Document:

Unassociated Document

Exhibit 10.99s

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Employment Agreement ("Agreement"), is entered into as of January 12th, 2012 (the "Effective Date") by and between Location Based Technologies, a Nevada Corporation ("Company"), and Desiree Mejia ("Executive").

 

W I T N E S S E T H:

 

WHEREAS, Company is a technology and telecommunications company that has designed and patented wireless communications products and systems combining advanced wireless technology to provide features of location based devices; and

 

WHEREAS, Company wishes to assure itself of the services of Executive for the period and upon the terms and conditions provided in this Agreement; and

 

WHEREAS, Executive is willing to serve in the employ of Company on a full-time basis for said period and upon the terms and conditions provided in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

 

1.           Employment.

 

a.           Term and Title.  Subject to the terms and conditions of this Agreement, Company hereby agrees to employ Executive as Chief Operating Officer, or in such other responsible or additional executive capacity as set forth herein, commencing on the Effective Date and continuing in full force and effect until the fifth (5) anniversary of the Effective Date; provided however, that the term of this Agreement shall automatically be extended for additional one-year periods unless either party provides written notice to the contrary at
least sixty (60) days prior to the end of the term then in effect (“Employment Term”).

 

b.           Duties and Responsibilities.  During the Employment Term, Executive agrees to devote his/her working time and attention to the business and affairs of Company and to faithfully and efficiently perform all reasonable responsibilities and duties commensurate with his/her position in Company to the best of his/her skill and abilities, in a competent and professional manner.  Executive agrees to fulfill such general management duties and responsibilities as are consistent with his/her
position. In addition, Executive shall serve as a director of the Company without additional compensation if elected by the shareholders of the Company.

 

  c.           Exclusive Services.  During the Employment Term, Executive further agrees not to engage in any business or perform any services that are competitive with the business of or services provided by Company or that may be deemed to constitute a conflict of interest.  Notwithstanding anything to the contrary contained in this Section 1(c), Executive shall not be prohibited from (i) rendering services to relatives, charitable or community organizations; (ii) managing his/her
personal investments in such manner as to not interfere with the performance of his/her duties hereunder; or (iii) owning no more than  4.99% of the equity securities of a corporation or other entity,  whose securities are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

 

  

 

  

 

2.           Compensation; Benefits.  During the Employment Term, Executive shall be entitled to the compensation package and benefits provided below:

 

 a.          Base Salary and Stock Compensation.  During the Employment Term, in full consideration for the services to be rendered by Executive and in complete discharge of Company's salary obligations hereunder, Company shall pay to Executive a base salary ("Base Salary") of Fifteen Thousand dollars ($15,000) per month, which amount shall be paid to Executive in accordance with Company's payroll policies as in effect from time to time for senior executives of Company, subject to all standard payroll deductions,
if any.

 

b.         Adjustments to Base Salary.  The base monthly salary shall be automatically increased by Two Thousand Five Hundred Dollars ($2,500) per month each time the Company acheives the following milestones (to be measured at the end of each fiscal quarter): i) achieving One Million Five Hundred Thousand Dollars ($1,500,000) in Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”); ii) upon achieving Two Million Five Hundred Thousand Dollars ($2,500,000) in EBITDA; upon achieving Three Million Five Hundred Thousand Dollar ($3,500,000) in EBITDA; upon acheving
Four Million Five Hundred Thousand Dollars ($4,500,000) in EBITDA.

 

c.  Additional Compensation.    The Company shall grant to Execuitve four million (4,000,000) options to purchase common stock at a price equal to ten percent (10%) above the thirty day volume weighted average price on the date of the signing of this Agreemet. The vesting schedule shall be as follows:

 

i) 500,000 options shall vest immediately as a year-end bonus for 2011.

 

ii) 250,000 options shall vest upon achieving 100,000 worldwide activations (including U.S.).

 

iii) 250,000 options or Seventy Five Thousand Dollars ($75,000) shall vest upon completing a capital raise in the form of a term loan, equity investment or equity-linked investment of Twenty Million Dollars ($20,000,000) or greater. The election to receive options or cash shall be solely at the Executives discretion.

 

iv)  250,000 options or Seventy Five Thousand Dollars ($75,000) shall vest upon succesfully listing on the American Stock Exchange. The election to receive options or cash shall be solely at the Executives discretion.

 

v)  500,000 options or One Hundred and Fifty Thousand Dollars ($150,000) shall vest upon succesfully listing on the NASDAQ Stock Exchange. The election to receive options or cash shall be solely at the Executives discretion.

 

vi)   In the event of the sale of 50.1% or more of the Company, any portion of the four million (4,000,000) options which have not vested shall automatically vest.

 

           d.                     Bonus.  Each year during the Employment Term, the Company may pay a bonus (the "Bonus") to Executive, which may be part of a general bonus plan established by the Board.

 

           e.                     Stock Incentive Plan/Options for Performance. Executive shall be entitled to participate in the Stock Incentive Plan of the Company on such terms as the Board of Directors deems appropriate from time to time.

 

           f.                     Expenses.  Company recognizes that in connection with Executive's performance of Executive's duties and obligations under this Agreement, Executive shall incur certain expenses of a business character.  Company shall reimburse Executive for all ordinary and reasonable expenses incurred by Executive in connection with performance of his/her duties hereunder, provided that Executive submits to Company substantiation of such
expenses.

 

  

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           g.                     Fringe Benefits/Insurance.  Executive shall be entitled to participate in any and all benefits and perquisites as are generally provided by the Company for the benefit of its executive employees including, but not limited to, eligibility for participation in any group life, health, dental, vision, hospitalization, disability or accident insurance, pension plan, retirement savings plan, 401(k) plan, or other such benefit plan or
policy which may presently be in effect or which may hereafter be adopted by the Company; provided, however, that nothing herein contained shall be deemed to require the Company to adopt or maintain any particular plan or policy, or to preclude the Company from amending or terminating any plan or policy.

 

           h.                     Vacation and Holidays.  Executive shall be entitled to 4 weeks paid vacation per year.  Executive shall also be entitled to all paid holidays given by Company to its employees.

 

         i.                     Remuneration. If Executive has accured compensation, Executive shall be entitled to remuneration in the following manner:

 

i)   If the Company recieves an equity or equity-linked investment in the amount of Twelve Million Dollars ($12,000,000) or greater, the Company shall repay Exeutive accrued compensation in full.

 

ii)  If the Company receives an capital investment which is strategic in nature (and therefore does not require the issuance of equity), of Eight Million Dollars ($8,000,000) or more, Company shall repay Exeutive any accrued compensaton in full. This includes, but is not limited to, the sale of any portion of the assets of the Company.

 

iii) If the Company acheives  EBITDA of One Million Dollars ($1,000,000) or more, Exeutive shall receive 2x Executive’s monthly sallary until any accrued compensation has been paid in full. EBITDA shall be measured at each quarter’s end and any salary adjustements shall begin on the first pay cyle of the following quarter. The final month’s remuneration may be adjusted as needed to prevent Execuitve from receiving more than the amount owed.

 

3.          Termination of Employment.

 

a.           Death.  In the event of Executive's death occurring any time during the Employment Term, the Agreement shall automatically terminate in which event Company shall thereupon be released and discharged of and from all further obligations under this Agreement except as in Section 4 hereof.

 

  

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  b.           Incapacity.  In the event of Executive's physical or mental disease or disability, to such a degree as to render Executive unable to substantially perform all of the duties and responsibilities with
which Executive is then charged for a period of 180 consecutive days ("Incapacity"), Company may terminate Executive's employment upon written notice to Executive that he is being terminated for Incapacity.  Executive's termination due to Incapacity shall be effective the later of (i) the expiration of the above period of Incapacity or (ii)
30 days after the date of such notice.

 

c.           Resignation.  Executive may resign his/her current position with Company and thereby terminate his/her employment, for any reason by giving Company 90 days advance written notice.

 

d.           Termination for Cause.  Notwithstanding anything to the contrary contained in this Agreement, Company may, by written notice to Executive, immediately terminate Executive's employment for "Cause."  For purposes of this Agreement, "Cause" shall mean that one of the following events (each, a "Cause Event") shall have occurred
after the Effective Date:  (i)  Executive's ongoing material breach of a material provision of this Agreement, following written notice of such breach from the board of directors of Company and a reasonable period of time to cure; (ii) chronic alcoholism or any other form of addiction that prevents Executive from performing the essential functions of his/her position with a reasonable accommodation.

 

e.           Suspension for Cause.  Company may, by written notice to Executive, suspend the employment of Executive only for Cause.  If Company exercises such right of suspension, Executive's obligation to render services, but not Company's obligation to pay Executive's Base Salary, shall be suspended for the period of time set forth in the notice; but in no event shall such suspension exceed a period of time equal to 3 consecutive months.  Company may, in its reasonable discretion by written
notice, terminate the employment of Executive at the expiration of the suspension period.

 

f.           Termination without Cause.  Any of the following shall constitute a “termination without cause”:  (i) termination of Executive’s full-time employment hereunder for any reason other than set forth in Sections 3(a) through (e) above; (ii) failure to elect or re-elect, or appoint or re-appointment, Executive as Co-President and Chief Executive Officer of the Company, unless consented to by Executive; (iii) a material change in Executive’s functions, duties or
responsibilities with the Company, which change would cause Executive’s position to become one of substantially less responsibility or scope, unless consented to by the Executive; or (iv) a material reduction in benefits or perquisites to Executive from those being provided as of the Effective Date, unless consented to by Executive.

 

4.           Rights Upon Termination.

 

a.           Upon termination of Executive's employment pursuant
to Section 3(a), (b) or (c) hereof, Executive shall receive any salary or monies previously due and owing to Executive and remaining unpaid; (ii) outstanding reimbursable business expenses; (iii) all earned but unused vacation time; (iv) life insurance benefits, if applicable, and (v) all other benefit entitlements in which Executive is a participant.

 

  

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b.           In the event Executive's employment is terminated by Company for Cause pursuant to Sections 3d or (e) above, Executive shall be entitled to payment for (i) all outstanding reimbursable business expenses, (ii) any unpaid Base Salary or incentive compensation that has accrued and has been earned for services performed by Executive prior to the effective date of the termination, (iii) all earned but unused vacation time. Executive shall not be entitled to any other payments or compensation.  Company shall be
released and discharged of and from any further obligation to Executive, except the payment of any monies previously due and owing to Executive.

 

c.           In the event Executive's employment is terminated by Company pursuant to Sections 3(f) hereof, Company shall pay Executive the Base Salary at least equal to the salary, including all bonuses and commissions, of the highest paid employee of the Company and medical benefits through the end of the Employment Term, or if such termination occurs in the last year of the Employment Term for a period of two
years after the date of termination.  If at any time during such period any events occur that would have resulted in increasing the Base Salary under the provisions of Section 2(b) if Executive were still employed by Company, Executive shall promptly be paid such additional amounts.  Additionally, any unvested portion of the 4,000,000 options shall immediately vest upon termination.

 

Executive shall not be entitled to any other payments or compensation.  Company shall be released and discharged of and from any further obligation to Executive, except the payment of any monies previously due and owing to Executive.

 

d.           Sole Obligations of Company.

 

Company shall have no other contractual obligations to Executive upon termination of Executive's employment for any reason, except as explicitly set forth in this Section 4 of this Agreement.

 

5.           Termination.

 

Executive agrees that, following notice of termination of his/her employment with Company, he/she will cooperate fully with Company in all matters relating to the completion of her pending work on behalf of Company and the orderly transition of such work to such other officer as Company may designate.  Executive further agrees that during and following the termination of his/her employment with Company, he will cooperate fully with Company as to any and all claims, controversies, disputes or complaints over which he has any knowledge other than his or her employment relationship with Company; provided,
however, Executive will be reimbursed by Company for any out of pocket expenses incurred pursuant to his/her duties under this Section 5 and reasonably compensated for his/her time.  Such cooperation includes, but is not limited to, providing Company with all information known to him/her related to such claims, controversies, disputes or complaints and appearing and giving testimony in any forum.

 

  

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6.           Confidential Information.

 

a.           Company Information.  Executive acknowledges that during the course of employment, Executive will have access to information about Company and that Executive's employment with Company shall bring Executive into close contact with proprietary information of Company.  In recognition of the foregoing, Executive agrees at all times during and following Executive's employment with Company, to hold in confidence, and not to use, except for the benefit of Company, or to intentionally disclose to any person, firm, corporation or other entity without
written authorization of Company, any "Confidential Information" of Company which Executive obtains or creates.  Executive understands that "Confidential Information" means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, suppliers, customer lists, prices and costs, markets, software, developments, inventions, laboratory notebooks, processes, formulas, technology, designs, drawing, engineering, hardware configuration information, marketing, licenses, finances, budgets or other business information disclosed to Executive by Company in writing or by drawings of parts or equipment, or created by Executive during the period of Executive 's employment (the "Employment
Period") during working hours.  Executive understands that "Confidential Information" includes information pertaining to any aspects of Company's business which is either information not known by actual or potential competitors of Company or is proprietary information of Company or its customers or suppliers, whether of a technical nature or otherwise.  Executive further understand that Confidential Information does not include any of the foregoing items which have become publicly known and made generally available through no wrongful act of Executive.

 

b.           Third Party Information. Executive recognizes that Company has received and in the future will receive confidential or proprietary information from third parties subject to a duty on Company's part to maintain the confidentiality of such information and to use such information only for certain limited purposes.  Executive agrees to hold all such confidential or proprietary information in confidence and not to intentionally disclose it to any person, firm or corporation or to use it except as necessary in carrying out my work for Company consistent with
Company's agreement with such third party.

 

7.           Inventions.

 

a.           Inventions Retained and Licensed.  Executive represents and warrants to Company that there are no inventions, original works of authorship, developments, improvements, or trade secrets which were made by Executive prior to the commencement of his/her employment with the Company under this Agreement (collectively, "Prior Invention(s)"), which belong solely to Executive or belong to Executive jointly with another, which relate in any way to any of
Company's proposed businesses, products or research and development, and which are not assigned to Company hereunder.  If, in the course of the Employment Period, Executive incorporates into a Company product, process or machine a Prior Invention owned by Executive, Company is hereby granted and shall have a non-exclusive, non-royalty-based, license to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Invention as part of or in connection with such Company product, process or machine.

 

  

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b.           Assignment of Inventions.  Executive agrees that Executive will promptly make full written disclosure to Company, will hold in trust for the right and benefit of Company, and hereby assigns to Company, or its designee, all rights, title and interests throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable or registrable under copyright or similar laws, which Executive may solely or jointly conceive or develop or reduce to practice, or
cause to be conceived or developed or reduced to practice during the Employment Period that (i) relate at the time of conception or development to the actual or demonstrably proposed business or research and development activities of Company; (ii) result from or relate to any work performed for Company during normal business hours; and (iii) are developed through the use of Confidential Information (collectively, "Inventions").  Executive further acknowledges that all Inventions, which are made by Executive (solely or jointly with others) within the scope of and during the period of Executive’s employment with Company, are "works made for hire" and are compensated by the Base Salary, unless regulated otherwise by a separate agreement between the “Company” and the “Executive”.

 

                          c.                               Inventions on Executive's Own Time.  The provisions of Section 7(a) and 7(b) above do not apply to any invention which qualifies fully under the provisions of California Labor Code §2870, which provides as
follows:§ 2870 - Invention on Own time - Exemption from Agreement

 

(1).  Any provision in an employment agreement which provides that an Executive shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the Executive developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either (i) relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (ii) result from any work performed by the Executive for the employer.

 

(2).  To the extent a provision in an employment agreement purports to require an Executive to assign an invention otherwise excluded from being required to be assigned under subdivision (a) of Section 2870, the provision is against the public policy of this state and is unenforceable.

 

d.           Patent and Copyright Rights.  Executive agrees to assist Company, or its designee, at Company's expense, in every reasonable way to secure Company's rights in the Inventions and any copyrights, patents, trademarks, mask work rights, moral rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which are necessary in
order to apply for, obtain, maintain and transfer such rights and in order to assign and convey to Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights, or other intellectual property rights relating thereto.

 

8.           Return of Company Documents.  Executive agree that, at the time of termination of employment with Company for any reason, Executive will deliver to Company (and will not keep in my possession, recreate or deliver to anyone else) any and all Confidential Information and all other documents, materials, information or property belonging to Company, its successors or assigns. Executive further agrees that any property situated on Company's premises and owned by Company, including disks and other storage media, filing cabinets or other work areas, is subject
to inspection by Company personnel at any time with or without notice.

 

  

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9.           Injunctive Relief.  Executive expressly acknowledge that any breach or threatened breach of any of the terms and/or conditions set forth in Sections 6 and 7 of this Agreement will result in substantial, continuing and irreparable injury to Company.  Therefore, Executive hereby agrees that, in addition to any other remedy that may be available to Company, Company shall be entitled to injunctive relief, specific performance or other equitable relief by a court of appropriate
jurisdiction in the event of any breach of threatened breach of the terms of this Agreement.

 

10.           Miscellaneous.

 

           a.                     Governing Law. This Agreement is deemed to be entered into and performed in Orange County, California.  Except as otherwise explicitly noted, this Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to the conflict of law rules of California.  The parties hereby submit to the exclusive jurisdiction of the state of California in connection with any
dispute arising from or related to this Agreement, and Orange County shall be the sole venue therefore.

 

           b.                     Modifications and Amendments.  This Agreement may be modified or amended only by a written instrument executed by the parties hereto and approved in writing by a duly authorized officer of Company and signed by the Executive impacted,. No modification or amendment shall be effective absent such approval.

 

           c.                     Independence and Severability.  Each of the rights enumerated above shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to Company at law or in equity.  If any of the covenants contained herein or any part of any of them is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of the covenant or
covenants or rights or remedies which shall be given full effect without regard to the invalid portions.  If any of the covenants contained herein are held to be invalid or unenforceable because of the duration of such provision or the area or scope covered thereby, Executive agrees that the court or arbitrator making such determination shall have the power to reduce the duration, scope and/or area of such provision and in its reduced form said provision shall then be enforceable.

 

           d.                     Notice.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given as of the date if delivered in person or by telecopy, on the next business day, if sent by a nationally recognized overnight courier service, and on the third business day if mailed by registered mail, return receipt requested, postage prepaid, and if addressed
to the Company then at its principal place of business, or if addressed to Executive, then his/her last known address on file with the Company.

 

           e.                     Waiver.  The observation or performance of any condition or obligation imposed upon Executive hereunder may be waived only upon the written consent of Company and the Executive.  Such waiver shall be limited to the terms thereof and shall not constitute a waiver of any other condition or obligation of Executive under this Agreement.

 

           f.                     Assignment.  This Agreement is personal to Executive and shall not be assigned by him/her. Company may assign its rights hereunder to (a) any corporation or other legal entity resulting from any merger, consolidation or other reorganization to which Company is a party or (b) any corporation, partnership, association or other legal entity or person to which Company may transfer all or substantially all of the assets and business of
Company existing at such time.  All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

 

  

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           g.                     Headings.  The headings have been inserted for convenience only and are not to be considered when construing the provisions of this Agreement.

 

           h.                     Counterparts.  This Agreement may be executed in one or more counterparts and transmitted by facsimile, a copy of which shall constitute an original and each of which, when taken together, shall constitute one and the same agreement.

 

           i.                     Survival of Provisions.  Notwithstanding anything to the contrary in this Agreement, Sections 5, 6, 7, 8, 9 and 10 of this Agreement shall survive the termination of this Agreement for the period of time so specified or implied in such Sections, respectively.

 

           j.                     Arbitration.  Any controversy, dispute or claim of any nature whatsoever involving Company and Executive or Executive's spouse or family, including without limitation any claims arising out of, in connection with, or in relation to this Agreement or Executive's employment with Company, any claims of unlawful discrimination, sexual harassment or wrongful termination, and any issues of arbitrability of any such disputes, will be
resolved by final and binding arbitration before the American Arbitration Association in Orange County, California, in accordance with its employee arbitration rules.

 

           k.                     Entire Agreement.  This Agreement constitutes the entire understanding between the parties hereto in respect of the employment of Executive by Company, superseding all negotiations, prior discussions, prior written, implied and oral agreements, preliminary agreements and understandings with Company or any of its officers, employees or agents.

 

   l.                       Prior Agreements. This Agreement shall superscede any and all prior Employment Agreements entered into by Company and Executive.

 

IN WITNESS WHEREOF, this Agreement is executed and agreed to as of January 12, 2012

 

 

	EXECUTIVE	 	 	 	 
	 	 	 	 	 
	Desiree Mejia	 	 	Date	 
	 	 	 	 	 
	 	 	 	 	 
	COMPANY	 	 	 	 
	 	 	 	 	 
	Dave Morse	 	 	Date	 

 

 

Location Based Technologies

 

 

9Unassociated Document

Exhibit 10.99t

 

LOCATION BASED TECHNOLOGIES, INC.

AMENDED AND RESTATED

2007 STOCK INCENTIVE PLAN

 

	
1.

	
PURPOSE

 

This Plan is intended to foster and promote the long-term financial success of Location Based Technologies, Inc. (the “Company”); to reward performance and to increase shareholder value by providing Participants appropriate incentives and rewards; to enable the Company to attract and retain the services of outstanding individuals upon whose judgment, interest and dedication the successful conduct of the Company’s business is largely dependent; to encourage Participants’ ownership interest in the Company; and to align the interests of management and directors with that of the Company’s shareholders.

 

	
2.

	
DEFINITIONS

 

(a)           “Affiliate” means any entity (whether a corporation, partnership, joint venture or other form of entity) that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, the Company, except solely with respect to the issuance of Incentive Stock Options, the term “Affiliate” shall be limited to any “parent corporation” or “subsidiary corporation” of the Company, as such terms are defined in Code Sections 424(e) and 424(f), respectively.

 

(b)           “Award” means, individually or collectively, a grant under the Plan of Non-Statutory Stock Options, Incentive Stock Options, Restricted Stock, Restricted Stock Units, and Stock Appreciation Rights.

 

(c)           “Award Agreement” means a written or electronic agreement evidencing and setting forth the terms of an Award.

 

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

 

(e)           “Cause” with respect to any Award shall have the meaning set forth in the Participant’s employment agreement, or if no meaning is set forth in the Participant’s employment agreement or there is no employment agreement, “Cause” means, unless otherwise specified in the Award Agreement, with respect to a Participant:

 

	
  

	
(i)

	
Commission of any act or acts of personal dishonesty intended to result in substantial personal enrichment to the Employee to the detriment of the Company;

 

	
  

	
(ii)

	
In the case of an Employee, repeated failures to perform his or her responsibilities that are demonstrably willful and deliberate, provided that such failures have continued for more than 10 days following written notice from the Company of its intent to terminate his or her employment based on such failures;

 

  

 

  

 

	
  

	
(iii)

	
Intentional, repeated or continuing violation of any of the Company’s policies or procedures that occurs or continues after notice to the Participant that he or she has violated such policy or procedure; or

 

	
  

	
(iv)

	
Any material breach of a written covenant or agreement with the Company, including the terms of this Plan or any material breach of fiduciary duty to the Company.

 

A Participant shall be considered to have been discharged for Cause if the Company determines within 30 days after his or her resignation or discharge that discharge for Cause was warranted.

 

(f)           “Change in Control” means the first to occur of any of the following events:

 

	
  

	
(i)

	
The date any one person, or more than one “person” acting as a group, acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person(s)) ownership of Common Stock possessing 50% or more of the total voting power of the Common Stock of the Company;

 

	
  

	
(ii)

	
Individuals who at any time during the term of this Agreement constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election was approved by a vote of at least 75% of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this clause (ii) considered as though such person were a member of the Incumbent Board;

 

	
  

	
(iii)

	
Any consolidation or merger to which the Company is a party, if following such consolidation or merger, stockholders of the Company immediately prior to such consolidation or merger shall not beneficially own securities representing at least 51% of the combined voting power of the outstanding voting securities of the surviving or continuing entity; or

 

	
  

	
(iv)

	
Any sale, lease, exchange or other transfer (in one transaction or in a series of related transactions) of all, or substantially all, of the assets of the Company, other than to an entity (or entities) of which the Company or the stockholders of the Company immediately prior to such transaction beneficially own securities representing at least 51% of the combined voting power of the outstanding voting securities.

 

Notwithstanding the foregoing, however, in any circumstance or transaction in which compensation resulting from or in respect of an Award would result in the imposition of an additional tax under Code Section 409A if the foregoing definition of “Change in Control” were to apply, but would not result in the imposition of any additional tax if the term “Change in Control” were defined herein to mean a “change in control event” within the meaning of Treasury Regulation Section  1.409A-3(i)(5), then “Change in Control” shall mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5), but only
to the extent necessary to prevent such compensation from becoming subject to an additional tax under Code Section 409A.

 

  

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(g)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(h)           “Committee” means the committee designated by the Board of Directors pursuant to Section 3 of the Plan to administer the Plan.

 

(i)           “Common Stock” means the Common Stock of the Company, par value $0.001 per share.

 

(j)           “Company” means Location Based Technologies, Inc., a corporation organized under the laws of Nevada, and all successors to it.

 

(k)           “Covered Employee” means an Employee who is, or is determined by the Committee may become, a “covered employee” within the meaning of Code Section 162(m).

 

(l)           “Date of Grant” means the date when the Company completes the corporate action necessary to create the legally binding right constituting an Award, as provided in Code Section 409A and the regulations thereunder.

 

(m)           “Disability” has the meaning set forth in Code Section 22(e)(3).

 

(n)           “Effective Date” means September 10, 2007, the date on which the Plan was originally effective. To the extent context requires, the Effective Date of this amendment, restatement, and continuation of the Plan will be the date on which the Plan, as amended and restated, is approved by the shareholders of the Company.

 

(o)           “Employee” means any person employed by the Company or an Affiliate.  Directors who are employed by the Company or an Affiliate shall be considered Employees under the Plan.

 

(p)           “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(q)           “Exercise Price” means the price at which a Participant may purchase a share of Common Stock pursuant to an Option, or, in the case of Stock Appreciation Rights, the exercise price of the Stock Appreciation Right upon the Date of Grant.

 

(r)           “Fair Market Value” on any date means the market price of Common Stock, determined by the Committee as follows:

 

	
  

	
(i)

	
The Fair Market Value per share shall be the average of the closing bid and asked prices of a share on the date of determination;

 

	
  

	
(ii)

	
If no shares of the Common Stock are traded on the date of determination, but there were shares traded on dates within a reasonable period before the date of determination, the Fair Market Value shall be the average of the closing bid and asked prices of a share of the Common Stock on the most recent date before the date of determination on which trading occurred.

 

  

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(iii)

	
Nevertheless, if neither of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate, in accordance with Code Section 409A.

 

The Committee’s determination of Fair Market Value shall be conclusive and binding on all persons.

 

(s)           “Incentive Stock Option” means a stock option granted to a Participant pursuant to Section 8 of the Plan that is intended to meet the requirements of Code Section 422.

 

(t)           “Non-Statutory Stock Option” means a stock option granted to a Participant pursuant to Section 7 of the Plan that is not intended to qualify, or does not qualify, as an Incentive Stock Option.

 

(u)           “Option” means an Incentive Stock Option or a Non-Statutory Stock Option.

 

(v)           “Outside Director” means a member of the Board of Directors of the Company or an Affiliate who is not also an Employee of the Company or an Affiliate.

 

(w)           “Participant” means any person who holds an outstanding Award.

 

(x)           “Performance Criteria” means the criteria the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.  The Performance Criteria that will be used to establish Performance Goals are limited to the following: economic value added (as determined by the Committee); achievement of profit, loss or expense ratio; cash flow; book value; sales of services; net income (either before or after taxes); operating earnings; return on capital; return on net assets; return on
stockholders’ equity; return on assets; stockholder returns; productivity; expenses; margins; operating efficiency; customer satisfaction; earnings per share; price per share of Common Stock; and market share; any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group.  The Committee shall, within the time prescribed by Code Section 162(m), define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Participant.

 

(y)           “Performance Goals” means the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria.  Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of an Affiliate or an individual.  The Committee shall establish Performance Goals for each Performance Period prior to, or as soon as practicable after, the commencement of such Performance Period.  The
Committee, in its discretion, may, within the time prescribed by Code Section 162(m), adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

 

  

4

  

 

(z)           “Performance Period” means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.

 

(aa)           “Permitted Transferees” means with respect to a Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of
assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests.

 

(bb)           “Plan” means the Location Based Technologies, Inc. Amended and Restated 2007 Stock Incentive Plan.

 

(cc)           “Qualified Performance-Based Award” means an Award that is intended to qualify as “qualified performance-based compensation” within the meaning of Code Section 162(m) and is designated as a Qualified Performance-Based Award pursuant to Section 12 hereof.

 

(dd)           “Retirement” with respect to an Employee means Termination of Service without Cause after attainment of age 65.  With respect to an Outside Director, “Retirement” means termination of service as a member of the Board of Directors for any reason other than death or Disability.

 

(ee)           “Share” means a share of Common Stock.

 

(ff)            “Termination of Service” shall mean the termination of employment of an Employee with the Company and all Affiliates or the termination of service of an Outside Director as a member of the Board of Directors.  A Participant’s service shall not be deemed to have terminated because of a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service.  Furthermore, a Participant’s service with the Company shall not be deemed
to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company or an Affiliate;  provided, however, that if any such leave exceeds 90 days, on the 91st day of such leave the Participant’s service shall be deemed to have terminated unless the Participant’s right to return to service is guaranteed by statute or contract.  The Participant’s service shall be deemed to have terminated upon the entity for which the Participant performs service ceasing to be an Affiliate (or any successor).  Subject to the foregoing, the Company, in its discretion, shall determine whether a Participant’s service has terminated and the effective date of such termination.

 

  

5

  

 

	
3.

	
ADMINISTRATION

 

The Committee shall administer the Plan.  The Committee shall consist of two or more disinterested directors of the Company, who shall be appointed by the Board of Directors.  A member of the Board of Directors shall be deemed to be “disinterested” only if he or she satisfies (i) such requirements as the Securities and Exchange Commission may establish for non-employee directors administering plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act and (ii) such requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Code Section
162(m)(4)(C).  The Board of Directors may also appoint one or more separate committees of the Board of Directors, each composed of one or more directors of the Company or an Affiliate who need not be disinterested, that may grant Awards and administer the Plan with respect to Employees, Outside Directors, and other individuals who are not considered officers or directors of the Company under Section 16 of the Exchange Act or for whom Awards are not intended to satisfy the provisions of Code Section 162(m).

 

(a)           The Committee shall have the sole and complete authority to:

 

	
  

	
(i)

	
Determine the individuals to whom Awards are granted, the type and amounts of Awards to be granted and the time of all such grants;

 

	
  

	
(ii)

	
Determine the terms, conditions and provisions of, and restrictions relating to, each Award granted;

 

	
  

	
(iii)

	
Interpret and construe the Plan and all Award Agreements;

 

	
  

	
(iv)

	
Prescribe, amend and rescind rules and regulations relating to the Plan;

 

	
  

	
(v)

	
Determine the content and form of all Award Agreements;

 

	
  

	
(vi)

	
Determine all questions relating to Awards under the Plan, including whether any conditions relating to an Award have been met;

 

	
  

	
(vii)

	
Consistent with the Plan and with the consent of the Participant, as appropriate, amend any outstanding Award or amend the exercise date or dates thereof, provided that the Committee shall not have any discretion or authority to make changes to any Award that is intended to qualify as a Qualified Performance-Based Award to the extent that the existence of such discretion or authority would cause such Award not to so qualify, or to “reprice” any Options within the meaning of Section 19(b) hereof;

 

	
  

	
(viii)

	
Determine the duration and purpose of leaves of absence that may be granted to a Participant without constituting termination of the Participant’s employment for the purpose of the Plan or any Award;

 

	
  

	
(ix)

	
Maintain accounts, records and ledgers relating to Awards;

 

	
  

	
(x)

	
Maintain records concerning its decisions and proceedings;

 

  

6

  

 

	
  

	
(xi)

	
Employ agents, attorneys, accountants or other persons for such purposes as the Committee considers necessary or desirable; and

 

	
  

	
(xii)

	
Do and perform all acts which it may deem necessary or appropriate for the administration of the Plan and to carry out the objectives of the Plan.

 

The Committee’s determinations under the Plan shall be final and binding on all persons.

 

(b)           Each Award shall be evidenced by an Award Agreement containing such provisions as may be approved by the Committee.  Each Award Agreement shall constitute a binding contract between the Company and the Participant, and every Participant, upon acceptance of the Award Agreement, shall be bound by the terms and restrictions of the Plan and the Award Agreement.  The terms of each Award Agreement shall be in accordance with the Plan, but each Award Agreement may include such additional provisions and restrictions determined by the Committee, in
its discretion, provided that such additional provisions and restrictions are not inconsistent with the terms of the Plan.  In particular, and at a minimum, the Committee shall set forth in each Award Agreement (i) the type of Award granted, (ii) the Exercise Price of any Option or Stock Appreciation Right, (iii) the number of Shares subject to the Award; (iv) the expiration date of the Award, (v) the manner, time, and rate (cumulative or otherwise) of exercise or vesting of such Award, and (vi) the restrictions, if any, placed upon such Award, or upon Shares which may be issued upon exercise of such Award.  Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the Committee in its discretion and set forth in the applicable Award
Agreement.  The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company.  Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions.

 

(c)           The Committee in its sole discretion and on such terms and conditions as it may provide may delegate all or any part of its authority and powers under the Plan to one or more members of the Board of Directors and/or officers of the Company; provided, however, that the Committee may not delegate its authority or power with respect to (i) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount
of an Award to such an officer or person; or (ii) any Qualified Performance-Based Award intended to satisfy the requirements of Code Section 162(m).

 

(d)           The Committee in its sole discretion and on such terms and conditions as it may provide may delegate all authority for: (i) the determination of forms of payment to be made by or received by the Plan and (ii) the execution of any Award Agreement.  The Committee may rely on the descriptions, representations, reports and estimates provided to it by the management of the Company or an Affiliate for determinations to be made pursuant to the Plan, including the satisfaction of any conditions of a Qualified Performance-Based Award.  However, only
the Committee or a portion of the Committee may certify the attainment of any conditions of a Qualified Performance-Based Award intended to satisfy the requirements of Code Section 162(m).

 

  

7

  

 

	
4.

	
TYPES OF AWARDS AND RELATED RIGHTS

 

The following types of Awards may be granted under the Plan:

 

(a)           Non-Statutory Stock Options;

 

(b)           Incentive Stock Options;

 

(c)           Restricted Stock; and

 

(d)           Stock Appreciation Rights.

 

	
5.

	
STOCK SUBJECT TO THE PLAN

 

(a)           General Limitations.  Subject to adjustment as provided in Section 16 of the Plan, the maximum number of Shares reserved for issuance in connection with Awards under the Plan is 20,000,000 Shares. Subject to adjustment as provided in Section 16 of the Plan, the maximum number of Shares reserved for issuance as Incentive Stock Options under the Plan is 20,000,000 Shares.

 

(b)           Individual Limitations.  Subject to adjustment as provided in Section 16 of the Plan:

 

	
  

	
(i)

	
in no event may Qualified Performance-Based Awards be granted to a single Participant in any 12-month period (i) in respect of more than 2,000,000 Shares (if the Award is denominated in Shares) or (ii) having a maximum payment with a value greater than $3,000,000 (if the Award is denominated in other than Shares).

 

(c)           Other Rules.

 

	
  

	
(i)

	
The number of Shares associated with an Award originally counted against the limitations as the result of the grant of the Award shall be restored against the limitations and be available for reissuance under this Plan if and to the extent the Award is surrendered, cancelled, expires, settled in cash, terminates or is forfeited for any reason.

 

	
  

	
(ii)

	
The following Shares shall not become available for issuance or reissuance under the Plan:

 

	
  

	
A.

	
Shares tendered by a Participant as full or partial payment to the Company upon exercise of an Option including Shares tendered by means of a “net exercise” as described in Section 9; and

 

  

8

  

 

	
  

	
B.

	
Shares withheld by, or otherwise remitted to satisfy a Participant’s tax withholding obligations upon the lapse of restrictions on Restricted Stock, the exercise of Options granted under the Plan or upon any other payment or issuance of Shares under the Plan.

 

(d)           Source of Shares.  Shares issued under the Plan may be either authorized but unissued Shares, authorized Shares previously issued held by the Company in its treasury which have been reacquired by the Company, or Shares purchased by the Company in the open market.

 

	
6.

	
ELIGIBILITY

 

Subject to the terms of the Plan, all Employees and Outside Directors shall be eligible to receive Awards under the Plan.  In addition, the Committee may grant Awards to consultants and advisors of the Company or an Affiliate.

 

	
7.

	
NON-STATUTORY STOCK OPTIONS

 

The Committee may, subject to the limitations of this Plan and the availability of Shares reserved but not previously awarded under the Plan, grant Non-Statutory Stock Options to eligible individuals upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions:

 

(a)           Exercise Price.  The Committee shall determine the Exercise Price of each Non-Statutory Stock Option.  However, the Exercise Price shall not be less than the Fair Market Value of the Common Stock on the Date of Grant.

 

(b)           Terms of Non-Statutory Stock Options.  The Committee shall determine the term during which a Participant may exercise a Non-Statutory Stock Option, but in no event may a Participant exercise a Non-Statutory Stock Option, in whole or in part, more than 10 years from the Date of Grant.  The Committee shall also determine the date on which each Non-Statutory Stock Option, or any part thereof, first becomes exercisable and any terms or conditions a Participant must satisfy in order
to exercise each Non-Statutory Stock Option.  Shares underlying each Non-Statutory Stock Option may be purchased, in whole or in part, by the Participant at any time during the term of such Non-Statutory Stock Option, after such Option becomes exercisable.  A Non-Statutory Stock Option may not be exercised for fractional shares.

 

(c)           Termination of Service.

 

	
  

	
(i)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, upon a Participant’s Termination of Service for any reason other than Disability or death, or Termination for Cause, the Participant may exercise only those Non-Statutory Stock Options that were immediately exercisable by the Participant at the date of such termination and only for three months following the date of such termination, or, if sooner, the expiration of the term of the Non-Statutory Stock Option.

 

	
  

	
(ii)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, in the event of a Participant’s Termination of Service due to Disability or death, all Non-Statutory Stock Options held by such Participant shall immediately become exercisable and remain exercisable for one year following the date of such termination, or, if sooner, the expiration of the term of the Non-Statutory Stock Option.

 

  

9

  

 

	
  

	
(iii)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, in the event of a Participant’s Termination of Service for Cause, all rights with respect to the Participant’s Non-Statutory Stock Options shall be forfeited and expire immediately upon the effective date of such Termination for Cause.

 

(d)           Extension of Term of Option.  The period during which a Non-Statutory Stock Option is to remain exercisable following a Participant’s Termination of Service shall be extended if the exercise of the Non-Statutory Stock Option would violate an applicable Federal, state, local, or foreign law until 30 days after the exercise of the Non-Statutory Stock Option would no longer violate applicable Federal, state, local, and foreign laws, but not beyond the original term of the
Non-Statutory Stock Option pursuant to Section 7(b).

 

(e)           Acceleration Upon Change in Control.  In the event of a Change in Control, all Non-Statutory Stock Options held by a Participant shall become immediately vested and fully exercisable and, subject to Section 16(b), shall remain exercisable until the expiration of the term of the Non-Statutory Stock Option.

 

(f)           Payment.  Payment due to a Participant upon the exercise of a Non-Statutory Stock Option shall be made in the form of Shares.

 

	
8.

	
INCENTIVE STOCK OPTIONS

 

The Committee may, subject to the limitations of the Plan and the availability of Shares reserved but not previously awarded under this Plan, grant Incentive Stock Options to Employees upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions:

 

(a)           Exercise Price.  The Committee shall determine the Exercise Price of each Incentive Stock Option.  However, the Exercise Price shall not be less than the Fair Market Value of the Common Stock on the Date of Grant; provided, however, that if at the time an Incentive Stock Option is granted, the Employee owns or is treated as owning, for purposes of Code Section 422, Common Stock representing more than 10% of the total combined voting securities of the Company (“10%
Owner”), the Exercise Price shall not be less than 110% of the Fair Market Value of the Common Stock on the Date of Grant.

 

(b)           Amounts of Incentive Stock Options.  To the extent the aggregate Fair Market Value of Shares with respect to which Incentive Stock Options that are exercisable for the first time by an Employee during any calendar year under the Plan and any other stock option plan of the Company or an Affiliate exceeds $100,000, or such higher value as may be permitted under Code Section 422, such Options in excess of such limit shall be treated as Non-Statutory Stock Options.  Fair Market
Value shall be determined as of the Date of Grant with respect to each such Incentive Stock Option.

 

  

10

  

 

(c)           Terms of Incentive Stock Options.  The Committee shall determine the term during which a Participant may exercise an Incentive Stock Option, but in no event may a Participant exercise an Incentive Stock Option, in whole or in part, more than 10 years from the Date of Grant; provided, however, that if at the time an Incentive Stock Option is granted to an Employee who is a 10% Owner, the Incentive Stock Option granted to such Employee shall not be exercisable after the expiration of five
years from the Date of Grant.  The Committee shall also determine the date on which each Incentive Stock Option, or any part thereof, first becomes exercisable and any terms or conditions a Participant must satisfy in order to exercise each Incentive Stock Option.  Shares underlying each Incentive Stock Option may be purchased, in whole or in part, at any time during the term of such Incentive Stock Option, after such Option becomes exercisable.  An Incentive Stock Option may not be exercised for fractional shares.

 

(d)           Termination of Service.

 

	
  

	
(i)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, upon a Participant’s Termination of Service for any reason other than Disability or death, or Termination for Cause, the Participant may exercise only those Incentive Stock Options that were immediately exercisable by the Participant at the date of such termination and only for three months following the date of such termination, or, if sooner, the expiration of the term of the Incentive Stock Option.

 

	
  

	
(ii)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, in the event of a Participant’s Termination of Service due to Disability or death, all Incentive Stock Options held by such Participant shall immediately become exercisable and remain exercisable for one year following the date of such termination, or, if sooner, the expiration of the term of the Incentive Stock Option.

 

	
  

	
(iii)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, in the event of an Employee’s Termination for Cause, all rights under such Employee’s Incentive Stock Options shall expire immediately upon the effective date of such Termination for Cause.

 

(e)           Extension of Term of Option.  The period during which an Incentive Stock Option is to remain exercisable following a Participant’s Termination of Service shall be extended if the exercise of the Incentive Stock Option would violate an applicable Federal, state, local, or foreign law until 30 days after the exercise of the Incentive Stock Option would no longer violate applicable Federal, state, local, and foreign laws, but not beyond the original term of the Incentive Stock Option
pursuant to Section 8(c).  Any extension of the term of an Incentive Stock Option pursuant to this Section 8(e) may cause the Option to be treated as a Non-Statutory Stock Option.

 

  

11

  

 

(f)           Acceleration Upon a Change in Control.  In the event of a Change in Control, all Incentive Stock Options held by such a Participant shall become immediately vested and fully exercisable, and, subject to Section 16(b), shall remain exercisable until the expiration of the term of the Incentive Stock Option.

 

(g)           Payment.  Payment due to a Participant upon the exercise of an Incentive Stock Option shall be made in the form of Shares.

 

(h)           Disqualifying Dispositions.  Each Award Agreement with respect to an Incentive Stock Option shall require the Participant to notify the Committee of any disposition of Shares issued pursuant to the exercise of such Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), within 10 days of such disposition.

 

	
9.

	
METHOD OF EXERCISE OF OPTIONS

 

Subject to any applicable Award Agreement, any Option may be exercised by the Participant in whole or in part at such time or times, and the Participant may make payment of the Exercise Price in such form or forms established by the Committee, including, without limitation, payment by delivery of cash or Common Stock owned by the Participant having a Fair Market Value on the exercise date equal to the total Exercise Price, or by any combination of cash and Shares, including exercise by means of a cashless exercise arrangement with a qualifying broker-dealer or a “net exercise.”  The Participant may deliver shares of Common Stock either by attestation or by the delivery of
a certificate or certificates for shares duly endorsed for transfer to the Company.  A “net exercise” means the delivery of a properly executed notice followed by a procedure pursuant to which (1) the Company will reduce the number of Shares otherwise issuable to a Participant upon the exercise of an Option by the largest whole number of Shares having a Fair Market Value that does not exceed the aggregate Exercise Price for the Shares with respect to which the Option is exercised, and (2) the Participant shall pay to the Company in cash the remaining balance of such aggregate Exercise Price not satisfied by such reduction in the number of whole Shares to be issued.  Shares will no longer be outstanding under an Option and will not be exercisable thereafter to the extent that (A) Shares are used to pay the Exercise Price pursuant to a “net
exercise,” (B) Shares are delivered to the Participant as a result of such exercise, and (C) Shares are withheld to satisfy tax withholding obligations

 

	
10.

	
RESTRICTED STOCK AWARDS

 

The Committee may, subject to the limitations of the Plan and the availability of Shares reserved but not previously awarded under this Plan, grant Restricted Stock to eligible individuals upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions:

 

(a)           Payment of the Restricted Stock.  The Restricted Stock may only be made in whole Shares.

 

  

12

  

 

(b)           Terms of the Restricted Stock.  The Committee shall determine the dates on which Restricted Stock granted to a Participant shall vest and any specific conditions or performance goals which must be satisfied prior to the vesting of any installment or portion of the Restricted Stock.  Notwithstanding other paragraphs in this Section 10, the Committee may, in its sole discretion, accelerate the vesting of any Restricted Stock except for any Restricted Stock that is part of a
Qualified Performance-Based Award under Section 12 hereof.  The acceleration of any Restricted Stock shall create no right, expectation or reliance on the part of any other Participant or that certain Participant regarding any other Restricted Stock.

 

(c)           Termination of Service.  Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, upon a Participant’s Termination of Service for any reason other than Retirement, Disability or death, the Participant’s unvested Restricted Stock as of the date of termination shall be forfeited and any rights the Participant had to such unvested Restricted Stock shall become null and void.  Unless otherwise provided in the applicable Award
Agreement, in the event of a Participant’s Termination of Service due to Retirement, Disability or death, all unvested Restricted Stock held by such Participant, including any Restricted Stock subject to a Performance Goal, shall immediately vest.

 

(d)           Acceleration Upon a Change in Control.  In the event of a Change in Control, all unvested Restricted Stock held by a Participant shall become immediately vested.

 

(e)           Dividends and Other Distributions.  A Participant holding Restricted Stock shall, unless otherwise provided in the applicable Award Agreement, be entitled to receive, with respect to such Restricted Stock, a payment equal to any cash dividends or distributions (other than distributions in Shares) and the number of Shares equal to any stock dividends, declared and paid with respect to such Restricted Stock if the record date for determining shareholders entitled to receive such dividends
falls between the Date of Grant of the relevant Restricted Stock and the date the relevant Restricted Stock or installment thereof is vested.

 

(f)           Voting of Restricted Stock.  A Participant shall be entitled to vote Restricted Stock that has been granted to him, but not yet vested, subject to the rules and procedures adopted by the Committee for this purpose.

 

(g)           Restrictive Legend.  Each certificate issued in respect of Restricted Stock shall be registered in the name of the Participant and, at the discretion of the Board, each such certificate may be deposited in a bank designated by the Board.  Each such certificate shall bear the following (or a similar) legend:

 

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the Location Based Technologies, Inc. Amended and Restated 2007 Stock Incentive Plan and an agreement entered into between the registered owner and Location Based Technologies, Inc.  A copy of such plan and agreement is on file at the principal office of Location Based Technologies, Inc.”

 

(h)           Transfers of Unrestricted Shares.  Upon the vesting date of Restricted Stock, such Restricted Stock will be transferred free of all restrictions to a Participant (or his or her legal representative, beneficiaries or heirs).

 

  

13

  

 

	
11.

	
STOCK APPRECIATION RIGHTS

 

The Committee may, subject to the limitations of the Plan and the availability of Shares reserved but not previously awarded under this Plan, grant Stock Appreciation Rights to eligible individuals upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions.  A Stock Appreciation Right is an award that entitles the holder to receive an amount equal to the difference between the Fair Market Value of the Shares at the time of exercise of the Stock Appreciation Right and the Exercise Price on the Date of Grant, subject to the provisions of this Section 11.

 

(a)           Exercise Price.  The Committee shall determine the Exercise Price of each Stock Appreciation Right.  However, the Exercise Price shall not be less than the Fair Market Value of the Common Stock on the Date of Grant.

 

(b)           Terms of Stock Appreciation Rights.  The Committee shall determine the term during which a Participant may exercise a Stock Appreciation Right, but in no event may a Participant exercise a Stock Appreciation Right, in whole or in part, more than 10 years from the Date of Grant.  The Committee shall also determine the date on which each Stock Appreciation Right, or any part thereof, first becomes exercisable and any terms or conditions a Participant must satisfy in order to
exercise each Stock Appreciation Right.  A Stock Appreciation Right may not be exercised for fractional shares.  If, on the date when a Stock Appreciation Right would otherwise terminate or expire the Exercise Price of the Stock Appreciation Right is less than the Fair Market Value of the Shares subject to the Stock Appreciation Right on such date but any portion of the Stock Appreciation Right has not been exercised, then the Stock Appreciation Right shall automatically be deemed to be exercised as of such date with respect to such portion.  An Award Agreement with respect to a Stock Appreciation Right may also provide for an automatic exercise of the Stock Appreciation Right on an earlier date.

 

(c)           Termination of Service.

 

	
  

	
(i)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, upon a Participant’s Termination of Service for any reason other than Disability or death, or Termination for Cause, the Participant may exercise only those Stock Appreciation Rights that were immediately exercisable by the Participant at the date of such termination and only for three months following the date of such termination, or, if sooner, the expiration of the term of the Stock Appreciation Right.

 

	
  

	
(ii)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, in the event of a Participant’s Termination of Service due to Disability or death, all Stock Appreciation Rights held by such Participant shall immediately become exercisable and remain exercisable for one year following the date of such termination, or, if sooner, the expiration of the term of the Stock Appreciation Right.

 

  

14

  

 

	
  

	
(iii)

	
Unless otherwise determined by the Committee and as set forth in an applicable Award Agreement, in the event of a Participant’s Termination for Cause, all rights with respect to the Participant’s Stock Appreciation Rights shall be forfeited and expire immediately upon the effective date of such Termination for Cause.

 

(d)           Extension of Term of Stock Appreciation Right.  The period during which a Stock Appreciation Right is to remain exercisable following a Participant’s Termination of Service shall be extended if the exercise of the Stock Appreciation Right would violate an applicable Federal, state, local, or foreign law until 30 days after the exercise of the Stock Appreciation Right would no longer violate applicable Federal, state, local, and foreign laws, but not beyond the original term of the
Stock Appreciation Right pursuant to Section 11(b).

 

(e)           Acceleration Upon Change in Control.  In the event of a Change in Control, each Stock Appreciation Right held by a Participant shall immediately become exercisable and, subject to Section 16(b), shall remain exercisable until the expiration of the term of the Stock Appreciation Right.

 

(f)           Payment.  Payment due to a Participant upon the exercise of a Stock Appreciation Right shall be made in the form of cash or Shares, or both, in the discretion of the Committee as set forth in the applicable Award Agreement.

 

	
12.

	
QUALIFIED PERFORMANCE-BASED AWARDS

 

(a)           Purpose.  The purpose of this Section 12 is to provide the Committee the ability to grant Restricted Stock as Qualified Performance-Based Awards.  If the Committee, in its discretion, decides to grant to a Covered Employee an Award that is intended to constitute a Qualified Performance-Based Award, the provisions of this Section 12 shall control over any contrary provision contained herein;
provided, however, that the Committee may grant Awards to Covered Employees that are based on Performance Criteria or Performance Goals that do not satisfy the requirements of this Section 12.

 

(b)           Applicability.  This Section 12 shall apply only to those Covered Employees selected by the Committee to receive Qualified Performance-Based Awards.  The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the relevant Performance Period.  Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such
Covered Employee as a Participant in any subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period or in any other period.

 

  

15

  

 

(c)           Procedures with Respect to Qualified Performance-Based Awards.  To the extent necessary to comply with the Qualified Performance-Based Award requirements of Code Section 162(m)(4)(C), with respect to any Award that may be granted to one or more Covered Employees, no later than 90 days following the commencement of any fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by Code Section 162(m)), the
Committee shall, in writing, (a) designate one or more Covered Employees, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (d) specify the relationship between Performance Criteria and the Performance Goals and the amounts of such Restricted Stock, as applicable, to be earned by each Covered Employee for such Performance Period.  Following the completion of each Performance Period, the Committee shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period.  No Award or portion thereof that is subject to the satisfaction of any condition shall be considered to be earned or vested until the Committee certifies in writing that the conditions to which the
distribution, earning or vesting of such Award is subject have been achieved.  The Committee may not increase during a year the amount of a Qualified Performance-Based Award that would otherwise be payable upon satisfaction of the conditions but may reduce or eliminate the payments as provided for in the Award Agreement.

 

(d)           Payment of Qualified Performance-Based Awards.  Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company or a subsidiary on the day a Qualified Performance-Based Award for such Performance Period is paid to the Participant.  Furthermore, a Participant shall be eligible to receive payment pursuant to a Qualified Performance-Based Award for a Performance Period only if the Performance Goals for such period are
achieved.  Unless otherwise provided in the applicable Award Agreement, in the event of Termination of the Participant’s Service due to Disability or death, all unvested Qualified Performance-Based Awards held by such Participant shall immediately vest.

 

(e)           Acceleration Upon a Change in Control.  In the event of a Change in Control, all unvested Qualified Performance-Based Awards held by a Participant shall become vested upon the Change in Control.

 

(f)           Dividends and Other Distributions.  Unless otherwise determined by the Committee and evidenced in an applicable Award Agreement, a Participant shall not be paid any dividends or distributions or other distributions with respect to Qualified Performance-Based Awards until the Participant has become vested in the Shares covered by the Qualified Performance-Based Awards.  At the time of vesting, the Participant shall receive a cash payment equal to the aggregate cash dividends
(without interest) (other than distributions in Shares) and the number of Shares equal to any stock dividends that the Participant would have received if the Participant had owned all of the Shares which vested for the period beginning on the date of the Award, and ending on the date of vesting or payment.  No dividends shall be paid to the Participant with respect to any Qualified Performance-Based Awards that are forfeited by the Participant.

 

(g)           Additional Limitations.  Notwithstanding any other provision of the Plan, any Award granted to a Covered Employee that is intended to constitute a Qualified Performance-Based Award shall be subject to any additional limitations set forth in Code Section 162(m) or any regulations or rulings issued thereunder that are requirements for qualification as qualified performance-based compensation as described in Code Section 162(m)(4)(C), and the Plan shall be deemed amended to the extent
necessary to conform to such requirements.

 

  

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(h)           Effect on Other Plans and Arrangements.  Nothing contained in the Plan will be deemed in any way to limit or restrict the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

 

	
13.

	
RIGHTS OF PARTICIPANTS

 

No Participant shall have any rights as a shareholder with respect to any Shares covered by an Option until the date of issuance of a stock certificate for such Common Stock.  Nothing contained in this Plan or in any Award Agreement confers on any person any right to continue in the employ or service of the Company or an Affiliate or interferes in any way with the right of the Company or an Affiliate to terminate a Participant’s services.

 

	
14.

	
DESIGNATION OF BENEFICIARY

 

A Participant may, with the consent of the Committee, designate a person or persons to receive, in the event of death, any Award to which the Participant would then be entitled.  Such designation will be made upon forms supplied by and delivered to the Company and may be revoked in writing.  If a Participant fails to designate a beneficiary, then the Participant’s estate will be deemed to be the beneficiary.

 

	
15.

	
TRANSFERABILITY OF AWARDS

 

(a)           Incentive Stock Options.  Incentive Stock Options are not transferable, voluntarily or involuntarily, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code.  During a Participant’s lifetime, Incentive Stock Options may be exercised only by the Participant (or a legal representative if the Participant becomes incapacitated).

 

(b)           Awards Other Than Incentive Stock Options.  All Awards granted pursuant to this Plan other than Incentive Stock Options are transferable only by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code; provided, however, with the approval of the Committee, a Participant may transfer a Non-Statutory Stock Option or a Stock Appreciation Right for no consideration to or for the benefit of one or more Permitted Transferees
subject to such limits as the Committee may establish, and the Permitted Transferee shall remain subject to all the terms and conditions applicable to the Award prior to such transfer.  The transfer of an Award pursuant to this Section shall include a transfer of the rights of a Participant under this Plan to consent to certain amendments to the Plan or an Award Agreement and, in the discretion of the Committee, shall also include transfer of ancillary rights associated with the Award.

 

  

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16.

	
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR A CHANGE OF CONTROL

 

(a)           Adjustment Clause.  In the event of any change in the outstanding shares of Stock of the Company by reason of any stock dividend, split, spinoff, recapitalization, merger, consolidation, combination, extraordinary dividend, exchange of shares or other change affecting the outstanding shares of Stock as a class without the Company’s receipt of consideration, or other equity restructuring within the meaning of Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 718, Stock Compensation (formerly, FASB Statement 123R), appropriate adjustments shall be made to the terms of any outstanding Awards, including, (i) the aggregate number of shares of Stock with respect to which awards may be made under the Plan, (ii) the terms and the number of shares and/or the price per share of any outstanding Stock Options, Stock Appreciation Rights, and Restricted Stock, and (iii) the share limitations set forth in Section 5 hereof.  The Committee shall also make appropriate adjustments described in (i)-(iii) of the previous sentence in the event of any distribution of assets to shareholders other than a normal cash dividend.  Adjustments, if any, and any determination or interpretations, made by the Committee shall be final, binding and conclusive.  Conversion of any convertible
securities of the Company shall not be deemed to have been effected without receipt of consideration.  Except as expressly provided herein, no issuance by the Company of shares of any class or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to an Award.

 

(b)           Change in Control.  If a Change in Control occurs, the Committee may, in its discretion and without limitation:

 

	
  

	
(i)

	
Cancel outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion (it being understood that if shareholders receive consideration other than publicly traded equity securities of the surviving entity, any determination by the Committee that the value of a Stock Option or Stock Appreciation Right shall equal the excess, if any, of the value of the consideration being paid for each Share in such transaction over the Exercise Price of such Option or Stock Appreciation Right shall conclusively be deemed valid).  Accordingly, if the Exercise Price of the Shares subject to a Stock Option or Stock Appreciation Right exceeds the Fair
Market Value of such Shares, then such Stock Option or Stock Appreciation Right may be cancelled without making a payment to the holder of the Stock Option or Stock Appreciation Right;

 

	
  

	
(ii)

	
Substitute other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for Shares subject to outstanding Awards;

 

	
  

	
(iii)

	
Arrange for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Affiliate, Affiliate, or division or by the entity that controls such Affiliate, Affiliate, or division following the transaction (as well as any corresponding adjustments to Awards that remain outstanding based upon Company securities); and

 

  

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(iv)

	
May, after giving Participants an opportunity to exercise their outstanding Stock Options and Stock Appreciation Rights, terminate any or all unexercised Stock Options and Stock Appreciation Rights.  Such termination shall take place as of the date of the Change in Control or such other date as the Committee may specify.

 

(c)           Code Section 409A Provisions with Respect to Adjustments.  Notwithstanding the foregoing: (i) any adjustments made pursuant to this Section to Awards that are considered “deferred compensation” within the meaning of Code Section 409A shall be made in compliance with the requirements of Code Section 409A unless the Participant consents otherwise; (ii) any adjustments made to Awards that are not considered “deferred compensation” subject to Code Section 409A shall
be made in such a manner as to ensure that after such adjustment, the Awards either continue not to be subject to Code Section 409A or comply with the requirements of Code Section 409A unless the Participant consents otherwise; and (iii) the Committee shall not have the authority to make any adjustments under this Section to the extent that the existence of such authority would cause an Award that is not intended to be subject to Code Section 409A to be subject thereto.

 

	
17.

	
TAX WITHHOLDING

 

Whenever under this Plan, cash or Shares are to be delivered upon exercise of an Award or any other event with respect to rights and benefits hereunder, the Committee shall be entitled to require as a condition of delivery (i) that the Participant remit an amount sufficient to satisfy all federal, state, and local withholding tax requirements related thereto, (ii) that the minimum withholding of such sums come from compensation otherwise due to the Participant or from any Shares due to the Participant under this Plan, or (iii) any combination of the foregoing provided.

 

  

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18.

	
TERMINATION OF AWARDS OR DISGORGEMENT OF FUNDS TRIGGERED BY MISCONDUCT, COMPETITION OR OTHER ACTIVITIES

 

(a)           Stock Options and Stock Appreciation Rights.  If at any time (including after a notice of exercise has been delivered) the Committee reasonably believes that a Participant, other than an Outside Director, has committed an act of Misconduct (as defined in this Section), the Committee may suspend the Participant’s right to exercise any Stock Option or Stock Appreciation Right pending a determination of whether an act of Misconduct has been committed.  If the Committee
determines a Participant, other than an Outside Director, (i) has committed an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company, breach of fiduciary duty or deliberate disregard of Company policies resulting in loss, damage or injury to the Company; (ii) has made an unauthorized disclosure of any trade secret or confidential information; (iii) engaged in any conduct constituting unfair competition; (iv) without the written consent of the Company, which may be withheld for any reason or no reason, serves (or agrees to serve) as an officer, director or employee of any proprietorship, partnership or corporation or becomes the owner of a business or a member of a partnership that competes with any portion of the Company’s business, or renders any service (including business consulting) to entities that compete with any portion of the
Company’s business; or (v) refuses or fails to consult with, supply information to, or otherwise cooperate with the Company after having been requested to do so (hereafter, “Misconduct”), neither the Participant nor his or her estate shall be entitled to exercise any Stock Option or Stock Appreciation Right whatsoever.  In addition, for any Participant who is designated as an executive officer by the Board of Directors, if the Committee determines that the Participant engaged in an act of embezzlement, fraud or breach of fiduciary duty during the Participant’s employment that contributed to an obligation to restate the Company’s financial statements (hereafter, “Contributing Misconduct”), the Participant shall be required to repay to the Company, in cash and upon demand, the Option Proceeds (as defined below) resulting from any sale or
other disposition (including to the Company) of Shares issued or issuable upon exercise of a Stock Option or Stock Appreciation Right if the sale or disposition was effected during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission of the financial statements required to be restated.  The term Option Proceeds means, with respect to any sale or other disposition (including to the Company) of Shares issuable or issued upon exercise of a Stock Option or Stock Appreciation Right, an amount determined appropriate by the Committee to reflect the effect of the restatement on the Company’s stock price, up to the amount equal to the number of Shares sold or disposed of multiplied by the difference between the market value per Share at the time of such sale or disposition and the Exercise Price.  The return of
Option Proceeds is in addition to and separate from any other relief available to the Company due to the executive officer’s Contributing Misconduct.  Any determination by the Committee with respect to the foregoing shall be final, conclusive and binding on all interested parties.  For any Participant who is an executive officer, the determination of the Committee shall be subject to approval of the Board of Directors.

 

(b)           Restricted Stock.  If at any time the Committee reasonably believes that a Participant, other than an Outside Director, has committed an act of Misconduct, the Committee may suspend the vesting of Shares under the Participant’s Restricted Stock Awards pending a determination of whether an act of Misconduct has been committed.  If an act of Misconduct has been committed by the Participant, the Participant’s Restricted Stock shall be forfeited and
cancelled.  In addition, for any Participant who is designated as an executive officer by the Board of Directors, if the Committee determines that the Participant engaged in Contributing Misconduct, the Participant shall be required to repay to the Company, in cash and upon demand, the Stock Proceeds (as defined below) resulting from any sale or other disposition (including to the Company) of Shares issued or issuable upon the vesting of such awards if the sale or disposition was effected during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission of the financial statements required to be restated.  The term Stock Proceeds means, with respect to any sale or other disposition (including to the Company) of Shares issued or issuable upon vesting of such awards, an amount determined appropriate by the Committee to
reflect the effect of the restatement on the Company’s stock price, up to the amount equal to the fair market value per Share at the time of such sale or other disposition multiplied by the number of Shares sold or disposed of.  The return of Stock Proceeds is in addition to and separate from any other relief available to the Company due to the executive officer’s Contributing Misconduct.  Any determination by the Committee with respect to the foregoing shall be final, conclusive and binding on all interested parties.  For any Participant who is an executive officer, the determination of the Committee shall be subject to approval of the Board of Directors.

 

  

20

  

 

	
19.

	
AMENDMENT OF THE PLAN AND AWARDS

 

(a)           The Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect, prospectively or retroactively; provided, however, (i) provisions governing grants of Incentive Stock Options shall be submitted for shareholder approval to the extent required by applicable law or regulation; (ii) except as permitted by Section 16, no amendment may increase the share limitations set forth in Section 5 or decrease the minimum Exercise Price for Stock Options or Stock Appreciation Rights set forth in Sections 7(a),
8(a) and 11(a), unless any such amendment is approved by the Company’s shareholders within 12 months before or after such amendment; and (iii) the provisions of Section 19(b) (relating to Option repricing) may not be amended, unless any such amendment is approved by the Company’s shareholders.  Failure to ratify or approve amendments or modifications by shareholders shall be effective only as to the specific amendment or modification requiring such approval or ratification.  Other provisions of this Plan will remain in full force and effect.  No such termination, modification or amendment may adversely affect the rights of a Participant under an outstanding Award without the written permission of such Participant.

 

(b)           The Committee may amend any Award Agreement, prospectively or retroactively; provided, however, that no such amendment shall adversely affect the rights of any Participant under an outstanding Award without the written consent of such Participant; provided, however, that repricing of Stock Options or Stock Appreciation Rights shall not be permitted.  For this purpose, a repricing means any of the following (or any other action that has the same effect as any of the following): (i) changing the terms of an Option or Stock Appreciation Right to lower
its Exercise Price; (ii) any other action that is treated as a repricing under generally accepted accounting principles; and (iii) canceling an Option or Stock Appreciation Right at a time when its exercise price is equal to or greater than the Fair Market Value of the underlying stock in exchange for another Option, Stock Appreciation Right or other Award, unless the cancellation and exchange occurs in connection with an event set forth in Section 16.  Such cancellation and exchange would be considered a repricing regardless of whether it is treated as a repricing under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant.

 

	
20.

	
RIGHT OF OFFSET

 

The Company will have the right to offset against its obligation to deliver shares of Common Stock (or other property) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other employee programs) that the Participant then owes to the Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement; provided, however, that no such offset shall be permitted if it would constitute an “acceleration” of a
payment hereunder within the meaning of Code Section 409A.  This right of offset shall not be an exclusive remedy and the Company’s election not to exercise the right of offset with respect to any amount payable to a Participant shall not constitute a waiver of this right of offset with respect to any other amount payable to the Participant or any other remedy.

 

  

21

  

 

	
21.

	
EFFECTIVE DATE OF PLAN

 

The Plan, as amended and restated, shall become effective immediately upon its approval by the Company’s shareholders. Awards may be granted under the Plan, as amended and restated, while the receipt of shareholder approval is pending, and, to the extent required by applicable law, any such Awards shall be conditioned on the receipt of such approval.

 

	
22.

	
TERMINATION OF THE PLAN

 

The right to grant Awards under the Plan will terminate 10 years after the Effective Date.  The Board of Directors has the right to suspend or terminate the Plan at any time, provided that no such action will, without the consent of a Participant, adversely affect a Participant’s rights under an outstanding Award.

 

	
23.

	
APPLICABLE LAW; COMPLIANCE WITH LAWS

 

The Plan will be administered in accordance with the laws of the state of California and applicable federal law.  Notwithstanding any other provision of the Plan, the Company shall have no liability to issue any Shares under the Plan unless such issuance would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.  Prior to the issuance of any Shares under the Plan, the Company may require a written statement that the recipient is acquiring the shares for investment and not for the purpose or with the intention of distributing the shares.

 

	
24.

	
PROHIBITION ON DEFERRED COMPENSATION

 

It is the intention of the Company that no Award shall be “deferred compensation” subject to Code Section 409A unless and to the extent that the Committee specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly.  The terms and conditions governing any Awards that the Committee determines will be subject to Code Section 409A, including any rules for elective or mandatory deferral of the delivery of cash or Shares pursuant thereto, shall be set forth in the applicable Award Agreement, and shall comply in all respects with Code Section 409A.  Notwithstanding any provision herein to the contrary, any
Award issued under the Plan that constitutes a deferral of compensation under a “nonqualified deferred compensation plan” as defined under Code Section 409A(d)(1) and is not specifically designated as such by the Committee shall be modified or cancelled to comply with the requirements of Code Section 409A, including any rules for elective or mandatory deferral of the delivery of cash or Shares pursuant thereto.

 

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