Participant may elect to defer payment of an Award within thirty (30) days of the date of grant, provided that the election (A) is made more than one (1) year prior to the date any portion of the Award becomes vested, and (B) meets such other or different requirements as may be determined by the Committee to be necessary to comply with Section 409A of the Code (and any regulations thereunder); and
(ii)    A Participant may elect to further defer the date when the payment of an Award is to be made, provided that: (A) the election is made more than one (1) year prior to the date payment is otherwise scheduled to begin; (B) the election does not become effective for twelve (12) months; (C) the date on which payment is to be made is delayed for at least five (5) years following the date payment is otherwise scheduled to begin; and (D) the election meets such other or different requirements as may be determined by the Committee to be necessary to comply with Section 409A of the Code (and any regulations thereunder).
(b)    Notwithstanding the terms of any Agreement to the contrary, the distribution of any Awards subject to Section 409A of the Code shall be made in accordance with Section 409A (and any regulations thereunder). For any such distribution to be made upon the Participant’s termination, “termination of employment” and like terms shall have the same meaning as “separation from service” under Section 409A (and any regulations thereunder). Except as otherwise provided in the deferral election or the Agreement, any such distribution that is to be made upon termination shall be made within ninety (90) days of such termination; provided, that if the Participant is a “specified employee” within the meaning of Section 409A (as determined by the Company or its delegate), any such distribution shall not be made until expiration of the 6-month period following the Participant’s termination (or, if earlier, the Participant’s death).
(c)    Notwithstanding any other provision of the Plan to the contrary, a Participant may, to the extent permitted by the Company consistent with Section 409A of the Code, elect to pay 

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any required employment taxes (and any resulting income taxes) that arise as of the date of deferral (or, if later, vesting) hereunder either (i) by direct payment or (ii) through the withholding of such amounts from nondeferred Awards or other compensation due the Participant. In the alternative, the Company may, in its sole discretion, offset such taxes against the Participant’s deferred Award to the extent permitted under Treas. Reg. Section 1.409A-3(j)(4) or other applicable regulations under Section 409A.
10.02    Deferral Account. The deferred Awards shall be credited to a bookkeeping account maintained by the Company in the name of the Participant. Any dividends or other distributions on credited Shares also shall be credited to that account. Such amounts may, as provided in the Agreement or determined by the Committee, be credited with a reasonable rate of interest or invested in additional deferred Shares.
10.03    Applicable Legal Requirements. The deferral of any Award under this Article shall comply and be administered consistent with Section 409A of the Code. Notwithstanding anything herein to the contrary, in no event will any deferral of the delivery of Shares or any other payment (or the acceleration of the delivery of deferred Shares or other deferred payments) for any Award be allowed if the Committee determines that the deferral would result in a violation of the requirements of Section 409A for deferral elections and/or the timing of payments. Any Agreement may be reformed by the Committee to the extent necessary or appropriate to comply with the requirements of Section 409A.
ARTICLE XI
ADJUSTMENTS
11.01    Adjustments for Changes in Capital Structure. The maximum number of Shares as to which Awards may be granted under this Plan, the annual Award limits and the terms (including the Option Price) of any outstanding Award shall be automatically adjusted proportionately in the event that (i) the Company (A) effects one or more dividends or distributions of securities, property or cash (other than regular, quarterly cash dividends), stock split-ups, subdivisions or consolidations of Stock or (B) engages in a reorganization, reclassification or spin-off or (ii) there occurs any other event or transaction that affects the number or kind of Shares outstanding, which the Committee determines that such adjustments are necessary or appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Any adjustments required hereunder for Options may be made in accordance with Section 424(a) of the Code and/or Section 409A of the Code, or, except as otherwise expressly provided in this Plan, may be designed to treat the Shares available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount distributed to the Company’s securityholders. Notwithstanding the foregoing or the terms of any Agreement to the contrary, any adjustments required hereunder for any Award shall, to the extent necessary to comply with Section 409A of the Code, be made in accordance with Section 409A (and any regulations thereunder).

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ARTICLE XII
CHANGE IN CONTROL
12.01    Change of Control.
(a) In the event of a Change of Control, the Committee may take any one or more of the following actions with respect to one or more of the outstanding Awards: 
(i) Provide that such Awards shall be assumed, or equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), provided that any such Options substituted for Incentive Stock Options may be structured to satisfy, in the determination of the Committee, the requirements of Code section 424(a); 
(ii) Provide that such Awards shall terminate upon consummation of the Change of Control and each Participant shall receive, in exchange therefor, a payment in securities, cash or a combination of the two equal to:

(A)    in the case of an Option, the Fair Market Value of the Shares payable under such Option as of the last trading day preceding the date on which the Change in Control takes place (net of the Option Price);
(B)    in the case of a SAR, the amount payable under the SAR as of the last trading day preceding the date on which the Change in Control takes place; or
(C)    in the case of any other Award, the Fair Market Value of the Shares subject to the Award as of the last trading day preceding the date on which the Change in Control takes place.
(iii) vest Awards and require that any Options or SARs be exercised at such time and upon such conditions as the Committee may determine (with any unexercised Awards terminating upon expiration of the time period for exercise).
Notwithstanding the foregoing or the terms of any Agreement to the contrary, any Award to which Section 409A of the Code applies may only be paid upon a Change of Control to the extent that the Change of Control event qualifies as such under Section 409A (and any applicable regulations thereunder).
12.02    Vesting Upon a Change in Control.
(a)    Notwithstanding any other provision of the Plan to the contrary, if a “Change of Control” occurs and the Participant’s employment with the Company terminates as described in subsection (b) below, the following shall (except as otherwise provided by the Committee or in the Agreement) occur:
(i)    All Options and SARs that are outstanding at the time the Participant’s employment with the Company terminates shall become fully vested and exercisable in full;

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(ii)    All Stock and Stock Unit Awards (including any Qualified Performance-Based Awards) that are outstanding at the time the Participant’s employment with the Company terminates shall become fully vested and any restrictions shall lapse, and;
(iii)    for any Awards with performance-based requirements that are outstanding at the time the Participant’s employment with the Company terminates, all uncompleted performance periods at the time of such Change of Control shall be deemed to have been completed, the level of performance set forth under the Agreement shall be either (i) the actual attained level, or (ii) if actual performance is not determinable, then the target level of performance shall be deemed to have been attained, and each such outstanding Award granted to each Participant for all outstanding Performance Periods shall become payable to each Participant.
Notwithstanding the foregoing, the time for payment of an Award shall not be accelerated under this Section to the extent such acceleration would be contrary to the payment timing or other rules under Section 409A of the Code, and, in the case of a Participant to whom Section 409A(a)(2)(B)(i) applies, payment shall, to the extent required under that Section 409A, be delayed for six months following the Participant’s termination as an Employee. Notwithstanding the foregoing or the terms of any Agreement to the contrary, any Award to which Section 409A of the Code applies may only be paid hereunder to extent permitted under Treas. Reg. Section 1.409A-3(c) (or other applicable regulation under Section 409A). Any such payment shall be made within ninety (90) days of the date of termination; provided, that if the Participant is a “specified employee” within the meaning of Section 409A (as determined by the Company or its delegate), any such payments shall not be made until the expiration of the 6-month period following the Participant’s termination (or, if earlier, the Participant’s death). For purposes of the foregoing, “termination of employment” and like terms shall have the same meaning as “separation from service” under Section 409A (and any regulations thereunder).
(b)    This Section shall (except as otherwise provided by the Committee or in the Agreement) apply in the event that the Participant’s employment terminates within two years of the Change of Control under either of the circumstances described below:
(i)    The Participant’s employment as an Employee is terminated by the Company other than for Cause: or
(ii)    The Participant terminates his or her employment as an Employee for good reason (as defined in subsection (c) below).
(c)    For purposes of this Section, “good reason” shall mean (i) a material reduction in the scope of a Participant’s authority, position, title, functions, duties or responsibilities, (ii) a material relocation of a Participant’s office location to a location more than 25 miles from the Participant’s prior principal place of employment, (iii) a material reduction in a Participant’s base salary, (iv) a material change in the Company’s annual bonus program adversely affecting the Participant, or (v) a material reduction in the other employee benefits provided to a Participant. The Participant must provide notice to the Company of his/her intent to terminate employment for good reason and the existence of the condition that constitutes good reason with a period of not more than 90 days following the initial existence of such condition and the Company will then have 30 days following notice to remedy the condition. If an Employee has an 

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employment or severance agreement that contains a definition of “good reason/cause”, that definition shall supersede and replace the foregoing definition.
ARTICLE XIII
OTHER PROVISIONS FOR GRANTS AND AWARDS
13.01    Tax Withholding Requirements.
(a)    To the extent required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company for the satisfaction of any required statutory federal, state and/or local withholding tax obligations that arise by reason of an Option exercise or other Award prior to delivery of any Shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, 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.
(b)    To the extent provided in the Agreement or permitted by the Committee, the Participant may (to the extent permitted under Section 409A of the Code) elect to have any such withholding obligations satisfied, in whole or in part, by having the Company’s withhold Shares subject to the Option or other Award, but not to exceed an amount equal to the maximum statutory tax rates in the Participant’s applicable tax jurisdiction or such other rate that will not trigger a negative accounting impact on the Company. The value of any Shares so withheld shall be determined based on the Fair Market Value as of the last trading day preceding the date the Shares are withheld for this purpose.
(c)    Notwithstanding anything else herein to the contrary, in the event of a cashless exercise of an Option, the Fair Market Value for tax withholding purposes shall be the per-Share price at which the Shares were sold by the broker in executing the cashless exercise.
13.02    Withdrawal. A Participant may at any time elect in writing to abandon an Award under the Plan.
13.03    Forfeiture Upon Termination For Cause. In the event that a Participant’s status as an Employee or Director is terminated for Cause, all of the Participant’s outstanding unexercised Options and unpaid Awards shall (except as otherwise provided in the Agreement or by the Committee) automatically terminate as of the date he or she ceases to be an Employee or Director.
13.04    Registration, Listing and Qualification of Stock.
(a)    No Option or SAR shall be exercisable, no Stock shall be issued or delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements), any listing agreement to which the Company is a party, and the rules of all domestic stock exchanges on which the Shares may be listed. The Company shall have the right to rely on an opinion of its counsel as to such compliance.
(b)    Any Shares issued pursuant to this Plan may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Awards shall be granted, Options or SARs shall be exercised, Shares shall be 

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issued and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters.
(c)    Any person exercising an Option or SAR or receiving Stock under any other Award shall make such representations, warranties and agreements and furnish such information as the Committee or the Company may request to assure compliance with the foregoing or any other applicable legal requirements.
13.05    Corporate Restrictions.
(a)    Any Stock to be issued pursuant to an Award shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company.
(b)    The Committee may provide that the Shares issued upon exercise of an Option or SAR or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or SAR or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (iv) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.
13.06    Investment Representations. The Company shall be under no obligation to issue any Shares pursuant to any Award unless the Shares have been effectively registered under the Securities Act of 1933 or the Participant shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such Shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and regulations. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Shares shall be issued and/or transferable under any other Award unless a registration statement with respect to the Shares underlying such Option is effective and current or the Company has determined that such registration is unnecessary.

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13.07    Registration. If the Company shall deem it necessary or desirable to register under the Securities Act of 1933 or other applicable statutes any Stock issued or to be issued pursuant to an Award, or to qualify any such Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, the Company shall take such action at its own expense. The Company may require from each Participant such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for that purpose.
13.08    Transferability of Awards. Notwithstanding any other provision of the Plan, the Committee may permit an Award to be transferred by a Participant to a family member (as defined in the General Instructions for the Form S-8) as a gift (or otherwise without payment of any consideration) on such terms and conditions as may be permitted under applicable law (or otherwise established by the Committee). Except as otherwise established by the Committee, the transferee shall be bound by the terms and conditions set forth in the Agreement for the transferred Award; provided, however that such transferee may not transfer any Award except by will or the laws of descent and distribution.
13.09    Applicable Legal Requirements. All Awards shall, to extent applicable, comply and be administered in accordance with the rules and requirements of Section 409A of the Code. To extent necessary to ensure such compliance, the Committee may reform any Agreement to the extent it determines that the Agreement does not comply with Section 409A. To the extent applicable, the Plan and all Agreements are intended to comply with the distribution and other requirements under Section 409A of the Code and shall, to the maximum extent possible, be interpreted and applied consistent with Section 409A (and any regulations thereunder). To the extent necessary, the Committee may reform any such Agreement to the extent it determines that the Agreement does not comply with Section 409A.
ARTICLE XIV
AMENDMENT AND TERMINATION
14.01    Amendment.
(a)    The Board shall have the right to amend the Plan at any time and from time to time; provided, that no such amendment of the Plan shall, without stockholder approval, be effective if stockholder approval of the amendment is required at such time to qualify for any exemption from Section 16 of the Exchange Act or by any other applicable law, regulation, rule or order.
(b)    No amendment may be made that would cause an Option or other Award not to qualify for exemption under Section 16 of the Exchange Act.
(c)    Except as otherwise provided in the Plan or the Agreement, no amendment of the Plan shall, without the written consent of a Participant adversely affect the rights of the Participant with respect to an Option or other Award prior to the date of the amendment or termination (except to the extent necessary to comply with any applicable law, regulation, rule or order).
(d)    Notwithstanding anything herein or in any Agreement to the contrary, the Board shall have the power to amend the Plan in any manner deemed necessary or advisable for 

21

Options or any other Awards made under the Plan to qualify for any exemption provided under Section 16 of the Exchange Act and any such amendment shall, to the extent deemed necessary or advisable by the Board, be applicable to any outstanding Options or other Award previously issued under the Plan. In the event of such an amendment to the Plan, the holder of any Option or other Award shall, upon request of the Board and as a condition for exercising of such Option, obtaining such other award, execute a conforming amendment in the form prescribed by the Board to the Agreement within such reasonable period of time as the Board shall specify in such request.
14.02    Termination. The Board shall have the right to terminate the Plan at any time; provided, that no such termination shall, except as otherwise provided in any Agreement, terminate any outstanding Option or other award previously granted under the Plan or adversely affect the rights of such Participant without his or her written consent. No new Awards may be granted under the Plan on or after the date of termination.
ARTICLE XV
GENERAL PROVISIONS
15.01     Government Regulations. The rights of Participants and the obligations of the Company hereunder shall be subject to all applicable laws, rules, and regulations and to such approvals as may be required by any governmental agency.
15.02    Claw-back/Recoupment Policy.  Awards are subject to mandatory repayment by the Participant to the Company pursuant to the Company’s Recoupment Policy, as may be amended from time to time to comply with applicable laws, or any law, rule, or regulation that imposes mandatory recoupment, under circumstances set forth in such law, rule, or regulation.
15.03    Unfunded Plan. The Plan, insofar as it provides for Awards, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by grants under this Plan. Any liability of the Company to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure payment of any grant under the Plan.
15.04    Effect on Employment and Service. Neither the adoption of this Plan, its operation, nor the issuance of any Awards hereunder shall confer upon any individual any right to continue as an Employee or Director of the Company or an Affiliate, or in any way affect any right and power of the Company or an Affiliate to terminate the employment or discontinue the service of any individual at any time with or without assigning a reason therefor.
15.05    Costs and Expenses. Except as otherwise provided by the Board, all costs and expenses of administering the Plan shall be paid by the Company.
15.06    Proceeds from Sale of Stock. Proceeds from the purchase of Shares by a Participant under the Plan may be used by the Company for any business purpose.

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15.07    Governing Law. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to the conflicts of laws principles thereof). The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any reference in this Plan or in the agreement evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.
15.08    Rules of Construction. Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law and any regulation, rule or other formal guidance thereunder.
15.09    Invalidity. If any provision of the Plan shall be held invalid or unlawful for any reason, such event shall not affect or render invalid or unenforceable the remaining provisions of the Plan.

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