Document:

EX-10.44

 Exhibit 10.44 
  

 
 March 9, 2015 

John Fawcett 
 25 Julie Ann Court 

Staten Island, New York 10304 
 Dear John: 

In connection with your separation of employment from Citizens Financial Group, Inc., as mutually agreed by you and Citizens
(“Citizens” is defined in Section 9 below), Citizens is offering you compensation specified in Section 1 below (the “Separation Payment”), some of which you are not otherwise entitled to, in exchange for a
release of certain rights specified in this Separation and General Release Agreement (“Agreement”). The terms of the Separation Payment and general release provisions are found below. Please understand that this is an
important legal document that you should read and consider carefully with an attorney of your choosing before you decide whether to sign. In order to be eligible to receive the Separation Payment, you must first agree to the terms and conditions
in this letter and return it to me at the address listed in Section 18 below. 
 You have a period of twenty-one (21) days from
the date you received this Agreement to decide whether to sign. You may sign before the end of the 21 day period (though you are under no obligation to do so). You will have a period of seven (7) days after the date you sign it to revoke your
acceptance. Provided you have not revoked it, on the eighth day following your execution of this Agreement (the “Effective Date”), this Agreement will become legally binding. Because there will be a period of time between the
Effective Date of this Agreement and your Separation Date, you will be asked to sign another document (the “Separation Agreement Rider”) upon your Separation Date which will re-affirm that all of the substantive terms of the
Agreement still hold true as of the Separation Date. A failure to sign, and not revoke, the Separation Agreement Rider will constitute a material breach of the Agreement and you will forfeit your right to receive any yet-to-be paid portion of the
Separation Payment. 
 1. Separation Date, Separation Payment and Other Consideration. Your Separation Date, as mutually agreed, shall be
April 30, 2015. If you do not revoke your acceptance of this Agreement, and subsequently sign and do not revoke the Separation Agreement Rider, and you otherwise comply with your obligations in this Agreement, within thirty (30) days of
the Separation Date, to the extent not provided sooner, you shall receive the following Separation Payment: 
  

	 	a.	 Citizens will pay $402,500 of your performance year 2014 variable compensation through compensation vehicles which do not subject that portion of your
award to forfeiture upon your separation from employment. This treatment constitutes the Separation Payment. During the normal course 

  
 1 

	 	
such portion of your award would have been payable through Performance Stock Units (“PSUs”) and subject to forfeiture if you are not employed by Citizens on the one year anniversary of
issuance. Accordingly, payment in this manner constitutes valuable legal consideration to which you are not otherwise entitled. An illustration of the difference in compensation vehicles has been provided to you under separate cover.

  

	 	b.	In recognition of your services rendered in, and in lieu of incentive compensation for 2015, Citizens will pay $500,000. 

  

	 	c.	As further consideration, in exchange for your entering into the Agreement and not revoking in advance of the Effective Date, Citizens will pay to Wechsler & Cohen, LLP (“W&C”) reasonable
attorney’s fees of $12,500, associated with the review of this Agreement and legal advice associated therewith. This payment will be made within thirty (30) days of the Effective Date conditional upon W&C submitting an invoice
indicating the amount charged in association with review of this Agreement and any advice provided in relation thereto, and a Form W-9 and any other reasonable documentation Citizens may need in order to process the payment. 

 

	 	d.	On the last day of the month in which your Separation Date occurs, your medical, dental and vision benefits will cease. You are eligible to continue your medical, dental and vision benefits, including your health care
flexible spending account, as provided under COBRA and as a retiree under Citizens retiree medical coverage, and election to continue coverage under either of these alternatives must be made before your active employee coverage ends. If you elect
COBRA, as additional consideration, Citizens will subsidize one additional month of coverage, and so for the first month following the month in which your Separation Date occurs, you will be billed only for an amount consistent with the employee
rate in effect at the time of your termination. After this first “extra” month of coverage, standard COBRA coverage will begin, with all premium costs paid by you on a monthly basis for as long as, and to the extent that, you remain
eligible for COBRA continuation. However, to help defray these costs during your first year post-employment, Citizens will pay you $25,000. You should consult the COBRA materials that will be provided separately for details regarding these benefits.
All eligibility for any benefits you may have under any other company-provided benefit plans, programs or practices will cease as of your Separation Date, except as Citizens determines is required by applicable law. 

 

	 	e.	Citizens will not oppose your receipt of unemployment benefits (and will accurately respond to any information request from a labor agency if it is requested to do so); please understand, however, that it is the
state’s Division of Unemployment Assistance that makes the determination whether and to what extent you are eligible for benefits. 

  
 2 

 2. Company Property. You agree that, no later than your Separation Date, you will return to Citizens all
Citizens-issued computers, laptops, cellular telephones, corporate credit card and wireless/internet devices, and within thirty (30) days of your Separation Date, you will submit to Citizens all documents, receipts and payment in full of all
balances on any corporate credit cards. You agree that if you fail to do so, to the extent permitted by applicable law, Citizens may withhold from your Separation Payment all amounts that Citizens determines you owe as a result, including but
not limited to charges on your corporate credit card. You acknowledge and agree that all Citizens keys, passkeys, documents, records and data (in whatever format and whether or not containing Confidential Information), computer hardware and
software, equipment and other tangible and intangible material or property that was provided to or obtained by you, or was produced by you, in the course of your employment with Citizens, is and remains the sole property of Citizens. You warrant and
agree that you have left all such property intact and, as of your Separation Date, you returned all such property to Citizens, without keeping any copy or excerpt. 

3. Confidential Information. You acknowledge and agree that your employment with Citizens created a relationship of confidence and trust between you
and Citizens with respect to all Confidential Information. You warrant and agree that (a) you have not used or disclosed any Confidential Information other than as necessary in the ordinary course of performing your duties as a Citizens
employee; and (b) you will keep in confidence and trust all Confidential Information known to you, and will not use or disclose such Confidential Information without the prior written consent of Citizens. Nothing in this Agreement is intended
to or shall preclude you from providing truthful testimony or providing truthful information in response to a valid subpoena, court order or request of any federal, state or local regulatory, quasi-regulatory or self-governing authority, provided,
to the extent permitted by law, you have provided to Citizens as much advance notice as practicable of any such compelled disclosure. As used in this Agreement, “Confidential Information” means information belonging to Citizens,
which is of value to Citizens and the disclosure of which could result in a competitive or other disadvantage to Citizens. Examples of Confidential Information are, without limitation, financial information, reports and forecasts; trade secrets,
know-how and other intellectual property; software; market or sales information or plans; customer lists and information; and business plans, prospects, opportunities, and possible acquisitions or dispositions of businesses or facilities that have
been discussed or considered by the management of Citizens. Confidential Information includes information you developed in the course of your employment with Citizens, as well as other information to which you may have had access in connection with
your employment. Confidential Information also includes the confidential information of others with whom Citizens has a business relationship. Notwithstanding the foregoing, Confidential Information does not include information in the public domain,
unless such information entered the public domain due to a breach of your obligations of this Agreement or otherwise. 
 4. Non-solicitation and
No-Hire. You agree that for a period of twelve (12) months after your employment with Citizens ends, you will not, directly or indirectly, on your own behalf or on behalf of any third person or entity, and whether through your own

  
 3 

 
efforts or through the efforts or assistance of any other person or entity (including, without limitation, any person employed by or associated with any entity with whom you are employed or
associated): 
  

	 	(a)	solicit or accept financial services-related business from (i) any individual or entity that was a client or customer of Citizens at any time during the three (3) months immediately prior to your Separation
Date, if you were introduced to or interacted with such client or customer regarding Citizens business; or (ii) any individual or entity that was a prospect of Citizens at any time during the twelve (12) months immediately prior to your
Separation Date, if you directly solicited such prospect or if you directly or indirectly, in whole or in part, supervised or participated in solicitation activities related to such prospects; provided, however, that you may accept employment with a
Citizens client or customer or prospect. Notwithstanding the foregoing, and for the avoidance of doubt, you shall not be in breach of this clause to the extent you solicit and/or accept business from actual or prospective publicly known
institutional clients or customers of Citizens if the individuals with whom you are dealing were not introduced to you by Citizens and you do not use Confidential Information or disparage Citizens. 

 

	 	(b)	participate in hiring, hire or employ any employee or consultant of Citizens, or solicit, encourage or induce any such employee or consultant to terminate his or her employment or other relationship with Citizens.

 You also agree that for a period of twelve (12) months after your employment with Citizens ends, you will inform your potential or
actual future employers of your obligations under this Section 4. You agree and acknowledge that Section 4 is a material provision of this Agreement. For avoidance of doubt, nothing in this Section 4 or the content in any other
section of this Agreement, is intended to prevent you from working for any other organization after your employment with Citizens ends. The prevailing party in any dispute, including without limitation any dispute concerning the obligations in this
Section 4, shall be entitled to an award of its and/or his reasonable attorneys’ fees, costs and expenses. 
 5. Post-Employment
Cooperation. You agree that, up to and after your Separation Date, you will reasonably cooperate with Citizens with any investigation or review by any federal, state or local regulatory or other authority, and in the defense or prosecution of
any demand, claim or action, that are now in existence or may be brought in the future against or on behalf of Citizens relating to events, occurrences or omissions that may have occurred while you were employed by Citizens. Your cooperation in
connection with such investigations, demands, claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial, cooperating in discovery, providing affidavits, and to act as a witness on
behalf of Citizens at reasonably convenient times as may be required or deemed necessary by Citizens, all without the requirement of being subpoenaed. Citizens shall, at your request, reimburse reasonable out-of-pocket expenses, including
attorney’s fees (or make mutually satisfactory counsel available to you at its cost), that you reasonably incur in connection with your 

  
 4 

 
performance of your obligations pursuant to this Section 5. Further, to the extent your time to cooperate exceeds 25 hours within any calendar year, Citizens shall pay you for your time
above 25 hours in that calendar year at the rate of $500 per hour. 
 6. Confidentiality of this Agreement. Except as expressly permitted by this
Agreement or when you are required by law or court order, you agree to keep the terms and conditions of this Agreement completely confidential and not disclose any information concerning this Agreement to any person or entity other than your
counsel, financial planner, accountant and immediate family members who must be informed of and agree to be bound by this Section 6. Notwithstanding the foregoing, and for the avoidance of doubt, you may disclose that you entered into an
amicable separation agreement with Citizens. 
 7. Non-Disparagement. You agree that you will not publicly make any derogatory or defamatory remarks
or comments that disparages Citizens, or any officer, director, employee or agent of Citizens. Citizens agrees that no member of its Executive Committee or Board of Directors will publicly make any derogatory or defamatory remarks or comments that
disparages you. To the extent a prospective employer contacts Citizens, Citizens will state that, consistent with company policy, the only information it provides about former employees is dates of hire and departure and last title, and will then
provide same for you. To the extent you may be in advanced discussions with a prospective employer, Bruce Van Saun agrees to make himself telephonically available as and to provide a positive reference. 

8. Unvested Awards. If you have any outstanding unvested awards under any plan, including but not limited to: (1) the Citizens Financial Group,
Inc. Converted Equity 2010 Deferral Plan, (2) the Citizens Financial Group, Inc. Converted Equity 2010 Long Term Incentive Plan (“LTIP”) and/or (3) The Royal Bank of Scotland Group plc 2007 Executive Share Option Plan, such
awards will vest and otherwise be treated in accordance with the rules of the relevant plan and the terms of the relevant award; provided, however, that under the LTIP you will be treated as having terminated employment under exceptional
circumstances under Section 6.2.1(vi) of the LTIP For the avoidance of doubt, the rules of the plans include, but are not limited to, any relevant schedules, provisions relating to clawback, and (where applicable) the requirement that
you do not engage in Detrimental Activity or Competitive Activity (as defined in the applicable plans), and that you comply with self-certification requirements, as applicable.

9. General Release and Representations. As a condition of receiving the Separation Payment, you will give up certain legal rights as described below (a
“General Release”). You agree that the Separation Payment described in this Agreement is in addition to anything of value to which you are or might otherwise be entitled, and except as provided in Section 10, shall constitute a
complete and final settlement of, and you hereby irrevocably and unconditionally release, waive and forever discharge: 
 Citizens Financial
Group, Inc. and its past, present and future owners, shareholders, parents, subsidiaries, affiliates, related and other entities 

  
 5 

 
describing the organizations or through which any of them conducts business (collectively, “Citizens”), and each of their officers, directors, agents, employees, consultants,
representatives, attorneys, insurers, agents, predecessors, successors, assigns, and employee benefits plans and the trustees, fiduciaries, and administrators of those plans (each a “Released Party” and collectively, the
“Released Parties”) 
 from any and all claims, demands, or causes of action, damages, costs, interest, attorneys’ fees, and
liabilities of whatever kind or nature, whether known or unknown, asserted or unasserted, (collectively, “claims”) that you have or may have, or which could be asserted by another on your behalf or through you, based upon any
action, omission or event (or the alleged continuation of the effects of any such action, omission or event) from the beginning of time until the date you sign this Agreement, including, without limitation, those arising out of or in connection with
your employment and/or your separation from employment and/or any Released Party’s treatment of you while in Citizens’ employ, at common law or pursuant to any federal, state or local laws, statutes, constitutions, public policies, orders,
regulations, ordinances or executive orders. This General Release therefore includes, without limitation: 
 Claims under the Age
Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Worker Adjustment and Retraining Notification Act, the Employee
Retirement Income Security Act, the Fair Credit Reporting Act, and all similar state and local employment and fair employment or anti-discrimination acts. This General Release also includes any claims for wrongful discharge, constructive discharge,
claims for breach of express or implied contract, or any other cause of action or claims of violation of common law. This General Release forever waives any and all relief, without regard to its form or characterization, including attorneys’
fees and costs. 
 In addition, you represent that you (a) have received all leave (paid or unpaid), compensation, wages, bonuses (exclusive of any
outstanding unvested deferred awards which are subject to relevant plan rules), and/or benefits to which you may be entitled and that no other amounts and/or benefits are due except as expressly provided in this Agreement; (b) have no known
workplace injuries or occupational diseases that you have not already reported to Citizens; (c) have either been provided or not been denied any leave requested under the Family and Medical Leave Act; (d) are not eligible to receive
payments or benefits under any other severance pay policy, plan, practice or arrangement of any Released Parties; and (e) have not complained of and are not aware of any fraudulent activity or any act(s) which would form the basis of a claim of
fraudulent or illegal activity by any Released Parties. 
 Citizens releases you from any and all claims, demands, or causes of action, damages, costs,
interest, attorneys’ fees, and liabilities of whatever kind or nature, of which any member of Citizens Board of Directors and/or Executive Committee has knowledge, 

  
 6 

 
asserted or unasserted, that Citizens has or may have, or which could be asserted by another on its behalf or through it, based upon any action, omission or event (or the alleged continuation of
the effects of any such action, omission or event) from the beginning of time until the date it signs this Agreement. 
 10. Exclusions From General
Release. Excluded from the General Release contained in Section 9 are any claims that cannot be waived by law including your right to seek a determination of the validity of the waiver of your rights under the ADEA, any unperformed
obligations that Citizens has expressly undertaken in this Agreement, and you rights if any to indemnification (including advancement). Also excluded from the General Release is your right to file a charge with an administrative agency or
participate in any agency investigation. You are, however, waiving all rights to recover any money, benefit or other relief in connection with such a charge or investigation, or any charge or claim filed by any other individual or by the Equal
Employment Opportunity Commission or any other federal or state agency. 
 11. Covenant Not To Sue. A “covenant not to sue” is a legal term
that means you promise not to file a lawsuit in court. You agree not to sue any Released Party based on any claim you have released or representation you have made in Section 9 above. You further agree that you will not permit such a claim to
be filed on your behalf seeking monetary or other relief against any Released Party, and you will not become a member of any class or group seeking monetary or other relief against Citizens in any matter relating to such a claim. 

12. Nature of the Agreement. This Agreement shall not be construed as an admission by Citizens that it or any other Released Party has acted wrongfully
with respect to you or any other person, or that you have any claims whatsoever against any Released Party. 
 13. Entire Agreement. You acknowledge
and agree that any prior representations, promises or agreements between you and Citizens relating to the subject matter of this Agreement are hereby extinguished; that there are no oral or written representations, promises or agreements between you
and Citizens other than those set forth in this Agreement, and that this constitutes the entire and only agreement on the subject matters covered in this Agreement. 

14. Severability. You agree that if any part, term or provision of this Agreement is declared or determined by any court to be illegal, invalid or
unenforceable, the validity of the remaining parts, terms or provisions shall not be affected and each remaining part, term or provision shall be legal, valid and enforceable to the fullest extent permitted by law, and in lieu of each such illegal,
invalid or unenforceable term or provision, there shall be added automatically as a part of this Agreement another legal, valid and enforceable part, term or provision as similar as possible to the one that was determined to be illegal, invalid or
unenforceable. 
 15. Choice of Law. You agree that any action to enforce this Agreement or otherwise arising out of or related to this Agreement
shall be governed by and interpreted in accordance with the laws of the State of New York, without regard to conflict of laws provisions. 

  
 7 

 16. Forfeiture of Payments/409A. You will forfeit all rights to receive the Separation Payment if you are
finally found to have materially breached this Agreement or engaged in conduct in deliberate disregard of your material obligations under this Agreement, provide that Citizens agree to provide you within thirty (30) days of its discovery of
such breach with written notice and a reasonable opportunity to cure, if curable. To the extent Citizens may withhold any payment pending the resolution of any such dispute, if found liable to pay it shall, in addition to attorney’s fees, costs
and expenses per Section 4, also pay nine (9%) per interest from the date such payments were first due, per New York law. 
 Citizens may deduct
or withhold from any compensation or benefits any applicable federal, state or local tax or employment withholdings or deductions resulting from any payments or benefits provided under this Agreement. In addition, it is Citizens’ intention that
all payments or benefits provided under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including without limitation the six month delay for payments of deferred compensation to
“key employees” upon separation from service pursuant to Section 409A(a)(2)(B)(i) of the Code (if applicable), and this Agreement shall be interpreted, administered and operated accordingly. If under this Agreement an amount is to be
paid in installments, each installment shall be treated as a separate payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(ii). Notwithstanding anything to the contrary herein, Citizens does not guarantee the tax treatment of any
payments or benefits under this Agreement, including without limitation under the Code, federal, state, local or foreign tax laws and regulations. In the event the period of a payment ends in the taxable year following your termination of
employment, any such payment shall be paid or commence in such subsequent taxable year if required under Section 409A of the Code in order to avoid the imposition of any additional tax, 

17. Informed Consent. You represent that: (a) you have had sufficient time to consider your options regarding this Agreement; (b) you have
been provided with accurate and complete information regarding your obligations and the benefits that are available to you under the terms of this Agreement; (c) you have not been subjected to any threats, intimidation or coercion in connection
with the Agreement; and (d) the terms of this Agreement have been written in a manner that you understand. 
 18. This is an Important Legal
Document. This Agreement is intended to comply with the Older Workers Benefit Protection Act with regard to your waiver of rights under ADEA: 
  

	 	(a)	You are specifically waiving rights and claims under the ADEA. 

  

	 	(b)	The waiver of rights and claims under the ADEA does not extend to any rights or claims arising after the date you execute this Agreement. 

  
 8 

	 	(c)	You acknowledge that Citizens has advised you in writing to consult with an attorney prior to signing this Agreement. You further acknowledge that you have had the opportunity to consult with an attorney of your choice
with respect to all terms and conditions set forth in this Agreement and to have the advice of counsel with respect to your decision to sign and enter into this Agreement. 

 

	 	(d)	You acknowledge that Citizens offered you no less than twenty-one (21) days to consider the terms and conditions of this Agreement, to consult with counsel of your choice, and to decide whether to sign and enter
into this Agreement. 

  

	 	(e)	You have seven (7) days after your execution of this Agreement to revoke your acceptance of it. Any such revocation must be received in writing within the 7-day revocation period by Susan LaMonica at 600
Washington Blvd., Stamford, CT 06901. You acknowledge and agree that this Agreement is neither effective nor enforceable and neither you nor Citizens is obligated to perform the promises contained herein in the event that you revoke your
acceptance of the Agreement or until expiration of the 7-day revocation period of the Separation Agreement Rider following the Agreement becoming effective. 

 

	
	FOR CITIZENS,
	
	 /s/ Susan LaMonica

	Susan LaMonica
	Chief Human Resources Office

 I have read this Agreement, and I am fully aware of the legal effects of the Agreement. I have freely chosen to
execute the Agreement, without relying on any promises or representations made by Citizens other than those contained in this Agreement. 
  

			
	Signature:		 /s/ John Fawcett

		
	Print Name:		 John Fawcett

		
	Dated:		 March 9, 2015

  
 9ex10-1.htm

 

Exhibit 10.1

 

LRAD CORPORATION

 

2015 EQUITY INCENTIVE PLAN

 

1.     Purposes of the Plan. LRAD Corporation, a Delaware corporation (the “Company”) hereby establishes an incentive compensation plan to be known as the 2015 Equity Incentive Plan (the “Plan”), as set forth in this document. The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares. The purpose of the Plan is to attract and retain Employees, Directors, and Consultants and to provide additional incentives for these persons consistent with the long-term success of the Company’s business. 

 

2.     Definitions. As used herein, the following definitions will apply:

 

(a)            “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

 

(b)            “Applicable Laws” means the requirements relating to the administration of equity-based awards and the related issuance of Shares under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted.

 

(c)             “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.

 

(d)            “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

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

 

(f)            “Change in Control” means the occurrence of any of the following events:

 

(i)      A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this Section 2(f)(i), the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control; or 

 

(ii)     A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any 12 month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this Section 2(f)(ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

 

 

 

(iii)    A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this Section 2(f)(iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s shareholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in this Section 2(f)(iii). For purposes of this Section 2(f)(iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time. Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

(g)            “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

 

(h)            “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof.

 

(i)             “Common Stock” means the common stock of the Company.

 

(j)             “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

 

 

2

 

 

(k)             “Director” means a member of the Board.

 

(l)              “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

 

(m)           “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

(n)            “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

(o)            “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)      If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)     If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(iii)    In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

 

Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend or holiday, the Fair Market Value will be the price as determined in accordance with subsections (i) through (iii) above (as applicable) on the immediately preceding business day, unless otherwise determined by the Administrator.

 

(p)            “Fiscal Year” means the fiscal year of the Company.

 

(q)            “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

 

3

 

 

(r)            “Inside Director” means a Director who is an Employee.

 

(s)            “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

 

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

 

(u)            “Option” means a stock option granted pursuant to the Plan.

 

(v)            “Outside Director” means a Director who is not an Employee.

 

(w)           “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(x)            “Participant” means the holder of an outstanding Award.

 

(y)           “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 10.

 

(z)            “Performance Unit” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10.

 

(aa)         “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

 

(bb)         “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an Option.

 

(cc)         “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

(dd)         “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

(ee)         “Section 16(b)” means Section 16(b) of the Exchange Act.

 

(ff)           “Service Provider” means an Employee, Director or Consultant.

 

 

4

 

 

(gg)         “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

 

(hh)     “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a Stock Appreciation Right.

 

(ii)     “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

3.            Stock Subject to the Plan.

 

(a)           Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 5,000,000 Shares.

 

(b)           Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 14, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to this Section 3(b).

 

(c)           Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

 

 

5

 

 

4.            Administration of the Plan.

 

(a)           Procedure.

 

(i)      Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of Section 162(m) of the Code.

 

(ii)     Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

 

(iii)    Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

 

(b)          Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

 

(i)       to determine the Fair Market Value;

 

(ii)      to select the Service Providers to whom and the times at which Awards may be granted hereunder;

 

(iii)     to determine the number of Shares to be covered by each Award granted hereunder;

 

(iv)    to approve forms of Award Agreements for use under the Plan;

 

(v)     to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;

 

(vi)    to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; 

 

(vii)   to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws; 

 

(viii)  to modify or amend each Award (subject to Section 20 of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 6(b) of the Plan regarding Incentive Stock Options); 

 

 

6

 

 

(ix)     to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 15 of the Plan; 

 

(x)      to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; 

 

(xi)     to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; and 

 

(xii)    to make all other determinations deemed necessary or advisable for administering the Plan.

 

(c)           Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.

 

5.             Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

 

6.             Stock Options.

 

(a)           Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

 

(b)           Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be 10 years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be 5 years from the date of grant or such shorter term as may be provided in the Award Agreement.

 

 

7

 

 

(c)           Option Exercise Price and Consideration.

 

(i)            Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following: 

 

(1)             In the case of an Incentive Stock Option:

 

(A)     granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant; or

 

(B)     granted to any Employee other than an Employee described in Section 6(c)(i)(1)(A), the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(2)             In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(3)             Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.

 

(ii)           Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

(iii)          Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.

 

(d)           Exercise of Option.

 

(i)        Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

 

 

8

 

 

An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

(ii)       Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for 90 days following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(iii)      Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for 12 months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

 

9

 

 

(iv)      Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided the right to designate a beneficiary is set forth in the Award Agreement and such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for 12 months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(v)      Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of an Option within the applicable time periods set forth in Section 7(d) is prevented by the provisions of Section 21 below, the Option shall remain exercisable until 30 days (or such longer period of time as determined by the Administrator, in its discretion) after the date the Participant is notified by the Company that the Option is exercisable (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement).

 

7.             Restricted Stock.

 

(a)     Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)     Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

 

(c)     Transferability. Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

 

(d)     Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

 

(e)     Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

 

 

10

 

 

(f)     Voting Rights. Unless otherwise determined by the Administrator, during the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares.

 

(g)     Dividends and Other Distributions. Unless otherwise determined by the Administrator, during the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

 

(h)     Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.

 

8.             Restricted Stock Units.

 

(a)     Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

 

(b)     Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion.

 

(c)     Dividend Equivalents and Other Ownership Rights. Prior to the satisfaction of applicable vesting criteria, the Participant shall not have any right to transfer any rights with respect to any Restricted Stock Units and shall not have rights of ownership in any Shares underlying the Restricted Stock Units, including the right to vote such Shares, but the Administrator may on or after the grant of Restricted Stock Units authorize the payment of dividend equivalents on such Restricted Stock Units in cash or additional Shares on a current, deferred or contingent basis with respect to any or all dividends or other distributions paid by the Company. Notwithstanding the foregoing, any dividend equivalents with respect to dividends paid in stock shall be subject to the same restrictions as the underlying Award.

 

(d)     Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

 

 

11

 

 

(e)     Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock Units in cash, Shares, or a combination of both.

 

(f)     Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.

 

9.             Stock Appreciation Rights.

 

(a)     Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

 

(b)     Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider.

 

(c)     Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than 100% of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.

 

(d)     Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(e)     Vesting. Any Award Agreement may specify:  (i) a waiting period or period before Stock Appreciation Rights shall become exercisable and (ii) permissible dates or periods on or during which Stock Appreciation Rights shall be exercisable, and any Award Agreement may provide for the earlier exercise of such rights in the event of a termination of employment.

 

(f)     Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(b) relating to the maximum term and Section 6(d) relating to exercise also will apply to Stock Appreciation Rights.

 

(g)     Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

 

(i)      The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; by

 

 

12

 

 

(ii)     The number of Shares with respect to which the Stock Appreciation Right is exercised.

 

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof. 

 

10.           Performance Units and Performance Shares.

 

(a)     Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.

 

(b)     Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

 

(c)     Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period”. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.

 

(d)     Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.

 

(e)     Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.

 

 

13

 

 

(f)     Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.

 

11.          Granting Options to Outside Directors. During the term of the Plan, a person who is initially elected to the Board and who is an Outside Director at the time of such initial election automatically shall be granted (a) an Option to purchase 30,000 Shares on the date of such initial election and (b) an Option to purchase 20,000 Shares on the date of each annual meeting of stockholders after such initial election at which the Outside Director is reelected to the Board. Members of the Board who are employees of the Company who subsequently retire from the Company and remain on the Board will not receive an initial Option grant pursuant to clause (a) of the preceding sentence, but to the extent that they are otherwise eligible, will receive, after retirement from employment with the Company, Options as described in clause (b) of the preceding sentence. The Board may from time to time, in its sole discretion, and subject to the limitations of the Plan, determine the terms and conditions of such Options, consistent with the Plan. All Options granted to Outside Directors will vest on the first anniversary of the date of grant and will be Nonstatutory Stock Options.

 

12.          Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed 3 months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then 6 months following the first day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

 

13.          Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

 

14.          Adjustments; Dissolution or Liquidation; Merger or Change in Control.

 

(a)     Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits in Section 3 of the Plan.

 

 

14

 

 

(b)     Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)     Change in Control. In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator determines, including, without limitation, that (i) Awards may be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or Change in Control; (iii) outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger or Change in Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this Section 14(c), the Administrator will not be required to treat all Awards similarly in the transaction.

 

In the event that the successor corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

 

For the purposes of this Section 14(c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

 

 

15

 

 

Notwithstanding anything in this Section 14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

 

(d)     Outside Director Awards. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met.

 

15.           Tax.

 

(a)     Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

 

(b)     Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b) electing to have the Company withhold otherwise deliverable cash (including cash from the sale of Shares issued to Participant) or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (c) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

 

16

 

 

(c)     Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A.

 

16.           No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company or any Parent or Subsidiary of the Company, nor will they interfere in any way with the Participant’s right or the Company’s right, or Parent’s or Subsidiary’s right, to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

 

17.           No Duty to Inform Regarding Exercise Rights. Neither the Company, the Board, the Administrator nor any Committee shall have any duty to inform a Participant of the pending expiration of the period in which an Award may be exercised.

 

18.           Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

 

19.           Term of Plan. Subject to Section 23 of the Plan, the Plan will become effective upon its adoption by the Board and the shareholders. It will continue in effect for a term of 10 years from the date adopted by the Board, unless terminated earlier under Section 20 of the Plan.

 

20.           Amendment and Termination of the Plan.

 

(a)     Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.

 

(b)     Shareholder Approval. The Company will obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)     Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

 

17

 

 

21.           Conditions Upon Issuance of Shares.

 

(a)     Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)     Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

22.           Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any state or federal law or under the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.

 

23.           Shareholder Approval. The Plan will be subject to approval by the shareholders of the Company within 12 months after the date the Plan is adopted by the Board. Such shareholder approval will be obtained in the manner and to the degree required under Applicable Laws.

 

 

 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00242-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00242-of-00352.parquet"}]]