Document:

Exhibit 10.6

 

VACCINOGEN, INC.

 

SUBSCRIPTION AGREEMENT

 

The undersigned (hereinafter
“Subscriber”) hereby confirms his/her/its subscription for the purchase of units (“Units”)
of Vaccinogen, Inc., a Maryland corporation (the “Company”), on the terms described below, with each Unit consisting
of:

 

(a)          One
share (the “Shares”) of common stock of the Company, par value $0.0001 per share (the “Common Stock”);

 

(b)          a
warrant (collectively, the “Warrants”) to purchase, at any time prior to the fifth anniversary of the date of
issuance of the Warrant (subject to mandatory exercise), 0.3 shares of Common Stock at the exercise price of $6.05 per whole share
of Common Stock (the “Warrant Exercise Price”). The shares of Common Stock underlying each Warrant are referred
to herein as the “Warrant Shares.”

 

Capitalized terms used and not otherwise defined herein shall
have the meanings set forth for such terms in the Company’s Amended and Restated Private Placement Memorandum Supplement,
dated January 29, 2014, as supplemented by Supplement No. 1 dated April 7, 2014 and further supplemented by Supplement No. 2 dated
August 20, 2014 (as amended or supplemented, and together with all documents and exhibits
thereto, the “Memorandum”). The Units, the Shares, the Adjustment Shares (as defined in Section 1(d) below),
the Warrants and the Warrant Shares are sometimes referred to collectively herein as the “Securities.”

 

In connection with
this subscription, Subscriber and the Company agree as follows:

 

1.            Purchase
and Sale of the Units; Issuance of Adjustment Shares.

 

(a)          The
Company hereby agrees to issue and to sell to Subscriber, and Subscriber hereby agrees to purchase from the Company, a number of
Units at a price equal to $5.50 per Unit (the “Unit Price”) and for the aggregate subscription amount set forth
on the signature page hereto. The form of Warrant is as annexed to the Memorandum. Upon acceptance of this Subscription Agreement
by the Company, the Company shall issue and deliver to Subscriber a share certificate and a warrant certificate evidencing the
applicable number of Shares and Warrants subscribed for against payment in U.S. Dollars of the Purchase Price (as defined below).

 

(b)          Subscriber
has hereby delivered and paid concurrently herewith the aggregate purchase price (the “Purchase Price”) set
forth on the signature page hereof required to purchase the Units subscribed for hereunder which amount has been paid in U.S. Dollars
by cash, wire transfer or check, subject to collection, to the order of “Vaccinogen, Inc.”

 

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(c)          Subscriber
understands and acknowledges that this subscription is part of a proposed placement by the Company of up to 5,600,000 Units, which
offering is being made on a “best efforts” basis (the “Offering”). Subscriber understands that the
Company may, at its discretion, increase the size of the Offering by up to $5 million, or an additional 909,090 Units. During the
Offering Period, funds will be held in an account established by the Company and released at the discretion of the Company from
time to time. If a subscription is not accepted, whether in whole or in part, the subscription funds held therein will be returned
to the investor without interest or deduction.

 

(d)          The
Company will also each to each Subscriber, for no additional consideration, such number of shares of Common Stock equal to the
difference between (1) the number of shares of our Common Stock that would have been issued to purchaser if the per-Unit purchase
price for such shares had been equal to $5.35 (the Market Price on October 31, 2013, the effective date of our first S-1 registration
statement) and (2) the number of shares of the Common Stock issuable to (y) the number of Shares issuable to Subscriber upon the
closing of sale of Units to Subscriber pursuant to Section 1(a) above (the “Adjustment Shares”).

 

“Market Price,”
as of any date, (i) means the average of the last reported sale prices for the shares of Common Stock on the OTCBB for the five
(5) Trading Days immediately preceding such date as reported by Bloomberg, or (ii) if the OTCBB is not the principal trading market
for the shares of Common Stock, the average of the last reported sale prices on the principal trading market for the Common Stock
during the same period as reported by Bloomberg, or (iii) if market value cannot be calculated as of such date on any of the foregoing
bases, the Market Price shall be the fair market value as reasonably determined in good faith by (a) the Board of Directors of
the Company or, at the option of a majority-in-interest of the holders of the outstanding Shares by (b) an independent investment
bank of nationally recognized standing in the valuation of businesses similar to the business of the corporation. The manner of
determining the Market Price of the Common Stock set forth in the foregoing definition shall apply with respect to any other security
in respect of which a determination as to market value must be made hereunder.

 

2.            Covenants,
Representations and Warranties of Subscriber. Subscriber covenants with, and represents and warrants to, the Company as follows:

 

(a)          The
Confidential Purchaser Questionnaire has been completed, signed and delivered to the Company by the Subscriber and is, as of the
date hereof, true, complete, and correct in all respects.

 

(b)          Subscriber
is an “accredited investor” as defined by Rule 501 of Regulation D under the Securities Act of 1933, as amended (the
“Act”), and Subscriber is capable of evaluating the merits and risks of Subscriber’s investment in the
Company and has the capacity to protect Subscriber’s own interests.

 

(c)          Subscriber
acknowledges and understands that the Securities are being purchased for investment purposes and not with a view to distribution
or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part thereof for any particular
price, or at any particular time, or upon the happening of any particular event or circumstances, except selling, transferring,
or disposing of the Securities made in full compliance with all applicable provisions of the Act, the rules and regulations promulgated
by the Securities and Exchange Commission (“SEC”) thereunder, and applicable state securities laws; and that
an investment in the Securities is not a liquid investment.

 

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(d)          Subscriber
acknowledges the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from
such registration is available. Subscriber is aware of the provisions of Rule 144 promulgated under the Act which permit limited
resale of common stock purchased in a private placement subject to the satisfaction of certain conditions, including, among other
things, the existence of a public market for the common stock, the availability of certain current public information about the
Company, the resale occurring not less than six months after a party has purchased and paid for the security to be sold, the sale
being effected through a “broker’s transaction” or in transactions directly with a “market maker”
and the number of shares of common stock being sold during any three-month period not exceeding specified limitations.

 

(e)          Subscriber
acknowledges that Subscriber has had the opportunity to ask questions of, and receive answers from the Company or any person acting
on its behalf concerning the Company and its business and to obtain any additional information, to the extent possessed by the
Company (or to the extent it could have been acquired by the Company without unreasonable effort or expense) necessary to verify
the accuracy of the information received by Subscriber. In connection therewith, Subscriber acknowledges that Subscriber has had
the opportunity to discuss the Company’s business, management and financial affairs with the Company’s management or
any person acting on its behalf. Subscriber has received and reviewed the Memorandum, and all the information, both written and
oral, that it desires. Without limiting the generality of the foregoing, Subscriber has been furnished with or has had the opportunity
to acquire, and to review: (i) copies of all of the Company’s publicly available documents, and (ii) all information, both
written and oral, it desires with respect to the Company’s business, management, financial affairs and prospects. In determining
whether to make this investment, Subscriber has relied solely on Subscriber’s own knowledge and understanding of the Company
and its business based upon Subscriber’s own due diligence investigations and the information furnished pursuant to this
paragraph. Subscriber understands that no person has been authorized to give any information or to make any representations which
were not furnished pursuant to this paragraph and Subscriber has not relied on any other representations or information.

 

(f)          Subscriber
has all requisite legal and other power and authority to execute and deliver this Subscription Agreement and to carry out and perform
Subscriber’s obligations under the terms of this Subscription Agreement. This Subscription Agreement constitutes a valid
and legally binding obligation of Subscriber, enforceable in accordance with its terms, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief
or other general principals of equity, whether such enforcement is considered in a proceeding in equity or law.

 

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(g)          Subscriber
has carefully considered and has discussed with the Subscriber’s professional legal, tax, accounting and financial advisors,
to the extent Subscriber has deemed necessary, the suitability of this investment and the transactions contemplated by this Subscription
Agreement for the Subscriber’s particular federal, state, local and foreign tax and financial situation and has determined
that this investment and the transactions contemplated by this Subscription Agreement are a suitable investment for the Subscriber.
Subscriber relies solely on such advisors and not on any statements or representations of the Company or any of its agents. Subscriber
understands that Subscriber (and not the Company) shall be responsible for Subscriber’s own tax liabilities which may arise
as a result of this investment or the transactions contemplated by this Subscription Agreement.

 

(h)          Neither
this Subscription Agreement nor the Confidential Purchaser Questionnaire contain any untrue statement of a material fact or omit
any material fact concerning Subscriber.

 

(i)          There
are no actions, suits, proceedings or investigations pending against Subscriber or Subscriber’s properties before any court
or governmental agency (nor, to Subscriber’s knowledge, is there any threat thereof) which would impair in any way Subscriber’s
ability to enter into and fully perform Subscriber’s commitments and obligations under this Subscription Agreement or the
transactions contemplated hereby.

 

(j)          The
execution, delivery and performance of and compliance with this Subscription Agreement and the issuance of the Securities will
not result in any material violation of, or conflict with, or constitute a material default under, any of Subscriber’s articles
of incorporation or bylaws or other governing documents, if applicable, or any of Subscriber’s material agreements nor result
in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of Subscriber or the
Securities.

 

(k)          Subscriber
acknowledges the Securities are speculative and involve a high degree of risk and that Subscriber can bear the economic risk of
the purchase of the Securities, including a total loss of his/her/its investment.

 

(l)          Subscriber
acknowledges he/she/it has carefully reviewed and considered the risk factors discussed in the “Risk Factors” section
of the Memorandum prior to making an investment decision.

 

(m)          Subscriber
recognizes that no federal, state or foreign agency has recommended or endorsed the purchase of the Securities.

 

(n)          Subscriber
is aware the Securities are and will be, when issued, “restricted securities” as that term is defined in Rule 144 of
the general rules and regulations under the Act.

 

(o)          Subscriber
understands any and all certificates representing the Securities and any and all securities issued in replacement thereof or in
exchange therefore shall bear the following legend or one substantially similar thereto, which Subscriber has read and understands:

 

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“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL
FOR THIS CORPORATION, IS AVAILABLE.”

 

(p)          Because
of the restrictions imposed on resale, Subscriber understands the Company shall have the right to note stop-transfer instructions
in its stock transfer records, and Subscriber has been informed of the Company’s intention to do so. Any sales, transfers,
or any other dispositions of the Securities by Subscriber, if any, will be in compliance with the Act.

 

(q)          Subscriber
acknowledges that Subscriber has such knowledge and experience in financial and business matters that he/she/it is capable of evaluating
the merits and risks of an investment in the Securities and of making an informed investment decision.

 

(r)          Subscriber
represents: (i) Subscriber is able to bear the economic risks of an investment in the Securities and to afford the complete loss
of the investment, and (ii) (A) Subscriber could be reasonably assumed to have the capacity to protect his/her/its own interests
in connection with this subscription; or (B) Subscriber has a pre-existing personal or business relationship with either the Company
or any affiliate thereof of such duration and nature as would enable a reasonably prudent purchaser to be aware of the character,
business acumen and general business and financial circumstances of the Company or such affiliate and is otherwise personally qualified
to evaluate and assess the risks, nature and other aspects of this subscription.

 

(s)          Subscriber
further represents the address set forth in the Confidential Purchaser Questionnaire is his/her principal residence (or, if Subscriber
is a company, partnership or other entity, the address of its principal place of business); that Subscriber is purchasing the Securities
for Subscriber’s own account and not, in whole or in part, for the account of any other person; Subscriber is purchasing
the Securities for investment and not with a view to resale or distribution; and Subscriber has not formed any entity for the purpose
of purchasing the Securities.

 

(t)          Subscriber
understands the Company shall have the unconditional right to accept or reject each subscription, in whole or in part, for any
reason or without a specific reason, in the sole and absolute discretion of the Company (even after receipt and clearance of Subscriber’s
funds). No subscription will be binding upon the Company until accepted by an authorized officer of the Company. In the event the
subscription is rejected, Subscriber’s subscription funds will be returned without interest thereon or deduction therefrom.

 

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(u)          Subscriber
has not been furnished with any oral representation or oral information in connection with the offering of the Securities that
is not contained in the Memorandum and this Subscription Agreement.

 

(v)         Subscriber
represents that Subscriber is not subscribing for Securities as a result of or subsequent to any advertisement, article, notice
or other communication published in any newspaper, magazine or similar media or broadcast over the Internet, television or radio
or presented at any seminar or meeting.

 

(w)          Subscriber
represents that Subscriber is not subscribing for Securities as a result of any registration statement filed by the Company with
the Securities and Exchange Commission.

 

(x)          Subscriber
has carefully read this Subscription Agreement, the Warrant, and the Memorandum, and Subscriber has accurately completed the Confidential
Purchaser Questionnaire which accompanies this Subscription Agreement.

 

(y)          No
representations or warranties have been made to Subscriber by the Company, or any officer, employee, agent, affiliate or subsidiary
of the Company, other than the representations of the Company contained herein, and in subscribing for the Securities, Subscriber
is not relying upon any representations other than those contained in the Memorandum or in this Subscription Agreement.

 

(z)          Subscriber
represents and warrants, to the best of its knowledge, that other than set forth in the Memorandum, no finder, broker, agent, financial
advisor or other intermediary, nor any purchaser representative or any broker-dealer acting as a broker, is entitled to any compensation
in connection with the transactions contemplated by this Subscription Agreement.

 

(aa)         Subscriber
represents and warrants that Subscriber: (i) has not distributed or reproduced the Memorandum, in whole or in part, at any time,
without the prior written consent of the Company; and (ii) for three (3) years from the date hereof will keep confidential the
existence of the Memorandum and the information contained therein or made available in connection with any further investigation
of the Company and not use the information about the Company for any other purpose.

 

(bb)         If
Subscriber is a trust, this investment, together with all other securities of the Company held by the trust, does not exceed 10%
of the trust assets.

 

3.            Covenants,
Representations and Warranties of the Company. The Company covenants with, and represents and warrants to, Subscriber as follows:

 

(a)          The
Company is duly organized and validly exists as a corporation in good standing under the laws of the State of Maryland.

 

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(b)          The
Company has all such corporate power and authority to enter into, deliver and perform this Subscription Agreement and the Warrant.

 

(c)          All
necessary corporate action has been duly and validly taken by the Company to authorize the execution, delivery and performance
of this Subscription Agreement and the Warrant by the Company, and the issuance and sale of the Securities to be sold by the Company
pursuant to this Subscription Agreement and the Warrant. This Subscription Agreement and the Warrant have been duly and validly
authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general
equitable principles.

 

(d)          As
of the date hereof, there is no litigation, arbitration, claim, governmental or other proceeding (formal or informal), or investigation
pending or to the Company's knowledge threatened, with respect to the Company, or its respective operations, businesses, properties,
or assets, except as properly described in the Memorandum or such as individually or in the aggregate do not now have and will
not, to the best knowledge of the Company, in the future have a material adverse effect upon the operations, business, properties
or assets of the Company. The Company is not, nor as of each Closing Date shall be, in violation of, or in default with respect
to, any law, rule, regulation, order, judgment or decree, except as properly described in the Memorandum or such as individually
or in the aggregate do not have and will not in the future have a material adverse effect upon the operations, business, properties,
or assets of the Company; nor is the Company required to take any action in order to avoid any such violation or default.

 

(e)          To
its best knowledge, the Company has not infringed, is not infringing, nor has received notice of any claim that the Company has
infringed with respect to asserted intellectual property rights (including, without limitation, copyright, patent, trademark, trade
dress, service mark and any other intellectual property rights) of others. To the best knowledge of the Company, none of the patents,
patent applications, trademarks, service marks, trade names and copyrights, and licenses and rights to the foregoing presently
owned or held by the Company, materially infringe upon any like right of any other person or entity. The Company: (i) owns or has
the right to use, free and clear of all liens, charges, claims, encumbrances, pledges, security interests, defects or other restrictions
of any kind whatsoever, sufficient patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect
to the foregoing, to conduct its business as presently conducted except as set forth in the Memorandum, and (ii) except as set
forth in the Memorandum, is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise
to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, copyright, know-how, technology
or other intangible asset, with respect to the use thereof or in connection with the conduct of its business as now conducted or
otherwise. The Company has direct ownership of title to all its intellectual property (including all United States and foreign
patent applications and patents), other proprietary rights, confidential information and know-how.

 

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(f)          The
Units (and component parts) and the Adjustment Shares to be issued and sold to the undersigned as provided in the Memorandum and
in this Subscription Agreement have been duly authorized and when issued and delivered against payment therefor, will be validly
issued, fully paid and non-assessable and will conform to the description thereof in the Memorandum. The Warrants are exercisable
for Common Stock and the shares of Common Stock issuable upon exercise of the Warrants have been duly authorized and when issued
and delivered upon exercise and due payment therefor will be validly issued, fully paid and non-assessable and will conform to
the description thereof in the Memorandum; and, except as set forth in the Memorandum, there are no preemptive or other rights
to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of Common Stock issuable to Subscriber
(whether issued directly as part of the Units, upon exercise of the Warrants or issuance of the Adjustment Shares) pursuant to
the Company's certificate of incorporation or by-laws or any agreement or other outstanding instrument to which the Company is
a party or is otherwise known to the Company. The Company has reserved sufficient shares of Common Stock to be issued upon exercise
of the Warrants and for issuance of the Adjustment Shares.

 

4.            Indemnification.
Subscriber agrees to indemnify and hold harmless the Company and its officers, directors, employees, shareholders, agents representatives
and affiliates, and any person acting on behalf of the Company, from and against any and all damage, loss, liability, cost and
expense (including reasonable attorneys’ fees) which any of them may incur by reason of the failure by Subscriber to fulfill
any of the terms and conditions of this Subscription Agreement, or by reason of any breach of the representations and warranties
made by Subscriber herein, or in any other document provided by Subscriber to the Company. All representations, warranties and
covenants of each of Subscriber and the Company contained herein shall survive the acceptance of this subscription.

 

5.            Patriot
Act Compliance. (Terms used in this section are defined in paragraph (d) below.)

 

To induce the Company
to accept the undersigned’s investment, the undersigned hereby makes the following representations, warranties and covenants
to the Company:

 

(a)          The
undersigned represents and warrants that no holder of any beneficial interest in the undersigned’s equity securities of the
Company (each a “Beneficial Interest Holder”) and, no Related Person (in the case the undersigned is an entity)
is or will be:

 

(1)         A
person or entity whose name appears on the list of specially designated nationals and blocked persons maintained by the Office
of Foreign Asset Control from time to time;

 

(2)         A
Foreign Shell Bank; or

 

(3)         A
person or entity resident in or whose subscription funds are transferred from or through an account in a Non-Cooperative Jurisdiction.

 

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(b)          The
undersigned represents that the bank or other financial institution (the “Wiring Institution”) from which the
undersigned’s funds will be wired is located in a FATF Country.

 

(c)          The
undersigned represents that:

 

(1)         Neither
it, any Beneficial Interest Holder nor any Related Person (in the case of the undersigned is an entity) is a Senior Foreign Political
Figure, any member of a Senior Foreign Political Figure’s Immediate Family or any Close Associate of a Senior Foreign Political
Figure;

 

(2)         Neither
it, any Beneficial Interest Holder nor any Related Person (in the case the undersigned is an entity) is resident in, or organized
or chartered under the laws of, a jurisdiction designated by the Secretary of the Treasury under Section 311 or 312 of the USA
PATRIOT Act as warranting special measures due to money laundering concerns; and

 

(3)         Its
investment funds do not originate from, nor will they be routed through, an account maintained at a Foreign Shell Bank, an “offshore
bank,” or a bank organized or chartered under the laws of a Non-Cooperative Jurisdiction.

 

(d)          Definitions:

 

Close Associate:
With respect to a Senior Foreign Political Figure, a person who is widely and publicly known internationally to maintain an unusually
close relationship with the Senior Foreign Political Figure, and includes a person who is in a position to conduct substantial
domestic and international financial transactions on behalf of the Senior Foreign Political Figure.

 

FATF: The Financial
Action Task Force on Money Laundering.

 

FATF Country:
A country that is a member of FATF. As of September 1, 2003, the countries which are members of FATF are: Argentina; Australia;
Austria; Belgium; Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong; Iceland; Ireland; Italy; Japan; Luxembourg;
Mexico; Kingdom of the Netherlands; New Zealand; Norway; Portugal; Singapore; South Africa; Spain; Sweden; Switzerland; Turkey;
United Kingdom and United States. For a current list of FATF members see http://www1.oecd.org/fatf/Members_en.htm.

 

Foreign Bank:
An organization which (i) is organized under the laws of a country outside the United States; (ii) engages in the business of banking;
(iii) is recognized as a bank by the bank supervisory or monetary authority of the country of its organization or principal banking
operations; (iv) receives deposits to a substantial extent in the regular course of its business; and (v) has the power to accept
demand deposits, but does not include the U.S. branches or agencies of a foreign bank.

 

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Foreign Shell Bank:
A Foreign Bank without a Physical Presence in any country, but does not include a Regulated Affiliate.

 

Government Entity:
Any government or any state, department or other political subdivision thereof, or any governmental body, agency, authority or
instrumentality in any jurisdiction exercising executive, legislative, regulatory or administrative functions of or pertaining
to government.

 

Immediate Family:
With respect to a Senior Foreign Political Figure, typically includes the political figure’s parents, siblings, spouse, children
and in-laws.

 

Non-Cooperative Jurisdiction:
Any foreign country or territory that has been designated as non-cooperative with international anti-money laundering principles
or procedures by an intergovernmental group or organization, such as FATF, of which the United States is a member and with which
designation the United States representative to the group or organization continues to concur. See http://www1.oecd.org/fatf/NCCT_en.htm
for FATF’s list of non-cooperative countries and territories.

 

Physical Presence:
A place of business maintained by a Foreign Bank and is located at a fixed address, other than solely a post office box or an electronic
address, in a country in which the Foreign Bank is authorized to conduct banking activities, at which location the Foreign Bank:
(a) employs one or more individuals on a full-time basis; (b) maintains operating records related to its banking activities; and
(c) is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities.

 

Publicly Traded Company:
An entity whose securities are listed on a recognized securities exchange or quoted on an automated quotation system in the U.S.
or country other than a Non-Cooperative Jurisdiction or a wholly-owned subsidiary of such an entity.

 

Qualified Plan:
A tax qualified pension or retirement plan in which at least 100 employees participate that is maintained by an employer organized
in the U.S. or is a U.S. Government Entity.

 

Regulated Affiliate:
A Foreign Shell Bank that: (a) is an affiliate of a depository institution, credit union or Foreign Bank that maintains a Physical
Presence in the U.S. or a foreign country, as applicable; and (b) is subject to supervision by a banking authority in the country
regulating such affiliated depository institution, credit union or Foreign Bank.

 

Related Person:
With respect to any entity, any interest holder, director, senior officer, trustee, beneficiary or grantor of such entity; provided
that in the case of an entity that is a Publicly Traded Company or a Qualified Plan, the term “Related Person” shall
exclude any interest holder holding less than 5% of any class of securities of such Publicly Traded Company and beneficiaries of
such Qualified Plan.

 

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Senior Foreign Political
Figure: A senior official in the executive, legislative, administrative, military or judicial branches of a non-U.S. government
(whether elected or not), a senior official of a major non-U.S. political party, or a senior executive of a non-U.S. government-owned
corporation. In addition, a Senior Foreign Political Figure includes any corporation, business or other entity that has been formed
by, or for the benefit of, a Senior Foreign Political Figure.

 

USA PATRIOT Act:
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
Act) Act of 2001 (Pub. L. No. 107-56).

 

6.            Independent
Nature of Subscriber’s Obligations and Rights. The obligations of the Subscriber under this Agreement and any other documents
delivered in connection herewith and therewith (collectively, the “Transaction Documents”) are several and not joint
with the obligations of any other purchaser of Units, and the Subscriber is not responsible in any way for the performance of the
obligations of any other purchaser of Units under any Transaction Document. The decision of the Subscriber to purchase Units pursuant
to the Transaction Documents has been made by the Subscriber independently of any other purchaser of Units. Nothing contained herein
or in any Transaction Document, and no action taken by any purchaser of Units pursuant thereto, shall be deemed to constitute such
purchasers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the purchasers
of Units are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Subscriber acknowledges that no other purchaser of Units has acted as agent for the Subscriber in connection
with making its investment hereunder and that no other purchaser of Units will be acting as agent of the Subscriber in connection
with monitoring its investment in the Units or enforcing its rights under the Transaction Documents. The Subscriber shall be entitled
to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other purchaser of Units to be joined as an additional party
in any proceeding for such purpose.

 

7.            Miscellaneous.

 

(a)          Subscriber
agrees not to transfer or assign this Subscription Agreement or any of Subscriber’s interest herein and further agrees that
the transfer or assignment of the Securities acquired pursuant hereto shall be made only in accordance with all applicable laws.

 

(b)          Subscriber
agrees that Subscriber cannot cancel, terminate or revoke this Subscription Agreement or any agreement of Subscriber made hereunder,
and this Subscription Agreement shall survive the death or legal disability of Subscriber and shall be binding upon Subscriber’s
heirs, executors, administrators, successors and permitted assigns.

 

(c)          Subscriber
has read and accurately completed this entire Subscription Agreement and Memorandum.

 

(d)          This
Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and
may be amended only by a written execution by all parties.

 

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(f)          Subscriber
acknowledges it has been advised to consult with his/her/its own attorney regarding this subscription and Subscriber has done so
to the extent that Subscriber deems appropriate. Subscriber understands and agrees that Subscriber has not been represented in
this transaction by counsel to the Company.

 

(g)          Any
notice or other document required or permitted to be given or delivered to the Subscriber shall be in writing and sent: (i) by
registered or certified mail with return receipt requested (postage prepaid) or (ii) by a recognized overnight delivery service
(with charges prepaid).

 

If to the Company, at:

 

Vaccinogen, Inc.

5300 Westview Drive, Suite
406

Frederick, MD 21703

Tel No.: 301-668-8400

Facsimile No.: 301-631-2970

Email: atussing@vaccinogeninc.com

Attention: Andrew
L. Tussing

 

If to the
Subscriber, at its address set forth on the signature page to this Subscription Agreement, or such other address as it shall have
specified to the Company in writing.

 

(h)          Failure
of the Company to exercise any right or remedy under this Subscription Agreement or any other agreement between the Company and
the Subscriber, or otherwise, or delay by the Company in exercising such right or remedy, will not operate as a waiver thereof.
No waiver by the Company will be effective unless and until it is in writing and signed by the Company.

 

(i)          This
Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Maryland,
as such laws are applied by the Maryland courts except with respect to the conflicts of law provisions thereof, and shall be binding
upon the Subscriber, the Subscriber’s heirs, estate, legal representatives, successors and assigns and shall inure to the
benefit of the Company, its successors and assigns.

 

(j)          Any
legal suit, action or proceeding arising out of or relating to this Subscription Agreement or the transactions contemplated hereby
shall be instituted exclusively in state or federal courts located in County of Frederick, State of Maryland (the “Maryland
Courts”). The parties hereto hereby: (i) waive any objection which they may now have or hereafter have to the venue of
any such suit, action or proceeding, and (ii) irrevocably consent to the jurisdiction of the applicable Maryland Court in any such
suit, action or proceeding. The parties further agree to accept and acknowledge service of any and all process which may be served
in any such suit, action or proceeding in the Maryland Courts and agree that service of process upon a party mailed by certified
mail to such party’s address shall be deemed in every respect effective service of process upon such party in any such suit,
action or proceeding.

 

    	12

    	 

    

 

(k)          If
any provision of this Subscription Agreement is held to be invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed modified to conform to such statute or rule of law. Any provision hereof that may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provisions hereof.

 

(l)          The parties
understand and agree money damages would not be a sufficient remedy for any breach of the Subscription Agreement by the Company
or the Subscriber and that the party against which such breach is committed shall be entitled to equitable relief, including injunction
and specific performance, as a remedy for any such breach. Such remedies shall not be deemed to be the exclusive remedies for a
breach by either party of the Subscription Agreement but shall be in addition to all other remedies available at law or equity
to the party against which such breach is committed.

 

(m)          All
pronouns and any variations thereof used herein shall be deemed to refer to the masculine, feminine, singular or plural, as identity
of the person or persons may require.

 

(n)          This
Subscription Agreement may be executed in counterparts and by facsimile, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.

 

[Signature Pages Follow]

 

    	13

    	 

    

 

Signature Page for Individuals:

 

IN WITNESS WHEREOF,
Subscriber has caused this Subscription Agreement to be executed as of the date indicated below.

 

	$______________________($5.50 per Unit)	 	 
	
        Purchase Price
	 	Number of Units
	 	 	 
	Print or Type Name	 	Print or Type Name (Joint-owner)
	 	 	 
	 	 	 
	Signature	 	Signature (Joint-owner)
	 	 	 
	 	 	 
	Date	 	Date (Joint-owner)
	 	 	 
	 	 	 
	IRS Taxpayer Identification Number	 	IRS Taxpayer Identification Number (Joint-

owner)
	 	 	 
	 	 	 
	Address	 	Address (Joint-owner)
	 	 	 
	 	 	 
	Telephone Number	 	Telephone Number
	 	 	 
	 	 	 
	Fax Number	 	Fax Number
	 	 	 
	 	 	 
	E-mail Address	 	E-mail Address

 

Type of Ownership

 

		 ̈	Individual

		 ̈	Tenants in common

		 ̈	Joint tenants with right of survivorship

		 ̈	Community property (check only if resident of community property state)

		 ̈	Other (please specify:____________________)

 

    	14

    	 

    

 

Wiring Instructions:

 

	Bank Name:	 	 
	ABA #:	 	 
	Tel Number:	 	 
	Address:	 	 
	Acct #:	 	 
	Swift Code:	 	 
	Acct. Name:	 	 
	Reference:	 	 

 

    	15

    	 

    

 

Partnerships, Corporations or Other
Entities:

 

IN WITNESS WHEREOF,
Subscriber has caused this Subscription Agreement to be executed as of the date indicated below.

 

	$ ______________________($5.50 per Unit)	 	 
	Total Purchase Price	 	Number of Units

 

	 
	Print or Type Name of Entity

 

	 
	Address

  

______________________________

Telephone Number

 

______________________________

Fax Number

 

______________________________

Email Address

 

	 	 	 
	Taxpayer I.D. No. (if applicable)	 	Date

 

	By:	 	 	 
	Signature: Name:	 	Print or Type Name and Indicate
	                   Title:	 	Title or Position with Entity

 

	 	 	 
	Signature (other authorized signatory)	 	Print or Type Name and Indicate
	 	 	Title or Position with Entity

 

Type of Ownership

 

		 ̈	Individual

		 ̈	Tenants in common

		 ̈	Joint tenants with right of survivorship

		 ̈	Community property (check only if resident of community property state)

		 ̈	Other (please specify:____________________)

 

    	16

    	 

    

 

All subscriptions from partnerships,
corporations, trusts or limited liability companies must be accompanied by resolutions of the appropriate corporate authority (board
of directors, trustee or managing partner or members, as applicable) and trust documents evidencing the authorization and power
to make the subscription.

 

Wiring Instructions:

 

	Bank Name:	 	 
	ABA #:	 	 
	Tel Number:	 	 
	Address:	 	 
	Acct #:	 	 
	Acct. Name:	 	 
	Reference:	 	 

 

    	17

    	 

    

 

SUBSCRIPTION ACCEPTANCE BY VACCINOGEN,
INC.

 

IN WITNESS WHEREOF,
the Company has caused this Subscription Agreement to be executed, and the foregoing subscription accepted, as of the date indicated
below.

 

	 	Vaccinogen, Inc.	 
	 	 	 
	 	By:	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 

 

Date: _______________________, 2014

 

    	18Exhibit 10.1

 

RiceBran Technologies

__________________________

2014 EQUITY INCENTIVE PLAN

__________________________

ARTICLE I

PURPOSE

The purpose of this RiceBran Technologies 2014 Equity Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer Eligible Employees, Consultants and Non‐Employee Directors incentive awards to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company's stockholders.  The Plan, as set forth herein, is effective as of the Effective Date (as defined in Article XIV).

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms shall have the following meanings:

2.1        "Acquisition Event" means a merger, reorganization or consolidation in which the Company is not the surviving entity, any transaction that results in the acquisition of all or substantially all of the Company's outstanding Common Stock by a single person or entity or by a group of persons or entities acting in concert, or the sale or transfer of all or substantially all of the Company's assets.

2.2        "Affiliate" means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade or business (including a partnership or limited liability company) that is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or any Affiliate; (d) any corporation, trade or business (including a partnership or limited liability company) that directly or indirectly controls 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any Affiliate has a material equity interest and that is designated as an "Affiliate" by resolution of the Committee.

 

2.3        "Appreciation Award" means any Stock Option or any Other Stock-Based Award that is based on the appreciation in value of a share of Common Stock in excess of an amount at least equal to the Fair Market Value on the date such Other Stock-Based Award is granted.

 

2.4        "Award" means any award granted or made under the Plan of any Stock Option, Restricted Stock, Other Stock-Based Award or Performance-Based Cash Award.

 

2.5        "Board" means the Board of Directors of the Company.

2.6        "Cause" means, with respect to a Participant's Termination of Employment or Termination of Consultancy: unless otherwise determined by the Committee at the time of the grant of the Award, (a) termination due to (i) the Participant's conviction of, or plea of guilty or nolo contendere to, a felony; (ii) perpetration by the Participant of an illegal act, dishonesty or fraud that could have a material adverse effect on the Company or its assets or reputation; or (iii) the Participant's willful misconduct with regard to the Company, as determined by the Committee.  With respect to a Participant's Termination of Directorship, "cause" means an act or failure to act that constitutes cause for removal of a director under Delaware law.

 

2.7        "Change in Control" unless otherwise defined in the applicable Award agreement or other written agreement approved by the Committee and subject to Section 13.14(b), means the occurrence of any of the following:

 

(a)        the acquisition (including through purchase, reorganization, merger, consolidation or similar transaction), directly or indirectly, in one or more transactions by a Person of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities representing 45% or more of the combined voting power of the securities of the Company entitled to vote generally in the election of directors of the Board (the "Company Voting Securities"), calculated on a fully diluted basis after giving effect to such acquisition;

 

(b)        an election of Persons to the Board that causes two-thirds of the Board to consist of Persons other than (i) members of the Board on the Effective Date and (ii) Persons who were nominated for election as members of the Board at a time when two-thirds of the Board consisted of Persons who were members of the Board on the Effective Date; provided that any Person nominated for election by a Board at least two-thirds of which consisted of Persons described in clauses (i) or (ii) or by Persons who were themselves nominated by such Board shall be deemed to have been nominated by a Board consisting of Persons described in clause (i);

 

(c)        the sale or other disposition, directly or indirectly, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any Person.

 

2.8        "Change in Control Price" has the meaning set forth in Section 10.1.

 

2.9        "Code" means the Internal Revenue Code of 1986, as amended.  Any reference to a section of the Code shall also be a reference to any successor provision and any Treasury Regulation promulgated thereunder.

 

2.10        "Committee" means:  (a) with respect to the application of the Plan to Eligible Employees and Consultants, a committee or subcommittee of the Board consisting of two or more non-employee directors, each of whom is intended to be (i) to the extent required by Rule 16b-3, a "nonemployee director" as defined in Rule 16b-3; (ii) to the extent required by Section 162(m), an "outside director" as defined under Section 162(m); and (iii) as applicable, an "independent director" as defined under the Nasdaq Listing Rules; and (b) with respect to the application of the Plan to Non-Employee Directors, the Board.  To the extent that no Committee exists that has the authority to administer the Plan, the functions of the Committee shall be exercised by the Board and all references herein to the Committee shall be deemed references to the Board.  If for any reason the appointed Committee does not meet the requirements of Rule 16b-3 or Section 162(m), such noncompliance shall not affect the validity of Awards, grants, interpretations or other actions of the Committee.

 

2.11        "Common Stock" means the common stock of the Company.

 

2.12        "Company" means RiceBran Technologies, a California corporation, and its successors by operation of law.

2

2.13        "Competitor" means any Person that is, directly or indirectly, in competition with the business or activities of the Company and its Affiliates.

 

2.14        "Consultant" means any natural person who provides bona fide consulting or advisory services to the Company or its Affiliates, provided that such services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not, directly or indirectly, promote or maintain a market for the Company's or its Affiliates' securities.

 

2.15        "Detrimental Activity" means:

 

(a)            without written authorization from the Company, disclosure to any Person outside the Company and its Subsidiaries, except as necessary in the furtherance of Participant's responsibilities to the Company or any of its Subsidiaries, at any time, of any confidential or proprietary information of the Company or any of its Affiliates acquired by the Participant at any time prior to the Participant's Termination;

 

(b)            any activity while employed or performing services that results, or if known could have reasonably been expected to result, in the Participant's Termination for Cause;

 

(c)            without written authorization from the Company, directly or indirectly, in any capacity whatsoever, (i) own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any Competitor; (ii) solicit, aid or induce any customer of the Company or any Subsidiary to curtail, reduce or terminate its business relationship with the Company or any Subsidiary, or in any other way interfere with any such business relationships with the Company or any Subsidiary; (iii) solicit, aid or induce any employee, representative or agent of the Company or any Subsidiary to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent; or (iv) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company, its Subsidiaries and any of their respective vendors, joint venturers or licensors;

 

(d)            a material breach of any restrictive covenant contained in any agreement between the Participant and the Company or an Affiliate.

 

Only the Chief Executive Officer or the Chief Financial Officer of the Company (or his or her designee, as evidenced in writing) shall have the authority to provide the Participant with written authorization to engage in the activities contemplated in subsections (a) and (c).

 

2.16        "Disability" means with respect to a Participant's Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code, provided, however, that except with respect to Awards granted as ISOs, the Committee in its discretion may determine whether a total and permanent disability exists in accordance with non-discriminatory and uniform standards adopted by the Committee from time to time.  A Disability shall only be deemed to occur at the time of the determination by the Committee of the Disability.  Notwithstanding the foregoing, for an Award that provides for payment or settlement triggered upon a Disability and that constitutes a Section 409A Covered Award, the foregoing definition shall apply for purposes of vesting of such Award, provided that for purposes of payment or settlement of such Award, such Award shall not be paid (or otherwise settled) until the earliest of: (A) the Participant's "disability" within the meaning of Section 409A(a)(2)(C)(i) or (ii) of the Code, (B) the Participant's "separation from service" within the meaning of Section 409A of the Code and (C) the date such Award would otherwise be settled pursuant to the terms of the Award agreement.

3

2.17        "Effective Date" means the effective date of the Plan as defined in Article XIV.

 

2.18        "Eligible Employee" means an employee of the Company or an Affiliate.

 

2.19        "Exchange Act" means the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.  Any references to any section of the Exchange Act shall also be a reference to any successor provision.

 

2.20        "Exercisable Awards" has the meaning set forth in Section 4.2(d).

 

2.21        "Fair Market Value" unless otherwise required by any applicable provision of the Code, means as of any date and except as provided below, (a) the five-day daily volume-weighted average price reported for the Common Stock on such date: (i) as reported on the principal national securities exchange in the United States on which it is then traded; or (ii) if not traded on any such national securities exchange, as quoted on an automated quotation system sponsored by the Financial Industry Regulatory Authority or (b) if the Common Stock shall not have been reported or quoted on such date, on the first day prior thereto on which the Common Stock was reported or quoted.  If the Common Stock is not traded, listed or otherwise reported or quoted, then Fair Market Value means the fair market value of the Common Stock as determined by the Committee in good faith in whatever manner it considers appropriate taking into account the requirements of Section 409A or Section 422 of the Code, as applicable.

 

2.22        "Family Member" means "family member" as defined in Section A.1.(5) of the general instructions of Form S-8, as may be amended from time to time.

 

2.23        "Incentive Stock Option" means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries or its Parent intended to be and designated as an "Incentive Stock Option" within the meaning of Section 422 of the Code.

 

2.24        "Individual Target Award" has the meaning in Section 9.1.

 

2.25        "Non-Employee Director" means a director of the Company who is not an active employee of the Company or an Affiliate.

 

2.26        "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option.

 

2.27        "Other Extraordinary Event" has the meaning in Section 4.2(b).

 

2.28        "Other Stock-Based Award" means an Award under Article VIII that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock.

 

2.29        "Parent" means any parent corporation of the Company within the meaning of Section 424(e) of the Code.

 

2.30        "Participant" means an Eligible Employee, Non-Employee Director or Consultant to whom an Award has been granted pursuant to the Plan.

4

2.31        "Performance-Based Cash Award" means a cash Award under Article IX that is payable or otherwise based on the attainment of certain pre-established performance goals during a Performance Period.

 

2.32        "Performance Criteria" has the meaning set forth in Exhibit A.

 

2.33        "Performance Period" means each fiscal year of the Company or such other period (as specified by the Committee) over which the attainment of performance goals is measured.

 

2.34        "Performance Share" means an Other Stock-Based Award of the right to receive a number of shares of Common Stock or cash of an equivalent value at the end of a specified Performance Period.

 

2.35        "Performance Unit" means an Other Stock-Based Award of the right to receive a fixed dollar amount, payable in cash or Common Stock or a combination of both, at the end of a specified Performance Period.

 

2.36        "Person" means any individual, entity (including any employee benefit plan or any trust for an employee benefit plan) or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision).

 

2.37        "Plan" means this RiceBran Technologies 2014 Equity Incentive Plan, as amended from time to time.

 

2.38        "Restricted Stock" means an Award of shares of Common Stock that is subject to restrictions pursuant to Article VII.

 

2.39        "Restriction Period" has the meaning set forth in Section 7.3(a).

 

2.40        "Rule 16b-3" means Rule 16b‐3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.

 

2.41        "Section 162(m)" means the exception for performance-based compensation under Section 162(m) of the Code.

 

2.42        "Section 4.2 Event" has the meaning set forth in Section 4.2(b).

 

2.43        "Section 409A Covered Award" has the meaning set forth in Section 13.14.

 

2.44        "Section 409A" means the nonqualified deferred compensation rules under Section 409A of the Code.

 

2.45        "Securities Act" means the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder.  Any reference to any section of the Securities Act shall also be a reference to any successor provision.

 

2.46        "Stock Option" or "Option" means any option to purchase shares of Common Stock granted to Eligible Employees, Non-Employee Directors or Consultants pursuant to Article VI.

 

2.47        "Subsidiary" means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.

5

2.48        "Ten Percent Stockholder" means a person owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, its Subsidiaries or its Parent.

 

2.49        "Termination" means a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable.

 

2.50        "Termination of Consultancy" means: (a) that the Consultant is no longer acting as a consultant to the Company or a Subsidiary; or (b) when an entity that is retaining a Participant as a Consultant ceases to be a Subsidiary unless the Participant otherwise is, or thereupon becomes, a Consultant to the Company or another Subsidiary at the time the entity ceases to be a Subsidiary.  In the event that a Consultant becomes an Eligible Employee or a Non‐Employee Director upon the termination of his or her consultancy, unless otherwise determined by the Committee no Termination of Consultancy shall be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible Employee or a Non‐Employee Director.  Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the Award agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Consultancy thereafter.

 

2.51        "Termination of Directorship" means that the Non‐Employee Director has ceased to be a director of the Company; except that if a Non‐Employee Director becomes an Eligible Employee or a Consultant upon the termination of his or her directorship, his or her ceasing to be a director of the Company shall not be treated as a Termination of Directorship unless and until the Participant has a Termination of Employment or Termination of Consultancy, as the case may be.

 

2.52        "Termination of Employment" means: (a) a termination of employment (for reasons other than a military or approved personal leave of absence) of a Participant from the Company and its Subsidiaries; or (b) when an entity that is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or another Subsidiary at the time the entity ceases to be a Subsidiary.  In the event that an Eligible Employee becomes a Consultant or a Non‐Employee Director upon the termination of his or her employment, unless otherwise determined by the Committee no Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non‐Employee Director.  Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the Award agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Employment thereafter.

 

2.53        "Transfer" means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in a Person), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in a Person) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law).  "Transferred" and "Transferable" shall have a correlative meaning.

6

ARTICLE III

 

ADMINISTRATION

 

3.1         The Committee.  The Plan shall be administered and interpreted by the Committee.

 

3.2         Grant and Administration of Awards.  The Committee shall have full authority and discretion, as provided in Section 3.6, to grant and administer Awards including the authority to:

 

(a)            select the Eligible Employees, Consultants and Non-Employee Directors to whom Awards may from time to time be granted;

 

(b)            determine the number of shares of Common Stock to be covered by each Award;

 

(c)            determine the type and the terms and conditions, not inconsistent with the terms of the Plan, of each Award (including, but not limited to, the exercise or purchase price (if any), Fair Market Value, as applicable, and any restriction or limitation or any vesting or exercisibility schedule or acceleration thereof);

 

(d)            determine whether a Stock Option is an Incentive Stock Option or Non‐Qualified Stock Option;

 

(e)            determine whether to require a Participant, as a condition of the granting of any Award, to refrain from selling or otherwise disposing of Common Stock acquired pursuant to such Award for a period of time as determined by the Committee;

 

(f)            condition the grant, vesting or payment of any Award on the attainment of performance goals (including goals based on the Performance Criteria) over a Performance Period, set such goals and such period, and certify the attainment of such goals;

 

(g)            amend, after the date of grant, the terms that apply to an Award upon a Participant's Termination, provided that such amendment does not reduce the Participant's rights under the Award;

 

(h)            determine the circumstances under which Common Stock and other amounts payable with respect to an Award may be deferred automatically or at the election of the Participant, in each case in a manner intended to comply with or be exempt from Section 409A;

 

(i)            generally, exercise such powers and perform such acts as the Committee deems necessary or advisable to promote the best interests of the Company in connection with the Plan that are not inconsistent with the provisions of the Plan;

 

(j)            construe and interpret the terms and provisions of the Plan and any Award (and any agreements relating thereto) and make all other determinations necessary or advisable for the administration of this Plan; and

 

(k)            correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto.

7

3.3         Award Agreements.  All Awards shall be evidenced by, and subject to the terms and conditions of, a written notice provided by the Company to the Participant or a written agreement executed by the Company and the Participant.

 

3.4         Guidelines.  The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem necessary or advisable.  The Committee may adopt special guidelines and provisions for persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdiction to comply with applicable tax and securities laws and may impose such limitations and restrictions that it deems necessary or advisable to comply with the applicable tax and securities laws of such domestic or foreign jurisdiction.

 

3.5         Delegation; Advisors.  The Committee may, as it from time to time as it deems advisable, to the extent permitted by applicable law and stock exchange rules:

 

(a)            delegate its responsibilities to officers or employees of the Company and its Affiliates, including delegating authority to officers to grant Awards or execute agreements or other documents on behalf of the Committee; and

 

(b)            engage legal counsel, consultants, professional advisors and agents to assist in the administration of the Plan and rely upon any opinion or computation received from any such Person.  Expenses incurred by the Committee or the Board in the engagement of any such person shall be paid by the Company.

 

3.6         Decisions Final.  All determinations, evaluations, elections, approvals, authorizations, consents, decisions, interpretations and other actions made or taken by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the sole and absolute discretion of all and each of them, and shall be final, binding and conclusive on all employees and Participants and their respective beneficiaries, heirs, executors, administrators, successors and assigns.

 

3.7         Procedures.  If the Committee is appointed, the Committee shall hold meetings, subject to the Bylaws of the Company, at such times and places as it shall deem advisable, including by telephone conference or by written consent.  The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

 

3.8          Liability; Indemnification.

 

(a)            The Committee, its members and any delegate or Person engaged pursuant to Section 3.5 shall not be liable for any action or determination made in good faith with respect to the Plan.  To the maximum extent permitted by applicable law, no officer or employee of the Company or any Affiliate or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.

 

(b)            To the maximum extent permitted by applicable law and the Articles of Incorporation and Bylaws of the Company and to the extent not covered by insurance directly insuring such person, each current or former officer or employee of the Company or any Affiliate and member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such person's own fraud or bad faith.  Such indemnification shall be in addition to any rights of indemnification provided for under applicable law or under the Articles of Incorporation or Bylaws of the Company or any Affiliate or any indemnification agreements between the Company and such current or former officer or employee of the Company.  Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to him or her.

8

ARTICLE IV

SHARE LIMITATIONS

4.1         Shares.

(a)            General Limitations.

 

(i)            The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted over the term of the Plan shall not exceed 1,600,000 shares (subject to any increase or decrease pursuant to Section 4.2).

(ii)            If any Appreciation Award expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised portion shall again be available under the Plan.  If shares of Restricted Stock or Other Stock-Based Awards that are not Appreciation Awards are forfeited for any reason, the number of forfeited shares comprising or underlying the Award shall again be available under the Plan.

 

(iii)            The number of shares available under the Plan shall be reduced by (A) the total number of Appreciation Awards that have been exercised, regardless of whether any shares of Common Stock underlying such Awards are not actually issued to the Participant as the result of a net exercise or settlement, and (B) all shares of Common Stock used to pay any exercise price or tax withholding obligation with respect to any Award.  In addition, the Company may not use the cash proceeds it receives from Stock Option exercises to repurchase shares of Common Stock on the open market for reuse under the Plan.  Notwithstanding anything to the contrary herein, Awards that may be settled solely in cash shall not be deemed to use any shares under the Plan.

 

(iv)            Shares issued under the Plan may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company, or both.

 

(b)            Individual Participant Limitations.

 

(i)            the maximum number of shares of Common Stock that may be made subject to Stock Options, Restricted Stock or Other Stock-Based Awards denominated in shares of Common Stock granted to each Eligible Employee or Consultant during any fiscal year of the Company is 500,000 shares per type of Award (subject to increase or decrease pursuant to Section 4.2); provided that the maximum number of shares of Common Stock for all types of Awards during any fiscal year of the Company that may be granted to each Eligible Employee or Consultant is 500,000 shares (subject to increase or decrease pursuant to Section 4.2); and

9

(ii)            the maximum value at grant of Other Stock-Based Awards denominated in dollars and Performance-Based Cash Awards that may be granted during any fiscal year of the Company to each Eligible Employee or Consultant is $3,000,000; provided, however, that the foregoing limit shall be adjusted on a proportionate basis for any Performance Period that is not based on one fiscal year of the Company;

 

provided, however, that the foregoing individual Participant limits shall be cumulative; that is, to the extent that shares of Common Stock for which Awards are permitted to be granted during a fiscal year to an individual Participant are not actually made subject to an Award in a fiscal year, the number of shares of Common Stock available for Awards to such Participant automatically shall increase in the subsequent fiscal years during the term of the Plan until used.

 

4.2         Changes.

 

(a)            The existence of the Plan and the Awards shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate, (vi) any Section 4.2 Event or (vii) any other corporate act or proceeding.

 

(b)            Subject to the provisions of Section 4.2(d), in the event of any change in the capital structure or business of the Company by reason of any stock split, reverse stock split, stock dividend, combination or reclassification of shares, recapitalization, merger, consolidation, spin off, split off, reorganization or partial or complete liquidation, issuance of rights or warrants to purchase Common Stock or securities convertible into Common Stock, sale or transfer of all or part of the Company's assets or business, or other corporate transaction or event that would be considered an "equity restructuring" within the meaning of FASB ASC Topic 718 (each, a "Section 4.2 Event"), then (i) the aggregate number or kind of shares that thereafter may be issued under the Plan, (ii) the number or kind of shares or other property (including cash) subject to an Award, (iii) the purchase or exercise price of Awards, or (iv) the individual Participant limits set forth in Section 4.1(b) (other than cash limitations) shall be adjusted by the Committee as the Committee determines, in good faith, to be necessary or advisable to prevent substantial dilution or enlargement of the rights of Participants under the Plan.  In connection with any Section 4.2 Event, the Committee may provide for the cancellation of outstanding Awards and payment in cash or other property in exchange therefor.  In addition, subject to Section 4.2(d), in the event of any change in the capital structure of the Company that is not a Section 4.2 Event (an "Other Extraordinary Event"), then the Committee may make the adjustments described in clauses (i) through (iv) above as it determines, in good faith, to be necessary or advisable to prevent substantial dilution or enlargement of the rights of Participants under the Plan.  Notice of any such adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be binding for all purposes of the Plan.  Except as expressly provided in this Section 4.2(b) or in the applicable Award agreement, a Participant shall have no rights by reason of any Section 4.2 Event or any Other Extraordinary Event.  Notwithstanding the foregoing, (x) any adjustments made pursuant to Section 4.2(b) to Awards that are considered "non-qualified deferred compensation" within the meaning of Section 409A shall be made in a manner intended to comply with the requirements of Section 409A; and (y) any adjustments made pursuant to Section 4.2(b) to Awards that are not considered "non-qualified deferred compensation" subject to Section 409A shall be made in a manner intended to ensure that after such adjustment, the Awards either (A) continue not to be subject to Section 409A or (B) comply with the requirements of Section 409A.

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(c)            Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or (b) shall be aggregated until, and eliminated at, the time of exercise by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half, except to the extent that applicable law requires prohibits rounding down, in which event fractions less than on-half shall be rounded up.  No cash settlements shall be made with respect to fractional shares eliminated by rounding except as required by applicable law.

 

(d)            Upon the occurrence of an Acquisition Event, the Committee may terminate all outstanding and unexercised Stock Options or any Other Stock-Based Award that provides for a Participant-elected exercise (collectively, "Exercisable Awards"), effective as of the date of the Acquisition Event, by delivering notice of termination to each Participant at least 20 days prior to the date of consummation of the Acquisition Event, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of such Exercisable Awards that are then outstanding to the extent vested on the date such notice of termination is given (or, at the discretion of the Committee, without regard to any limitations on exercisability otherwise contained in the Award agreements), but any such exercise shall be contingent on the occurrence of the Acquisition Event, and, provided that, if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void and the applicable provisions of Section 4.2(b) and Article X shall apply.  For the avoidance of doubt, in the event of an Acquisition Event, the Committee may terminate any Exercisable Award for which the exercise price is equal to or exceeds the Fair Market Value on the date of the Acquisition Event without payment of consideration therefor.  If an Acquisition Event occurs but the Committee does not terminate the outstanding Awards pursuant to this Section 4.2(d), then the provisions of Section 4.2(b) and Article X shall apply.

 

4.3         Minimum Purchase Price.  Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan, such shares shall not be issued for a consideration that is less than permitted under applicable law.

ARTICLE V

ELIGIBILITY

5.1         General Eligibility.  All current and prospective Eligible Employees and Consultants, and current Non-Employee Directors, are eligible to be granted Awards.  Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee.  Notwithstanding anything herein to the contrary, no Award under which a Participant may receive shares of Common Stock may be granted to an Eligible Employee, Consultant or Non-Employee Director of any Affiliate if such shares of Common Stock do not constitute "service recipient stock" for purposes of Section 409A of the Code with respect to such Eligible Employee, Consultant or Non-Employee Director if such shares are required to constitute "service recipient stock" for such Award to comply with, or be exempt from, Section 409A of the Code.

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5.2          Incentive Stock Options.  Notwithstanding anything herein to the contrary, only Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock Options under the Plan.  Eligibility for the grant of an Incentive Stock Option and actual participation in the Plan shall be determined by the Committee.

 

5.3          General Requirement.  The grant of Awards to a prospective Eligible Employee or Consultant and the vesting and exercise of such Awards shall be conditioned upon such Person actually becoming an Eligible Employee or Consultant; provided, however, that no Award may be granted to a prospective Eligible Employee or Consultant unless the Company determines that the Award will comply with applicable laws, including the securities laws of all relevant jurisdictions (and, in the case of an Award to an Eligible Employee or Consultant pursuant to which Common Stock would be issued prior to such Person performing services for the Company, the Company may require payment by cash or check in order to ensure proper issuance of the shares in compliance with applicable law).  Awards may be awarded in consideration for past services actually rendered to the Company or an Affiliate.

ARTICLE VI

STOCK OPTIONS

6.1          Stock Options.  Each Stock Option shall be one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.  The Committee shall have the authority to grant to any Eligible Employee Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options.  The Committee shall have the authority to grant any Consultant or Non-Employee Director Non-Qualified Stock Options.  Each Option granted under this Plan will be identified as an Incentive Stock Option or a Non-Qualified Stock Option. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof that does not qualify shall constitute a separate Non-Qualified Stock Option.

 

6.2          Incentive Stock Options.  Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under Section 422 of the Code.

 

6.3          Terms of Stock Options.  Stock Options shall be subject to the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

 

(a)            Exercise Price.  The exercise price per share of Common Stock subject to a Stock Option shall be determined by the Committee on or before the date of grant, provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value on the date of grant.

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(b)            Stock Option Term.  The term of each Stock Option shall be fixed by the Committee, provided that no Stock Option shall be exercisable more than ten years after the date such Stock Option is granted (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, five years).

 

(c)            Exercisability.

 

(i)            Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at grant.  Notwithstanding any other provision of the Plan to the contrary, the vesting period applicable to Stock Options shall be no less than (A) one year, if vesting is based (in whole or in part) on the attainment of one or more performance goals, and (B) three years (with no more than one-third of the shares subject thereto vesting on each of the first three anniversaries of the date of grant), if the vesting is based solely on the continued performance of services by the Participant; provided, that the Committee shall be authorized (at the time of grant or thereafter) to provide for earlier vesting in the event of a Change in Control or a Participant's retirement, death or Disability.  Subject to the immediately preceding sentence, the Committee may waive any limitations on exercisability at any time at or after grant in whole or in part, in its discretion.

 

(ii)            Unless otherwise determined by the Committee at grant, the Option agreement shall provide that (A) in the event the Participant engages in Detrimental Activity prior to any exercise of the Stock Option, all Stock Options held by the Participant shall thereupon terminate and expire, (B) as a condition of the exercise of a Stock Option, the Participant shall be required to certify in a manner acceptable to the Company (or shall be deemed to have certified) that the Participant is in compliance with the terms and conditions of the Plan and that the Participant has not engaged in, and does not intend to engage in, any Detrimental Activity, and (C) in the event the Participant engages in Detrimental Activity during the one-year period commencing on the earlier of the date the Stock Option is exercised or the date of the Participant's Termination, the Company shall be entitled to recover from the Participant at any time within one year after such date, and the Participant shall pay over to the Company, an amount equal to any gain realized (whether at the time of exercise or thereafter) as a result of the exercise. Unless otherwise determined by the Committee at grant, the foregoing provision shall cease to apply upon a Change in Control.

 

(d)            Method of Exercise.  To the extent vested, a Stock Option may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Committee (or its designee) specifying the number of shares of Common Stock to be purchased.  Such notice shall be in a form acceptable to the Committee and shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law and authorized by the Committee, if the Common Stock is traded on a national securities exchange or quoted on a national quotation system sponsored by the Financial Industry Regulatory Authority, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; or (iii) on such other terms and conditions as may be acceptable to the Committee (including  the relinquishment of Stock Options or by payment in full or in part in the form of Common Stock owned by the Participant (for which the Participant has good title free and clear of any liens and encumbrances)).  No shares of Common Stock shall be issued until payment therefor, as provided herein, has been made or provided for.

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(e)            Non-Transferability of Options.  No Stock Option shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participant's lifetime, only by the Participant.  Notwithstanding the foregoing, the Committee may determine that a Non-Qualified Stock Option that otherwise is not Transferable pursuant to this section is Transferable to a Family Member in whole or in part, and in such circumstances, and under such conditions as specified by the Committee.  A Non-Qualified Stock Option that is Transferred to a Family Member pursuant to the preceding sentence (i) may not be Transferred subsequently other than by will or by the laws of descent and distribution and (ii) remains subject to the terms of the Plan and the applicable Award agreement.

 

(f)            Termination by Death or Disability.  Unless otherwise determined by the Committee at grant (or, if no rights of the Participant (or, in the case of his death, his estate) are reduced, thereafter), if a Participant's Termination is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable on the date of the Participant's Termination may be exercised by the Participant (or, in the case of death, by the legal representative of the Participant's estate) at any time within a period of one year after the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

 

(g)            Involuntary Termination Without Cause.  Unless otherwise determined by the Committee at grant (or, if no rights of the Participant (or, in the case of his death, his estate) are reduced, thereafter), if a Participant's Termination is by involuntary termination without Cause, all Stock Options that are held by such Participant that are vested and exercisable on the date of the Participant's Termination may be exercised by the Participant at any time within a period of 90 days after the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

 

(h)            Voluntary Termination.  Unless otherwise determined by the Committee at grant (or, if no rights of the Participant (or, in the case of his death, his estate) are reduced, thereafter), if a Participant's Termination is voluntary (other than a voluntary Termination described in subsection (i)(ii) below), all Stock Options that are held by such Participant that are vested and exercisable on the date of the Participant's Termination may be exercised by the Participant at any time within a period of 30 days after the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.

 

(i)            Termination for Cause.  Unless otherwise determined by the Committee at grant (or, if no rights of the Participant (or, in the case of his death, his estate) are reduced, thereafter), if a Participant's Termination (i) is for Cause or (ii) is a voluntary Termination after the occurrence of an event that would be grounds for a Termination for Cause, all Stock Options, whether vested or not vested, that are held by such Participant shall terminate and expire on the date of such Termination.

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(j)            Unvested Stock Options.  Unless otherwise determined by the Committee, Stock Options that are not vested as of the date of a Participant's Termination for any reason shall terminate and expire on the date of such Termination.

 

(k)            Incentive Stock Option Limitations.  To the extent that the aggregate Fair Market Value (determined as of the date of grant) with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under the Plan and any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non‐Qualified Stock Options.  In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary or any Parent at all times from the date an Incentive Stock Option is granted until three months prior to the date of exercise thereof (or such other period as required by applicable law), such Stock Option shall be treated as a Non-Qualified Stock Option.  Should any provision of the Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.

 

(l)            Form, Modification, Extension and Renewal of Stock Options.  Stock Options may be evidenced by such form of agreement as is approved by the Committee.  The Committee may (i) modify, extend or renew outstanding Stock Options (provided that (A) the rights of a Participant are not reduced without his or her consent and (B) such action does not subject the Stock Options to Section 409A or otherwise extend the Stock Options beyond their stated term), and (ii) accept the surrender of outstanding Stock Options and authorize the granting of new Stock Options in substitution therefor.  Notwithstanding anything herein to the contrary, an outstanding Option may not be modified to reduce the exercise price thereof nor may a new Option at a lower price be substituted for a surrendered Option (other than adjustments or substitutions in accordance with Section 4.2), unless such action is approved by the stockholders of the Company.

 

(m)            No Reload Options.  Options shall not provide for the grant of the same number of Options as the number of shares used to pay for the exercise price of Options or shares used to pay withholding taxes (i.e., "reloads").

ARTICLE VII

RESTRICTED STOCK

7.1          Awards of Restricted Stock.  The Committee shall determine the Participants, to whom, and the time or times at which, grants of Restricted Stock shall be made, the number of shares to be awarded, the purchase price (if any) to be paid by the Participant (subject to Section 7.2), the time or times at which such Awards may be subject to forfeiture or to restrictions on transfer, and all other terms and conditions of the Awards.

 

Unless otherwise determined by the Committee at grant, each Award of Restricted Stock shall provide that (A) in the event the Participant engages in Detrimental Activity prior to any vesting of Restricted Stock, all unvested Restricted Stock shall be immediately forfeited, and (B) in the event the Participant engages in Detrimental Activity during the one year period after any vesting of such Restricted Stock, the Committee shall be entitled to recover from the Participant (at any time within one year after such engagement in Detrimental Activity) an amount equal to the Fair Market Value as of the vesting date(s) of any Restricted Stock that had vested in the period referred to above. Unless otherwise determined by the Committee at grant, the foregoing shall cease to apply upon a Change in Control.

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The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance goals (including goals based on the Performance Criteria) or such other factors as the Committee may determine.

 

7.2          Awards and Certificates.  The Committee may require, as a condition to the effectiveness of an Award of Restricted Stock, that the Participant execute and deliver to the Company an Award agreement or other documentation and comply with the terms of such Award agreement or other documentation. Further, Restricted Stock shall be subject to the following conditions:

 

(a)            Purchase Price.  The purchase price of Restricted Stock, if any, shall be fixed by the Committee.  In accordance with Section 4.3, the purchase price for shares of Restricted Stock may be zero to the extent permitted by applicable law.

 

(b)            Legend.  Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of shares of Restricted Stock.  Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:

 

"The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the RiceBran Technologies (the "Company") 2014 Equity Incentive Plan (as amended from time to time, the "Plan"), and an Award Agreement entered into between the registered owner and the Company dated __________.  Copies of such Plan and Agreement are on file at the principal office of the Company."

 

(c)            Custody.  If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that such stock certificates be held in custody by the Company until the restrictions on the shares have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power, endorsed in blank, relating to the Common Stock covered by such Award.

 

7.3          Restrictions and Conditions.  Restricted Stock shall be subject to the following restrictions and conditions:

 

(a)            Restriction Period.

 

(i)            The Participant shall not be permitted to Transfer shares of Restricted Stock, and the Restricted Stock shall be subject to a risk of forfeiture (collectively, "restrictions") during the period or periods set by the Committee (the "Restriction Periods"), as set forth in the Restricted Stock Award agreement.  The Committee may provide for the lapse of the restrictions in whole or in part (including in installments) based on service, attainment of performance goals or such other factors or criteria as the Committee may determine, and may waive all or any part of the restrictions at any time subject to Section 7.3(a)(iii).

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(ii)            If the grant of Restricted Stock or the lapse of restrictions is based on the attainment of performance goals, such performance goals shall be established by the Committee in writing on or before the date the grant of Restricted Stock is made and while the outcome of the performance goals is substantially uncertain and that is permitted under Section 162(m) with regard to an Award of Restricted Stock that is intended to comply with Section 162(m).  Such performance goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including dispositions and acquisitions) and other similar events or circumstances.

 

(iii)            Notwithstanding any other provision of the Plan to the contrary, the Restriction Period with respect to any Restricted Stock Award shall be no less than (A) one year, if the lapsing of restrictions is based (in whole or in part) on the attainment of one or more performance goals, and (B) three years (with restrictions as to no more than one-third of the shares subject thereto lapsing on each of the first three anniversaries of the date of grant), if the lapsing of restrictions is based solely on the continued performance of services by the Participant; provided, that the Committee shall be authorized (at the time of grant or thereafter) to provide for the earlier lapsing of restrictions in the event of a Change in Control or a Participant's retirement, death or Disability; and provided further, that Restricted Stock Awards with respect to up to 10% of the total number of shares of Common Stock reserved for Awards may be exempt from the foregoing limitations.

 

(b)            Rights as a Stockholder.  Except as otherwise determined by the Committee, the Participant shall have all the rights of a holder of shares of Common Stock of the Company with respect to Restricted Stock, subject to the following provisions of this Section 7.3(b). Except as otherwise determined by the Committee, (i) the Participant shall have no right to tender shares of Restricted Stock, (ii) dividends or other distributions (collectively, "dividends") on shares of Restricted Stock shall be withheld, in each case, while the Restricted Stock is subject to restrictions, and (iii) in no event shall dividends or other distributions payable thereunder be paid unless and until the shares of Restricted Stock to which they relate no longer are subject to a risk of forfeiture. Dividends that are not paid currently shall be credited to bookkeeping accounts on the Company's records for purposes of the Plan and, except as otherwise determined by the Committee, shall not accrue interest. Such dividends shall be paid to the Participant in the same form as paid on the Common Stock upon the lapse of the restrictions.

 

(c)            Termination.  Upon a Participant's Termination for any reason during the Restriction Period, all Restricted Stock still subject to restriction will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant, or, if no rights of a Participant are reduced, thereafter.

 

(d)            Lapse of Restrictions.  If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the Participant, and any and all unpaid distributions or dividends payable thereunder shall be paid.  All legends shall be removed from said certificates at the time of delivery to the Participant, except as otherwise required by applicable law or other limitations imposed by the Committee.

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ARTICLE VIII

OTHER STOCK-BASED AWARDS

8.1         Other Awards.  The Committee is authorized to grant Other Stock‐Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, including but not limited to, shares of Common Stock awarded purely as a bonus and not subject to any restrictions or conditions, shares of Common Stock in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock appreciation rights, stock equivalent units, restricted stock units, Performance Shares, Performance Units and Awards valued by reference to book value of shares of Common Stock.

 

The Committee shall have authority to determine the Participants, to whom, and the time or times at which, Other Stock-Based Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other terms and conditions of the Awards.

 

The Committee may condition the grant or vesting of Other Stock-Based Awards upon the attainment of performance goals (including, performance goals based on the Performance Criteria) or such other factors as the Committee may determine.  If the grant or vesting of an Other Stock-Based Award is based on the attainment of performance goals, such performance goals shall be established by the Committee in writing on or before the date the grant of Other Stock-Based Award is made and while the outcome of the performance goals is substantially uncertain and that is permitted under Section 162(m) with regard to an Other Stock-Based Award that is intended to comply with Section 162(m).  Such performance goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including dispositions and acquisitions) and other similar events or circumstances).

 

8.2          Terms and Conditions.  Other Stock-Based Awards made pursuant to this Article VIII shall be subject to the following terms and conditions:

 

(a)            Non-Transferability.  The Participant may not Transfer Other Stock-Based Awards or the Common Stock underlying such Awards prior to the date on which the underlying Common Stock is issued, or, if later, the date on which any restriction, performance or deferral period applicable to such Common Stock lapses.

 

(b)            Dividends.  The Committee shall determine to what extent, and under what conditions, the Participant shall have the right to receive dividends, dividend equivalents or other distributions (collectively, "dividends") with respect to shares of Common Stock covered by Other Stock-Based Awards. Except as otherwise determined by the Committee, dividends with respect to unvested Other Stock-Based Awards shall be withheld until such Other Stock-Based Awards vest. Dividends that are not paid currently shall be credited to bookkeeping accounts on the Company's records for purposes of the Plan and, except as otherwise determined by the Committee, shall not accrue interest. Such dividends shall be paid to the Participant in the same form as paid on the Common Stock or such other form as is determined by the Committee upon the lapse of the restrictions.

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(c)            Vesting.  Other Stock Based Awards and any underlying Common Stock shall vest or be forfeited to the extent set forth in the applicable Award agreement or as otherwise determined by the Committee.  At the expiration of any applicable Performance Period, the Committee shall determine the extent to which the relevant performance goals are achieved and the portion of each Other Stock-Based Award that has been earned.   The Committee may, at or after grant, accelerate the vesting of all or any part of any Other Stock-Based Award.  Notwithstanding any other provision of the Plan to the contrary, the minimum vesting period with respect to any Other Stock-Based Awards shall be no less than (i) one year, if the vesting is based (in whole or in part) on the attainment of one or more performance goals, and (ii) three years (with restrictions as to no more than one-third of the shares subject thereto lapsing on each of the first three anniversaries of the date of grant), if the vesting is based solely on the continued performance of services by the Participant; provided, that, the Committee shall be authorized (at the time of grant or thereafter) to provide for the earlier vesting in the event of a Change in Control or a Participant's retirement, death or Disability; and provided further, that, subject to the limitations set forth in Section 4.1, Other Stock-Based Awards with respect to up to 10% of the total number of shares of Common Stock reserved for Awards may be exempt from the foregoing limitations.

 

(d)            Payment.  Following the Committee's determination in accordance with subsection (c) above, shares of Common Stock or, as determined by the Committee, the cash equivalent of such shares shall be delivered to the Eligible Employee, Consultant or Non-Employee Director, or his legal representative, in an amount equal to such individual's earned Other Stock-Based Award.  Notwithstanding the foregoing, the Committee may exercise negative discretion by providing in an Other Stock-Based Award the discretion to pay an amount less than otherwise would be provided under the applicable level of attainment of the performance goals or subject the payment of all or part of any Other Stock-Based Award to additional vesting, forfeiture and deferral conditions as it deems appropriate.

 

(e)            Detrimental Activity.  Unless otherwise determined by the Committee at grant, each Other Stock-Based Award shall provide that (A) in the event the Participant engages in Detrimental Activity prior to any vesting of such Other Stock-Based Award, all unvested Other Stock-Based Award shall be immediately forfeited, and (B) in the event the Participant engages in Detrimental Activity during the one year period after any vesting of such Other Stock-Based Award, the Committee shall be entitled to recover from the Participant (at any time within the one-year period after such engagement in Detrimental Activity) an amount equal to any gain the Participant realized from any Other Stock-Based Award that had vested in the period referred to above.  Unless otherwise determined by the Committee at grant, the foregoing provision shall cease to apply upon a Change in Control.

 

(f)            Price.  Common Stock issued on a bonus basis under this Article VIII may be issued for no cash consideration; Common Stock purchased pursuant to a purchase right awarded under this Article VIII shall be priced as determined by the Committee.

 

(g)            Termination.  Upon a Participant's Termination for any reason during the Performance Period, the Other Stock-Based Awards will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant or, if no rights of the Participant are reduced, thereafter.

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ARTICLE IX

PERFORMANCE-BASED CASH AWARDS

9.1        Performance-Based Cash Awards.  The Committee shall have authority to determine the Eligible Employees and Consultants to whom, and the time or times at which, Performance-Based Cash Awards shall be made, the dollar amount to be awarded pursuant to such Performance-Based Cash Award, and all other conditions for the payment of the Performance-Based Cash Award.

 

Except as otherwise provided herein, the Committee shall condition the right to payment of any Performance-Based Cash Award upon the attainment of specified performance goals (including performance goals based on the Performance Criteria) established pursuant to Section 9.2(c) and such other factors as the Committee may determine, including to comply with the requirements of Section 162(m).  The Committee may establish different performance goals for different Participants.

 

Subject to Section 9.2(c), for any Participant the Committee may specify a targeted Performance-Based Cash Award for a Performance Period (each an "Individual Target Award").  An Individual Target Award may be expressed, at the Committee's discretion, as a fixed dollar amount, a percentage of the Participant's base pay, as a percentage of a bonus pool funded by a formula based on achievement of performance goals, or an amount determined pursuant to an objective formula or standard.  The Committee's establishment of an Individual Target Award for a Participant for a Performance Period shall not imply or require that the same level or any Individual Target Award be established for the Participant for any subsequent Performance Period or for any other Participant for that Performance Period or any subsequent Performance Period.  At the time the performance goals are established (as provided in Section 9.2(c)), the Committee shall prescribe a formula to determine the maximum and minimum percentages (which may be greater or less than 100% of an Individual Target Award) that may be earned or payable based upon the degree of attainment of the performance goals during the Performance Period.  Notwithstanding anything else herein, the Committee may exercise negative discretion by providing in an Individual Target Award the discretion to pay a Participant an amount that is less than the Participant's Individual Target Award (or attained percentages thereof) regardless of the degree of attainment of the performance goals; provided that, except as otherwise specified by the Committee with respect to an Individual Target Award, no discretion to reduce a Performance-Based Cash Award earned based on achievement of the applicable performance goals shall be permitted for any Performance Period in which a Change in Control occurs, or during such Performance Period with regard to the prior Performance Periods if the Performance-Based Cash Awards for the prior Performance Periods have not been paid by the time of the Change in Control, with regard to individuals who were Participants at the time of the Change in Control.

 

9.2        Terms and Conditions.  Performance-Based Cash Awards shall be subject to the following terms and conditions:

 

(a)            Committee Certification.  At the expiration of the applicable Performance Period, the Committee shall determine and certify in writing the extent to which the performance goals established pursuant to Section 9.2(c) are achieved and, if applicable, the percentage of the Performance-Based Cash Award that has been vested and earned.

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(b)            Waiver of Limitation.  In the event of the Participant's Disability or death, or in cases of special circumstances (to the extent permitted under Section 162(m) with regard to a Performance-Based Cash Award that is intended to comply with Section 162(m)), the Committee may waive in whole or in part any or all of the limitations imposed thereunder with respect to any or all of a Performance-Based Cash Award.

 

(c)            Performance Goals, Formulae or Standards.  The performance goals for the earning of Performance-Based Cash Awards shall be established by the Committee in writing on or before the date the grant of Performance-Based Cash Award is made and while the outcome of the performance goals is substantially uncertain and that is permitted under Section 162(m) with regard to a Performance-Based Cash Award that is intended to comply with Section 162(m).  Such performance goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including dispositions and acquisitions) and other similar type events or circumstances.

 

(d)            Payment.  Following the Committee's determination and certification in accordance with subsection (a) above, the earned Performance-Based Cash Award amount shall be paid to the Participant or his legal representative, in accordance with the terms and conditions set forth in Performance-Based Cash Award agreement, but in no event, except as provided in the next sentence, shall such amount be paid later than the later of: (i) March 15 of the year following the year in which the applicable Performance Period ends (or, if later, the year in which the Award is earned); or (ii) two and one-half months after the expiration of the fiscal year of the Company in which the applicable Performance Period ends.  Notwithstanding the foregoing, the Committee may place such conditions on the payment of all or any portion of any Performance-Based Cash Award as the Committee may determine and prior to the beginning of a Performance Period the Committee may (A) provide that the payment of all or any portion of any Performance-Based Cash Award shall be deferred and (B) permit a Participant to elect to defer receipt of all or a portion of any Performance-Based Cash Award.  Any Performance-Based Cash Award deferred by a Participant in accordance with the terms and conditions established by the Committee shall not increase (between the date on which the Performance-Based Cash Award is credited to any deferred compensation program applicable to such Participant and the payment date) by an amount that would result in such deferral being deemed as an "increase in the amount of compensation" under Section 162(m).  To the extent applicable, any deferral under this Section 9.2(d) shall be made in a manner intended to comply with or be exempt from the applicable requirements of Section 409A.  Notwithstanding the foregoing, the Committee may exercise negative discretion by providing in a Performance-Based Cash Award the discretion to pay an amount less than otherwise would be provided under the applicable level of attainment of the performance goals.

 

(e)            Termination.  Unless otherwise determined by the Committee at the time of grant (or, if no rights of the Participant (or, in the case of his death, his estate) are reduced, thereafter), no Performance-Based Cash Award or pro rata portion thereof shall be payable to any Participant who incurs a Termination prior to the date such Performance-Based Cash Award is paid and the performance-Based Cash Awards only shall be deemed to be earned when actually paid.

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ARTICLE X

CHANGE IN CONTROL PROVISIONS

10.1       In the event of a Change in Control of the Company, except as otherwise provided by the Committee in an Award agreement or otherwise in writing, a Participant's unvested Award shall not vest and a Participant's Award shall be treated in accordance with one of the following methods as determined by the Committee:

 

(a)            Awards, whether or not then vested, may be continued, assumed, have new rights substituted therefor or be treated in accordance with Section 4.2(d), and Restricted Stock or other Awards may, where appropriate in the discretion of the Committee, receive the same distribution as other Common Stock on such terms as determined by the Committee; provided that, the Committee may decide to award additional Restricted Stock or any other Award in lieu of any cash distribution.  Notwithstanding anything to the contrary herein, any assumption or substitution of Incentive Stock Options shall be structured in a manner intended to comply with the requirements of Treasury Regulation §1.424-1 (and any amendments thereto).

 

(b)            Awards may be canceled in exchange for an amount of cash equal to the Change in Control Price (as defined below) per share of Common Stock covered by such Awards), less, in the case of an Appreciation Award, the exercise price per share of Common Stock covered by such Award.  The "Change in Control Price" means the price per share of Common Stock paid in the Change in Control transaction.

 

(c)            Appreciation Awards may be cancelled without payment, if the Change in Control Price is less than the exercise price per share of such Appreciation Awards.

 

Notwithstanding anything else herein, the Committee may provide for accelerated vesting or lapse of restrictions, of an Award at any time.

ARTICLE XI

TERMINATION OR AMENDMENT OF PLAN

Notwithstanding any other provision of the Plan, the Board, or the Committee (to the extent permitted by law), may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan (including any amendment deemed necessary or advisable to ensure that the Company may comply with any regulatory requirement referred to in Article XIII or Section 409A), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be reduced without the consent of such Participant and, provided further, without the approval of the holders of the Company's Common Stock entitled to vote in accordance with applicable law, no amendment may be made that would (a) increase the aggregate number of shares of Common Stock that may be issued under the Plan (except by operation of Section 4.2); (b) increase the maximum individual Participant limits under Section 4.1(b) (except by operation of Section 4.2); (c) change the classification of individuals eligible to receive Awards under the Plan; (d) extend the maximum term of Options; (e)  alter the Performance Criteria; (f) other than adjustments or substitutions in accordance with Section 4.2, amend the terms of outstanding Awards to reduce the exercise price of outstanding Stock Options or Appreciation Awards, or cancel outstanding Stock Options or Appreciation Awards (where, prior to the reduction or cancellation, the exercise price exceeds the Fair Market Value on the date of cancellation) in exchange for cash, other Awards or Stock Options or Appreciation Awards with an exercise price that is less than the exercise price of the original Stock Options or Appreciation Awards; (g) require stockholder approval in order for the Plan to continue to comply with the applicable provisions of Section 162(m) or, to the extent applicable to Incentive Stock Options, Section 422 of the Code or (h) require stockholder approval under the rules of any exchange or system on which the Company's securities are listed or traded at the request of the Company.

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The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively; provided that no such amendment reduces the rights of any Participant without the Participant's consent.  Actions taken by the Committee in accordance with Article IV shall not be deemed to reduce the rights of any Participant.

Notwithstanding anything herein to the contrary, the Board or the Committee may amend the Plan or any Award at any time without a Participant's consent to comply with Section 409A or any other applicable law.

 

ARTICLE XII

UNFUNDED PLAN

The Plan is an "unfunded" plan for incentive and deferred compensation.  With respect to any payments as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company.

ARTICLE XIII

GENERAL PROVISIONS

13.1       Legend.  The Committee may require each person receiving shares of Common Stock pursuant to an Award to represent to and agree with the Company in writing that the Participant is acquiring the shares without a view to distribution thereof and such other securities law related representations as the Committee shall request.  In addition to any legend required by the Plan, the certificates or book entry accounts for such shares may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer.

 

All certificates or book entry accounts for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders, legends and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national automated quotation system on which the Common Stock is then quoted, any applicable Federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.  If necessary or advisable in order to prevent a violation of applicable securities laws or to avoid the imposition of public company reporting requirements, then, notwithstanding anything herein to the contrary, any stock-settled Awards shall be paid in cash in an amount equal to the Fair Market Value on the date of settlement of such Awards.

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13.2       Other Plans.  Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

 

13.3       No Right to Employment/Consultancy/Directorship.  Neither the Plan nor the grant of any Award thereunder shall give any Participant or other person any right to continued employment, consultancy or directorship by the Company or any Affiliate, or limit in any way the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate his or her employment, consultancy or directorship at any time.

 

13.4       Withholding of Taxes.  The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash thereunder, payment by the Participant of, any Federal, state or local taxes required by law to be withheld.  Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company.  Any statutorily required withholding obligation with regard to any Participant may be satisfied, subject to the consent of the Committee, by reducing the number of shares of Common Stock otherwise deliverable or by delivering shares of Common Stock already owned.  Any fraction of a share of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant.

 

13.5       No Assignment of Benefits.  No Award or other benefit payable under the Plan shall, except as otherwise specifically provided in the Plan or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such person.

 

13.6       Listing and Other Conditions.  If at any time counsel to the Company shall be of the opinion that any offer or sale of Common Stock pursuant to an Award is or may be unlawful or prohibited, or will or may result in the imposition of excise taxes on the Company, under the statutes, rules or regulations of any applicable jurisdiction or under the rules of the national securities exchange on which the Common Stock then is listed, the Company shall have no obligation to make such offer or sale, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to the Common Stock or Awards, and the right to exercise any Option or Exercisable Award shall be suspended until, in the opinion of said counsel, such offer or sale shall be lawful, permitted or will not result in the imposition of excise taxes on the Company.

 

13.7       Governing Law.  The Plan and matters arising under or related to it shall be governed by and construed in accordance with the internal laws of the State of California to the extent required by California law without giving effect to its principles of conflicts of laws.

 

13.8       Construction.  Wherever any words are used in the Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply.  As used herein, (a) "or" shall mean "and/or" and (b) "including" or "include" shall mean "including, without limitation."  Any reference herein to an agreement in writing shall be deemed to include an electronic writing to the extent permitted by applicable law.

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13.9       Other Benefits.  No Award, whether at grant or payment, shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates or shall affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation, unless expressly provided to the contrary in such benefit plan.

 

13.10    Costs.  The Company shall bear all expenses associated with administering the Plan, including expenses of issuing Common Stock pursuant to any Awards.

 

13.11    No Right to Same Benefits.  The provisions of Awards need not be the same with respect to each Participant, and each Award to an individual Participant need not be the same.

 

13.12    Death/Disability.  The Committee may require the transferee of a Participant to supply it with written notice of the Participant's death or Disability and to supply it with a copy of the will (in the case of the Participant's death) or such other evidence as the Committee deems necessary or advisable to establish the validity of the transfer of an Award.  The Committee also may require that the transferee agree to be bound by all of the terms and conditions of the Plan.

 

13.13    Section 16(b) of the Exchange Act.  All elections and transactions under the Plan by persons subject to Section 16 of the Exchange Act involving shares of Common Stock are intended to comply with any applicable exemptive condition under Rule 16b-3.  The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or advisable for the administration and operation of the Plan and the transaction of business thereunder.

 

13.14    Section 409A.  Although the Company does not guarantee to a Participant the particular tax treatment of any Award, all Awards are intended to comply with, or be exempt from, the requirements of Section 409A and the Plan and any Award agreement shall be limited, construed and interpreted in accordance with such intent.  To the extent that any Award constitutes "non-qualified deferred compensation" pursuant to Section 409A (a "Section 409A Covered Award"), it is intended to be paid in a manner that will comply with Section 409A.  In no event shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A or for any damages for failing to comply with Section 409A.  Notwithstanding anything in the Plan or in an Award to the contrary, the following provisions shall apply to Section 409A Covered Awards:

 

(a)            A termination of employment shall not be deemed to have occurred for purposes of any provision of a Section 409A Covered Award providing for payment upon or following a termination of the Participant's employment unless such termination is also a "separation from service" within the meaning of Section 409A and, for purposes of any such provision of a Section 409A Covered Award, references to a "termination," "termination of employment" or like terms shall mean separation from service.  Notwithstanding any provision to the contrary in the Plan or the Award, if the Participant is deemed on the date of the Participant's Termination to be a "specified employee" within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by the Company from time to time, or if none, the default methodology set forth in Section 409A, then with regard to any such payment under a Section 409A Covered Award, to the extent required to be delayed in compliance with Section 409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier of (i) the expiration of the six-month period measured from the date of the Participant's separation from service, and (ii) the date of the Participant's death.  All payments delayed pursuant to this Section 13.14(a) shall be paid to the Participant on the first day of the seventh month following the date of the Participant's separation from service or, if earlier, on the date of the Participant's death.

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(b)            With respect to any payment pursuant to a Section 409A Covered Award that is triggered upon a Change in Control, the settlement of such Award shall not occur until the earliest of (i) the Change in Control if such Change in Control constitutes a "change in the ownership of the corporation," a "change in effective control of the corporation" or a "change in the ownership of a substantial portion of the assets of the corporation," within the meaning of Section 409A(a)(2)(A)(v) of the Code, (ii) the date such Award otherwise would be settled pursuant to the terms of the applicable Award agreement and (iii) the Participant's "separation from service" within the meaning of Section 409A, subject to Section 13.14(a).

 

(c)            For purposes of Code Section 409A, a Participant's right to receive any installment payments under the Plan or pursuant to an Award shall be treated as a right to receive a series of separate and distinct payments.

 

(d)            Whenever a payment under the Plan or pursuant to an Award specifies a payment period with reference to a number of days (e.g., "payment shall be made within 30 days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

13.15    Successor and Assigns.  The Plan shall be binding on all successors and permitted assigns of a Participant, including the estate of such Participant and the executor, administrator or trustee of such estate.

 

13.16    Severability of Provisions.  If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.

 

13.17    Payments to Minors, Etc.  Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Board, the Company, its Affiliates and their employees, agents and representatives with respect thereto.

 

13.18    Headings and Captions.  The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

 

13.19    Recoupment.  All Awards granted or other compensation paid by the Company under the Plan, including any shares of Common Stock issued under any Award thereunder, will be subject to: (i) any compensation recapture policies established by the Board or the Committee from time to time and in effect at the time of grant of the Award, and (ii) any compensation recapture policies to the extent required pursuant to any applicable law (including, without limitation, the Dodd-Frank Act) or the rules and regulations of any national securities exchange on which the shares of Common Stock are then traded.

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13.20    Reformation.  If any provision regarding Detrimental Activity or any other provision set forth in the Plan or an Award agreement is found by any court of competent jurisdiction or arbitrator to be invalid, void or unenforceable or to be excessively broad as to duration, activity, geographic application or subject, such provision or provisions shall be construed, by limiting or reducing them to the extent legally permitted, so as to be enforceable to the maximum extent compatible with then applicable law.

 

13.21    Electronic Communications.  Notwithstanding anything else herein to the contrary, any Award agreement, notice of exercise of an Exercisable Award, or other document or notice required or permitted by the Plan or an Award that is required to be delivered in writing may, to the extent determined by the Committee, be delivered and accepted electronically. Signatures also may be electronic if permitted by the Committee. The term "written agreement" as used in the Plan shall include any document that is delivered and/or accepted electronically.

 

13.22    Agreement. As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the "Lead Underwriter"), a Participant shall irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for Common Stock, or any other rights to purchase or acquire Common Stock  (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time following the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter shall specify (the "Lock-up Period").  The Participant shall further agree to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agree that the Company may impose stop-transfer instructions with respect to Common Stock acquired pursuant to an Award until the end of such Lock-up Period.

13.23          Insider Trading Policy.  Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company's securities by Employees, officers and/or directors of the Company.

ARTICLE XIV

EFFECTIVE DATE OF PLAN

The Plan was adopted by the Board on June 23, 2014, effective on such date (the "Effective Date").  The Plan was approved by the stockholders of the Company on _________.

ARTICLE XV

TERM OF PLAN

No Award shall be granted on or after the tenth anniversary of the earlier of (a) the date the Plan is adopted or (b) the date of stockholder approval of the Plan, provided that Awards granted prior to such tenth anniversary may extend beyond that date in accordance with the terms of the Plan. Awards (other than Stock Options or stock appreciation rights) may be based on such Performance Criteria in order to qualify for the "performance-based compensation" exception under Section 162(m) of the Code.

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EXHIBIT A

PERFORMANCE CRITERIA

Performance goals established for purposes of the grant or vesting of performance-based Awards of Restricted Stock, Other Stock-Based Awards or Performance-Based Cash Awards that are intended to be "performance-based" under Section 162(m) shall be based on one or more of the following performance criteria ("Performance Criteria"):

 

		(1)	enterprise value or value creation targets;

 

		(2)	income or net income; operating income; net operating income or net operating income after tax; operating profit or net operating profit;

 

		(3)	cash flow including, but not limited to, from operations or free cash flow;

 

		(4)	specified objectives with regard to limiting the level of increase in all or a portion of bank debt or other long-term or short-term public or private debt or other similar financial obligations, or other capital structure improvements, which may be calculated net of cash balances or other offsets and adjustments as may be established by the Committee;

 

		(5)	net sales, revenues, net income or earnings before income tax or other exclusions;

 

		(6)	operating margin; return on operating revenue or return on operating profit;

 

		(7)	return measures (after tax or pre-tax), including return on capital employed, return on invested capital; return on equity, return on assets, return on net assets;

 

		(8)	market capitalization, fair market value of the shares of the Company's Common Stock, franchise value (net of debt), economic value added;

 

		(9)	total stockholder return or growth in total stockholder return (with or without dividend reinvestment);

 

		(10)	proprietary investment results;

 

		(11)	estimated market share;

 

		(12)	expense management/control or reduction (including without limitation, compensation and benefits expense);

 

		(13)	customer satisfaction;

 

		(14)	technological improvements/implementation, new product innovation;

 

		(15)	collections and recoveries;

 

		(16)	property/asset purchases;

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		(17)	litigation and regulatory resolution/implementation goals;

 

		(18)	leases, contracts or financings (including renewals, overhead, savings, G&A and other expense control goals);

 

		(19)	risk management/implementation;

 

		(20)	development and implementation of strategic plans or organizational restructuring goals;

 

		(21)	development and implementation of risk and crisis management programs; compliance requirements and compliance relief; productivity goals; workforce management and succession planning goals;

 

		(22)	employee satisfaction or staff development;

 

		(23)	formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance revenue or profitability or to enhance its customer base;

 

		(24)	completion of a merger, acquisition or any transaction that results in the sale of all or substantially all of the stock or assets; or

 

		(25)	other Company specific operational metrics.

 

All Performance Criteria may be based upon the attainment of specified levels of the Company (or Affiliate, division, other operational unit, business segment or administrative department of the Company or any Affiliate) performance under one or more of the measures described above and may be measured relative to the performance of other corporations (or an affiliate, subsidiary, division, other operational unit, business segment or administrative department of another corporation or its affiliates).  Any goal may be expressed as a dollar figure, on a percentage basis (if applicable) or on a per share basis, and goals may be either absolute, relative to a selected peer group or index, or a combination of both.  To the extent permitted under Section 162(m), (including compliance with any requirements for shareholder approval), the Committee may: (i) designate additional business criteria on which the Performance Criteria may be based or (ii) adjust, modify or amend the aforementioned business criteria.

 

Except as otherwise determined by the Committee at grant, the measures used in Performance Criteria set under the Plan shall be determined in accordance with generally accepted accounting principles ("GAAP") and in a manner consistent with the methods used in the Company's regular reports on Forms 10-K and 10-Q, without regard to any of the following unless otherwise determined by the Committee consistent with the requirements of Code Section 162(m)(4)(C) of the Code and the regulations thereunder:

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(a)            all items of gain, loss or expense for the fiscal year or other applicable performance period that are related to special, unusual or non-recurring items, events or circumstances affecting the Company (or Affiliate, division, other operational unit, business segment or administrative department of the Company or any Affiliate) or the financial statements of the Company (or Affiliate, division, other operational unit, business segment or administrative department of the Company or any Affiliate);

 

(b)            all items of gain, loss or expense for the fiscal year or other applicable performance period that are related to (i) the disposal of a business or discontinued operations or (ii) the operations of any business acquired by the Company (or Affiliate, division, other operational unit, business segment or administrative department of the Company or any Affiliate) during the fiscal year or other applicable performance period; and

 

(c)            all items of gain, loss or expense for the fiscal year or other applicable performance period that are related to changes in accounting principles or to changes in applicable law or regulations.

 

To the extent any Performance Criteria are expressed using any measures that require deviations from GAAP, such deviations shall be at the discretion of the Committee as exercised at the time the Performance Criteria are set and to the extent permitted under Section 162(m).

 

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