Document:

Exhibit 10.1

 

I.D. SYSTEMS, INC.

2015 EQUITY COMPENSATION PLAN 

 

1.            Establishment
and Purpose 

 

The purpose of the
I.D. Systems, Inc. 2015 Equity Compensation Plan (the “Plan”) is to provide a means whereby eligible employees, officers,
non-employee directors and other individual service providers develop a sense of proprietorship and personal involvement in the
development and financial success of the Company and to encourage them to devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its stockholders. The Company, by means of the Plan, seeks to retain the services
of such eligible persons and to provide incentives for such persons to exert maximum efforts for the success of the Company and
its Subsidiaries.

 

The Plan permits the
grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Stock Units, Performance
Shares, Performance Units, Incentive Bonus Awards, Other Cash-Based Awards and Other Stock-Based Awards. This Plan shall become
effective upon the date set forth in Section 18.1 hereof.

 

2. Definitions 

 

Wherever the following
capitalized terms are used in the Plan, they shall have the meanings specified below:

 

2.1   “Affiliate”
means, with respect to a Person, a Person that directly or indirectly Controls, or is Controlled by, or is under common Control
with, such Person.

 

2.2   “Applicable
Law” means the requirements relating to the administration of equity-based awards or equity compensation plans under
U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted
under the Plan.

 

2.3   “Award”
means an award of a Stock Option, Stock Appreciation Right, Restricted Stock, Stock Unit, Performance Share, Performance Unit,
Incentive Bonus Award, Other Cash-Based Award and/or Other Stock-Based Award granted under the Plan.

 

2.4   “Award
Agreement” means either (i) a written or electronic agreement entered into between the Company and a Participant setting
forth the terms and conditions of an Award including any amendment or modification thereof, or (ii) a written or electronic statement
issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification
thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic,
internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant. Each Award Agreement shall
be subject to the terms and conditions of the Plan and need not be identical.

 

2.5   “Board”
means the Board of Directors of the Company.

 

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2.6   “Cause”
means (i) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other crime that causes the Company
or its Affiliates public disgrace or disrepute, or materially and adversely affects the Company’s or its Affiliates’
operations or financial performance or the relationship the Company has with its customers, (ii) gross negligence or willful misconduct
with respect to the Company or any of its Affiliates, including, without limitation fraud, embezzlement, theft or proven dishonesty
in the course of his or her employment; (iii) refusal to perform any lawful, material obligation or fulfill any duty (other than
any duty or obligation of the type described in clause (v) below) to the Company or its Affiliates (other than due to a Disability),
which refusal, if curable, is not cured within 10 days after delivery of written notice thereof; (iv) material breach of any agreement
with or duty owed to the Company or any of its Affiliates, which breach, if curable, is not cured within 10 days after the delivery
of written notice thereof; or (v) any breach of any obligation or duty to the Company or any of its Affiliates (whether arising
by statute, common law or agreement) relating to confidentiality, noncompetition, nonsolicitation or proprietary rights. Notwithstanding
the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an employment agreement, consulting
agreement or other similar agreement that specifically defines “cause,” then with respect to such Participant, “Cause”
shall have the meaning defined in that employment agreement, consulting agreement or other agreement.

 

2.7   “Change
in Control” means, unless otherwise provided in an Award Agreement, the occurrence of any one of the following events:

 

(i) any “person,”
including a “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company,
any entity controlling, controlled by or under common control with the Company, any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the Company or any such entity, and, with respect to any particular
Participant, the Participant and any “group” (as such term is used in Section 13(d)(3) of the Exchange Act) of which
the Participant is a member), is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or more of either (A) the combined voting power of
the Company’s then outstanding securities or (B) the then outstanding shares of Common Stock (in either such case other than
as a result of an acquisition of securities directly from the Company); or

 

(ii) any consolidation
or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately
after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate 50% or more of the combined voting power of the securities of the corporation
issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any); or

 

(iii) there shall occur
(A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company
of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting
securities of which are owned by “persons” (as defined above) in substantially the same proportion as their ownership
of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company; or

 

(iv) the members of
the Board at the beginning of any consecutive 24-calendar-month period (the “Incumbent Directors”) cease for any reason
other than due to death to constitute at least a majority of the members of the Board; provided that any member of the Board whose
election, or nomination for election by the Company’s stockholders, was approved or ratified by a vote of at least a majority
of the members of the Board then still in office who were members of the Board at the beginning of such 24-calendar-month period,
shall be deemed to be an Incumbent Director.

 

Notwithstanding the
foregoing, no event or condition shall constitute a Change in Control to the extent that, if it were, a 20% tax would be imposed
under Section 409A of the Code; provided that, in such a case, the event or condition shall continue to constitute a Change in
Control to the maximum extent possible (e.g., if applicable, in respect of vesting without an acceleration of distribution) without
causing the imposition of such 20% tax.

 

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

 

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2.9   “Committee”
means the committee of the Board delegated with the authority to administer the Plan, or the full Board, as provided in Section
3 of the Plan. With respect to any decision involving an Award intended to satisfy the requirements of Section 162(m) of the Code,
the Committee shall consist of two or more directors of the Company who are “outside directors” within the meaning
of Section 162(m) of the Code. With respect to any decision relating to a Reporting Person, the Committee shall consist solely
of two or more directors who are disinterested within the meaning of Rule 16b-3 promulgated under the Exchange Act, as amended
from time to time, or any successor provision. The fact that a Committee member shall fail to qualify under any of these requirements
shall not invalidate an Award if the Award is otherwise validly made under the Plan. The Board may at any time appoint additional
members to the Committee, remove and replace members of the Committee with or without cause, and fill vacancies on the Committee
however caused.

 

2.10   “Common
Stock” means the Company’s Common Stock, par value $.01 per share.

 

2.11   “Company”
means I.D. Systems, Inc., a Delaware corporation, and any successor thereto as provided in Section 16.8.

 

2.12   “Control”
means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, or the power
to appoint directors of the Company, whether through the ownership of voting securities, by contract or otherwise (the terms “Controlled
by” and “under common Control with” shall have correlative meanings).

 

2.13   “Date
of Grant” means the date on which an Award under the Plan is granted by the Committee, or such later date as the Committee
may specify to be the effective date of an Award.

 

2.14   “Disability”
means a Participant being considered “disabled” within the meaning of Section 409A of the Code and Treasury Regulation
1.409A-3(i)(4), as well as any successor regulation or interpretation.

 

2.15   “Effective
Date” means the date set forth in Section 18.1 hereof.

 

2.16   “Eligible
Person” means any person who is an employee, officer, director, consultant, advisor or other individual service provider
of the Company or any Subsidiary, or any person who is determined by the Committee to be a prospective employee, officer, director,
consultant, advisor or other individual service provider of the Company or any Subsidiary.

 

2.17   “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

2.18   “Fair
Market Value” of a share of Common Stock shall be, as applied to a specific date (i) the closing price of a share of
Common Stock as of such date on the principal established stock exchange or national market system on which the Common Stock is
then traded (or, if there is no trading in the Common Stock as of such date, the closing price of a share of Common Stock on the
most recent date preceding such date on which trades of the Common Stock were recorded), as reported in The Wall Street Journal
or such other source as the Committee deems reliable; or (ii) if the shares of Common Stock are not then traded on an established
stock exchange or national market system but are then traded in an over-the-counter market, the average of the closing bid and
asked prices for the shares of Common Stock in such over-the-counter market as of such date (or, if there are no closing bid and
asked prices for the shares of Common Stock as of such date, the average of the closing bid and the asked prices for the shares
of Common Stock on the most recent date preceding such date on which such closing bid and asked prices are available on such over-the-counter
market), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or (iii) if the shares
of Common Stock are not then listed on a national securities exchange or national market system or traded in an over-the-counter
market, the price of a share of Common Stock as determined by the Committee in its discretion in a manner consistent with Section
409A of the Code and Treasury Regulation 1.409A-1(b)(5)(iv), as well as any successor regulation or interpretation.

 

2.19 “Incentive
Bonus Award” means an Award granted under Section 12 of the Plan.

 

2.20 “Incentive
Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of Section
422 of the Code and the regulations promulgated thereunder.

 

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2.21 “Nonqualified
Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option.

 

2.22 “Other
Cash-Based Award” means a contractual right granted to an Eligible Person under Section 13 hereof entitling such Eligible
Person to receive a cash payment at such times, and subject to such conditions, as are set forth in the Plan and the applicable
Award Agreement.

 

2.23 “Other
Stock-Based Award” means a contractual right granted to an Eligible Person under Section 13 representing a notional unit
interest equal in value to a share of Common Stock to be paid and distributed at such times, and subject to such conditions as
are set forth in the Plan and the applicable Award Agreement.

 

2.24 “Participant”
means any Eligible Person who holds an outstanding Award under the Plan.

 

2.25 “Person”
shall mean any individual, partnership, firm, trust, corporation, limited liability company or other similar entity. When two or
more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing
of Common Stock, such partnership, limited partnership, syndicate or group shall be deemed a “Person”

 

2.26 “Performance
Measures” mean the measures of performance of the Company and its Subsidiaries as more fully described in Section 14
of the Plan and Exhibit A hereto.

 

2.27 “Performance
Shares” means a contractual right granted to an Eligible Person under Section 10 hereof representing a notional unit
interest equal in value to a share of Common Stock to be paid and distributed at such times, and subject to such conditions, as
are set forth in the Plan and the applicable Award Agreement.

 

2.28 “Performance
Unit” means a contractual right granted to an Eligible Person under Section 11 hereof representing a notional dollar
interest as determined by the Committee to be paid and distributed at such times, and subject to such conditions, as are set forth
in the Plan and the applicable Award Agreement.

 

2.29 “Plan”
means this I.D. Systems, Inc. 2015 Equity Compensation Plan, as it may be amended from time to time.

 

2.30 “Reporting
Person” means an officer, director or greater than ten percent stockholder of the Company within the meaning of Rule
16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.

 

2.31 “Restricted
Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that are issued subject
to such vesting and transfer restrictions and such other conditions as are set forth in the Plan and the applicable Award Agreement.

 

2.32 “Securities
Act” means the Securities Act of 1933, as amended.

 

2.33 “Service”
means a Participant’s employment or other service relationship with the Company or any Subsidiary.

 

2.34 “Stock
Appreciation Right” means a contractual right granted to an Eligible Person under Section 7 hereof entitling such Eligible
Person to receive a payment, upon the exercise of such right, in such amount and at such time, and subject to such conditions,
as are set forth in the Plan and the applicable Award Agreement.

 

2.35 “Stock
Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common Stock
at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

 

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2.36 “Stock
Unit Award” means a contractual right granted to an Eligible Person under Section 9 hereof representing notional unit
interests equal in value to a share of Common Stock to be paid and distributed at such times, and subject to such conditions, as
are set forth in the Plan and the applicable Award Agreement.

 

2.37 “Subsidiary”
means an entity (whether or not a corporation) that is wholly or majority owned or controlled, directly or indirectly, by the Company;
provided, however, that with respect to Incentive Stock Options, the term “Subsidiary” shall include only an entity
that qualifies under section 424(f) of the Code as a “subsidiary corporation” with respect to the Company.

 

3.            Administration

 

3.1   Committee
Members.  The Plan shall be administered by the Committee; provided that the entire Board may act in lieu of the
Committee on any matter, subject to Code Section 162(m) and 16b-3 Award requirements referred to in Section 2.9 of the Plan. If
and to the extent permitted by Applicable Law, the Committee may authorize one or more Reporting Persons (or other officers) to
make Awards to Eligible Persons who are not Reporting Persons (or other officers whom the Committee has specifically authorized
to make Awards). Subject to Applicable Law and the restrictions set forth in the Plan, the Committee may delegate administrative
functions to individuals who are Reporting Persons, officers, or employees of the Company or its Subsidiaries.

 

3.2   Committee
Authority.  The Committee shall have such powers and authority as may be necessary or appropriate for the Committee
to carry out its functions as described in the Plan. Subject to the express limitations of the Plan, the Committee shall have authority
in its discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number
of shares, units or other rights subject to each Award, the exercise, base or purchase price of an Award (if any), the time or
times at which an Award will become vested, exercisable or payable, the performance criteria, performance goals and other conditions
of an Award, the duration of the Award, and all other terms of the Award. Subject to the terms of the Plan, the Committee shall
have the authority to amend the terms of an Award in any manner that is not inconsistent with the Plan (including to extend the
post-termination exercisability period of Stock Options and Stock Appreciation Rights), provided that no such action shall adversely
affect the rights of a Participant with respect to an outstanding Award without the Participant’s consent. The Committee
shall also have discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all
other determinations necessary or advisable for Plan administration, including, without limitation, to correct any defect, to supply
any omission or to reconcile any inconsistency in the Plan or any Award Agreement hereunder. The Committee may prescribe, amend,
and rescind rules and regulations relating to the Plan. The Committee’s determinations under the Plan need not be uniform
and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such persons are similarly
situated. The Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations
and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company
or such attorneys, consultants, accountants or other advisors as it may select. All interpretations, determinations, and actions
by the Committee shall be final, conclusive, and binding upon all parties.

 

3.3   No
Liability; Indemnification.  Neither the Board nor any Committee member, nor any Person acting at the direction of
the Board or the Committee, shall be liable for any act, omission, interpretation, construction or determination made in good faith
with respect to the Plan, any Award or any Award Agreement. The Company and its Subsidiaries shall pay or reimburse any member
of the Committee, as well as any other Person who takes action on behalf of the Plan, for all reasonable expenses incurred with
respect to the Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for any claims,
liabilities, and costs (including reasonable attorney’s fees) arising out of their good faith performance of duties on behalf
of the Company with respect to the Plan. The Company and its Subsidiaries may, but shall not be required to, obtain liability insurance
for this purpose.

 

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4.            Shares
Subject to the Plan 

 

4.1   Share
Limitation.

 

(a) Subject to adjustment
pursuant to Section 4.2 and any other applicable provisions hereof, the maximum aggregate number of shares of Common Stock which
may be issued under all Awards granted to Participants under the Plan shall be 1,200,000 shares, all of which may be issued in
respect of Incentive Stock Options.

 

(b) Shares of Common
Stock issued under the Plan may be either authorized but unissued shares or shares held in the Company’s treasury. Any shares
of Common Stock subject to Awards that are settled in Common Stock shall be counted against the maximum share limitations of this
Section 4.1 as one share of Common Stock for every share of Common Stock subject thereto, regardless of the number of shares of
Common Stock actually issued to settle the Stock Option or Stock Appreciation Right upon exercise.

 

To the extent that any Award under the
Plan payable in shares of Common Stock is forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements
or upon the occurrence of other forfeiture events, or otherwise terminates without payment being made thereunder, the shares of
Common Stock covered thereby will no longer be counted against the foregoing maximum share limitations and may again be made subject
to Awards under the Plan pursuant to such limitations.

 

4.2   Adjustments.  If
there shall occur any change with respect to the outstanding shares of Common Stock by reason of any recapitalization, reclassification,
stock dividend, extraordinary dividend, stock split, reverse stock split, or other distribution with respect to the shares of Common
Stock, or any merger, reorganization, consolidation, combination, spin-off or other similar corporate change, or any other change
affecting the Common Stock, the Committee shall, in the manner and to the extent that it deems appropriate and equitable to the
Participants and consistent with the terms of the Plan, cause an adjustment to be made in (i) the maximum numbers and kind of shares
provided in Section 4.1 hereof, (ii) the numbers and kind of shares of Common Stock, units, or other rights subject to then outstanding
Awards, (iii) the price for each share or unit or other right subject to then outstanding Awards, (iv) the performance measures
or goals relating to the vesting of an Award and (v) any other terms of an Award that are affected by the event to prevent dilution
or enlargement of a Participant’s rights under an Award. Notwithstanding the foregoing, in the case of Incentive Stock Options,
any such adjustments shall, to the extent practicable, be made in a manner consistent with the requirements of Section 424(a) of
the Code.

 

5.            Participation
and Awards 

 

5.1   Designation
of Participants.  All Eligible Persons are eligible to be designated by the Committee to receive Awards and become
Participants under the Plan. The Committee has the authority, in its discretion, to determine and designate from time to time those
Eligible Persons who are to be granted Awards, the types of Awards to be granted and the number of shares of Common Stock or units
subject to Awards granted under the Plan. In selecting Eligible Persons to be Participants and in determining the type and amount
of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems relevant or appropriate.

 

5.2   Determination
of Awards.  The Committee shall determine the terms and conditions of all Awards granted to Participants in accordance
with its authority under Section 3.2 hereof. An Award may consist of one type of right or benefit hereunder or of two or more such
rights or benefits granted in tandem or in the alternative. To the extent deemed appropriate by the Committee, an Award shall be
evidenced by an Award Agreement as described in Section 16.1 hereof.

 

6.            Stock
Options 

 

6.1 Grant of Stock
Option.  A Stock Option may be granted to any Eligible Person selected by the Committee. Subject to the provisions
of Section 6.6 hereof and Section 422 of the Code, each Stock Option shall be designated, in the discretion of the Committee, as
an Incentive Stock Option or as a Nonqualified Stock Option.

 

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6.2 Exercise Price.  The
exercise price per share of a Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the
Date of Grant, subject to adjustments as provided for under Section 4.2, provided that the Committee may in its discretion specify
for any Stock Option an exercise price per share that is higher than the Fair Market Value on the Date of Grant.

 

6.3 Vesting of Stock
Options.  The Committee shall in its discretion prescribe the time or times at which, or the conditions upon which,
a Stock Option or portion thereof shall become vested and/or exercisable. The requirements for vesting and exercisability of a
Stock Option may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period
(or periods) and/or on the attainment of a specified performance goal (or goals) established by the Committee in its discretion.
The Committee may, in its discretion, accelerate the vesting or exercisability of any Stock Option at any time. The Committee in
its sole discretion may allow a Participant to exercise unvested Nonqualified Stock Options, in which case the shares of Common
Stock then issued shall be Restricted Stock having analogous vesting restrictions to the unvested Nonqualified Stock Options.

 

6.4 Term of Stock
Options.  The Committee shall in its discretion prescribe in an Award Agreement the period during which a vested
Stock Option may be exercised, provided that the maximum term of a Stock Option shall be ten (10) years from the Date of Grant.
A Stock Option may be earlier terminated as specified by the Committee and set forth in an Award Agreement upon or following the
termination of a Participant’s Service with the Company or any Subsidiary, including by reason of voluntary resignation,
death, Disability, termination for Cause or any other reason. Except as otherwise provided in this Section 6 or in an Award Agreement
as such agreement may be amended from time to time upon authorization of the Committee, no Stock Option may be exercised at any
time during the term thereof unless the Participant is then in the Service of the Company or one of its Subsidiaries. Notwithstanding
the foregoing, unless an Award Agreement provides otherwise:

 

(a)  If
a Participant who holds a Stock Option incurs a termination of Service with the Company (including, if applicable, any of its Subsidiaries)
by reason of his or her death, such Stock Option may, to the extent then exercisable, be exercised by such Participant’s
estate or any person who acquires the right to exercise such Stock Option by bequest or inheritance at any time in accordance with
its terms for up to one year after the date of such Participant’s death (but in no event after the earlier of the expiration
of the term of such Stock Option or such time as the Stock Option is otherwise canceled or terminated in accordance with its terms).
Upon expiration of such one-year period, no portion of the Stock Option held by such Participant shall be exercisable and the Stock
Option shall be deemed to be canceled, forfeited and of no further force or effect.

 

(b)  If
a Participant who holds a Stock Option incurs a termination of Service with the Company (including, if applicable, any of its Subsidiaries)
by reason of his or her Disability, such Stock Option may, to the extent then exercisable, be exercised by the Participant or his
or her personal representative at any time in accordance with its terms for up to one year after the date of such Participant’s
termination of Service (but in no event after the earlier of the expiration of the term of such Stock Option or such time as the
Stock Option is otherwise canceled or terminated in accordance with its terms). Upon expiration of such one-year period, no portion
of the Stock Option held by such Participant shall be exercisable and the Stock Option shall be deemed to be canceled, forfeited
and of no further force or effect.

 

(c)  If
a Participant who holds a Stock Option incurs a termination of Service with the Company (including, if applicable, any of its Subsidiaries)
for any reason other than death, Disability or Cause, such Stock Option may, to the extent then exercisable, be exercised up until
three (3) months following such termination of Service (but in no event after the earlier of the expiration of the term of such
Stock Option or such time as the Stock Option is otherwise canceled or terminated in accordance with its terms). Upon expiration
of such three-month period, no portion of the Stock Option held by such Participant shall be exercisable and the Stock Option shall
be deemed to be canceled, forfeited and of no further force or effect.

 

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6.5   Stock
Option Exercise.  Subject to such terms and conditions as shall be specified in an Award Agreement, a Stock Option
may be exercised in whole or in part at any time during the term thereof by notice in the form required by the Company, and payment
of the aggregate exercise price by certified or bank check, or such other means as the Committee may accept. As set forth in an
Award Agreement or otherwise determined by the Committee, in its sole discretion, at or after grant, payment in full or in part
of the exercise price of an Option may be made: (i) in the form of shares of Common Stock that have been held by the Participant
for such period as the Committee may deem appropriate for accounting purposes or otherwise, valued at the Fair Market Value of
such shares on the date of exercise; (ii) by surrendering to the Company shares of Common Stock otherwise receivable on exercise
of the Option; (iii) by a cashless exercise program implemented by the Committee in connection with the Plan; and/or (iv) by such
other method as may be approved by the Committee and set forth in an Award Agreement. Subject to any governing rules or regulations,
as soon as practicable after receipt of written notification of exercise and full payment of the exercise price and satisfaction
of any applicable tax withholding pursuant to Section 17.5, the Company shall deliver to the Participant evidence of book entry
shares of Common Stock, or upon the Participant’s request, Common Stock certificates in an appropriate amount based upon
the number of shares of Common Stock purchased under the Option. Unless otherwise determined by the Committee, all payments under
all of the methods indicated above shall be paid in United States dollars or shares of Common Stock, as applicable.

 

6.6   Additional
Rules for Incentive Stock Options.

 

(a)  Eligibility.  An
Incentive Stock Option may only be granted to an Eligible Person who is considered an employee under Treasury Regulation §1.421-7(h)
of the Company or any Subsidiary.

 

(b)  Annual
Limits.  No Incentive Stock Option shall be granted to an Eligible Person as a result of which the aggregate Fair
Market Value (determined as of the Date of Grant) of the stock with respect to which Incentive Stock Options are exercisable for
the first time in any calendar year under the Plan and any other stock option plans of the Company or any Subsidiary would exceed
$100,000, determined in accordance with Section 422(d) of the Code. This limitation shall be applied by taking Incentive Stock
Options into account in the order in which granted.

 

(c)  Ten
Percent Stockholders.  If a Stock Option granted under the Plan is intended to be an Incentive Stock Option, and
if the Participant, at the time of grant, owns stock possessing ten percent or more of the total combined voting power of all classes
of Common Stock of the Company or any Subsidiary, then (A) the Stock Option exercise price per share shall in no event be less
than 110% of the Fair Market Value of the Common Stock on the date of such grant and (B) such Stock Option shall not be exercisable
after the expiration of five (5) years following the date such Stock Option is granted.

 

(d)  Termination
of Employment.  An Award of an Incentive Stock Option shall provide that such Stock Option may be exercised not later
than three (3) months following termination of employment of the Participant with the Company and all Subsidiaries, or not later
than one (1) year following death or a permanent and total disability within the meaning of Section 22(e)(3) of the Code, as and
to the extent determined by the Committee to be necessary to comply with the requirements of Section 422 of the Code.

 

(e)  Disqualifying
Dispositions.  If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of within
two (2) years following the Date of Grant or one (1) year following the transfer of such shares to the Participant upon exercise,
the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition
and provide such other information regarding the disposition as the Company may reasonably require.

 

7.            Stock
Appreciation Rights 

 

7.1   Grant
of Stock Appreciation Rights.  A Stock Appreciation Right may be granted to any Eligible Person selected by the Committee.
Stock Appreciation Rights may be granted on a basis that allows for the exercise of the right by the Participant or that provides
for the automatic payment of the right upon a specified date or event.

 

7.2   Base
Price.  The base price of a Stock Appreciation Right shall be determined by the Committee in its sole discretion;
provided, however, that the base price for any grant of a Stock Appreciation Right shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the Date of Grant, subject to adjustments as provided for under Section 4.2.

 

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7.3   
Vesting of Stock Appreciation Rights.  The Committee shall in its discretion prescribe the time or times at which,
or the conditions upon which, a Stock Appreciation Right or portion thereof shall become vested and/or exercisable. The requirements
for vesting and exercisability of a Stock Appreciation Right may be based on the continued Service of a Participant with the Company
or a Subsidiary for a specified time period (or periods) or on the attainment of a specified performance goal (or goals) established
by the Committee in its discretion. The Committee may, in its discretion, accelerate the vesting or exercisability of any Stock
Appreciation Right at any time.

 

7.4 Term of Stock
Appreciation Rights.  The Committee shall in its discretion prescribe in an Award Agreement the period during which
a vested Stock Appreciation Right may be exercised, provided that the maximum term of a Stock Appreciation Right shall be ten (10)
years from the Date of Grant. A Stock Appreciation Right may be earlier terminated as specified by the Committee and set forth
in an Award Agreement upon or following the termination of a Participant’s Service with the Company or any Subsidiary, including
by reason of voluntary resignation, death, Disability, termination for Cause or any other reason. Except as otherwise provided
in this Section 7 or in an Award Agreement as such agreement may be amended from time to time upon authorization of the Committee,
no Stock Appreciation Right may be exercised at any time during the term thereof unless the Participant is then in the Service
of the Company or one of its Subsidiaries.

 

7.5 Payment of Stock
Appreciation Rights.  Subject to such terms and conditions as shall be specified in an Award Agreement, a vested
Stock Appreciation Right may be exercised in whole or in part at any time during the term thereof by notice in the form required
by the Company and payment of any exercise price. Upon the exercise of a Stock Appreciation Right and payment of any applicable
exercise price, a Participant shall be entitled to receive an amount determined by multiplying: (i) the excess of the Fair Market
Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right over the base price of such Stock Appreciation
Right, by (ii) the number of shares as to which such Stock Appreciation Right is exercised. Payment of the amount determined under
the immediately preceding sentence may be made, as approved by the Committee and set forth in the Award Agreement, in shares of
Common Stock valued at their Fair Market Value on the date of exercise, in cash, or in a combination of shares of Common Stock
and cash, subject to applicable tax withholding requirements set forth in Section 17.5. If Stock Appreciation Rights are settled
in shares of Common Stock, then as soon as practicable following the date of settlement the Company shall deliver to the Participant
evidence of book entry shares of Common Stock, or upon the Participant’s request, Common Stock certificates in an appropriate
amount.

 

8.            Restricted
Stock Awards 

 

8.1 Grant of Restricted
Stock Awards.  A Restricted Stock Award may be granted to any Eligible Person selected by the Committee. The Committee
may require the payment by the Participant of a specified purchase price in connection with any Restricted Stock Award. The Committee
may provide in an Award Agreement for the payment of dividends and distributions to the Participant at such times as paid to stockholders
generally or at the times of vesting or other payment of the Restricted Stock Award. If any dividends or distributions are paid
in stock while a Restricted Stock Award is subject to restrictions under Section 8.3 of the Plan or Code Section 162(m), the dividends
or other distributions shares shall be subject to the same restrictions on transferability as the shares of Common Stock to which
they were paid unless otherwise set forth in the Award Agreement. The Committee may also subject the grant of any Restricted Stock
Award to the execution of a voting agreement with the Company or with any Affiliate of the Company.

 

8.2 Vesting Requirements.  The
restrictions imposed on shares of Common Stock granted under a Restricted Stock Award shall lapse in accordance with the vesting
requirements specified by the Committee in the Award Agreement. Upon vesting of a Restricted Stock Award, such Award shall be subject
to the tax withholding requirement set forth in Section 17.5. The requirements for vesting of a Restricted Stock Award may be based
on the continued Service of the Participant with the Company or its Subsidiaries for a specified time period (or periods) or on
the attainment of a specified performance goal (or goals) established by the Committee in its discretion. The Committee may, in
its discretion, accelerate the vesting of a Restricted Stock Award at any time. If the vesting requirements of a Restricted Stock
Award shall not be satisfied, the Award shall be forfeited and the shares of Common Stock subject to the Award shall be returned
to the Company. In the event that the Participant paid any purchase price with respect to such forfeited shares, unless otherwise
provided by the Committee in an Award Agreement, the Company will refund to the Participant the lesser of (i) such purchase price
and (ii) the Fair Market Value of such shares on the date of forfeiture.

 

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8.3 Restrictions.  Shares
granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until
all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. The Committee may require in
an Award Agreement that certificates representing the shares granted under a Restricted Stock Award bear a legend making appropriate
reference to the restrictions imposed, and that certificates representing the shares granted or sold under a Restricted Stock Award
will remain in the physical custody of an escrow holder until all restrictions are removed or have expired.

 

8.4 Rights as Stockholder.  Subject
to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant to whom a Restricted Stock Award
is made shall have all rights of a stockholder with respect to the shares granted to the Participant under the Restricted Stock
Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto,
unless the Committee determines otherwise at the time the Restricted Stock Award is granted.

 

8.5 Section 83(b)
Election.  If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted
Stock Award, the Participant shall file, within 30 days following the Date of Grant, a copy of such election with the Company (directed
to the Secretary thereof) and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code.
The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making
or refraining from making an election with respect to the Award under Section 83(b) of the Code.

 

9.            Stock
Unit Awards 

 

9.1 Grant of Stock
Unit Awards.  A Stock Unit Award may be granted to any Eligible Person selected by the Committee. The value of each
stock unit under a Stock Unit Award is equal to the Fair Market Value of the Common Stock on the applicable date or time period
of determination, as specified by the Committee. A Stock Unit Award shall be subject to such restrictions and conditions as the
Committee shall determine. A Stock Unit Award may be granted together with a dividend equivalent right with respect to the shares
of Common Stock subject to the Award, which may be accumulated and may be deemed reinvested in additional stock units, as determined
by the Committee in its discretion. If any dividend equivalents are paid while a Stock Unit Award is subject to restrictions under
Section 9 of the Plan or Code Section 162(m), the dividend equivalents shall be subject to the same restrictions on transferability
as the Stock Units to which they were paid, unless otherwise set forth in the Award Agreement.

 

9.2 Vesting of Stock
Unit Awards.  On the Date of Grant, the Committee shall, in its discretion, determine any vesting requirements with
respect to a Stock Unit Award, which shall be set forth in the Award Agreement. The requirements for vesting of a Stock Unit Award
may be based on the continued Service of the Participant with the Company or its Subsidiaries for a specified time period (or periods)
or on the attainment of a specified performance goal (or goals) established by the Committee in its discretion. The Committee may,
in its discretion, accelerate the vesting of a Stock Unit Award at any time. A Stock Unit Award may also be granted on a fully
vested basis, with a deferred payment date as may be determined by the Committee or elected by the Participant in accordance with
rules established by the Committee.

 

9.3 Payment of Stock
Unit Awards.  A Stock Unit Award shall become payable to a Participant at the time or times determined by the Committee
and set forth in the Award Agreement, which may be upon or following the vesting of the Award. Payment of a Stock Unit Award may
be made, at the discretion of the Committee, in cash or in shares of Common Stock, or in a combination thereof as described in
the Award Agreement, subject to applicable tax withholding requirements set forth in Section 17.5. Any cash payment of a Stock
Unit Award shall be made based upon the Fair Market Value of the Common Stock, determined on such date or over such time period
as determined by the Committee. Notwithstanding the foregoing, unless specified otherwise in the Award Agreement, any Stock Unit,
whether settled in Common Stock or cash, shall be paid no later than two and one-half months after the later of the calendar year
or fiscal year in which the Stock Units vest. If Stock Unit Awards are settled in shares of Common Stock, then as soon as practicable
following the date of settlement, the Company shall deliver to the Participant evidence of book entry shares of Common Stock, or
upon the Participant’s request, Common Stock certificates in an appropriate amount.

 

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10.          Performance
Shares 

 

10.1 Grant of Performance
Shares.  Performance Shares may be granted to any Eligible Person selected by the Committee. A Performance Share
Award shall be subject to such restrictions and condition as the Committee shall specify. A Performance Share Award may be granted
with a dividend equivalent right with respect to the shares of Common Stock subject to the Award, which may be accumulated and
may be deemed reinvested in additional stock units, as determined by the Committee in its discretion.

 

10.2 Value of Performance
Shares.  Each Performance Share shall have an initial value equal to the Fair Market Value of a share of Common Stock
on the Date of Grant. The Committee shall set performance goals in its discretion that, depending on the extent to which they are
met over a specified time period, shall determine the number of Performance Shares that shall be paid to a Participant.

 

10.3 Earning of
Performance Shares.  After the applicable time period has ended, the number of Performance Shares earned by the Participant
over such time period shall be determined as a function of the extent to which the applicable corresponding performance goals have
been achieved. This determination shall be made solely by the Committee. The Committee may, in its discretion, waive any performance
or vesting conditions relating to a Performance Share Award.

 

10.4 Form and Timing
of Payment of Performance Shares.  The Committee shall pay at the close of the applicable Performance Period, or
as soon as practicable thereafter, any earned Performance Shares in the form of cash or in shares of Common Stock or in a combination
thereof, as specified in a Participant’s Award Agreement, subject to applicable tax withholding requirements set forth in
Section 17.5. Notwithstanding the foregoing, unless specified otherwise in the Award Agreement, all Performance Shares shall be
paid no later than two and one-half months following the later of the calendar year or fiscal year in which such Performance Shares
vest. Any shares of Common Stock paid to a Participant under this Section 10.4 may be subject to any restrictions deemed appropriate
by the Committee. If Performance Shares are settled in shares of Common Stock, then as soon as practicable following the date of
settlement the Company shall deliver to the Participant evidence of book entry shares of Common Stock, or upon the Participant’s
request, Common Stock certificates in an appropriate amount.

 

11.          Performance
Units 

 

11.1 Grant of Performance
Units.  Performance Units may be granted to any Eligible Person selected by the Committee. A Performance Unit Award
shall be subject to such restrictions and condition as the Committee shall specify in a Participant’s Award Agreement.

 

11.2 Value of Performance
Units.  Each Performance Unit shall have an initial notional value equal to a dollar amount determined by the Committee,
in its sole discretion. The Committee shall set performance goals in its discretion that, depending on the extent to which they
are met over a specified time period, will determine the number of Performance Units that shall be settled and paid to the Participant.

 

11.3 Earning of
Performance Units.  After the applicable time period has ended, the number of Performance Units earned by the Participant,
and the amount payable in cash, in shares or in a combination thereof, over such time period shall be determined as a function
of the extent to which the applicable corresponding performance goals have been achieved. This determination shall be made solely
by the Committee. The Committee may, in its discretion, waive any performance or vesting conditions relating to a Performance Unit
Award

 

11.4 Form and Timing
of Payment of Performance Units.  The Committee shall pay at the close of the applicable Performance Period, or as
soon as practicable thereafter, any earned Performance Units in the form of cash or in shares of Common Stock or in a combination
thereof, as specified in a Participant’s Award Agreement, subject to applicable tax withholding requirements set forth in
Section 17.5. Notwithstanding the foregoing, unless specified otherwise in the Award Agreement, all Performance Units shall be
paid no later than two and one-half months following the later of the calendar year or fiscal year in which such Performance Units
vest. Any shares of Common Stock paid to a Participant under this Section 11.4 may be subject to any restrictions deemed appropriate
by the Committee. If Performance Units are settled in shares of Common Stock, then as soon as practicable following the date of
settlement the Company shall deliver to the Participant evidence of book entry shares of Common Stock, or upon the Participant’s
request, Common Stock certificates in an appropriate amount.

 

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12.          Incentive
Bonus Awards 

 

12.1 Incentive Bonus
Awards.  The Committee, at its discretion, may grant Incentive Bonus Awards to such Participants as it may designate
from time to time. The terms of a Participant’s Incentive Bonus Award shall be set forth in the Participant’s Award
Agreement. Each Award Agreement shall specify such general terms and conditions as the Committee shall determine.

 

12.2 Incentive Bonus
Award Performance Criteria.  The determination of Incentive Bonus Awards for a given year or years may be based upon
the attainment of specified levels of Company or Subsidiary performance as measured by pre-established, objective performance criteria
determined at the discretion of the Committee, including any or all of the Performance Measures set forth in Exhibit A hereto.
The Committee shall (i) select those Participants who shall be eligible to receive an Incentive Bonus Award, (ii) determine the
performance period, (iii) determine target levels of performance, and (iv) determine the level of Incentive Bonus Award to be paid
to each selected Participant upon the achievement of each performance level. The Committee generally shall make the foregoing determinations
prior to the commencement of services to which an Incentive Bonus Award relates (or for Incentive Bonus Awards intended to satisfy
Code Section 162(m), within the permissible time period established for exemption under Code Section 162(m) and the regulations
promulgated thereunder), to the extent applicable, and while the outcome of the performance goals and targets is substantially
uncertain.

 

12.3 Payment of
Incentive Bonus Awards.

 

(a)  Incentive
Bonus Awards shall be paid in cash or Common Stock, as set forth in a Participant’s Award Agreement. Payments shall be made
following a determination by the Committee that the performance targets were attained and shall be made within two and one-half
months after the later of the end of the fiscal or calendar year in which the Incentive Award is no longer subject to a substantial
risk of forfeiture.

 

(b)  The
amount of an Incentive Bonus Award to be paid upon the attainment of each targeted level of performance shall equal a percentage
of a Participant’s base salary for the fiscal year, a fixed dollar amount, or such other formula, as determined by the Committee.

 

13.          Other
Cash-Based Awards and Other Stock-Based Awards 

 

13.1         Other
Cash-Based and Stock-Based Awards.  The Committee may grant other types of equity-based or equity-related Awards
not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted shares of Common Stock)
in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may involve the transfer
of actual shares of Common Stock to a Participant, or payment in cash or otherwise of amounts based on the value of shares of Common
Stock. In addition, the Committee, at any time and from time to time, may grant Cash-Based Awards to a Participant in such amounts
and upon such terms as the Committee shall determine, in its sole discretion.

 

13.2 Value of Cash-Based
Awards and Other Stock-Based Awards.  Each Other Stock-Based Award shall be expressed in terms of shares of Common
Stock or units based on shares of Common Stock, as determined by the Committee, in its sole discretion. Each Other Cash-Based Award
shall specify a payment amount or payment range as determined by the Committee, in its sole discretion. If the Committee exercises
its discretion to establish performance goals, the value of Other Cash-Based Awards that shall be paid to the Participant will
depend on the extent to which such performance goals are met.

 

13.3 Payment of
Cash-Based Awards and Other Stock-Based Awards.  Payment, if any, with respect to Other Cash-Based Awards and Other
Stock-Based Award shall be made in accordance with the terms of the Award, in cash or shares of Common Stock as the Committee determines.

 

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14.          Code
Section 162(m) Awards 

 

14.1 Awards Granted
Under Code Section 162(m).  The Committee, at its discretion, may designate that a Restricted Stock, Stock Unit,
Performance Share, Performance Unit, Incentive Bonus, Other Stock Award or Other Cash Award shall be granted as a Code Section
162(m) Award. Such an Award must comply with the following additional requirements, which shall control over any other provision
that pertains to such Award.

 

14.2 Performance
Measures.

 

(a)  Each
Code Section 162(m) Award shall be based upon the attainment of specified levels of pre-established, objective Performance Measures
that are intended to satisfy the performance based compensation exemption requirements of Code Section 162(m) and the regulations
promulgated thereunder. Further, at the discretion of the Committee, an Award also may be subject to goals and restrictions in
addition to the Performance Measures.

 

(b)  “Performance
Measures” means the measures of performance of the Company and its Subsidiaries used to determine a Participant’s entitlement
to an Award under the Plan. Such performance measures shall have the same meanings as used in the Company’s financial statements,
or, if such terms are not used in the Company’s financial statements, they shall have the meaning applied pursuant to generally
accepted accounting principles, or as used generally in the Company’s industry. Performance Measures shall be calculated
with respect to the Company and each Subsidiary consolidated therewith for financial reporting purposes or such division or other
business unit as may be selected by the Committee. For purposes of the Plan, the Performance Measures shall be calculated in accordance
with generally accepted accounting principles to the extent applicable, but, unless otherwise determined by the Committee, prior
to the accrual or payment of any Award under this Plan for the same performance period and excluding the effect (whether positive
or negative) of any change in accounting standards or any extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the performance goals. Performance Measures shall be based on one or more of the criteria
set forth in Exhibit A which is hereby incorporated by reference, as determined by the Committee.

 

(c)  For
each Code Section 162(m) Award, the Committee shall (i) select the Participant who shall be eligible to receive a Code Section
162(m) Award, (ii) determine the applicable performance period, (iii) determine the target levels of the Company or Subsidiary
Performance Measures, and (iv) determine the number of shares of Common Stock or cash or other property (or combination thereof)
subject to an Award to be paid to each selected Participant. The Committee shall make the foregoing determinations prior to the
commencement of services to which an Award relates (or within the permissible time period established under Code Section 162(m))
and while the outcome of the performance goals and targets is substantially uncertain.

 

14.3 Attainment
of Code Section 162(m) Goals.

 

(a)  After
each performance period, the Committee shall certify in writing (which may include the written minutes for any meeting of the Committee):
(i) if the Company has attained the performance targets, and (ii) the number of shares pursuant to the Award that are to become
freely transferable, if applicable, or the cash or other property payable under the Award. The Committee shall have no discretion
to waive all or part of the conditions, goals and restrictions applicable to the receipt of full or partial payment of an Award
except in the case of a Change in Control of the Company or the death or Disability of a Participant.

 

(b)  Notwithstanding
the foregoing, the Committee may, in its discretion, reduce any Award based on such factors as may be determined by the Committee,
including, without limitation, a determination by the Committee that such a reduction is appropriate in light of pay practices
of competitors, or the performance of the Company, a Subsidiary or a Participant relative to the performance of competitors, or
performance with respect to the Company’s strategic business goals.

 

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14.4 Individual
Participant Limitations.  Subject to adjustment as provided in Section 4.2, with respect to Awards intended to be
Code Section 162(m) Awards and Stock Option and Stock Appreciation Rights Awards intended to be exempt from the deductibility limitation
in Code Section 162(m), (i) no Participant in any one fiscal year of the Company may be granted Stock Options, Stock Appreciation
Rights, Restricted Stock, Stock Units, Performance Shares Awards, Incentive Bonus Awards and Other Stock Based Awards that are
denominated in shares of Common Stock with respect to more than 300,000 shares in the aggregate, and (ii) the maximum dollar value
payable to any Participant in any one (1) fiscal year of the Company with respect to Stock Units, Performance Units or Incentive
Bonus Awards or Other Stock-Based Awards that may be settled in cash or other property (other than Common Stock) is $2,000,000.
If an Award is cancelled, the cancelled Award shall continue to be counted towards the applicable limitations. In the case of Performance
Measures based on performance periods beginning and ending in different calendar years, the number of shares of Common Stock or
cash amount which is paid in respect of each calendar year during the performance period shall be determined by multiplying the
total number of shares of Common Stock or cash amount, as applicable, paid for the performance period by a fraction, of which (i)
the numerator is the number of days during the performance period in that particular calendar year, and (ii) the denominator is
the total number of days during the performance period. The limitations in this Section 14.4 shall be interpreted and applied in
a manner consistent with Section 162(m) of the Code and the regulations thereunder.

 

15.          Change
in Control 

 

15.1 Effect of Change
in Control.

 

(a)  The
Committee may, at the time of the grant of an Award and as set forth in an Award Agreement, provide for the effect of a “Change
in Control” on an Award. Such provisions may include any one or more of the following: (i) the acceleration or extension
of time periods for purposes of exercising, vesting in, or realizing gain from any Award, (ii) the elimination or modification
of performance or other conditions related to the payment or other rights under an Award, (iii) provision for the cash settlement
of an Award for an equivalent cash value, as determined by the Committee, or (iv) such other modification or adjustment to an Award
as the Committee deems appropriate to maintain and protect the rights and interests of Participants upon or following a Change
in Control. To the extent necessary for compliance with Section 409A of the Code, an Award Agreement shall provide that an Award
subject to the requirements of Section 409A that would otherwise become payable upon a Change in Control shall only become payable
to the extent that the requirements for a “change in control” for purposes of Section 409A have been satisfied.

 

(b)  Notwithstanding
anything to the contrary set forth in the Plan, unless otherwise provided by an Award Agreement, upon or in anticipation of any
Change in Control, the Committee may, in its sole and absolute discretion and without the need for the consent of any Participant,
take one or more of the following actions contingent upon the occurrence of that Change in Control: (i) cause any or all outstanding
Stock Options and Stock Appreciation Rights held by Participants affected by the Change in Control to become vested and immediately
exercisable, in whole or in part; (ii) cause any or all outstanding Restricted Stock, Stock Units, Performance Shares, Performance
Units, Incentive Bonus Awards and any other Award held by Participants affected by the Change in Control to become non-forfeitable,
in whole or in part; (iii) cancel any Stock Option or Stock Appreciation Right in exchange for a substitute option in a manner
consistent with the requirements of Treasury Regulation. §1.424-1(a) (notwithstanding the fact that the original Stock Option
may never have been intended to satisfy the requirements for treatment as an Incentive Stock Option); (iv) cancel any Restricted
Stock, Stock Units, Performance Shares or Performance Units held by a Participant in exchange for restricted stock or performance
shares of or stock or performance units in respect of the capital stock of any successor corporation; (v) redeem any Restricted
Stock held by a Participant affected by the Change in Control for cash and/or other substitute consideration with a value equal
to the Fair Market Value of an unrestricted share of Common Stock on the date of the Change in Control; (vi) cancel any Stock Option
or Stock Appreciation Right held by a Participant affected by the Change in Control in exchange for cash and/or other substitute
consideration with a value equal to (A) the number of shares of Common Stock subject to that Stock Option or Stock Appreciation
Right, multiplied by (B) the difference, if any, between the Fair Market Value per share of Common Stock on the date of the Change
in Control and the exercise price of that Stock Option or Stock Appreciation Right; provided, that if the Fair Market Value
per share of Common Stock on the date of the Change in Control does not exceed the exercise price of any such Stock Option or Stock
Appreciation Right, the Committee may cancel that Stock Option or Stock Appreciation Right without any payment of consideration
therefor; (vii) cancel any Stock Unit or Performance Unit held by a Participant affected by the Change in Control in exchange for
cash and/or other substitute consideration with a value equal to the Fair Market Value per share of Common Stock on the date of
the Change in Control (provided that such cancelation and exchange does not violate Section 409A of the Code); or (ix) make such
other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate.

 

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16.          General Provisions 

 

16.1 Award Agreement.  To
the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by an Award Agreement in a written or
electronic form approved by the Committee setting forth the number of shares of Common Stock or units subject to the Award, the
exercise price, base price, or purchase price of the Award, the time or times at which an Award will become vested, exercisable
or payable and the term of the Award. The Award Agreement may also set forth the effect on an Award of termination of Service under
certain circumstances. The Award Agreement shall be subject to and incorporate, by reference or otherwise, all of the applicable
terms and conditions of the Plan, and may also set forth other terms and conditions applicable to the Award as determined by the
Committee consistent with the limitations of the Plan. Award Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. The grant of an Award under the
Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions,
as are specified in the Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the
Award Agreement.

 

16.2 Forfeiture
Events/Representations.  The Committee may specify in an Award Agreement at the time of the Award that the Participant’s
rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon
the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.
Such events shall include, but shall not be limited to, termination of Service for Cause, violation of material Company policies,
breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by
the Participant that is detrimental to the business or reputation of the Company. The Committee may also specify in an Award Agreement
that the Participant’s rights, payments and benefits with respect to an Award shall be conditioned upon the Participant making
a representation regarding compliance with noncompetition, confidentiality or other restrictive covenants that may apply to the
Participant and providing that the Participant’s rights, payments and benefits with respect to an Award shall be subject
to reduction, cancellation, forfeiture or recoupment on account of a breach of such representation. In addition and without limitation
of the foregoing, any amounts paid hereunder shall be subject to recoupment in accordance with The Dodd–Frank Wall Street
Reform and Consumer Protection Act and any implementing regulations thereunder, any “clawback” policy adopted by the
Company or as is otherwise required by applicable law or stock exchange listing condition.

 

16.3 No Assignment
or Transfer; Beneficiaries.

 

(a)  Awards
under the Plan shall not be assignable or transferable by the Participant, except by will or by the laws of descent and distribution,
and shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge. Notwithstanding the foregoing,
the Committee may provide in an Award Agreement that the Participant shall have the right to designate a beneficiary or beneficiaries
who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death.
During the lifetime of a Participant, an Award shall be exercised only by such Participant or such Participant’s guardian
or legal representative. In the event of a Participant’s death, an Award may, to the extent permitted by the Award Agreement,
be exercised by the Participant’s beneficiary as designated by the Participant in the manner prescribed by the Committee
or, in the absence of an authorized beneficiary designation, by the legatee of such Award under the Participant’s will or
by the Participant’s estate in accordance with the Participant’s will or the laws of descent and distribution, in each
case in the same manner and to the same extent that such Award was exercisable by the Participant on the date of the Participant’s
death.

 

(b)  Limited
Transferability Rights.  Notwithstanding anything else in this Section 16.3 to the contrary, the Committee may in
its discretion provide in an Award Agreement that an Award in the form of a Nonqualified Stock Option, share-settled Stock Appreciation
Right, Restricted Stock, Performance Share or share-settled Other Stock-Based Award may be transferred, on such terms and conditions
as the Committee deems appropriate, either (i) by instrument to the Participant’s “Immediate Family” (as defined
below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the
Participant’s designated beneficiaries, or (iii) by gift to charitable institutions. Any transferee of the Participant’s
rights shall succeed and be subject to all of the terms of the applicable Award Agreement and the Plan. “Immediate Family”
means 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, and shall include adoptive relationships.

 

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16.4 Rights as Stockholder.  A
Participant shall have no rights as a holder of shares of Common Stock with respect to any unissued securities covered by an Award
until the date the Participant becomes the holder of record of such securities. Except as provided in Section 4.2 hereof, no adjustment
or other provision shall be made for dividends or other stockholder rights, except to the extent that the Award Agreement provides
for dividend payments or dividend equivalent rights.

 

16.5 Employment
or Service.  Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible
Person or Participant any right to continue in the Service of the Company or any of its Subsidiaries, or interfere in any way with
the right of the Company or any of its Subsidiaries to terminate the employment or other service relationship of an Eligible Person
or Participant for any reason at any time.

 

16.6 Fractional
Shares.  In the case of any fractional share or unit resulting from the grant, vesting, payment or crediting of dividends
or dividend equivalents under an Award, the Committee shall have the discretionary authority to (i) disregard such fractional share
or unit, (ii) round such fractional share or unit to the nearest lower or higher whole share or unit, or (iii) convert such fractional
share or unit into a right to receive a cash payment.

 

16.7 Other Compensation
and Benefit Plans.  The amount of any compensation deemed to be received by a Participant pursuant to an Award shall
not constitute includable compensation for purposes of determining the amount of benefits to which a Participant is entitled under
any other compensation or benefit plan or program of the Company or any Subsidiary, including, without limitation, under any bonus,
pension, profit-sharing, life insurance, salary continuation or severance benefits plan, except to the extent specifically provided
by the terms of any such plan.

 

16.8 Plan Binding
on Transferees.  The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, the
Participant’s executor, administrator and permitted transferees and beneficiaries. In addition, all obligations of the Company
under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence
of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.

 

16.9 Foreign Jurisdictions.  The
Committee may adopt, amend and terminate such arrangements and grant such Awards, not inconsistent with the intent of the Plan,
as it may deem necessary or desirable to comply with any tax, securities, regulatory or other laws of other jurisdictions with
respect to Awards that may be subject to such laws. The terms and conditions of such Awards may vary from the terms and conditions
that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose. Moreover, the
Board may approve such supplements to or amendments, restatements or alternative versions of the Plan, not inconsistent with the
intent of the Plan, as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan
as in effect for any other purpose.

 

16.10 Substitute
Awards in Corporate Transactions.  Nothing contained in the Plan shall be construed to limit the right of the Committee
to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate
transaction, of the business or assets of any corporation or other entity. Without limiting the foregoing, the Committee may grant
Awards under the Plan to an employee or director of another corporation who becomes an Eligible Person by reason of any such corporate
transaction in substitution for awards previously granted by such corporation or entity to such person. The terms and conditions
of the substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent
the Committee deems necessary for such purpose. Any shares of Common Stock subject to these substitute Awards shall not be counted
against any of the maximum share limitations set forth in the Plan.

 

    	16

    	 

    

 

17.          Legal Compliance 

 

17.1 Securities
Laws.  No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then applicable
requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies having
jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met. As a condition precedent
to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take any reasonable
action to meet such requirements. The Committee may impose such conditions on any shares of Common Stock issuable under the Plan
as it may deem advisable, including, without limitation, restrictions under the Securities Act, as amended, under the requirements
of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable
to such shares. The Committee may also require the Participant to represent and warrant at the time of issuance or transfer that
the shares of Common Stock are being acquired only for investment purposes and without any current intention to sell or distribute
such shares. All Common Stock issued pursuant to the terms of this Plan shall constitute “restricted securities,” as
that term is defined in Rule 144 promulgated pursuant to the Securities Act, and may not be transferred except in compliance herewith
and with the registration requirements of the Securities Act or an exemption therefrom. Certificates representing Common Stock
acquired pursuant to an Award may bear such legend as the Company may consider appropriate under the circumstances. If an Award
is made to an Eligible Person who is subject to Chinese jurisdiction, and approval of the Award by China’s State Administration
of Foreign Exchange is needed, the Award may be converted to cash or other equivalent amount if and to the extent that such approval
is not obtained.

 

17.2 Incentive Arrangement.  The
Plan is designed to provide an on-going, pecuniary incentive for Participants to produce their best efforts to increase the value
of the Company. The Plan is not intended to provide retirement income or to defer the receipt of payments hereunder to the termination
of a Participant’s employment or beyond. The Plan is thus intended not to be a pension or welfare benefit plan that is subject
to Employee Retirement Income Security Act of 1974 (“ERISA”), and shall be construed accordingly. All interpretations
and determinations hereunder shall be made on a basis consistent with the Plan’s status as not an employee benefit plan subject
to ERISA.

 

17.3 Unfunded Plan.  The
adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company to discharge its obligations
hereunder shall not be deemed to create a trust or other funded arrangement. Except upon the issuance of Common Stock pursuant
to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither
a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company
by virtue of the Plan. Notwithstanding the foregoing, the Company shall have the right (but no obligation) to implement or set
aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations
under the Plan.

 

17.4 Section 409A
Compliance.  To the extent applicable, it is intended that the Plan and all Awards hereunder comply with the requirements
of Section 409A of the Code or an exemption thereto, and the Plan and all Award Agreements shall be interpreted and applied by
the Committee in a manner consistent with this intent in order to avoid the imposition of any additional tax under Section 409A
of the Code. Notwithstanding anything in the Plan or an Award Agreement to the contrary, in the event that any provision of the
Plan or an Award Agreement is determined by the Committee, in its sole discretion, to not comply with the requirements of Section
409A of the Code or an exemption thereto, the Committee shall, in its sole discretion, have the authority to take such actions
and to make such interpretations or changes to the Plan or an Award Agreement as the Committee deems necessary, regardless of whether
such actions, interpretations, or changes shall adversely affect a Participant, subject to the limitations, if any, of applicable
law. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on any
Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.

 

    	17

    	 

    

 

17.5 Tax Withholding.

 

(a)  The
Company shall have the power and the right to deduct or withhold, or require a participant to remit to the Company, the minimum
statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld
with respect to any taxable event arising as a result of this Plan, but in no event shall such deduction or withholding or remittance
exceed the minimum statutory withholding requirements. Notwithstanding the foregoing, if a minimum statutory amount of withholding
does not apply under the laws of any foreign jurisdiction, the Company may withhold such amount for remittance to the applicable
taxing authority of such jurisdiction as the Company determines in its discretion, uniformly applied, to be appropriate.

 

(b)  A
Participant may, in order to fulfill the withholding obligation, tender previously-acquired shares of Common Stock or have shares
of stock withheld from the exercise, provided that the shares have an aggregate Fair Market Value sufficient to satisfy in whole
or in part the applicable withholding taxes. The broker-assisted exercise procedure described in Section 6.5 may also be utilized
to satisfy the withholding requirements related to the exercise of a Stock Option.

 

(c)  Notwithstanding
the foregoing, a Participant may not use shares of Common Stock to satisfy the withholding requirements to the extent that (i)
there is a substantial likelihood that the use of such form of payment or the timing of such form of payment would subject the
Participant to a substantial risk of liability under Section 16 of the Exchange Act; or (ii) such withholding would constitute
a violation of the provisions of any law or regulation (including the Sarbanes-Oxley Act of 2002).

 

17.6 No Guarantee
of Tax Consequences.  Neither the Company, the Board, the Committee nor any other Person make any commitment or guarantee
that any federal, state, local or foreign tax treatment will apply or be available to any Participant or any other person hereunder.

 

17.7 Severability.  If
any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other jurisdiction.

 

17.8 Stock Certificates;
Book Entry Form.  Notwithstanding any provision of the Plan to the contrary, unless otherwise determined by the Committee
or required by any applicable law, rule or regulation, any obligation set forth in the Plan pertaining to the delivery or issuance
of stock certificates evidencing shares of Common Stock may be satisfied by having issuance and/or ownership of such shares recorded
on the books and records of the Company (or, as applicable, its transfer agent or stock plan administrator).

 

17.9 Governing Law.  The
Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Delaware, without
reference to the principles of conflicts of laws, and to applicable Federal securities laws.

 

18.          Effective
Date, Stockholder Approval, Amendment and Termination 

 

18.1 Effective Date.  The
effective date of the Plan shall be the date the Plan is approved by the holders of a majority of the votes cast at a meeting of
stockholders at which a quorum is present. The Plan shall be subject to stockholder approval within twelve (12) months after the
date the Plan is adopted. Such stockholder approval shall be obtained in the manner required under Applicable Law.

 

18.2 Amendment;
Termination.  The Board may suspend or terminate the Plan (or any portion thereof) at any time and may amend the
Plan at any time and from time to time in such respects as the Board may deem advisable or in the best interests of the Company
or any Subsidiary; provided, however, that (a) no such amendment, suspension or termination shall materially and adversely affect
the rights of any Participant under any outstanding Awards, without the consent of such Participant, (b) to the extent necessary
and desirable to comply with any applicable law, regulation, or stock exchange rule, the Company shall obtain stockholder approval
of any Plan amendment in such a manner and to such a degree as required, and (c) stockholder approval is required for any amendment
to the Plan that (i) increases the number of shares of Common Stock available for issuance under the Plan, or (ii) changes the
persons or class of persons eligible to receive Awards. The Plan will continue in effect until terminated in accordance with this
Section 18.2; provided, however, that no Award will be granted hereunder on or after the 10th anniversary of
the date of the Plan’s initial adoption by the Board; but provided further, that Awards granted prior to such 10th
anniversary may extend beyond that date.

 

INITIAL BOARD APPROVAL: May 5, 2015

 

INITIAL STOCKHOLDER APPROVAL: June 23,
2015    

 

    	18

    	 

    

 

EXHIBIT A 

PERFORMANCE MEASURES

 

Code Section 162(m)
Awards shall be based on the attainment of objective performance goals that are established by the Committee and relate to one
or more Performance Measures, in each case on specified date or over any period, up to 10 years, as determined by the Committee.

 

“Performance Measures”
means the following business criteria (or any combination thereof) with respect to one or more of the Company, any Subsidiary or
any division or operating unit thereof:

 

	 	•	pre-tax income, 
	 	 	 
	 	•	after-tax income, 
	 	 	 
	 	•	net income (meaning net income as reflected in the Company’s financial reports for the applicable period, on an aggregate, diluted and/or per share basis, or economic net income), 
	 	 	 
	 	•	operating income or profit, 
	 	 	 
	 	•	cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital, 
	 	 	 
	 	•	earnings per share (basic or diluted), 
	 	 	 
	 	•	return on equity, 
	 	 	 
	 	•	returns on sales or revenues, 
	 	 	 
	 	•	return on invested capital or assets (gross or net), 
	 	 	 
	 	•	cash, funds or earnings available for distribution, 
	 	 	 
	 	•	operating expenses, 
	 	 	 
	 	•	implementation or completion of critical projects or processes, 
	 	 	 
	 	•	return on investment, 
	 	 	 
	 	•	total return to stockholders (meaning the aggregate Common Stock price appreciation and 
	 	 	 
	 	•	dividends paid (assuming full reinvestment of dividends) during the applicable period), 
	 	 	 
	 	•	net earnings growth, 
	 	 	 
	 	•	stock appreciation (meaning an increase in the price or value of the Common Stock after the date of grant of an award and during the applicable period), 
	 	 	 
	 	•	return measures (including but not limited to return on assets, capital, equity, or sales), 
	 	 	 
	 	•	increase in revenues, 
	 	 	 
	 	•	the Company’s published ranking against its peer group of companies based on total stockholder return, 
	 	 	 
	 	•	net earnings, 
	 	 	 
	 	•	changes (or the absence of changes) in the per share price of the Company’s Common Stock, 
	 	 	 
	 	•	earnings before or after any one or more of the following items: interest, taxes, depreciation or amortization, as reflected in the Company’s financial reports for the applicable period, 
	 	 	 
	 	•	total revenue growth (meaning the increase in total revenues after the date of grant of an award and during the applicable period, as reflected in the Company’s financial reports for the applicable period), 
	 	 	 
	 	•	economic value created, 

 

	 	•	operating margin or profit margin, 
	 	 	 
	 	•	Share price or total shareholder return, 

 

    	A-1

    	 

    

 

 

	 	•	cost targets, reductions and savings, productivity and efficiencies, 
	 	 	 
	 	•	strategic business criteria, consisting of one or more objectives based on meeting objectively determinable criteria: specified market penetration, geographic business expansion, investor satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget comparisons, 
	 	 	 
	 	•	objectively determinable personal or professional objectives, including any of the following performance goals: the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions, and 
	 	 	 
	 	•	any combination of, or a specified increase or improvement in, any of the foregoing. 

 

Where applicable, the
Performance Measures may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a
percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a Subsidiary or affiliate,
or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market
index, a group of other companies or a combination thereof, all as determined by the Committee.

 

The Performance Measures
may include a threshold level of performance below which no payment shall be made (or no vesting shall occur), levels of performance
at which specified payments shall be made (or specified vesting shall occur), and a maximum level of performance above which no
additional payment shall be made (or at which full vesting shall occur).

 

Except as otherwise
expressly provided, all financial terms are used as defined under Generally Accepted Accounting Principles (“GAAP”)
and all determinations shall be made in accordance with GAAP, as applied by the Company in the preparation of its periodic reports
to stockholders.

 

To the extent permitted
by Section 162(m) of the Code, unless the Committee provides otherwise at the time of establishing the performance goals, for each
fiscal year of the Company, the Committee shall have the authority to make equitable adjustments to the Performance Measures in
recognition of unusual or non-recurring events affecting the Company or any Subsidiary or affiliate or the financial statements
of the Company or any Subsidiary or affiliate and may provide for objectively determinable adjustments, as determined in accordance
with GAAP, to any of the Performance Measures described above for one or more of the items of gain, loss, profit or expense: (A)
determined to be extraordinary or unusual in nature or infrequent in occurrence, (B) related to the disposal of a segment of a
business, (C) related to a change in accounting principle under GAAP or a change in applicable laws or regulations, (D) related
to discontinued operations that do not qualify as a segment of a business under GAAP, and (E) attributable to the business operations
of any entity acquired by the Company during the fiscal year.

 

    	A-2Exhibit 10.3

 

NATERA, INC.

 

2015 EMPLOYEE STOCK PURCHASE PLAN

 

(AS ADOPTED EFFECTIVE AS OF THE DATE OF THE INITIAL PUBLIC OFFERING)

 

 

NATERA, INC.

 

2015 EMPLOYEE STOCK PURCHASE PLAN

 

SECTION 1.                         PURPOSE OF THE PLAN.

 

The Board adopted the Plan effective as of the IPO Date.  The purpose of the Plan is to provide Eligible Employees with an opportunity to increase their proprietary interest in the success of the Company by purchasing Stock from the Company on favorable terms and to pay for such purchases through payroll deductions or other approved contributions.

 

SECTION 2.                         ADMINISTRATION OF THE PLAN.

 

(a)                                 Committee Composition.  The Committee shall administer the Plan.  The Committee shall consist exclusively of one or more members of the Board, who shall be appointed by the Board.

 

(b)                                 Committee Responsibilities.  The Committee shall interpret the Plan and make all other policy decisions relating to the operation of the Plan.  The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan shall be final and binding on all persons.

 

SECTION 3.                         STOCK OFFERED UNDER THE PLAN.

 

(a)                                 Authorized Shares.  The number of shares of Stock available for purchase under the Plan shall be 893,548 shares of the Company’s Stock (subject to adjustment pursuant to Subsection (c) below), plus the additional shares described in Subsection (b) below.  Shares of Stock issued pursuant to the Plan may be authorized but unissued shares or treasury shares.

 

(b)                                 Annual Increase in Shares.  As of the first business day of each fiscal year of the Company during the term of the Plan, commencing in 2016 and ending in (and including) 2035, the aggregate number of shares of Stock that may be issued under the Plan shall automatically increase by a number equal to the least of (i) 1% of the total number of shares of Stock actually issued and outstanding on the last business day of the prior fiscal year, (ii) 880,000 shares of Stock (subject to adjustment pursuant to Subsection (c) below), or (iii) a number of shares of Stock determined by the Board.

 

(c)                                  Anti-Dilution Adjustments.   In the event that any dividend or other distribution (whether in the form of cash, stock or other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of stock or other securities of the Company, or other similar change in the corporate structure of the Company affecting the Stock and effected 

 

 

without receipt or payment of consideration by the Company occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, there will be a proportionate adjustment of the number and class of Stock that may be delivered under the Plan, the Purchase Price per share and the number of shares of Stock covered by each option under the Plan which has not yet been exercised, and the numerical limits of Sections 3(a), 3(b)(ii) and 9(c).

 

(d)                                 Reorganizations.  Any other provision of the Plan notwithstanding, in the event of a Corporate Reorganization, the Plan may be continued or assumed by the surviving corporation or its parent corporation.  If such acquirer refuses to continue or assume the Plan, then, immediately prior to the effective time of the Corporate Reorganization, any Offering Period then in progress shall terminate, and, a new Purchase Date for each such Offering Period will be set, immediately prior to the effective time of the Corporate Reorganization. In the event a new Purchase Date is set under this Section 3(d), Participants will be given notice of the new Purchase Date.  The Plan shall in no event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.

 

SECTION 4.                         ENROLLMENT AND PARTICIPATION.

 

(a)                                 Offering Periods and Purchase Periods.

 

(i)                                     Base Offering Periods.  The Committee may establish Offering Periods of such frequency and duration as it may from time to time determine as appropriate (the “Base Offering Periods”); provided that a Base Offering Period shall in no event be longer than 27 months (or such other period as may be imposed under applicable tax law).  The Base Offering Periods are intended to qualify under Code Section 423.  Unless changed by the Committee, the Plan shall operate such that two Base Offering Periods, each of six months’ duration and each including a single six-month Purchase Period, will commence on May 1 and November 1 of each year, except that the Committee may determine that the first Base Offering Period applicable to the Eligible Employees of a new Participating Company shall commence on any later date specified by the Committee.

 

(ii)                                  Additional Offering Periods.  At the discretion of the Committee, additional Offering Periods (the “Additional Offering Periods”) may be conducted under the Plan or, if necessary or advisable, in the sole discretion of the Committee, under a separate sub-plan or sub-plans permitting grants to Eligible Employees of certain Participating Companies (each, a “Sub-Plan”).  Such Additional Offering Periods may, but need not, qualify under Code Section 423, and will be designed to achieve desired tax objectives in particular locations outside the United States of America or to comply with local laws applicable to offerings in such foreign jurisdictions.  The Committee shall determine the commencement and duration of each Additional Offering Period, and Additional Offering Periods may be consecutive or overlapping.  The other terms and conditions of each Additional Offering Period shall be those set forth in this Plan document or in the applicable Sub-Plan, with such changes or additional features as the Committee determines necessary to comply with local law.   Each Sub-Plan shall be considered a separate plan from the Plan (the “Statutory Plan”). The total number of 

 

2

 

Shares authorized to be issued under the Plan as provided in Section 3 above applies in the aggregate to both the Statutory Plan and any Sub-Plan.  Unless otherwise superseded by the terms of such  Sub-Plan, the provisions of this Plan document shall govern the operation of such Sub-Plan.

 

(iii)                               Separate Offerings.  Each Base Offering Period and Additional Offering Period conducted under the Plan or any Sub-Plan is intended to constitute a separate “offering” for purposes of Code Section 423.

 

(iv)                              Equal Rights and Privileges.  To the extent an Offering Period is intended to qualify under Code Section 423, all participants in such Offering Period shall have the same rights and privileges with respect to their participation in such Offering Period in accordance with Code Section 423 and the regulations thereunder except for differences that may be mandated by local law and are consistent with the requirements of Code Section 423(b)(5).

 

(b)                                 [Intentionally Left Blank].

 

(c)                                  Enrollment After IPO  In the case of any individual who qualifies as an Eligible Employee on the first day of any Offering Period, he or she may elect to become a Participant on such day by filing the prescribed enrollment form with the Company.  The enrollment form shall be filed at the prescribed location at least 10 business days (or such other period as the Committee or its designee may designate) prior to such day.

 

(d)                                 Duration of Participation.  Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she:

 

(i)                                     Reaches the end of the Offering Period or Purchase Period, as applicable, in which his or her employee contributions were discontinued under Section 5(c) or 9(b);

 

(ii)                                  Is deemed to withdraw from the Plan under Subsection (b) above;

 

(iii)                               Withdraws from the Plan under Section 6(a); or

 

(iv)                              Ceases to be an Eligible Employee.

 

A Participant whose employee contributions were discontinued automatically under Section 9(b) shall automatically resume participation as described therein.  In all other cases, a former Participant may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (c) above.

 

SECTION 5.       EMPLOYEE CONTRIBUTIONS.

 

(a)                                 Commencement of Payroll Deductions.  A Participant may purchase shares of Stock under the Plan by means of payroll deductions or (if so approved by the Committee with respect to all Participants) other approved contributions in form and substance satisfactory to the Committee.  Payroll deductions or other approved contributions shall 

 

3

 

commence as soon as reasonably practicable after the Company has received the prescribed enrollment form.  In jurisdictions where payroll deductions are not permitted under local law, Participants may purchase shares of Stock by making contributions in the form that is acceptable and approved by the Committee.

 

(b)                                 Amount of Payroll Deductions.  An Eligible Employee shall designate on the prescribed enrollment form the portion of his or her Compensation that he or she elects to have withheld for the purchase of Stock.  Such portion shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 15%.

 

(c)                                  Reducing Withholding Rate or Discontinuing Payroll Deductions.  If a Participant wishes to reduce his or her rate of payroll withholding, such Participant may do so by filing a new enrollment form with the Company at the prescribed location at any time.  The new withholding rate shall be effective as soon as reasonably practicable after the Company has received such form.  The new withholding rate may be 0% or any whole percentage of the Participant’s Compensation, but not more than his or her old withholding rate.  No Participant shall make more than one election under this Subsection (c) during any Purchase Period.  (In addition, employee contributions may be discontinued automatically pursuant to Section 9(b).)

 

(d)                                 Increasing Withholding Rate.  If a Participant wishes to increase his or her rate of payroll withholding, such Participant may do so by filing a new enrollment form with the Company at the prescribed location at any time.  The new withholding rate may be effective on the first day of the next-upcoming Offering Period in which the Participant participates, provided that the Participant has filed the enrollment form with the Company at the prescribed location at least 10 business days (or such other period as the Committee or its designee may designate) prior to such day.  The new withholding rate may be any whole percentage of the Participant’s Compensation, but not less than 1% nor more than 15%.  An increase in a Participant’s rate of payroll withholding may not take effect during an Offering Period.

 

SECTION 6.                         WITHDRAWAL FROM THE PLAN.

 

(a)                                 Withdrawal.  A Participant may elect to withdraw from the Plan (or, if applicable, from an Offering Period) by filing the prescribed form with the Company at the prescribed location at any time before a Purchase Date.  As soon as reasonably practicable thereafter, payroll deductions or other approved contributions shall cease and the entire amount credited to the Participant’s Plan Account with respect to such Offering Period shall be refunded to him or her in cash, without interest (except as otherwise required by the laws of the local jurisdiction).  No partial withdrawals from an Offering Period shall be permitted.

 

(b)                                 Re-Enrollment After Withdrawal.  A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 4(c).  Re-enrollment may be effective only at the commencement of an Offering Period.

 

SECTION 7.                         CHANGE IN EMPLOYMENT STATUS.

 

(a)                                 Termination of Employment.  Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the 

 

4

 

Plan under Section 6(a).  (A transfer from one Participating Company to another shall not be treated as a termination of employment provided that each Participating Company is then participating in the same Offering Period.)

 

(b)                                 Leave of Absence.  For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing.  Employment, however, shall be deemed to terminate on the first day following three months after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work.  Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

 

(c)                                  Death.  In the event of the Participant’s death, the amount credited to his or her Plan Account shall be paid to a beneficiary designated by him or her for this purpose on the prescribed form or, if none, to the Participant’s estate.  Such form shall be valid only if it was filed with the Company at the prescribed location before the Participant’s death.

 

SECTION 8.                         PLAN ACCOUNTS AND PURCHASE OF SHARES.

 

(a)                                 Plan Accounts.  The Company shall maintain a Plan Account on its books in the name of each Participant.  Whenever an amount is deducted from the Participant’s Compensation under the Plan, such amount shall be credited to the Participant’s Plan Account.  Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Company’s general assets and applied to general corporate purposes.  Unless otherwise required by the laws of the local jurisdiction, no interest shall be credited to Plan Accounts.

 

(b)                                 Purchase Price.  The Purchase Price for each share of Stock purchased on a Purchase Date shall be the lower of:

 

(i)                                     85% of the Fair Market Value of such share on the first day of such Offering Period; or

 

(ii)                                  85% of the Fair Market Value of such share on the Purchase Date.

 

(c)                                  Number of Shares Purchased.  On each Purchase Date, each Participant shall be deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Offering Period in accordance with Section 6(a).  The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Plan Account.  The foregoing number of shares of Stock purchasable by a Participant are subject to the limitations set forth in Section 9.  The Committee may determine with respect to all Participants that any fractional share, as calculated under this Subsection (c), shall be (i) rounded down to the next lower whole share or (ii) credited as a fractional share.

 

(d)                                 Available Shares Insufficient.  In the event that the aggregate number of shares that all Participants elect to purchase with respect to a particular Purchase Period exceeds 

 

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(i) the number of shares of Stock that were available under Section 3 above for sale under the Plan on the first day of the applicable Offering Period, or (ii) the number of shares that were available under Section 3 above for sale under the Plan on the applicable Purchase Date, then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction.  The numerator of such fraction is the number of shares that such Participant has elected to purchase, and the denominator of such fraction is the number of shares that all Participants have elected to purchase.  The Company may make a pro rata allocation of the shares available on the first day of an applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such date.  In the event of a pro-rata allocation under this Section (d), the Committee may determine in its discretion to continue all Offering Periods then in effect or terminate all Offering Periods then in effect pursuant to Section 14.

 

(e)                                  Issuance of Stock.  The shares of Stock purchased by a Participant under the Plan may be registered in the name of such Participant, or jointly in the name of such Participant and his or her spouse as joint tenants with the right of survivorship or as community property (with or without the right of survivorship).  The Company may permit or require that shares be deposited directly with a broker designated by the Company or to a designated agent of the Company, and the Company may utilize electronic or automated methods of share transfer. The Company may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares.  (The two preceding sentences shall apply whether or not the Participant is required to pay income tax in the United States.)

 

(f)                                   Tax Withholding.  To the extent required by applicable federal, state, local or foreign law, a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issue any shares of Stock under the Plan until such obligations, if any, are satisfied.

 

(g)                                  Unused Cash Balances.  Subject to the final sentence of Section 8(c), an amount remaining in the Participant’s Plan Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Plan Account to the next Purchase Period.  Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsections (c) or (d) above or Section 9(b) shall be refunded to the Participant in cash, without interest (except as otherwise required by the laws of the local jurisdiction).

 

(h)                                 Stockholder Approval.  Any other provision of the Plan notwithstanding, no shares of Stock shall be purchased under the Plan unless and until the Company’s stockholders have approved the adoption of the Plan.

 

SECTION 9.   PLAN LIMITATIONS.

 

(a)                                 Five Percent Limit.  Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant,

 

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immediately after his or her election to purchase such Stock, would own stock possessing more than 5% of the total combined voting power or value of all classes of stock of the Company or any parent or Subsidiary of the Company, determined in accordance with applicable tax law.

 

(b)                                 Dollar Limit.  As specified by Code Section 423(b)(8), no Participant shall be entitled to accrue rights to purchase Stock pursuant to any such rights outstanding under the Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Stock accrued under any other right to purchase Stock under the Plan, and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of Code Section 423) of the Company or any Related Corporation, would otherwise permit such Participant to purchase more than $25,000 worth of Stock of the Company or any Related Corporation (determined on the basis of the Fair Market Value per share on the date such rights are granted, and which, with respect to the Plan, will be determined as of the beginning of the respective Offering Period) for each calendar year such rights are at any time outstanding.

 

If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall automatically resume at the beginning of the next Offering Period with a scheduled Purchase Date in the next calendar year, provided that he or she is an Eligible Employee at the beginning of such Offering Period.

 

(c)                                  Purchase Period Share Purchase Limit.  Any other provision of the Plan notwithstanding, no Participant shall purchase more than 5,000 shares of Stock with respect to any Purchase Period; provided that the Committee may, for future Offering Periods, increase or decrease in its absolute discretion, the maximum number of shares of Stock that a Participant may purchase during each Purchase Period.

 

SECTION 10.                  RIGHTS NOT TRANSFERABLE.

 

The rights of any Participant under the Plan, or any Participant’s interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by beneficiary designation or the laws of descent and distribution.  If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by beneficiary designation or the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 6(a).

 

SECTION 11.                  NO RIGHTS AS AN EMPLOYEE.

 

Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.

 

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SECTION 12.                  NO RIGHTS AS A STOCKHOLDER.

 

A Participant shall have no rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the applicable Purchase Date.

 

SECTION 13.                  SECURITIES LAW REQUIREMENTS.

 

Shares of Stock shall not be issued, and the Company shall have no liability for failure to issue shares of Stock, under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.

 

SECTION 14.                  AMENDMENT OR DISCONTINUANCE.

 

(a)                                 General Rule.  The Committee, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Committee, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or upon completion of the purchase of shares of Stock on the next Purchase Date, or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to Section 3(c) or (d)). If the Offering Periods are terminated prior to expiration, all amounts then credited to Participants’ accounts which have not been used to purchase shares of Stock will be returned to the Participants (without interest thereon, except as otherwise required by the laws of the local jurisdiction) as soon as administratively practicable.

 

(b)                                 Committee’s Discretion.  Without stockholder consent and without limiting Section 14(a), the Committee will be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as it determines in its sole discretion advisable which are consistent with the Plan.

 

(c)                                  Accounting Consideration.  In the event the Committee determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Committee may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting consequence including, but not limited to:

 

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(i)                                     Amending the Plan to conform with the safe harbor definition under Financial Accounting Standards Board Accounting Standards Codification Topic 718, including with respect to an Offering Period underway at the time;

 

(ii)                                  Altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;

 

(iii)                               Shortening any Offering Period by setting a new Purchase Date, including an Offering Period underway at the time of the Committee’s action;

 

(iv)                              Reducing the maximum percentage of Compensation a Participant may elect to set aside as payroll deductions; and

 

(v)                                 Reducing the maximum number of shares of Stock a Participant may purchase during any Purchase Period.

 

Such modifications or amendments will not require stockholder approval or the consent of any Plan Participants.

 

(d)                                 Stockholder Approval.  Except as provided in Section 3, any increase in the aggregate number of shares of Stock that may be issued under the Plan shall be subject to the approval of the Company’s stockholders.  In addition, any other amendment of the Plan shall be subject to the approval of the Company’s stockholders to the extent required under Section 14(e) or by any applicable law or regulation.

 

(e)                                  Plan Termination.  The Plan shall terminate automatically 20 years after its adoption by the Board, unless (i) the Plan is extended by the Board and (ii) the extension is approved within 12 months by a vote of the stockholders of the Company.

 

SECTION 15.                  DEFINITIONS.

 

(a)                                 “Board” means the Board of Directors of the Company, as constituted from time to time.

 

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

 

(c)                                  “Committee” means a committee of the Board, as described in Section 2.

 

(d)                                 “Company” means Natera, Inc., a Delaware corporation.

 

(e)                                  “Compensation” means, unless otherwise determined by the Committee, (i) cash base salary paid to a Participant by a Participating Company plus (ii) any pre-tax contributions made by the Participant under Code Sections 401(k) or 125.  “Compensation” shall exclude all cash items other than base salary and shall excluded all non-cash items, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income attributable

 

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to equity compensation awards of the Company, and similar items.  The Committee shall determine whether a particular item is included in Compensation.

 

(f)                                   “Corporate Reorganization” means:

 

(i)                                     The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization; or

 

(ii)                                  The sale, transfer or other disposition of all or substantially all of the Company’s assets or the complete liquidation or dissolution of the Company.

 

(g)                                  “Eligible Employee” means a common law employee of a Participating Company who is customarily employed for five months or more per calendar year and more than 20 hours per week.  The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of any country that has jurisdiction over him or her.  In addition, the Committee may determine prior to the commencement of an Offering Period not to exclude part-time employees or exclude employees whose customary employment is for fewer hours per week or fewer months in a calendar year; provided that such terms are applied in an identical manner to all employees of every Participating Company in such Offering Period.

 

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

 

(i)                                     “Fair Market Value” means the price at which Stock was last sold in the principal U.S. market for the Stock on the applicable date or, if the applicable date was not a trading day, on the last trading day prior to the applicable date.  If Stock is no longer traded on a public U.S. securities market, the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.  The Committee’s determination shall be conclusive and binding on all persons.

 

(j)                                    “IPO” means the Company’s initial offering of Stock to the public.

 

(k)                                 “IPO Date” means the effective date of the registration statement filed by the Company with the Securities and Exchange Commission for its initial offering of Stock to the public.

 

(l)                                     “Offering Period” means any period, including as the context requires Base Offering Periods and Additional Offering Periods, with respect to which the right to purchase Stock may be granted under the Plan, as determined pursuant to Section 4(a).

 

(m)                             “Participant” means an Eligible Employee who participates in the Plan or any Sub-Plan, as provided in Section 4.

 

(n)                                 “Participating Company” means (i) the Company and (ii) each present or future Subsidiary designated by the Committee as a Participating Company.

 

(o)                                 “Plan” means this Natera, Inc. 2015 Employee Stock Purchase Plan, as it may be amended from time to time.

 

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(p)                                 “Plan Account” means the account established for each Participant pursuant to Section 8(a).

 

(q)                                 “Purchase Date”means the last trading day of a Purchase Period.

 

(r)                                    “Purchase Period”means a period within an Offering Period (which for an Offering Period with only a single Purchase Period would be coterminous with the Offering Period) during which contributions may be made toward the purchase of Stock under the Plan, as determined pursuant to Section 4(a).

 

(s)                                   “Purchase Price” means the price at which Participants may purchase Stock under the Plan, as determined pursuant to Section 8(b).

 

(t)                                    “Related Corporation” means any “parent corporation” of the Company as defined in Code Section 424(e) or any Subsidiary.

 

(u)                                 “Stock” means the Common Stock of the Company.

 

(v)                                 “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

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