Document:

alye_ex102.htm

EXHIBIT 10.2
  
 AMENDED AND RESTATED EMPLOYMENT AGREEMENT
  
 THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated as of January 1, 2019 (“Effective Date”), is entered into by and between Aly Energy Services, Inc., (the “Employer”) and Alya Hidayatallah (the “Executive”).
  
 WHEREAS, the parties have entered into an Employment Agreement, dated as of May 1, 2017 (the “Original Agreement”); and
  
 WHEREAS, the parties desire to amend and restate the Original Agreement as set forth herein;
  
 NOW, THEREFORE, the Employer and the Executive hereby agree as follows:
  
 1. Compensation and Employment. Executive agrees to continue employment with Employer, and Employer agrees to continue to employ Executive, on the terms and conditions set forth below. 
  
 (a) Duties of Executive. Executive's job title shall be the Chief Financial Officer of the Employer, and Executive’s responsibilities shall include such services commensurate with such title. Executive’s job duties will be principally located within the Houston, Texas metropolitan area.
  
 (b) Performance of Duties. Executive agrees during the Term (as defined hereinafter) of his/her employment, (i) he/she shall devote sufficient business time (at least 40 hours per week) and efforts, skills and abilities during business time exclusively to the performance of his/her duties as stated in this Agreement and to the furtherance of Employer's business, and (ii) he/she shall not be engaged in, or employed by, any other business enterprise without the written approval of the board of managers of Employer. Executive shall also use his/her best efforts to preserve the business of the Employer and the goodwill of all employees, customers, suppliers and other persons having business relations with the Employer. Notwithstanding the preceding, Executive may (i) advise, consult with and/or invest in businesses outside of the business or (ii) engage in the management of personal investments and in charitable service activities outside of the business so long as the foregoing do not materially detract from the performance of his/her duties hereunder or otherwise have a material adverse effect on Employer.
  
 (c) Base Salary. The Employer shall pay to Executive, and Executive agrees to accept for his/her employment by Employer, a base salary (the "Base Salary") which shall be $250,000, payable in installments by Employer in accordance with its payroll policies and subject to all appropriate withholdings.
  
 (d) Bonus Plan. Prior to January 1 of each year, Employer’s management will prepare a recommendation to the board of directors of targeted results of operations for such year, and the board will set proposed target results in a written bonus plan for such year. If 90% of Employer’s target results of operations for such year are achieved, Executive will receive a bonus equal to 40% of the Base Salary for such year; if 100% of target results of operations are achieved, Executive will receive a bonus equal to 50% of the Base Salary for such year; and if 110% or more of target results of operations are achieved, Executive will receive a bonus equal to 60% of the Base Salary for such year. Executive will also be eligible for a discretionary bonus ranging from 0% to 50% of Base Salary depending on the achievement of strategic objectives set in advance by the Employer’s CEO. The maximum total bonus that can be paid to Executive in any year is 110% of Base Salary.
   	 
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 (e) Option Grant. Pursuant to the Original Agreement, Executive received a fully vested grant of non-qualified stock options under Employer’s 2017 Stock Option Plan.
  
 (f) Benefits. Executive shall be entitled to participate in all employee benefits of the Employer as are generally afforded to other senior management employees of Employer.
  
 (g) Expense Reimbursement. Employer shall reimburse Executive for all business travel and other out-of-pocket expenses authorized by Employer and reasonably incurred by Executive in the performance of his/her duties hereunder during the Term. All reimbursable expenses shall be appropriately documented in reasonable detail by Executive upon submission of any request for reimbursement, and in a format and manner consistent with Employer's expense reporting policy applicable to executives of Employer at the level of Executive's position, as well as applicable federal and state tax record keeping requirements.
  
 (f) Vacation. Executive shall be entitled to 30 business days of vacation per calendar year of employment (which shall accrue ratably during each calendar year of employment). Accrued, untaken vacation days from one calendar year shall not carry over to the next succeeding calendar year of employment or be permitted to be paid in cash.
  
 2. Term. 
  
 (a) The term of this Agreement (the "Term") shall begin on the Effective Date and continue until the earliest of:
  
 (i) the 3rd day after Employer gives Executive written notice of his/her termination for "Cause" (as defined hereinafter),
  
 (ii) the date on which Employer terminates it for any reason other than for "Cause” or on which Executive terminates it for “Good Reason” (as defined hereinafter), provided that in such case, Employer shall pay Executive severance pay equal to (A) the Executive’s Base Salary for the “Severance Period” (as defined hereinafter), less (B) any amounts Employer is entitled to offset pursuant to subsection (c) below; and provided, further, that Employer shall also pay to Executive (when and if a bonus would otherwise have been paid pursuant to Section 1(d) above), the following portion of the bonus for the year in which the termination occurred: (A) if the termination occurred during the first six months of any bonus year, 50% of the bonus, or (B) if the termination occurred during the second six months of any bonus year, 100% of the bonus.
  
 (iii) the death or “total disability” (as defined hereinafter) of Executive; or
   	 
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 (iv) the date specified in Executive's written notice of his/her resignation for any reason.
  
 (b) For purposes of this Agreement:
  
 (i) “Severance Period” shall mean 12 months. 
  
 (ii) "Cause" for termination shall be limited to the following conduct of Executive: (a) has engaged in gross negligence, gross incompetence or willful misconduct in the performance of Executive’s duties with respect to Employer or any of its affiliates, (b) has refused without proper legal reason to perform Executive’s duties and responsibilities to Employer or any of its affiliates, (c) has breached any provision of Article VIII or any other provision of this Agreement, (d) has materially breached any provision of any written agreement or corporate policy or code of conduct established by Employer or any of its affiliates (and as amended from time to time), (e) has engaged in conduct that is materially injurious to Employer or any of its affiliates, (f) has disclosed, without specific authorization from Employer, confidential information of Employer or any of its affiliates that is injurious to any such entity, (g) has committed an act of theft, fraud, embezzlement, misappropriation or breach of a fiduciary duty to Employer or any of its affiliates or (h) has been convicted of (or pleaded no contest to) a crime involving fraud, dishonesty or moral turpitude or any felony, provided, however, that termination for Cause by Employer under any of clause (a) through (f) above shall not be permitted unless Employer has given the Executive at least thirty (30) days’ prior written notice that it has a basis for a termination for Cause, which notice shall specify the facts and circumstances constituting a basis for termination for Cause and Executive has not remedied such facts and circumstances constituting a basis for termination for Cause, to the extent possible, within such 30-day period. 
  
 (iii) “total disability” shall mean the certification by a reputable physician after examination of the Executive, of the Executive’s inability to substantially perform his/her duties pursuant to this Agreement as a result of a medical condition (other than a medical condition arising out of or attributable to the abuse of drugs and/or alcohol).
  
 (iv) “Good Reason” shall mean (a) the occurrence of a “Change of Control,” (b) the relocation of Executive to a location outside the Houston, Texas metropolitan area without Executive’s consent, (c) the material reduction by Employer in Executive’s Base Salary, responsibilities, duties, authority, title, compensation or reporting relationship without Executive’s consent or (d) Employer adversely affects Executive’s participation in or materially reduces Executive’s benefit under any benefit plan of Employer (including stock option and bonus arrangements) in which Executive is participating, without Executive’s consent.
  
 (v) “Change of Control” shall have the meaning set forth in Employer’s 2017 Stock Option Plan.
   	 
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 (c) In the event of any termination of Executive's employment under this Agreement for any reason, the Employer's obligation to make any payments hereunder shall be subject to offset for, among other items, any loans or other monetary obligations Executive has with the Employer which shall be deemed paid to the extent subtracted from the amount of payments due Executive. All payments and benefits payable under this Agreement are gross payments subject to applicable withholdings.
  
 (d) The Employer will pay to Executive the severance pay referenced above only upon the parties signing a mutual release that waives all claims that the Employer and Executive may have against the other, except (i) in regard to the enforcement of a party’s rights under this Agreement or (ii) in respect of actions or omissions of a party constituting gross negligence or willful misconduct.
  
 3. Trade Secrets and Confidential Information. 
  
 (a) For purposes of this section, "Confidential Information" means any data or information, other than Trade Secrets, that is valuable to the Employer, its direct or indirect subsidiaries, or its customers or prospective customers, and not generally known to the public or to competitors of the Employer. For purposes of this Agreement, "Trade Secret" means information including, but not limited to, any technical or non-technical data, formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plan, product plan, list of actual or potential customers or suppliers or other information similar to any of the foregoing, which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
  
 (b) Executive acknowledges that by this Agreement, he/she shall be employed by the Employer in a confidential relationship wherein he, in the course of his/her employment with the Employer, will receive and will have access to Confidential Information and Trade Secrets of the Employer, including but not limited to confidential and secret business and marketing plans, strategies, and studies, detailed client/customer lists and information relating to the operations and business requirements of those clients/customers and, accordingly, he/she is willing to enter into the covenants contained in Sections 3 and 4 of this Agreement in order to provide the Employer with what he/she considers to be reasonable protection for his/her interests.
  
 (c) Executive hereby agrees that, during the Term and for an additional period of 12 months thereafter, he/she will hold in confidence all Confidential Information of the Employer, its direct or indirect subsidiaries, or its customers or prospective customers, that came into Executive's knowledge during his/her employment by the Employer and will not disclose, publish or make use of such Confidential Information without the prior written consent of the Employer.
  
 (d) Executive shall hold in confidence all Trade Secrets of the Employer, its direct or indirect subsidiaries, or its customers or prospective customers, that came into Executive's knowledge during his/her employment by the Employer and shall not disclose, publish or make use of at any time after the date hereof such Trade Secrets without the prior written consent of the Employer's board of managers for as long as the information remains a Trade Secret.
   	 
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 (e) Notwithstanding the foregoing, the provisions of this Section 3 will not apply to (i) information required to be disclosed by Executive in the ordinary course of his/her duties hereunder, (ii) Confidential Information that otherwise becomes generally known in the industry or to the public through no act of Executive or any person or entity acting on Executive's behalf, or which is required to be disclosed by court order or applicable law, or (iii) information independently developed by Executive without use or reference to any Confidential Information.
  
 (f) The parties agree that the restrictions contained in this Section 3 are in addition to and not in lieu of protections afforded to trade secrets and confidential information under applicable state law. Nothing in this Agreement is intended to or shall be interpreted as diminishing or otherwise limiting the Employer's right under applicable law to protect its Trade Secrets and Confidential Information.
  
 4. Return of Employer Property. All records, designs, patents, business plans, financial statements, manuals, memoranda, customer lists, customer databases, rolodexes and other property delivered to or compiled by Executive for or on behalf of the Employer or its representatives, vendors or customers that pertain to the Business of the Employer (including the respective subsidiaries thereof) shall be and remain the property of the Employer, and be subject at all times to its discretion and control. Upon the request of the Employer and, in any event, upon the termination of Executive's employment with the Employer, Executive shall deliver all such materials to the Employer. Likewise, all correspondence, reports, records, charts, advertising materials and other similar data pertaining to the business, activities or future plans of the Employer that are collected by Executive shall be delivered promptly to the Employer without request by it upon termination of Executive's employment.
  
 5. Compliance with Section 409A of the Code. Each payment under this Agreement, including each payment in a series of installment payments, is intended to be a separate payment for purposes of Treas. Reg. § 1.409A-2(b), and is intended to be: (i) exempt from Section 409A of the Internal Revenue Code of 1986, the regulations and other binding guidance promulgated thereunder (“Section 409A”) or (ii) in compliance with Section 409A; and the provisions of this Agreement will be administered, interpreted and construed accordingly. Notwithstanding the foregoing provisions of this Agreement, if the payment of any severance compensation or severance benefits under Article VII would be subject to additional taxes and interest under Section 409A, then any such payments that Executive would otherwise be entitled to during the first six months following Executive’s separation from service shall be accumulated and paid on the date that is six months after Executive’s separation from service (or if such payment date does not fall on a business day of Employer, the next following business day of Employer), or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes and interest.
  
 6. Entire Agreement. This Agreement supersedes any and all other agreements, either oral or written, between the parties hereto with respect to the subject matter hereof and contains all of the covenants and agreements between the parties with respect thereto. 
   	 
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 7. Modification. No change or modification of this Agreement shall be valid or binding upon the parties hereto, nor shall any waiver of any term or condition in the future be so binding, unless such change or modification or waiver shall be in writing and signed by the parties hereto. 
  
 8. Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas (excluding conflicts of law principles). If any action is brought to enforce or interpret this Agreement, venue for such action shall be in the state courts of Texas. 
  
 9. Attorney's Fees. If any action, proceeding, or litigation is brought under or with respect to this Agreement, the prevailing party shall be entitled to his/her costs and expenses incurred in relation thereto, including reasonable attorneys' fees.
  
 10. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which shall constitute one document. 
  
 11. Estate. If Executive dies prior to the expiration of the Term of employment, any monies that may be due him/her from Employer under this Agreement as of the date of his/her death shall be paid to his/her estate. 
  
 12. Assignment. Employer shall have the right to assign this Agreement to its successors or assigns. Employer further covenants to cause any such successor or assign to assume the terms and conditions of this Agreement. The terms "successors" and "assigns" shall include any person, corporation, partnership or other entity that buys all or substantially all of Employer's assets or all of its stock, or with which Employer merges or consolidates. The rights, duties and benefits to Executive hereunder are personal to him/her. Accordingly, no such right or benefit may be assigned by him/her, and no other person shall have any rights therein. 
  
 13. Binding Effect. This Agreement shall be binding upon the parties hereto, together with their respective executors, administrators, successors, personal representatives, heirs and assigns. 
  
 14. Waiver of Breach. The waiver by any party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by the breaching party.
   	 
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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
   	 	Aly Energy Services, Inc.	
	 	 	 	 
	 	By:	/s/ MICKI HIDAYATALLAH	
	  
	  
	Micki Hidayatallah	 
	 	 	Chief Executive Officer	 
	 	 	 	 
	  
	 EXECUTIVE:
	  

	  
	  
	  
	  

	  
	 By:
	 /s/ ALYA HIDAYATALLAH
	  

	  
	  
	 Alya Hidayatallah
	  

  
  	 
	7alye_ex104.htm

EXHIBIT 10.4
  
 ALY ENERGY SERVICES, INC. 
 2017 STOCK OPTION PLAN
  
 The purpose of the Aly Energy Services, Inc. 2017 Equity Compensation Plan (the “Plan”) is to provide designated employees of Aly Energy Services, Inc. (the “Company”) and its subsidiaries with the opportunity to receive grants of stock options. The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefiting the Company’s shareholders, and will align the economic interests of the participants with those of the shareholders. 
  
 The Board of Directors of the Company (the “Board”) has approved the Plan on April 4, 2017. The Plan shall become effective on the date on which it is approved by a majority in interest of the Company’s shareholders. 
  
 1. Administration 
  
 (a) Committee. The Plan shall be administered and interpreted by the Compensation Committee of the Board of Directors (the “Committee”). The Committee shall consist of two or more persons appointed by the Board, all of whom shall be “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and related Treasury regulations and may be “non-employee directors” as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To the extent that the Company has not constituted a Compensation Committee, references hereunder to the “Committee” shall mean the entire Board.
  
 (b) Committee Authority. The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability and (iv) deal with any other matters arising under the Plan. 
  
 (c) Committee Determinations. The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals. 
  
 2. Grants 
  
 Awards under the Plan may consist of grants (herein “Grants”) of incentive stock options as described in Section 5 (“Incentive Stock Options”) or nonqualified stock options as described in Section 5 (“Nonqualified Stock Options”) (Incentive Stock Options and Nonqualified Stock Options are collectively referred to as “Options”). All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument (the “Grant Instrument”) or an amendment to the Grant Instrument. The Committee shall approve the form and provisions of each Grant Instrument. Grants under a particular Section of the Plan need not be uniform as among the grantees. 
   	 
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 3. Shares Subject to the Plan 
  
 (a) Shares Authorized. Subject to the adjustment specified below, the aggregate number of shares of common stock of the Company (“Company Stock”) that may be issued or transferred under the Plan is 16,861,908 shares, and the maximum number of shares of Company Stock that may be delivered pursuant to Incentive Stock Options is 5,000,000 of those shares. The maximum aggregate number of shares of Company Stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 5,200,000 shares. The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent Options granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, the shares subject to such Grants shall again be available for purposes of the Plan. 
  
 (b) Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation in which the Company is the surviving corporation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for Grants, the maximum number of shares of Company Stock that any individual participating in the Plan may be granted in any year, the number of shares covered by outstanding Grants, the kind of shares issued under the Plan, and the price per share or the applicable market value of such Grants shall be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Company Stock to 
 preclude, to the extent practicable, the enlargement or dilution of rights and benefits under such Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. Any adjustments determined by the Committee shall be final, binding and conclusive. 
  
 4. Eligibility for Participation 
  
 (a) Eligible Persons. All employees of the Company and its subsidiaries (“Employees”) shall be eligible to participate in the Plan.
  
 (b) Selection of Grantees. The Committee shall select the Employees to receive Grants and shall determine the number of shares of Company Stock subject to a particular Grant in such manner as the Committee determines. Employees who receive Grants under this Plan shall hereinafter be referred to as “Grantees.” In no event shall Options be granted to any Grantee in substitution for, or upon cancellation of, previously granted Options to purchase Company Stock, or shall similar action be taken to effect the “repricing” of previously granted Options. 
  
 5. Granting of Options 
  
 (a) Number of Shares. The Committee shall determine the number of shares of Company Stock that will be subject to each Grant of Options to Employees.
  
 (b) Type of Option and Price. The Committee may grant Incentive Stock Options that are intended to qualify as “incentive stock options” within the meaning of section 422 of the Code or Nonqualified Stock Options that are not intended so to qualify or any combination of Incentive Stock Options and Nonqualified Stock Options, all in accordance with the terms and conditions set forth herein. The purchase price (the “Exercise Price”) of Company Stock subject to an Option shall be determined by the Committee but in all cases shall be equal to, or greater than, the Fair Market Value of a share of Company Stock on the date the Option is granted; provided, however, that an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company, unless the Exercise Price per share is not less than 110% of the Fair Market Value of Company Stock on the date of grant. So long as the Company Stock is publicly traded, Fair Market Value per share shall be determined as follows:
  
 (x) if the principal trading market for the Company Stock is a national securities exchange or the Nasdaq National Market, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported; or
   	 
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 (y) if the Company Stock is not principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determined by the Committee. 
  
 (c) Option Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, may not have a term that exceeds five years from the date of grant. 
  
 (d) Exercisability of Options. Options shall become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument or an amendment to the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for any reason. 
  
 (e) Termination of Employment, Disability or Death. 
  
 (i) Except as provided below, an Option may only be exercised while the Grantee is employed by the Company as an Employee. In the event that a Grantee ceases to be employed by the Company for any reason other than a “disability” or death, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceases to be employed by the Company (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by the Company shall terminate as of such date. Notwithstanding the foregoing provisions of this Section, in the event a Grant issued under the Plan is subject to Section 409A of the Code, then, to the extent necessary to comply with the requirements of Section 409A of the Code, a Grantee shall be considered to cease employment with the Company for any reason other than a disability or death, provided that such employment shall cease in accordance with the definition of “separation from service” provided for under Section 409A of the Code and the regulations or other guidance issued thereunder. 
  
 (ii) In the event the Grantee ceases to be employed by the Company because the Grantee is “disabled”, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by the Company (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Any of the Grantee’s Options which are not otherwise exercisable as of the date on which the Grantee ceases to be employed by the Company shall terminate as of such date. 
  
 (iii) If the Grantee dies while employed by the Company or within 90 days after the date on which the Grantee ceases to be employed on account of a termination of employment specified in Section 5(e)(i) above (or within such other period of time as may be specified by the Committee), any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by the Company (or within such other period of time as may be specified by the Committee), but in any event no later than the date of expiration of the Option term. Any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by the Company shall terminate as of such date. 
   	 
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 (iv) For purposes of this Section 5(e): 
  
 (A) The term “Company” shall mean the Company and its parent and subsidiary corporations. 
  
 (B) “Employed by the Company” shall mean employment or service as an Employee (so that, for purposes of exercising Options, a Grantee shall not be considered to have terminated employment or service until the Grantee ceases to be an Employee), unless the Committee determines otherwise. 
  
 (C) “Disability” shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3) of the Code. Notwithstanding the foregoing provisions of this Section 5(e)(iv)(C), in the event a Grant issued under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition and to the extent necessary to comply with the requirements of Section 409A of the Code, the definition of “disability” for purposes of such Grant shall be the definition of “disability” provided for under Section 409A of the Code and the regulations or other guidance issued thereunder. 
  
 (v) Notwithstanding anything to the contrary in this Plan, (i) if upon the date of a Grantee’s termination of employment with the Company, the Grantee is a “specified employee” within the meaning of Section 409A of the Code, and the delay of any amounts otherwise payable under this Plan as a result of the Grantee’s termination of employment is necessary in order to prevent any accelerated or additional tax to Grantee under Section 409A of the Code, then the Company will delay the payment of any such amounts hereunder until the date that is six (6) months following the date of Grantee’s termination of employment with the Company at which time any such delayed amounts will be paid to Grantee in a single lump sum. 
  
 (f) Exercise of Options. A Grantee may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company with payment of the Exercise Price. The Grantee shall pay the Exercise Price for an Option in cash or by such other method as the Committee may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. The Grantee shall pay the Exercise Price and the amount of any withholding tax due at the time of exercise. 
  
 (g) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary (within the meaning of section 424(f) of the Code). 
  
 6. Withholding of Taxes 
  
 All Grants under the Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company shall have the right to deduct from all Grants paid in cash, or from other wages paid to the Grantee, any federal, state or local taxes required by law to be withheld with respect to such Grants. In the case of Options and other Grants paid in Company Stock, the Company may require the Grantee or other person receiving such shares to pay to the Company the amount of any such taxes that the Company is required to withhold with respect to such Grants, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Grants. 
   	 
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 7. Transferability of Grants 
  
 (a) Nontransferability of Grants. Except as provided below, only the Grantee may exercise rights under a Grant during the Grantee’s lifetime. A Grantee may not transfer those rights except by will or by the laws of descent and distribution or, with respect to Grants other than Incentive Stock Options, if permitted in any specific case by the Committee, pursuant to a domestic relations order (as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the regulations thereunder). When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee (“Successor Grantee”) may exercise such rights. A Successor Grantee must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution. 
  
 (b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options to family members or other persons or entities according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer. 
  
 8. Change of Control of the Company 
  
 As used herein, a “Change of Control” shall be deemed to have occurred if: 
  
 (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 51% or more of the voting power of the then outstanding securities of the Company; or 
  
 (ii) The shareholders of the Company approve (or, if shareholder approval is not required, the Board approves) an agreement providing for (i) the merger or consolidation of the Company with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 51% or more of all votes to which all shareholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), (ii) the sale or other disposition of all or substantially all of the assets of the Company, or (iii) a liquidation or dissolution of the Company. 
  
 Notwithstanding the foregoing provisions of this Section 8, in the event a Grant issued under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition and to the extent necessary to comply with the requirements of Section 409A of the Code, the definition of “Change of Control” for purposes of such Grant shall be the definition provided for under Section 409A of the Code and the regulations or other guidance issued thereunder. 
  
 9. Consequences of a Change of Control 
  
 (a) Notice and Acceleration. Upon a Change of Control, unless the Committee determines otherwise, (i) the Company shall provide each Grantee with outstanding Grants written notice of such Change of Control and (ii) all outstanding Options shall automatically accelerate and become fully exercisable.
  
 (b) Assumption of Grants. Upon a Change of Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding Options that are not exercised shall be assumed by, or replaced with comparable options or rights by, the surviving corporation. 
   	 
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 (c) Other Alternatives. Notwithstanding the foregoing, subject to subsection (d) below, in the event of a Change of Control, the Committee may take one or both of the following actions: the Committee may (i) require that Grantees surrender their outstanding Options in exchange for a payment by the Company, in cash or Company Stock as determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the shares of Company Stock subject to the Grantee’s unexercised Options exceeds the Exercise Price of the Options, or (ii) after giving Grantees an opportunity to exercise their outstanding Options, terminate any or all unexercised Options at such time as the Committee deems appropriate. Such surrender or termination shall take place as of the date of the Change of Control or such other date as the Committee may specify. 
  
 10. Amendment and Termination of the Plan 
  
 (a) Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Board shall not amend the Plan without shareholder approval if such approval is required by Sections 162(m), 421 and 422 of the Code. 
  
 (b) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders. 
  
 (c) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be amended by agreement of the Company and the Grantee consistent with the Plan. 
  
 (d) Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns. 
  
 11. Funding of the Plan 
  
 This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of Grants. 
  
 12. Rights of Participants 
  
 Nothing in this Plan shall entitle any Employee or other person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ of the Company or any other employment rights. 
  
 13. Grants in Connection with Corporate Transactions and Otherwise. 
  
 Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Grants to employees thereof who become Employees of the Company, or for other proper corporate purposes, or (ii) limit the right of the Company to grant stock options or make other awards outside of this Plan. Without limiting the foregoing, the Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company or any of its subsidiaries in substitution for a stock option made by such corporation. The terms and conditions of the substitute grants may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute grants. 
   	 
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 14. Compliance with Law. 
  
 The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section. 
  
 15. Governing Law. 
  
 The validity, construction, interpretation and effect of the Plan and Grant Instruments issued under the Plan shall exclusively be governed by and determined in accordance with the law of State of Delaware.
  
 16. Section 409A. 
  
 To the extent this Plan provides for nonqualified deferred compensation, it is intended to satisfy the provisions of Section 409A of the Code and related regulations and Treasury pronouncements. If any provision herein results in the imposition of an excise tax on any Grantee under Section 409A of the Code, any such provision will be reformed to avoid any such imposition in such manner as the Committee determines is appropriate to comply with Section 409A of the Code.
   	 
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