Document:

EX-10.3

 Exhibit 10.3 

AMENDED AND RESTATED 

INTERCREDITOR AGREEMENT 
 by and
among 
 BANK OF AMERICA, N.A. and 

WELLS FARGO BANK, NATIONAL ASSOCIATION, 

as ABL Agents, 
 and 

WILMINGTON TRUST, NATIONAL ASSOCIATION, 

as Second Lien Agent 
 Dated as of
September 1, 2016 

 TABLE OF CONTENTS 
  

							
	 	  	 	  	Page No.	 
		
	 ARTICLE 1 DEFINITIONS
	  	 	3	  
			
	 Section 1.1
	  	UCC Definitions	  	 	3	  
	 Section 1.2
	  	Other Definitions	  	 	3	  
	 Section 1.3
	  	Rules of Construction	  	 	10	  
		
	 ARTICLE 2 LIEN PRIORITY
	  	 	11	  
			
	 Section 2.1
	  	Priority of Liens	  	 	11	  
	 Section 2.2
	  	Waiver of Right to Contest Liens	  	 	12	  
	 Section 2.3
	  	Remedies Standstill	  	 	12	  
	 Section 2.4
	  	Release of Liens	  	 	13	  
	 Section 2.5
	  	No New Liens	  	 	13	  
	 Section 2.6
	  	Waiver of Marshalling	  	 	14	  
		
	 ARTICLE 3 ACTIONS OF THE PARTIES
	  	 	14	  
			
	 Section 3.1
	  	Certain Actions Permitted	  	 	14	  
	 Section 3.2
	  	Agent for Perfection	  	 	14	  
	 Section 3.3
	  	Insurance	  	 	15	  
	 Section 3.4
	  	No Additional Rights For the Loan Parties Hereunder	  	 	15	  
	 Section 3.5
	  	Payments Over	  	 	15	  
		
	 ARTICLE 4 APPLICATION OF PROCEEDS
	  	 	15	  
			
	 Section 4.1
	  	Application of Proceeds	  	 	15	  
	 Section 4.2
	  	Specific Performance	  	 	17	  
		
	 ARTICLE 5 INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS
	  	 	17	  
			
	 Section 5.1
	  	Notice of Acceptance and Other Waivers	  	 	17	  
	 Section 5.2
	  	Modifications to ABL Documents and Second Lien Documents	  	 	18	  
	 Section 5.3
	  	Reinstatement and Continuation of Agreement	  	 	19	  
		
	 ARTICLE 6 INSOLVENCY PROCEEDINGS
	  	 	20	  
			
	 Section 6.1
	  	DIP Financing	  	 	20	  
	 Section 6.2
	  	Relief From Stay	  	 	20	  
	 Section 6.3
	  	No Contest; Adequate Protection	  	 	20	  
	 Section 6.4
	  	Asset Sales	  	 	21	  
	 Section 6.5
	  	Separate Grants of Security and Separate Classification	  	 	21	  
	 Section 6.6
	  	Enforceability	  	 	22	  
	 Section 6.7
	  	ABL Obligations Unconditional	  	 	22	  
	 Section 6.8
	  	Second Lien Obligations Unconditional	  	 	22	  
		
	 ARTICLE 7 MISCELLANEOUS
	  	 	23	  
			
	 Section 7.1
	  	Rights of Subrogation	  	 	23	  
	 Section 7.2
	  	Further Assurances	  	 	23	  
	 Section 7.3
	  	Representations	  	 	23	  

  
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	 Section 7.4
	  	Amendments	  	 	23	  
	 Section 7.5
	  	Addresses for Notices	  	 	24	  
	 Section 7.6
	  	No Waiver; Remedies	  	 	24	  
	 Section 7.7
	  	Continuing Agreement, Transfer of Secured Obligations	  	 	24	  
	 Section 7.8
	  	Governing Law; Entire Agreement	  	 	25	  
	 Section 7.9
	  	Counterparts	  	 	25	  
	 Section 7.10
	  	No Third Party Beneficiaries	  	 	25	  
	 Section 7.11
	  	Headings	  	 	25	  
	 Section 7.12
	  	Severability	  	 	25	  
	 Section 7.13
	  	Attorneys’ Fees	  	 	25	  
	 Section 7.14
	  	VENUE; JURY TRIAL WAIVER	  	 	26	  
	 Section 7.15
	  	Intercreditor Agreement	  	 	26	  
	 Section 7.16
	  	No Warranties or Liability	  	 	27	  
	 Section 7.17
	  	Conflicts	  	 	27	  
	 Section 7.18
	  	Information Concerning Financial Condition of the Loan Parties	  	 	27	  
	 Section 7.19
	  	Concerning the Second Lien Agent	  	 	28	  
	 Section 7.20
	  	Amendment and Restatement	  	 	28	  

  
 ii 

 AMENDED AND RESTATED INTERCREDITOR AGREEMENT 

THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT (as amended, supplemented, restated or otherwise modified from time to time pursuant to the
terms hereof, this “Agreement”) is entered into as of September 1, 2016 by and among BANK OF AMERICA, N.A., in its capacity as administrative agent and co-collateral agent and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as successor to WELLS FARGO RETAIL FINANCE, LLC, in its capacity as co-collateral agent (together with their respective successors and assigns in such capacities, the “ABL Agents”), for (i) the financial
institutions party from time to time to the ABL Credit Agreement referred to below (such financial institutions, together with their respective successors, assigns and transferees, the “ABL Lenders”) and (ii) any ABL Bank
Product Affiliates and ABL Cash Management Affiliates (each as defined below) (such ABL Bank Product Affiliates and ABL Cash Management Affiliates, together with the ABL Agents and the ABL Lenders, the “ABL Secured Parties”)
and WILMINGTON TRUST, NATIONAL ASSOCIATION, as successor to WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (in such capacity, “Trustee”) and as collateral agent (in such capacity, and together with its successors and
assigns in such capacity, the “Second Lien Agent”) for (i) itself, the Trustee and the holders of the Notes issued under that certain Second Lien Notes Indenture referred to below (such holders, together with their respective
successors, assigns and transferees, the “Noteholders”) and (ii) the lenders under the Second Lien Credit Agreement referred to below (such lenders, together with their respective successors, assigns and transferees, the
“Second Lien Lenders”) and the agents for such Second Lien Lenders. 
 RECITALS: 

A. Pursuant to that certain Third Amended and Restated Credit Agreement dated as of July 21, 2015 by and among Sears Roebuck Acceptance Corp.
(“SRAC”) and Kmart Corporation (“Kmart”, and together with SRAC, the “ABL Borrowers”), Sears Holdings Corporation (“Holdings”), the ABL
Lenders and the ABL Agents (as such agreement has been or may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof, including by that certain First Amendment to Third Amended and
Restated Credit Agreement, dated as of April 8, 2016, the “ABL Credit Agreement”), the ABL Lenders have agreed to make certain loans and provide other financial accommodations to or for the benefit of Holdings and certain of
its subsidiaries. 
 B. Pursuant to a certain Amended and Restated Guarantee and Collateral Agreement dated as of May 21, 2009 (as the same
has been or may be amended, supplemented, restated and/or otherwise modified, the “ABL Guarantee and Collateral Agreement”) by Holdings and certain of its subsidiaries (including, without limitation, the ABL Borrowers) in
favor of the ABL Agents for the benefit of the ABL Secured Parties, (1) Holdings and certain of its subsidiaries (collectively, with Holdings, the “ABL Guarantors”) have guaranteed the payment and performance of the ABL
Obligations under the ABL Documents (as hereinafter defined), and (2) the ABL Borrowers and the ABL Guarantors (collectively, the “ABL Loan Parties”) have granted a security interest and lien in certain of their assets
(including, without limitation, credit card accounts receivables, pharmacy receivables, inventory and other assets related thereto) to secure the respective obligations of each of the ABL Loan Parties under the ABL Documents. 

  
 1 

 C. Pursuant to that certain Indenture dated as of October 12, 2010 by and among Holdings, as
issuer (in such capacity, the “Second Lien Notes Issuer”), certain subsidiaries of Holdings, as guarantors (in such capacity, the “Second Lien Notes Guarantors”, and together with the Second Lien Notes
Issuer, the “Second Lien Notes Parties”), the Trustee and the Second Lien Agent, Holdings has issued the Notes (as defined in the Second Lien Notes Indenture) and the Noteholders have purchased the Notes (as such agreement
may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof, the “Second Lien Notes Indenture”). 

D. Pursuant to that certain Second Lien Credit Agreement dated as of the date hereof by and among SRAC and Kmart, as borrowers (in such
capacity, the “Second Lien Credit Agreement Borrowers”), Holdings and the other the guarantors party thereto (in such capacity, the “Second Lien Credit Agreement Guarantors”, and together with the
Second Lien Credit Agreement Borrowers, the “Second Lien Credit Agreement Loan Parties”), the Second Lien Lenders and JPP, LLC, a Delaware limited liability company, as administrative agent and collateral administrator (in
such capacity, the “Second Lien Credit Agreement Agent”), the Second Lien Credit Agreement Borrowers have borrowed the Term Loan (as defined in the Second Lien Credit Agreement) (as such agreement may be amended,
supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof, the “Second Lien Credit Agreement”). 

E. Pursuant to (i) the Indenture, the Second Lien Notes Parties and the Second Lien Agent entered into that certain Security Agreement
dated as of October 12, 2010 by Holdings and certain of its subsidiaries in favor of the Second Lien Agent for the benefit of the Trustee, the Noteholders and the Second Lien Agent (as amended, including by the amendment and joinder referred to
below, the “Second Lien Security Agreement), (ii) that certain First Amendment to Security Agreement, dated as of the date hereof, the Second Lien Notes Parties and the Second Lien Agent amended the Second Lien Security Agreement
to cure certain ambiguities, omission, defects or inconsistencies therein, and (iii) the Second Lien Credit Agreement, the Second Lien Credit Agreement Agent, in its capacity as a Pari Passu Agent, as defined in the Second Lien Security Agreement,
and the Second Lien Agent entered into that certain Pari Passu Joinder Agreement to the Second Lien Security Agreement, dated as of the date hereof. 

F. Each of the ABL Agents, or predecessors thereof (on behalf of the ABL Secured Parties) and the Second Lien Agent (on behalf of the Second
Lien Secured Parties) previously entered into that certain Intercreditor Agreement dated October 12, 2010 (the “Existing Intercreditor Agreement”) to agree to the relative priority of Liens on the Collateral (as defined
below) and certain other rights, priorities and interests as provided herein. 
 G. Pursuant to that certain Instrument of Resignation,
Appointment, and Acceptance dated June 24, 2014, Wells Fargo Bank, National Association resigned as Second Lien Agent and Wilmington Trust, National Association was appointed and accepted the appointment as successor Second Lien Agent. 

H. At this time, each of the ABL Agents (on behalf of the ABL Secured Parties) and the Second Lien Agent (on behalf of the Second Lien Secured
Parties) desire to, and do hereby amend and restate the Existing Intercreditor Agreement in its entirety. 

  
 2 

 NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 
 ARTICLE 1 

DEFINITIONS 

Section 1.1 UCC Definitions. Unless otherwise defined herein, all capitalized terms used herein shall have the same meaning
herein as in the Uniform Commercial Code. 
 Section 1.2 Other Definitions. Subject to Section 1.1, as used in this Agreement,
the following terms shall have the meanings set forth below: 
 “ABL Agents” shall have the meaning assigned to that
term in the introduction to this Agreement and shall include any successors thereto as well as any Person designated as the “Agent”, “Administrative Agent”, “Collateral Agent” or “Co-Collateral Agent” under
any ABL Credit Agreement. 
 “ABL Bank Products Affiliate” shall mean any ABL Lender or any Affiliate of any ABL
Lender that has entered into a Swap Contract or other Bank Product with an ABL Loan Party with the obligations of such ABL Loan Party thereunder being secured by one or more ABL Collateral Documents, together with their respective successors,
assigns and transferees. 
 “ABL Borrowers” shall have the meaning assigned to that term in the recitals to this
Agreement. 
 “ABL Cash Management Affiliate” shall mean any ABL Lender or any Affiliate of an ABL
Lender that provides Cash Management Services to any of the ABL Loan Parties with the obligations of such ABL Loan Parties thereunder being secured by one or more ABL Collateral Documents, together with their respective successors, assigns and
transferees. 
 “ABL Collateral” shall mean all Property now owned or hereafter acquired by any Borrower or any
Guarantor in or upon which a Lien is granted or purported to be granted to the ABL Agents (and in all events includes the Second Lien Collateral) under any of the ABL Collateral Documents, together with all substitutions, additions, products and
Proceeds thereof. 
 “ABL Collateral Documents” shall mean the ABL Guarantee and Collateral Agreement, together with
all other security agreements, account control agreements, freight forwarder and/or customs broker’s agreements, collateral access agreements, license agreements and other collateral documents executed and delivered in connection with the ABL
Credit Agreement, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time. 

“ABL Credit Agreement” shall have the meaning assigned to such term in the recitals to this Agreement and shall
include any other agreement extending the maturity of, consolidating, restructuring, refunding, replacing or refinancing all or any portion of the ABL Obligations, whether by the same or any other agent, lender or group of lenders. 

  
 3 

 “ABL Documents” shall mean the ABL Credit Agreement, the ABL Collateral
Documents, all Swap Contracts and other Bank Products between any ABL Loan Party and any ABL Bank Products Affiliate, all Cash Management Services agreements between any ABL Loan Party and any ABL Cash Management Affiliate, those other ancillary
agreements to which any ABL Secured Party is a party or beneficiary and all other agreements, instruments, documents and certificates, now or hereafter executed by or on behalf of any ABL Loan Party and delivered to the ABL Agents or any other ABL
Secured Party, in connection with any of the foregoing or with the ABL Credit Agreement or the ABL Guarantee and Collateral Agreement, in each case, as the same may be amended, supplemented, restated or otherwise modified from time to time in
accordance with the terms hereof and thereof. 
 “ABL Guarantee and Collateral Agreement” shall have the meaning
assigned to that term in the recitals to this Agreement and shall also include any other agreement amending or replacing such agreement, whether by the same or any other agent, lender or group of lenders. 

“ABL Guarantors” shall have the meaning assigned to that term in the recitals to this Agreement and shall also include
any other Person who becomes a guarantor under the ABL Guarantee and Collateral Agreement. 
 “ABL Lenders” shall
have the meaning assigned to that term in the introduction to this Agreement. 
 “ABL Loan Parties” shall have the
meaning assigned to that term in the recitals to this Agreement. 
 “ABL Obligations” shall mean all obligations of
every nature of each ABL Loan Party from time to time owed to the ABL Secured Parties, or any of them, under any ABL Document, whether for principal, interest, reimbursement of amounts drawn under letters of credit, payments for early termination of
Swap Contracts, fees, expenses, indemnification or otherwise, and all other amounts owing or due under the terms of the ABL Documents (including interest, fees, indemnification payments, expense reimbursements and other amounts which, but for the
filing of a petition in bankruptcy with respect to such ABL Loan Party, would have accrued on or been payable with respect to any ABL Obligation, whether or not a claim is allowed against such ABL Loan Party for such interest, fees, indemnification
payments, expense reimbursements and other amounts in the related bankruptcy proceeding), as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time in accordance with the terms hereof and
thereof. 
 “ABL Recovery” shall have the meaning set forth in Section 5.3(a). 

“ABL Secured Parties” shall have the meaning assigned to that term in the introduction to this Agreement. 

  
 4 

 “Affiliate” shall mean, with respect to a specified Person, any other
Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified. 

“Agent(s)” means individually the ABL Agents or the Second Lien Agent and collectively means both the ABL Agents and
the Second Lien Agent. 
 “Agreement” shall have the meaning assigned to that term in the introduction to this
Agreement. 
 “Bank Products” shall have the meaning provided in the ABL Credit Agreement. 

“Bankruptcy Code” shall mean Title 11 of the United States Code , as now or hereafter in effect or any successor
thereto. 
 “Borrower” shall mean with respect to the ABL Obligations, the ABL Borrowers and, with respect to the
Second Lien Obligations, Holdings or the Second Lien Credit Agreement Borrowers, as applicable, and collectively means all of them. 

“Cash Management Services” shall have the meaning provided in the ABL Credit Agreement. 

“Collateral” shall mean collectively, all ABL Collateral and all Second Lien Collateral. 

“Control Collateral” shall mean any Collateral consisting of any Deposit Account, Instruments and any other Collateral
as to which a Lien may be perfected through possession or control by the secured party, or any agent therefor. 
 “Credit
Documents” shall mean the ABL Documents and the Second Lien Documents. 
 “Debtor Relief Laws” shall
mean the Bankruptcy Code as now or hereafter in effect or any successor thereto, as well as all other liquidation, conservatorship, bankruptcy, assignment for benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States federal or state law or of any applicable foreign law from time to time in effect affecting the rights of creditors generally. 

“DIP Financing” shall have the meaning set forth in Section 6.1(a). 

“Discharge of ABL Obligations” shall mean (a) the payment in full in cash of all outstanding ABL Obligations
including, with respect to (i) amounts available to be drawn under outstanding letters of credit issued thereunder (or indemnities or other undertakings issued pursuant thereto in respect of outstanding letters of credit), the cancellation of such
letters of credit or the delivery or provision of money or backstop letters of credit in respect thereof in compliance with the terms of any ABL Credit Agreement (which shall not exceed an amount equal to 105% of the aggregate undrawn amount of such
letters of credit) and (ii) outstanding ABL Obligations with respect to Bank Products and Cash Management Services (or indemnities or other undertakings issued pursuant thereto in respect of outstanding Bank Products and Cash Management Services) or
the delivery or provision of cash collateral in respect thereof in compliance with the terms of any ABL Credit Agreement and (b) the termination of all commitments to extend credit under the ABL Documents. 

  
 5 

 “Discharge of Second Lien Obligations” shall mean the payment in full in
cash, or the discharge or defeasance, of all outstanding Second Lien Obligations in accordance with the Second Lien Notes Indenture and the Second Lien Credit Agreement, as applicable. 

“Event of Default” shall mean an Event of Default as defined in the ABL Credit Agreement, the Second Lien Notes
Indenture or the Second Lien Credit Agreement, as applicable. 
 “Exercise (of) Any Secured Creditor Remedies” or
“Exercise of Secured Creditor Remedies” shall mean, except as otherwise provided in the final sentence of this definition: 

(a) the taking by any Secured Party of any action to enforce or realize upon any Lien, including the institution of any
foreclosure proceedings or the noticing of any public or private sale pursuant to Article 9 of the Uniform Commercial Code or other applicable law; 

(b) the exercise by any Secured Party of any right or remedy provided to a secured creditor on account of a Lien under any of
the Credit Documents, under applicable law, in an Insolvency Proceeding or otherwise, including the election to retain any of the ABL Collateral or Second Lien Collateral, as applicable, in satisfaction of a Lien; 

(c) the taking of any action by any Secured Party or the exercise of any right or remedy by any Secured Party in respect of the
collection on, set off against, marshaling of, injunction respecting or foreclosure on the ABL Collateral or Second Lien Collateral, as applicable, or the Proceeds thereof; 

(d) the appointment on the application of a Secured Party, of a receiver, receiver and manager or interim receiver of all or
part of the ABL Collateral or Second Lien Collateral, as applicable; 
 (e) the sale, lease, license, or other disposition of
all or any portion of the ABL Collateral or Second Lien Collateral by private or public sale conducted by a Secured Party or any other means at the direction of a Secured Party permissible under applicable law; and 

(f) the exercise of any other right of a secured creditor under Part 6 of Article 9 of the Uniform Commercial Code or under
provisions of similar effect other applicable law. 
 For the avoidance of doubt, none of the following shall be deemed to constitute an Exercise of Secured
Creditor Remedies: (i) the filing of a proof of claim in any Insolvency Proceeding or seeking adequate protection (subject to Section 6.3 below), (ii) the exercise of rights by the ABL Agents during the continuance of a Cash Dominion Event (as
defined in the ABL Credit Agreement), including, without limitation, the notification of account debtors, depository 

  
 6 

 
institutions or any other Person to deliver proceeds of the ABL Collateral to the ABL Agents, (iii) the consent by the ABL Agents to a store closing sale, going out of business sale or other
disposition by any Loan Party of any of the ABL Collateral, (iv) the reduction of advance rates or sub-limits by the ABL Agents, or (v) the imposition of Availability Reserves or Inventory Reserves (in each case as defined in the ABL Credit
Agreement) by the ABL Agents. 
 “Existing Intercreditor Agreement” shall have the meaning assigned to that term in
the recitals to this Agreement. 
 “Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 

“Guarantor” shall mean any of the ABL Guarantors, the Second Lien Notes Guarantors or the Second Lien Credit Agreement
Guarantors, as applicable, and collectively means all of them. 
 “Holdings” shall have the meaning assigned to that
term in the introduction to this Agreement. 
 “Indebtedness” shall mean (i) all obligations of a Person
for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (ii) the maximum amount of all letters of credit, bankers’ acceptances, bank guaranties, surety bonds,
performance bonds and similar instruments issued or created by or for the account of such Person; (iii) obligations of such Person under any Swap Contract; (iv) indebtedness secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse, and (v) any guarantees of the foregoing. 
 “Insolvency Proceeding” shall
mean (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors or other similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case covered by clauses (a) and (b) undertaken under
any Debtor Relief Laws. 
 “Lender(s)” means individually, the ABL Lenders, the Noteholders or the Second Lien
Lenders, and collectively means all of the ABL Lenders, the Noteholders and the Second Lien Lenders. 

“Lien” shall mean, with respect to any asset, any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, encumbrance, collateral assignment, charge or security interest in, on or of such asset. 

  
 7 

 “Lien Priority” shall mean with respect to any Lien of the ABL Secured
Parties or the Second Lien Secured Parties in the Collateral, the order of priority of such Lien as specified in Section 2.1. 

“Loan Parties” shall mean the ABL Loan Parties and the Second Lien Loan Parties. 

“Noteholders” shall have the meaning assigned to that term in the introduction to this Agreement. 

“Notes” shall have the meaning provided in the Second Lien Notes Indenture. 

“Party” shall mean the ABL Agents or the Second Lien Agent, and “Parties” shall mean
both the ABL Agents and the Second Lien Agent. 
 “Person” shall mean an individual, partnership, corporation,
limited liability company, unlimited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. 

“Proceeds” shall mean (a) all “proceeds,” as defined in Article 9 of the Uniform Commercial Code, with
respect to the Collateral, and (b) whatever is recoverable or recovered when any Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily. 

“Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or
intangible. 
 “Second Lien Agent” shall have the meaning assigned to that term in the introduction to this
Agreement and shall include any successor thereto. 
 “Second Lien Collateral” shall mean all
“Collateral”, as defined in the Second Lien Security Agreement, and any other asset which becomes subject to a Lien securing the Second Lien Obligations. 

“Second Lien Collateral Documents” shall mean the Second Lien Security Agreement, together with all other security
agreements, joinder agreements, account control agreements, freight forwarder and/or customs broker’s agreements, collateral access agreements, license agreements and other collateral documents executed and delivered in connection with the
Second Lien Indentures and the Second Lien Credit Agreement, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time. 

“Second Lien Credit Agreement” shall have the meaning assigned to that term in the recitals to this Agreement and
shall include any other agreement extending the maturity of, consolidating, restructuring, refunding, replacing or refinancing all or any portion of the Second Lien Obligations thereunder, whether by the same or any other agent, lender or group of
lenders. 
 “Second Lien Credit Agreement Agent” shall have the meaning assigned to that term in the recitals to
this Agreement. 

  
 8 

 “Second Lien Credit Agreement Borrowers” shall have the meaning assigned
to that term in the recitals to this Agreement. 
 “Second Lien Credit Agreement Guarantors” shall have the meaning
assigned to that term in the recitals to this Agreement. 
 “Second Lien Credit Agreement Loan Parties” shall have
the meaning assigned to that term in the recitals to this Agreement. 
 “Second Lien Documents” shall mean the
Second Lien Notes Indenture, the Notes , the Second Lien Credit Agreement, the Second Lien Collateral Documents, the Loan Documents (as defined in the Second Lien Credit Agreement), and all other agreements, instruments, documents and certificates,
now or hereafter executed by or on behalf of any Second Lien Loan Party or any of its respective Affiliates, and delivered to the Trustee, the Second Lien Credit Agreement Agent or the Second Lien Agent, in connection with the Second Lien Notes
Indenture or the Second Lien Credit Agreement, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof and thereof. 

“Second Lien Lenders” shall have the meaning assigned to that term in the introduction to this Agreement. 

“Second Lien Loan Parties” shall mean the Second Lien Notes Parties and the Second Lien Credit Agreement Loan Parties.

 “Second Lien Notes Guarantors” shall have the meaning assigned to that term in the recitals to this Agreement.

 “Second Lien Notes Indenture” shall have the meaning assigned to that term in the recitals to this Agreement and
shall include any other agreement extending the maturity of, consolidating, restructuring, refunding, replacing or refinancing all or any portion of the Second Lien Obligations thereunder. 

“Second Lien Notes Issuer” shall have the meaning assigned to that term in the recitals to this Agreement. 

“Second Lien Notes Parties” shall have the meaning assigned to that term in the recitals to this Agreement. 

“Second Lien Obligations” shall mean all obligations of every nature of each Second Lien Loan Party from time to time
owed to the Second Lien Secured Parties or any of them, under any Second Lien Document, whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Second Lien Loan Party, would have
accrued on any Second Lien Obligation to the extent a claim is allowed against such Second Lien Loan Party for such interest in the related bankruptcy proceeding), fees, expenses, indemnification or otherwise, and all other amounts owing or due
under the terms of the Second Lien Documents, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. 

  
 9 

 “Second Lien Recovery” shall have the meaning set forth in Section
5.3(b). 
 “Second Lien Secured Parties” shall mean the Second Lien Agent, the Trustee, the Noteholders, the Second
Lien Credit Agreement Agent and the Second Lien Lenders. 
 “Second Lien Security Agreement” shall have the meaning
assigned to that term in the recitals to this Agreement. 
 “Secured Parties” shall mean the ABL Secured Parties and
the Second Lien Secured Parties. 
 “Subsidiary” shall mean with respect to any Person (the
“parent”) at any date, any corporation, partnership, joint venture, limited liability company, trust, or other entity (a) of which equity interests representing more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one
or more subsidiaries of the parent. 
 “Swap Contract” shall have the meaning provided in the ABL Credit Agreement.

 “Uniform Commercial Code” shall mean the Uniform Commercial Code as the same may, from time to time, be in effect
in the State of New York; provided that to the extent that the Uniform Commercial Code is used to define any term in any security document and such term is defined differently in differing Articles of the Uniform Commercial Code, the
definition of such term contained in Article 9 shall govern; provided further that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, publication or priority of, or remedies with
respect to, Liens of any Party is governed by the Uniform Commercial Code or foreign personal property security laws as enacted and in effect in a jurisdiction other than the State of New York, the term “Uniform Commercial Code” will mean
the Uniform Commercial Code or such foreign personal property security laws as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions. 
 Section 1.3 Rules of Construction. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting and shall be deemed to be followed by the phrase “without limitation,”
and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, clause, schedule and exhibit references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, restatements, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements thereto and thereof,
as applicable (subject to any restrictions on such alterations, amendments, changes, restatements, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person’s successors and assigns. Any reference herein to the 

  
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repayment in full of an obligation shall mean the payment in full in cash of such obligation, or in such other manner as may be approved in writing by the requisite holders or representatives in
respect of such obligation. Any reference herein to a time of day means Eastern time. 
 ARTICLE 2 

LIEN PRIORITY 

Section 2.1 Priority of Liens. 

(a) Notwithstanding (i) the date, time, method, manner, or order of grant, attachment, or perfection of any Liens granted to the ABL Secured
Parties in respect of all or any portion of the ABL Collateral or of any Liens granted to the Second Lien Secured Parties in respect of all or any portion of the Second Lien Collateral and regardless of how any such Lien was acquired (whether by
grant, statute, operation of law, subrogation or otherwise), (ii) the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of the ABL Agents for the benefit of the ABL Secured Parties in any ABL
Collateral or the Second Lien Agent for the benefit of the Second Lien Secured Parties in any Second Lien Collateral, (iii) any provision of the Uniform Commercial Code, Debtor Relief Laws or any other applicable law, or of the ABL Documents or the
Second Lien Documents, (iv) whether the ABL Agents or the Second Lien Agent, in each case, either directly or through agents, holds possession of, or has control over, all or any part of the Collateral, (v) the date on which the ABL Obligations or
the Second Lien Obligations are advanced or made available to the Loan Parties, or (vi) any failure of the ABL Agents or the Second Lien Agent to perfect its Lien in the ABL Collateral or the Second Lien Collateral, as applicable, the subordination
of any Lien on the ABL Collateral securing any ABL Obligations or on any Second Lien Collateral securing any Second Lien Obligations, as applicable, to any Lien securing any other obligation of any Borrower or Guarantor, or the avoidance,
invalidation or lapse of any Lien on the ABL Collateral securing any ABL Obligations or on any Second Lien Collateral securing any Second Lien Obligations, the ABL Agents, on behalf of themselves and the ABL Secured Parties, and the Second Lien
Agent, on behalf of itself and the Second Lien Secured Parties, hereby agree that the following priorities apply to the Collateral: 

(A) First, to the ABL Agents and the ABL Lenders to the extent of the ABL Obligations; 

(B) Second, to the Second Lien Agent, the Noteholders and the Second Lien Lenders to the extent of the Second Lien
Obligations. 
 (b) The ABL Agents, for and on behalf of themselves and the ABL Secured Parties, acknowledge and agree that the Second Lien
Agent, for the benefit of itself and the Second Lien Secured Parties, has been, or may be, granted Liens upon the Second Lien Collateral and the ABL Agents hereby consent thereto. The subordination of Lien by the Second Lien Agent in favor of the
ABL Agents as set forth herein shall not be deemed to subordinate the Second Lien Agent’s Liens to the Liens of any other Person. 

  
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 Section 2.2 Waiver of Right to Contest Liens. 

(a) The Second Lien Agent, for and on behalf of itself and the Second Lien Secured Parties, agrees that it and they shall not (and hereby
waives any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity,
priority, enforceability, or perfection of the Liens of the ABL Agents and the ABL Secured Parties in respect of the Collateral or the provisions of this Agreement. The Second Lien Agent, for itself and on behalf of the Second Lien Secured
Parties, agrees that none of the Second Lien Agent or the Second Lien Secured Parties will take any action that would interfere with any Exercise of Secured Creditor Remedies undertaken by the ABL Agents or any ABL Secured Party under the ABL
Documents with respect to the Collateral. The Second Lien Agent, for itself and on behalf of the Second Lien Secured Parties, hereby waives any and all rights it or the Second Lien Secured Parties may have as a junior lien creditor or otherwise
to contest, protest, object to, or interfere with the manner in which the ABL Agents or any ABL Lender seeks to enforce its Liens in any Collateral. The foregoing shall not be construed to prohibit the Second Lien Agent from enforcing the
provisions of this Agreement or otherwise acting in accordance with this Agreement. 
 (b) The ABL Agents, for and on behalf of themselves
and the ABL Secured Parties, agrees that it and they shall not (and hereby waives any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in
any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the Second Lien Agent or the Second Lien Secured Parties in respect of the Second Lien Collateral or the provisions of
this Agreement. The foregoing shall not be construed to prohibit the ABL Agents from enforcing the provisions of this Agreement or otherwise acting in accordance with this Agreement. 

Section 2.3 Remedies Standstill. 

(a) The Second Lien Agent, on behalf of itself and the Second Lien Secured Parties, agrees that, from the date hereof until the date upon
which the Discharge of ABL Obligations shall have occurred, neither the Second Lien Agent nor any Second Lien Secured Party will Exercise Any Secured Creditor Remedies with respect to any of the Collateral, and will not take, receive or accept any
Proceeds of Collateral. From and after the date upon which the Discharge of ABL Obligations shall have occurred, the Second Lien Agent or any Second Lien Secured Party may Exercise Any Secured Creditor Remedies under the Second Lien Documents
or applicable law as to any Second Lien Collateral. 
 (b) Notwithstanding the provisions of Sections 2.3(a) or any other provision of this
Agreement, nothing contained herein shall be construed to prevent any Agent or any Secured Party from (i) filing a claim or statement of interest with respect to the ABL Obligations or Second Lien Obligations owed to it in any Insolvency Proceeding
commenced by or against any Loan Party, (ii) taking any action (not adverse to the Lien Priority of the Liens of the ABL Agents or ABL Secured Parties on the Collateral or the rights of the ABL Agent or any of the ABL Secured Parties to Exercise Any
Secured Creditor Remedies in respect thereof) in order to create, perfect, preserve or protect (but not enforce) its Lien on any ABL Collateral or Second Lien Collateral, as applicable, (iii) filing any necessary or responsive pleadings in
opposition to any motion, adversary proceeding or other pleading filed by any Person objecting to or otherwise 

  
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seeking disallowance of the claim or Lien of such Agent or Secured Party, (iv) voting on any plan of reorganization or filing any proof of claim in any Insolvency Proceeding of any Loan Party, or
(v) objecting to the proposed retention of the Collateral by the ABL Agents or any other ABL Secured Party in full or partial satisfaction of any ABL Obligations, in each case (i) through (v) above to the extent not inconsistent with the terms of
this Agreement. 
 (c) Each of the Second Lien Agent, each Second Lien Secured Party, the ABL Agents and each ABL Secured Party agrees (i)
that it will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim, in the case of the Second Lien Agent and each Second Lien Secured Party, against either the ABL Agents or any other
ABL Secured Party, and in the case of the ABL Agents and each other ABL Secured Party, against either the Second Lien Agent or any other Second Lien Secured Party, seeking damages from or other relief by way of specific performance, instructions or
otherwise, with respect to, any action taken or omitted to be taken by such Person with respect to the ABL Collateral or Second Lien Collateral, as applicable, which is consistent with the terms of this Agreement, and none of such Parties shall be
liable for any such action taken or omitted to be taken, or (ii) it will not be a petitioning creditor or otherwise assist in the filing of an involuntary Insolvency Proceeding. 

Section 2.4 Release of Liens. In the event of (A) any private or public sale of all or any portion of the Collateral in
connection with any Exercise of Secured Creditor Remedies by the ABL Agents or by the ABL Loan Parties with the consent of the ABL Agents, or (B) any sale, transfer or other disposition of all or any portion of the Collateral, so long as such sale,
transfer or other disposition is then permitted by the ABL Documents or consented to by the requisite ABL Lenders, the Second Lien Agent agrees, on behalf of itself and the Second Lien Secured Parties that such sale, transfer or other disposition
will be free and clear of the Liens, if any, on such Collateral securing the Second Lien Obligations, and the Second Lien Agent’s and the Second Lien Secured Parties’ Liens, if any, with respect to the Collateral so sold, transferred, or
disposed shall terminate and be automatically released without further action concurrently with, and to the same extent as, the release of the ABL Secured Parties’ Liens on such Collateral. In furtherance of, and subject to, the foregoing,
the Second Lien Agent agrees that it will promptly execute any and all Lien releases or other documents reasonably requested in writing and provided by the ABL Agents in connection therewith. The Second Lien Agent hereby appoints the ABL Agents
and any officer or duly authorized person of the ABL Agents, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the Second Lien Agent and in the name of the
Second Lien Agent or in the ABL Agents’ own name, from time to time, in the ABL Agents’ sole discretion, for the purposes of carrying out the terms of this paragraph, to take any and all appropriate action and to execute and deliver or
file any and all documents and instruments as may be necessary or desirable to accomplish the purposes of this paragraph, including any financing statements, endorsements, assignments, releases or other documents or instruments of transfer (which
appointment, being coupled with an interest, is irrevocable). 
 Section 2.5 No New Liens. Until the Discharge of ABL
Obligations shall have occurred, the parties hereto agree that no Second Lien Secured Party shall acquire or hold any Lien on any assets of any Loan Party securing any Second Lien Obligation which assets are not also subject to the Lien of the ABL
Agents under the ABL Documents. If any Second Lien 

  
 13 

 
Secured Party shall nonetheless acquire or hold any Lien on any assets of any Loan Party securing any Second Lien Obligation which assets are not also subject to the Lien of the ABL Agents under
the ABL Documents, then the Second Lien Agent (or the relevant Second Lien Secured Party) shall, without the need for any further consent of any other Second Lien Secured Party or any Second Lien Loan Party and notwithstanding anything to the
contrary in any other Second Lien Document, be deemed to also hold and have held such Lien as agent or bailee for the benefit of the ABL Agents as security for the ABL Obligations (subject to the terms of the ABL Credit Agreement) and shall promptly
notify the ABL Agents in writing of the existence of such Lien. 
 Section 2.6 Waiver of Marshalling. Until the Discharge
of ABL Obligations, the Second Lien Agent, on behalf of itself and the Second Lien Secured Parties, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise
claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable
law.
 ARTICLE 3 

ACTIONS OF THE PARTIES 

Section 3.1 Certain Actions Permitted. The Second Lien Agent and the ABL Agents may make such demands or file such claims in
respect of the Second Lien Obligations or the ABL Obligations, as applicable, as are necessary to prevent the waiver or bar of such claims under applicable statutes of limitations or other statutes, court orders, or rules of procedure at any time.

 Section 3.2 Agent for Perfection. 

(a) The ABL Agents, for and on behalf of themselves and each ABL Secured Party, agree to hold all Second Lien Collateral in their possession,
custody, or control (or in the possession, custody, or control of agents or bailees for either) as agent for the Second Lien Secured Parties solely for the purpose of perfecting the security interest granted to the Second Lien Agent in such Second
Lien Collateral, subject to the terms and conditions of this Section 3.2. 
 (b) The Second Lien Agent, for and on behalf of itself and each
Second Lien Secured Party, agree to hold all Collateral in their possession, custody, or control (or in the possession, custody, or control of agents or bailees for either) as agent for the ABL Secured Parties solely for the purpose of perfecting
the security interest granted to the ABL Agents in such Collateral, subject to the terms and conditions of this Section 3.2.
 (c) None of
the ABL Agents, the ABL Secured Parties, the Second Lien Agent, or the Second Lien Secured Parties, as applicable, shall have any obligation whatsoever to the others to assure that the Collateral is genuine or owned by any Borrower, any Guarantor,
or any other Person or to preserve rights or benefits of any Person. The duties or responsibilities of the ABL Agents and the Second Lien Agent under this Section 3.2 are and shall be limited solely to holding or maintaining control of the
Collateral or Second Lien Collateral, as applicable, as agent for the other Party for purposes of perfecting the Lien held by the Second Lien Agent or the ABL Agents, as applicable. The ABL Agents are not and shall not be deemed

  
 14 

 
to be a fiduciary of any kind for the Second Lien Secured Parties or any other Person. The Second Lien Agent is not and shall not be deemed to be a fiduciary of any kind for the ABL Secured
Parties, or any other Person.
 Section 3.3 Insurance. Proceeds of Collateral include insurance proceeds and, therefore, the
Lien Priority shall govern the ultimate disposition of casualty insurance proceeds. The ABL Agents and the Second Lien Agent shall each be named as additional insured or loss payee, as applicable, with respect to all insurance policies maintained by
the Borrowers or Guarantors relating to the ABL Collateral and Second Lien Collateral, respectively. Until the Discharge of ABL Obligations, the ABL Agents shall have the sole and exclusive right, as against the Second Lien Agent, to adjust
settlement of insurance claims in the event of any covered loss, theft or destruction of any Collateral and take other such actions with respect to insurance covering the Collateral as set forth in the ABL Credit Agreement. All proceeds of such
insurance shall be remitted to the ABL Agents, and the Second Lien Agent shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds in accordance with Section 4.1 hereof. The ABL Agents are hereby authorized
to make any endorsements as agent for the Second Lien Agent or any such other Second Lien Secured Parties in accordance with the power of attorney granted pursuant to Section 2.4 above. 

Section 3.4 No Additional Rights For the Loan Parties Hereunder. If any ABL Secured Party or Second Lien Secured Party
shall enforce its rights or remedies in violation of the terms of this Agreement, the Loan Parties shall not be entitled to use such violation as a defense to any action by any ABL Secured Party or Second Lien Secured Party, nor to assert such
violation as a counterclaim or basis for set off or recoupment against any ABL Secured Party or Second Lien Secured Party. 
 Section 3.5
Payments Over. So long as the Discharge of ABL Obligations has not occurred, any Collateral or Proceeds thereof received by the Second Lien Agent or any Second Lien Secured Parties in connection with the exercise of any right or remedy
(including set off) relating to the Collateral in contravention of this Agreement shall be segregated and held in trust and forthwith paid over to the ABL Agents for the benefit of the ABL Secured Parties in the same form as received, with any
necessary endorsements or as a court of competent jurisdiction may otherwise direct. The ABL Agents are hereby authorized to make any such endorsements as agent for the Second Lien Agent or any such Second Lien Secured Parties. This authorization is
coupled with an interest and is irrevocable until such time as this Agreement is terminated in accordance with its terms. 
 ARTICLE 4

 APPLICATION OF PROCEEDS 

Section 4.1 Application of Proceeds. 

(a) Revolving Nature of ABL Obligations. The Second Lien Agent, for and on behalf of itself and the Second Lien Secured Parties,
expressly acknowledges and agrees that (i) the ABL Credit Agreement includes a revolving commitment, that in the ordinary course of business the ABL Agents and the ABL Lenders will apply payments and make advances thereunder, and that no application
of any Collateral or the release of any Lien by the ABL 

  
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Agents upon any portion of the Collateral in connection with a permitted disposition by the ABL Loan Parties under any ABL Credit Agreement shall constitute the Exercise of Secured Creditor
Remedies under this Agreement; (ii) the amount of the ABL Obligations that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and that the terms of the ABL Obligations may be modified,
extended or amended from time to time, and that the aggregate amount of the ABL Obligations may be increased, replaced or refinanced, in each event, without notice to or consent by the Second Lien Secured Parties and without affecting the provisions
hereof; and (iii) all Collateral received by the ABL Agents may be applied, reversed, reapplied or credited, in whole or in part, to the ABL Obligations at any time. The Lien Priority shall not be altered or otherwise affected by any such amendment,
modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the ABL Obligations or the Second Lien Obligations, or any portion thereof. 

(b) Application of Proceeds of Collateral. The ABL Agents and the Second Lien Agent hereby agree that all Collateral and all other
Proceeds thereof, received by either of them in connection with any Exercise of Secured Creditor Remedies with respect to the Collateral shall be applied, 

first, to the payment of costs and expenses of the ABL Agents in connection with such Exercise of Secured Creditor
Remedies to the extent provided in the ABL Documents, 
 second, to the payment of the ABL Obligations in accordance
with the ABL Documents until the Discharge of ABL Obligations shall have occurred, 
 third, to the payment of the
Second Lien Obligations in accordance with the Second Lien Documents until the Discharge of Second Lien Obligations shall have occurred, and 

fourth, the balance, if any, to the Loan Parties or as a court of competent jurisdiction may direct. 

(c) Limited Obligation or Liability. In exercising remedies, whether as a secured creditor or otherwise, the ABL Agents shall have no
obligation or liability to the Second Lien Agent or to any Second Lien Secured Party regarding the adequacy of any Proceeds or for any action or omission, except solely for an action or omission that breaches the express obligations undertaken by
each Party under the terms of this Agreement. Notwithstanding anything to the contrary herein contained, none of the Parties hereto waives any claim that it may have against a Secured Party on the grounds that any sale, transfer or other disposition
by the Secured Party was not commercially reasonable in every respect as required by the Uniform Commercial Code. 
 (d) Turnover of
Collateral. Upon the Discharge of ABL Obligations, the ABL Agents shall deliver to the Second Lien Agent or shall execute such documents as the Second Lien Agent may reasonably request (at the expense of the Second Lien Notes Issuer) to enable
the Second Lien Agent to have control over any Control Collateral constituting Second Lien 

  
 16 

 
Collateral still in the ABL Agents’ possession, custody, or control in the same form as received with any necessary endorsements, or as a court of competent jurisdiction may otherwise
direct, subject to the reinstatement provisions of Section 5.3 below. 
 Section 4.2 Specific Performance. Each of the ABL
Agents and the Second Lien Agent is hereby authorized to demand specific performance of this Agreement, whether or not any Borrower or any Guarantor shall have complied with any of the provisions of any of the Credit Documents, at any time when the
other Party shall have failed to comply with any of the provisions of this Agreement applicable to it. Each of the ABL Agents, for and on behalf of itself and the ABL Secured Parties, and the Second Lien Agent, for and on behalf of itself and the
Second Lien Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance. 

ARTICLE 5 

INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS 

Section 5.1 Notice of Acceptance and Other Waivers.  

(a) All ABL Obligations at any time made or incurred by any Borrower or any Guarantor shall be deemed to have been made or incurred in
reliance upon this Agreement, and the Second Lien Agent, on behalf of itself and the Second Lien Secured Parties, hereby waives notice of acceptance, or proof of reliance by the ABL Agents or any ABL Secured Party of this Agreement and notice of the
existence, increase, renewal, extension, accrual, creation, or non-payment of all or any part of the ABL Obligations. 
 (b) None of
the ABL Agents, any ABL Secured Party, or any of their respective Affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or any Proceeds, or for any delay in doing
so, or shall be under any obligation to sell or otherwise dispose of any Collateral or Proceeds thereof or to take any other action whatsoever with regard to the Collateral or any part or Proceeds thereof. If the ABL Agents or any ABL Secured Party
honors (or fails to honor) a request by any Borrower for an extension of credit pursuant to any ABL Credit Agreement or any of the other ABL Documents, whether the ABL Agents or any ABL Secured Party have knowledge that the honoring of (or failure
to honor) any such request would constitute a default under the terms of any Second Lien Document or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if the ABL Agents
or any ABL Secured Party otherwise should exercise any of its contractual rights or remedies under any ABL Documents (subject to the express terms and conditions hereof), neither the ABL Agents nor any ABL Secured Party shall have any liability
whatsoever to the Second Lien Agent or any Second Lien Secured Party as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The ABL Agents and the ABL
Secured Parties shall be entitled to manage and supervise their loans and extensions of credit under any ABL Credit Agreement and any of the other ABL Documents as they may, in their sole discretion, deem appropriate, and may manage their loans and
extensions of credit without regard to any rights or interests that the Second Lien Agent or any of the Second Lien Secured Parties have in the Collateral, except as otherwise expressly set forth in this Agreement. The Second Lien Agent, on behalf
of itself and the Second Lien Secured Parties, 

  
 17 

 
agrees that neither the ABL Agents nor any ABL Secured Party shall incur any liability as a result of a sale, lease, license, application, or other disposition of all or any portion of the
Collateral or Proceeds thereof, pursuant to the ABL Documents, so long as such disposition is conducted in accordance with mandatory provisions of applicable law and does not breach the provisions of this Agreement. 

Section 5.2 Modifications to ABL Documents and Second Lien Documents.  

(a) The Second Lien Agent, on behalf of itself and the Second Lien Secured Parties, hereby agrees that, without affecting the obligations of
the Second Lien Agent and the Second Lien Secured Parties hereunder, the ABL Agents and the ABL Secured Parties may, at any time and from time to time, in their sole discretion without the consent of or notice to the Second Lien Agent or any Second
Lien Secured Party, and without incurring any liability to the Second Lien Agent or any Second Lien Secured Party or impairing or releasing the Lien Priority provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate,
restructure, or otherwise modify any of the ABL Documents in any manner whatsoever. 
 (b) The ABL Agents, on behalf of themselves and the
ABL Secured Parties, hereby agree that, without affecting the obligations of the ABL Agents and the ABL Secured Parties hereunder, the Second Lien Agent and the Second Lien Secured Parties may, at any time and from time to time, in their sole
discretion without the consent of or notice to the ABL Agents or any ABL Secured Party, and without incurring any liability to the ABL Agents or any ABL Secured Party or impairing or releasing the Lien Priority provided for herein, amend, restate,
supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify any of the Second Lien Documents in any manner whatsoever except that the following shall require the prior written consent of the ABL Agents: 

(1) except as provided in Section 2.5, retain or obtain a Lien on any Property of any Person to secure any of the Second Lien
Obligations; or 
 (2) amend the Second Lien Documents in any manner which would have the effect of contravening the terms of
this Agreement or the ABL Documents. 
 (c) The ABL Obligations and the Second Lien Obligations may be refinanced, in whole or in part, in
each case, without notice to, or the consent (except to the extent a consent is required pursuant to Section 5.2(b) above or to permit the refinancing transaction under any ABL Document or any Second Lien Document) of the ABL Agents, the ABL Secured
Parties, the Second Lien Agent or the Second Lien Secured Parties, as the case may be, all without affecting the Lien Priority provided for herein or the other provisions hereof, provided, however, that the holders of such refinancing
Indebtedness (or an authorized agent or trustee on their behalf) bind themselves in writing to the terms of this Agreement pursuant to such documents or agreements (including amendments or supplements to this Agreement) as the ABL Agents or the
Second Lien Agent, as the case may be, shall reasonably request and in form and substance reasonably acceptable to the ABL Agents or the Second Lien Agent, as the case may be, and any such refinancing transaction shall be in accordance with any
applicable provisions of both the ABL Documents and the Second Lien Documents (to the extent such documents survive the refinancing). 

  
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 Section 5.3 Reinstatement and Continuation of Agreement.  

(a) If the ABL Agents or any ABL Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the
estate of any Borrower, any Guarantor, or any other Person any payment made in satisfaction of all or any portion of the ABL Obligations (an “ABL Recovery”), then the ABL Obligations shall be reinstated to the extent of such
ABL Recovery. If this Agreement shall have been terminated prior to such ABL Recovery, this Agreement shall be reinstated in full force and effect in the event of such ABL Recovery, and such prior termination shall not diminish, release,
discharge, impair, or otherwise affect the obligations of the Parties from such date of reinstatement. All rights, interests, agreements, and obligations of the ABL Agents, the Second Lien Agent, the ABL Secured Parties, and the Second Lien Secured
Parties under this Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of, any Insolvency Proceeding by or against any Borrower or any
Guarantor or any other circumstance which otherwise might constitute a defense available to, or a discharge of any Borrower or any Guarantor in respect of the ABL Obligations or the Second Lien Obligations. No priority or right of the ABL Agents or
any ABL Secured Party shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Borrower or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of any of the ABL
Documents, regardless of any knowledge thereof which the ABL Agents or any ABL Secured Party may have. 
 (b) If the Second Lien Agent or
any Second Lien Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Borrower, any Guarantor, or any other Person any payment made in satisfaction of all or any portion of the Second
Lien Obligations (a “Second Lien Recovery”), then the Second Lien Obligations shall be reinstated to the extent of such Second Lien Recovery. If this Agreement shall have been terminated prior to such Second Lien Recovery,
this Agreement shall be reinstated in full force and effect in the event of such Second Lien Recovery, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the Parties from such date of
reinstatement. All rights, interests, agreements, and obligations of the ABL Agents, the Second Lien Agent, the ABL Secured Parties, and the Second Lien Secured Parties under this Agreement shall remain in full force and effect and shall continue
irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of, any Insolvency Proceeding by or against any Borrower or any Guarantor or any other circumstance which otherwise might constitute a defense available
to, or a discharge of any Borrower or any Guarantor in respect of the ABL Obligations or the Second Lien Obligations. No priority or right of the Second Lien Agent or any Second Lien Secured Party shall at any time be prejudiced or impaired in any
way by any act or failure to act on the part of any Borrower or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of any of the Second Lien Documents, regardless of any knowledge thereof which the Second
Lien Agent or any Second Lien Secured Party may have. 

  
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 ARTICLE 6 

INSOLVENCY PROCEEDINGS 

Section 6.1 DIP Financing. 

(a) If any Borrower or any Guarantor shall be subject to any Insolvency Proceeding at any time prior to the Discharge of ABL Obligations, and
the ABL Agents or any of the ABL Secured Parties shall seek to provide any Borrower or any Guarantor with, or consent to a third party providing, any financing under Section 364 of the Bankruptcy Code or consent to any order for the use of cash
collateral constituting Collateral under Section 363 of the Bankruptcy Code (or any similar provision of any foreign Debtor Relief Laws or under a court order in respect of measures granted with similar effect under any foreign Debtor Relief Laws)
(each, a “DIP Financing”), with such DIP Financing to be secured by all or any portion of the Collateral (including assets that, but for the application of Section 552 of the Bankruptcy Code would be Collateral), then the
Second Lien Agent, on behalf of itself and the Second Lien Secured Parties, agrees that it will raise no objection and will not support any objection to such DIP Financing or use of cash collateral or to the Liens securing the same on any basis,
including, without limitation, on the grounds of a failure to provide “adequate protection” for the Liens of the Second Lien Agent securing the Second Lien Obligations (and will not request any adequate protection solely as a result of
such DIP Financing or use of cash collateral, and will not offer or support any debtor-in-possession financing which would compete with such DIP Financing); provided that (i) the Second Lien Agent retains its Lien on the Collateral to secure the
Second Lien Obligations (in each case, including Proceeds thereof arising after the commencement of the case under the any Debtor Relief Laws), subject to the terms of this Agreement, to the Liens in favor of the ABL Secured Parties existing prior
to the commencement of such Insolvency Proceeding, to any adequate protection Liens granted in favor of the ABL Obligations, and to the senior priority of the DIP Financing, (ii) all Liens on the Collateral securing any such DIP Financing shall be
senior to or on a parity with the Liens of the ABL Agents and the ABL Secured Parties securing the ABL Obligations on the Collateral and (iii) the foregoing provisions of this Section 6.1(a) shall not prevent the Second Lien Agent and the Second
Lien Secured Parties from objecting to any provision in any DIP Financing relating to any provision or content of a plan of reorganization or other plan of similar effect under any Debtor Relief Laws. 

(b) All Liens granted to the ABL Agents or the Second Lien Agent in any Insolvency Proceeding, whether as adequate protection or otherwise,
are intended by the Parties to be and shall be deemed to be subject to the Lien Priority and the other terms and conditions of this Agreement. 

Section 6.2 Relief From Stay. Until the Discharge of ABL Obligations has occurred, the Second Lien Agent, on behalf of itself
and the Second Lien Secured Parties, agrees not to seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of any portion of the Collateral without the ABL Agents’ express written consent. 

Section 6.3 No Contest; Adequate Protection. The Second Lien Agent, on behalf of itself and the Second Lien Secured
Parties, agrees that, prior to the Discharge of ABL Obligations, none of them shall contest (or support any other Person contesting) (i) any request by the ABL Agents or any ABL Secured Party for adequate protection of its interest in the 

  
 20 

 
Collateral, (ii) subject to Section 6.1(a) above, any proposed provision of DIP Financing by the ABL Agents and the ABL Secured Parties (or any other Person proposing to provide DIP Financing
with the consent of the ABL Agents) or (iii) any objection by the ABL Agents or any ABL Secured Party to any motion, relief, action, or proceeding based on a claim by the ABL Agents or any ABL Secured Party that its interests in the
Collateral are not adequately protected (or any other similar request under any law applicable to an Insolvency Proceeding), so long as any Liens granted to the ABL Agents as adequate protection of its interests are subject to this
Agreement.
 (a) Notwithstanding the foregoing provisions in this Section 6.3, in any Insolvency Proceeding, if the ABL Secured Parties (or
any subset thereof) are granted adequate protection with respect to the Collateral in the form of additional collateral (even if such collateral is not of a type which would otherwise have constituted Collateral), then the ABL Agents, on behalf of
themselves and the ABL Secured Parties, agrees that the Second Lien Agent, on behalf of itself or any of the Second Lien Secured Parties, may seek or request (and the ABL Secured Parties will not oppose such request) adequate protection with respect
to its interests in such Collateral in the form of a Lien on the same additional collateral, which Lien will be subordinated to the Liens securing the ABL Obligations on the same basis as the other Liens of the Second Lien Agent on Collateral. 

Section 6.4 Asset Sales. The Second Lien Agent agrees, on behalf of itself and the Second Lien Secured Parties, that it will not
oppose any sale consented to by the ABL Agents of any Collateral pursuant to Section 363(f) of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding or under a court order in respect of measures granted
with similar effect under any foreign Debtor Relief Laws) so long as the Liens of the Parties attach to the proceeds of such sale consistent with the Lien Priority set forth herein on the assets sold and such proceeds are otherwise applied in
accordance with this Agreement.
 Section 6.5 Separate Grants of Security and Separate Classification. Each Second Lien
Secured Party and each ABL Secured Party acknowledges and agrees that (i) the grants of Liens pursuant to the ABL Collateral Documents and the Second Lien Collateral Documents constitute two separate and distinct grants of Liens and (ii) because of,
among other things, their differing rights in the Collateral, the Second Lien Obligations are fundamentally different from the ABL Obligations and must be separately classified in any plan of reorganization (or other plan of similar effect under any
Debtor Relief Laws) proposed or adopted in an Insolvency Proceeding. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the ABL Secured Parties and the Second Lien
Secured Parties in respect of the Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then the Second Lien Secured Parties hereby acknowledge and agree that all distributions shall be made
as if there were separate classes of ABL Obligation claims and Second Lien Obligation claims against the Loan Parties, with the effect being that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all
claims held by the other Secured Parties), the ABL Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of
post-petition interest that is available from the Collateral before any distribution is made in respect of the claims held by the Second Lien Secured Parties from such Collateral, with the Second Lien Secured Parties hereby 

  
 21 

 
acknowledging and agreeing to turn over to ABL Secured Parties amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such
turnover has the effect of reducing the aggregate recoveries. 
 Section 6.6 Enforceability. The provisions of this Agreement
are intended to be and shall be enforceable under Section 510(a) of the Bankruptcy Code.
 Section 6.7 ABL Obligations
Unconditional. All rights of the ABL Agents hereunder, and all agreements and obligations of the Second Lien Agent and the Loan Parties (to the extent applicable) hereunder, shall, except as otherwise specifically provided herein,
remain in full force and effect irrespective of: 
 (i) any lack of validity or enforceability of any ABL Document; 

(ii) any change in the time, place or manner of payment of, or in any other term of, all or any portion of the ABL Obligations,
or any amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of any ABL Document; 

(iii) any exchange, release, voiding, avoidance or non perfection of any security interest in any Collateral or any other
collateral, or any release, amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding, restatement or increase of all or any portion of the ABL Obligations or any guarantee or
guaranty thereof; or 
 (iv) any other circumstances that otherwise might constitute a defense available to, or a discharge
of, any Loan Party in respect of the ABL Obligations, or of any of the Second Lien Agent or any Loan Party, to the extent applicable, in respect of this Agreement. 

Section 6.8 Second Lien Obligations Unconditional. All rights of the Second Lien Agent hereunder, all agreements and obligations
of the ABL Agents and the Loan Parties (to the extent applicable) hereunder, shall, except as otherwise specifically provided herein, remain in full force and effect irrespective of: 

(i) any lack of validity or enforceability of any Second Lien Document; 

(ii) any change in the time, place or manner of payment of, or in any other term of, all or any portion of the Second Lien
Obligations, or any amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of any Second Lien Document (but solely to the extent permitted pursuant to Section
5.2(b) above); 
 (iii) any exchange, release, voiding, avoidance or non perfection of any security interest in any
Collateral, or any other collateral, or any release, amendment, waiver or other modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding, restatement or increase of all or any portion of the Second Lien
Obligations or any guarantee or guaranty thereof; or 
 (iv) any other circumstances that otherwise might constitute a
defense available to, or a discharge of, any Loan Party in respect of the Second Lien Obligations, or of any of the ABL Agents or any Loan Party, to the extent applicable, in respect of this Agreement. 

  
 22 

 ARTICLE 7 

MISCELLANEOUS 

Section 7.1 Rights of Subrogation. The Second Lien Agent, for and on behalf of itself and the Second Lien Secured Parties,
agrees that no payment to the ABL Agents or any ABL Secured Party pursuant to the provisions of this Agreement shall entitle the Second Lien Agent or any Second Lien Secured Party to exercise any rights of subrogation in respect thereof until the
Discharge of ABL Obligations. 
 Section 7.2 Further Assurances. The Parties will, at their own expense and at any time and
from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that either Party may reasonably request, in order to protect any right or interest granted or
purported to be granted hereby or to enable the ABL Agents or the Second Lien Agent to exercise and enforce their rights and remedies hereunder; provided, however, that no Party shall be required to pay over any payment or
distribution, execute any instruments or documents, or take any other action referred to in this Section 7.2, to the extent that such action would contravene any law, order or other legal requirement or any of the terms or provisions of this
Agreement, and in the event of a controversy or dispute, such Party may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 7.2.

 Section 7.3 Representations. The Second Lien Agent represents and warrants to the ABL Agents, that it has entered into this
Agreement pursuant to the provisions of the applicable Second Lien Documents and the directions of the Second Lien Loan Parties, the Noteholders and the Second Lien Lenders as stated therein, that it has the requisite power and authority under the
Second Lien Documents to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself and the Second Lien Secured Parties and that this Agreement shall be binding obligations of the Second Lien Agent and the Second
Lien Secured Parties, enforceable against the Second Lien Agent and the Second Lien Secured Parties in accordance with its terms (it being understood that such representation as it relates to the Noteholders or Second Lien Lenders is made based
solely on the representation made by the Noteholders or Second Lien Lenders, as applicable, pursuant to the express terms of the applicable Second Lien Documents). The ABL Agents represent and warrant to the Second Lien Agent that they have the
requisite power and authority under the ABL Documents to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of themselves and the ABL Secured Parties and that this Agreement shall be binding obligations of the ABL
Agents and the ABL Secured Parties, enforceable against the ABL Agents and the ABL Secured Parties in accordance with its terms. 

Section 7.4 Amendments. No amendment or waiver of any provision of this Agreement nor consent to any departure by any Party
hereto shall be effective unless it is in a written agreement executed by the Second Lien Agent and the ABL Agents and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

  
 23 

 Section 7.5 Addresses for Notices. Unless otherwise specifically
provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, or sent by overnight express courier service or United States mail and shall be deemed to have
been given when delivered in person or by courier service, upon receipt of a telecopy or three (3) days after deposit in the United States mail (certified, with postage prepaid and properly addressed). For the purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is delivered as provided in this Section) shall be as set forth below or, as to each party, at such other address as may be designated by such party in a written notice to all of the other
parties. 
  

			
	ABL Agents:	  	Bank of America, N.A.
		  	100 Federal Street
		  	Boston, Massachusetts 02109
		  	Attention: Stephen J. Garvin
		
		  	With a copy to:
		
		  	Riemer & Braunstein, LLP
		  	Three Center Plaza
		  	Boston, MA 02108
		  	Attention: Donald E. Rothman, Esquire
		  	Fax: (617) 880-3456
		
	Second Lien Agent:	  	Wilmington Trust, National Association
		  	Corporate Capital Markets
		  	50 South Sixth Street, Suite 1290
		  	Minneapolis, MN 55402
		  	Telephone: 612-217-5667
		  	Facsimile: 612-217-5651
		  	Attention: Sears Holdings Corp. Administrator

 Section 7.6 No Waiver; Remedies. No failure on the part of any Party to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law. 
 Section 7.7 Continuing Agreement, Transfer
of Secured Obligations. This Agreement is a continuing agreement and shall (a) remain in full force and effect until the earlier of the Discharge of ABL Obligations (subject to Section 4.1(d)) or the Discharge of Second Lien
Obligations, (b) be binding upon the Parties and their successors and assigns, and (c) inure to the benefit of and be enforceable by the Parties and their respective successors, transferees and assigns. Nothing herein is intended, or shall be
construed to give, any other Person any right, remedy or claim under, to or in respect of this Agreement or any Collateral. All references to 

  
 24 

 
any Loan Party shall include any Loan Party as debtor-in-possession and any receiver or trustee for such Loan Party in any Insolvency Proceeding. Without limiting the generality of the
foregoing clause (c), the ABL Agents, any ABL Secured Party, the Second Lien Agent, or any Second Lien Secured Party may assign or otherwise transfer all or any portion of the ABL Obligations or the Second Lien Obligations, as applicable, to any
other Person that is permitted to be an assignee pursuant to the applicable credit documents (it being acknowledged that the ABL Obligations or the Second Lien Obligations may not be assigned in whole or in part to any Borrower, any Guarantor or any
Affiliate of any Borrower or any Guarantor or any Subsidiary of any Borrower or any Guarantor, or to any other Person, in each case that is not permitted under the terms of the applicable credit documents to hold such ABL obligations or Second Lien
Obligations), and such other Person shall thereupon become vested with all the rights and obligations in respect thereof granted to the ABL Agents, the Second Lien Agent, any ABL Secured Party, or any Second Lien Secured Party, as the case may be,
herein or otherwise. The ABL Secured Parties and the Second Lien Secured Parties may continue, at any time and without notice to the other parties hereto, to extend credit and other financial accommodations, lend monies and provide Indebtedness
to, or for the benefit of, any Loan Party on the faith hereof. 
 Section 7.8 Governing Law; Entire Agreement. The
validity, performance, and enforcement of this Agreement shall be governed by and construed in accordance with the laws of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the
applicable of the law of another jurisdiction would be required thereby. This Agreement constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes any prior agreements, written
or oral, with respect thereto. 
 Section 7.9 Counterparts. This Agreement may be executed in any number of
counterparts, and it is not necessary that the signatures of all Parties be contained on any one counterpart hereof, each counterpart will be deemed to be an original, and all together shall constitute one and the same document. 

Section 7.10 No Third Party Beneficiaries. This Agreement is solely for the benefit of the ABL Agents, ABL Secured
Parties, Second Lien Agent and Second Lien Secured Parties. No other Person (including any Borrower, any Guarantor or any Affiliate of any Borrower or any Guarantor, or any Subsidiary of any Borrower or any Guarantor) shall be deemed to be a
third party beneficiary of this Agreement. 
 Section 7.11 Headings. The headings of the articles and sections of
this Agreement are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof. 

Section 7.12 Severability. If any of the provisions in this Agreement shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement and shall not invalidate the Lien Priority or the application of Proceeds and other priorities set forth
in this Agreement. 
 Section 7.13 Attorneys’ Fees. The Parties agree that if any
dispute, arbitration, litigation, or other proceeding is brought with respect to the enforcement of this Agreement or 

  
 25 

 
any provision hereof, the prevailing party in such dispute, arbitration, litigation, or other proceeding shall be entitled to recover its reasonable attorneys’ fees and all other costs and
expenses incurred in the enforcement of this Agreement, irrespective of whether suit is brought.
 Section 7.14 VENUE; JURY
TRIAL WAIVER. 
 (a) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON
THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY ABL SECURED PARTY OR ANY SECOND LIEN SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT,
ANY SECOND LIEN DOCUMENTS, OR ANY ABL DOCUMENTS AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. 
 (b) EACH
PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 
 (c) EACH PARTY TO THIS AGREEMENT
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.5. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 

Section 7.15 Intercreditor Agreement. This Agreement is the Intercreditor Agreement referred to in the ABL Credit
Agreement, the Second Lien Credit Agreement and the Indenture. Nothing in this Agreement shall be deemed to subordinate the obligations due to (i) 

  
 26 

 
any ABL Secured Party to the obligations due to any Second Lien Secured Party or (ii) any Second Lien Secured Party to the obligations due to any ABL Secured Party (in each case, whether before
or after the occurrence of an Insolvency Proceeding), it being the intent of the Parties that this Agreement shall effectuate a subordination of Liens but not a subordination of Indebtedness. 

Section 7.16 No Warranties or Liability. The Second Lien Agent and the ABL Agents acknowledge and agree that neither
has made any representation or warranty with respect to the execution, validity, legality, completeness, collectability or enforceability of any other ABL Document or any Second Lien Document. Except as otherwise provided in this Agreement, the
Second Lien Agent and the ABL Agents will be entitled to manage and supervise their respective extensions of credit to any Loan Party in accordance with law and their usual practices, modified from time to time as they deem appropriate. 

Section 7.17 Conflicts. In the event of any conflict between the provisions of this Agreement and the provisions of
any ABL Document or any Second Lien Document, the provisions of this Agreement shall govern. 
 Section 7.18 Information
Concerning Financial Condition of the Loan Parties. 
 (a) Each of the Second Lien Agent and the ABL Agents hereby
assumes responsibility for keeping itself informed of the financial condition of the Loan Parties and all other circumstances bearing upon the risk of nonpayment of the ABL Obligations or the Second Lien Obligations. The Second Lien Agent and
the ABL Agents hereby agree that no party shall have any duty to advise any other party of information known to it regarding such condition or any such circumstances. In the event the Second Lien Agent or the ABL Agents, in their sole
discretion, undertakes at any time or from time to time to provide any information to any other party to this Agreement, (a) they shall be under no obligation (i) to provide any such information to such other party or any other party on any
subsequent occasion, (ii) to undertake any investigation not a part of its regular business routine, or (iii) to disclose any other information, (b) they make no representation as to the accuracy or completeness of any such information and shall not
be liable for any information contained therein, and (c) the Party receiving such information hereby agrees to hold the other providing Party harmless from any action the receiving Party may take or conclusion the receiving Party may reach or draw
from any such information, as well as from and against any and all losses, claims, damages, liabilities, and expenses to which such receiving Party may become subject arising out of or in connection with the use of such information. 

(b) The Loan Parties agree that any information provided to the ABL Agents, the Second Lien Agent, any ABL Secured Party or any Second Lien
Secured Party may be shared by such Person with any ABL Secured Party, any Second Lien Secured Party, the ABL Agents or the Second Lien Agent notwithstanding a request or demand by such Loan Party that such information be kept confidential;
provided that such information shall otherwise be subject to the respective confidentiality provisions in the ABL Credit Agreement, the Second Lien Credit Agreement and the Indenture, as applicable. 

  
 27 

 Section 7.19 Concerning the Second Lien Agent. 

Notwithstanding any term herein to the contrary, it is hereby expressly agreed and acknowledged that the agreements set forth herein by the
Second Lien Agent are made solely in its capacity as collateral agent under the Indenture and the Second Lien Security Agreement and related Second Lien Documents pursuant to the provisions of the Second Lien Documents and the directions of the
Second Lien Loan Parties and the Second Lien Secured Parties, as stated therein, and not in its individual capacity. The Second Lien Agent shall not have any duties, obligations, or responsibilities under this Agreement except as expressly set forth
herein, and shall have the benefit of all exculpatory provisions, presumptions, indemnities, protections, benefits, immunities or reliance rights contained in the Second Lien Documents in the acceptance, execution, delivery and performance of this
Agreement as though fully set forth herein. 
 Section 7.20 Amendment and Restatement. 

Effective upon the execution and delivery of this Agreement, the terms and provisions of the Existing Intercreditor Agreement shall be and
hereby are amended, restated, and superseded in their entirety by the terms and provisions of this Agreement. Each of the Loan Parties, the ABL Agents, the Second Lien Agent, the ABL Secured Parties, and the Second Lien Secured Parties hereby
confirms and agrees that all references in any of the ABL Documents or the Second Lien Documents to “the Intercreditor Agreement”, “thereto”, “thereof”, “thereunder”, “therein”, or words of like
import referring to the Existing Intercreditor Agreement shall mean this Agreement. 
 [SIGNATURE PAGES FOLLOW] 

  
 28 

 IN WITNESS WHEREOF, the ABL Agents, for and on behalf of themselves and the ABL Lenders, and the
Second Lien Agent, for and on behalf of itself, the Noteholders and the Second Lien Lenders, have caused this Agreement to be duly executed and delivered as of the date first above written. 

 

					
	BANK OF AMERICA, N.A., in its capacity as an ABL Agent
		
	By:	 	 /s/ Matthew Potter

		 	Name:	 	Matthew Potter
		 	Title:	 	Vice President
	
	WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as an ABL Agent
		
	By:	 	 /s/ Joseph Burt

		 	Name:	 	Joseph Burt
		 	Title:	 	Director
	
	WILMINGTON TRUST, NATIONAL ASSOCIATION, in its capacity as the Second Lien Agent
		
	By:	 	 /s/ Lynn M. Steiner

		 	Name:	 	Lynn M. Steiner
		 	Title:	 	Vice President

 Signature Page to Intercreditor Agreement 

 ACKNOWLEDGMENT 

Each Borrower and each Guarantor hereby acknowledges that it has received a copy of this Agreement and consents thereto, agrees to recognize
all rights granted thereby to the ABL Agents and the Second Lien Agent, and will not do any act or perform any obligation which is not in accordance with the agreements set forth in this Agreement. Each Borrower and each Guarantor further
acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under this Agreement and (i) as between the ABL Secured Parties and the ABL Loan Parties, the ABL Documents remain in full force and effect as written and are
in no way modified hereby, and (ii) as between the Second Lien Secured Parties and the Second Lien Loan Parties, the applicable Second Lien Documents remain in full force and effect as written and are in no way modified hereby. 

 

					
	SEARS ROEBUCK ACCEPTANCE CORP., as ABL Borrower, Second Lien Credit Agreement Borrower and Guarantor
		
	By:	 	 /s/ Robert A. Riecker

		 	Name:	 	Robert A. Riecker
		 	Title:	 	Vice President, Finance
	
	KMART CORPORATION, as ABL Borrower, Second Lien Credit Agreement Borrower and Guarantor
		
	By:	 	 /s/ Robert A. Riecker

		 	Name:	 	Robert A. Riecker
		 	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	SEARS HOLDINGS CORPORATION, as Second Lien Notes Issuer and Guarantor
		
	By:	 	 /s/ Robert A. Riecker

		 	Name:	 	Robert A. Riecker
		 	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

  
 Acknowledgement
— Intercreditor Agreement 

 
			
	A&E HOME DELIVERY, LLC,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	A&E LAWN & GARDEN, LLC,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	A&E SIGNATURE SERVICE, LLC,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	CALIFORNIA BUILDER APPLIANCES, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President

  
 Acknowledgement
— Intercreditor Agreement 

 
			
	FLORIDA BUILDER APPLIANCES, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	KLC, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	KMART HOLDING CORPORATION,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	KMART OF MICHIGAN, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	KMART OF WASHINGTON LLC,
	as Guarantor
	
	By: Kmart Corporation, as Sole Member
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

  
 Acknowledgement
— Intercreditor Agreement 

 
			
	KMART OPERATIONS LLC,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	KMART STORES OF ILLINOIS LLC,
	as Guarantor
	
	By: Kmart Corporation, as Sole Member
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	KMART STORES OF TEXAS LLC,
	as Guarantor
	
	By: Kmart Corporation, as Sole Member
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	KMART.COM LLC,
	as Guarantor
	
	By: BlueLight.com, as Sole Member
		
	By:	 	 /s/ Lawrence J. Meerschaert

	Name:	 	Lawrence J. Meerschaert
	Title:	 	Vice President

  
 Acknowledgement
— Intercreditor Agreement 

 
			
	MYGOFER LLC,
	as Guarantor
	
	By: Kmart Corporation, as Sole Member
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	PRIVATE BRANDS, LTD.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	SEARS BRANDS MANAGEMENT CORPORATION,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	SEARS HOLDINGS MANAGEMENT CORPORATION,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

  
 Acknowledgement
— Intercreditor Agreement 

 
			
	SEARS HOME IMPROVEMENT PRODUCTS, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	President
	
	SEARS OPERATIONS LLC,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

	
	SEARS PROTECTION COMPANY,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	SEARS PROTECTION COMPANY (FLORIDA), L.L.C.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	SEARS, ROEBUCK AND CO.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	 Vice President, Controller and
 Chief Accounting
Officer

  
 Acknowledgement
— Intercreditor Agreement 

 
			
	SEARS, ROEBUCK DE PUERTO RICO, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	SOE, INC.,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President
	
	STARWEST, LLC,
	as Guarantor
		
	By:	 	 /s/ Robert A. Riecker

	Name:	 	Robert A. Riecker
	Title:	 	Vice President

  
 Acknowledgement
— Intercreditor Agreement__________

 

 

 

 

 

 

 

 

2016 STOCK INCENTIVE PLAN

 

 

 

 

 

 

For:

 

URANIUM ENERGY CORP.

 

Dated June 7, 2016

 

 

 

 

 

 

__________

 

URANIUM ENERGY CORP.

 

 

2016 STOCK INCENTIVE PLAN

 

1.                     PURPOSE

1.1                  The purpose of this Stock Incentive Plan (the "Plan") is to advance the interests of Uranium Energy Corp. (the "Company") by encouraging Eligible Participants (as herein defined) to acquire shares of the Company, thereby increasing their proprietary interest in the Company, encouraging them to remain associated with the Company and furnish them with additional incentive in their efforts on behalf of the Company in the conduct of their affairs.

1.2                 This Plan is specifically designed for Eligible Participants of the Company who are residents of the United States and/or subject to taxation in the United States, although Awards (as herein defined) under this Plan may be issued to other Eligible Participants.

1.3                 This Plan supersedes, replaces and is in substitution for the Company's "2015 Stock Incentive Plan", dated as originally ratified by the Board of Directors of the Company on June 15, 2015, as was ratified by the shareholders of the Company at the Company's annual general meeting held on July 30, 2015.  Any securities issued under the 2015 Stock Incentive Plan that are outstanding as of the date hereof are covered by this Plan.  The maximum aggregate number of shares of the Company which may be issued pursuant to all awards under this Plan is set forth in Section 3.1(a) hereof.

2.                      DEFINITIONS

2.1                 As used herein, the following definitions shall apply:
(a)       "Administrator" means the Committee or otherwise the Board; 

(b)       "Affiliate" and "Associate" have the meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act;

(c)       "Applicable Laws" means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, state corporate laws, state or provincial securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein;

(d)       "Award" means the grant of an Option, SAR, Restricted Stock, unrestricted Shares, Restricted Stock Unit, Deferred Stock Unit or other right or benefit under this Plan; 

 

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(e)       "Award Agreement" means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto;

(f)       "Board" means the Board of Directors of the Company;

(g)       "Cause" means, with respect to the termination by the Company or a Related Entity of the Grantee's Continuous Service, that such termination is for "Cause" as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee's:
(i)       refusal or failure to act in accordance with any specific, lawful direction or order of the Company or a Related Entity;

(ii)       unfitness or unavailability for service or unsatisfactory performance (other than as a result of Disability);

(iii)       performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity;

(iv)       dishonesty, intentional misconduct or material breach of any agreement with the Company or a Related Entity; or

(v)       commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person;

(h)       "Change of Control" means, except as provided below, a change in ownership or control of the Company effected through any of the following transactions:
(i)       the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such shareholders accept;

(ii)       a change in the composition of the Board over a period of 36 months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors; 

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 (iii)       the sale or exchange by the Company (in one or a series of transactions) of all or substantially all of its assets to any other person or entity; or

(iv)       approval by the shareholders of the Company of a plan to dissolve and liquidate the Company. 

Notwithstanding the foregoing, the following transactions shall not constitute a "Change of Control":

(i)       the closing of any public offering of the Company's securities pursuant to an effective registration statement filed under the United States Securities Act of 1933, as amended;

(ii)       the closing of a public offering of the Company's securities through the facilities of any stock exchange; or

(iii)       with respect to an Award that is subject to Section 409A of the Code, and payment or settlement of such Award is to be accelerated in connection with an event that would otherwise constitute a Change of Control, no event set forth previously in this definition shall constitute a Change of Control for purposes of this Plan or any Award Agreement unless such event also constitutes a "change in the ownership", a "change in the effective control" or a "change in the ownership of a substantial portion of the assets of the corporation" as defined under Section 409A of the Code and Treasury guidance formulated thereunder, which guidance currently provides that:
(A)       a change in ownership of a corporation shall be deemed to have occurred if any one person or more than one person acting as a group acquires stock of a corporation that constitutes more than 50% of the total Fair Market Value or total voting power of the stock of the corporation. Stock acquired by any person or group of people who already own more than 50% of such total Fair Market Value or total voting power of stock shall not trigger a change in ownership;

(B)       a change in the effective control of a corporation generally shall be deemed to have occurred if within a 12-month period either: 
(I)       any one person or more than one person acting as a group acquires ownership of stock possessing 35% or more of the total voting power of the stock of the corporation; or 

(II)       a majority of the members of the corporation's board of directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of directors prior to the date of the appointment or election; and

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(C)       a change in the ownership of a substantial portion of the corporation's assets generally is deemed to occur if within a 12-month period any person, or more than one person acting as a group, acquires assets from the corporation that have a total gross fair market value at least equal to 40% of the total gross fair market value of all the corporation's assets immediately prior to such acquisition.  The gross fair market value of assets is determined without regard to any liabilities;

(i)       "Code" means the United States Internal Revenue Code of 1986, as amended;

(j)       "Committee" means the Compensation Committee or any other committee appointed by the Board to administer this Plan in accordance with the provisions of this Plan; provided, however, that:
(i)       the Committee shall consist of two or more members of the Board;

(ii)       the directors appointed to serve on the Committee shall be "non-employee directors" (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and "outside directors" (within the meaning of Section 162(m) of the Code) to the extent that Rule 16b-3 and, if necessary for relief from the limitation under Section 162(m) of the Code and such relief is sought by the Company, Section 162(m) of the Code, respectively, are applicable;

(iii)       the mere fact that a Committee member shall fail to qualify under either of the foregoing requirements set forth in Section 2.1(j)(ii) shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan; and

(iv)       members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board;

(k)       "Common Stock" means the common stock of the Company;

(l)       "Company" means Uranium Energy Corp., a Nevada corporation;

(m)       "Consultant" means any person (other than an Employee) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity;

(n)       "Continuing Directors" means members of the Board who either (i) have been Board members continuously for a period of at least 36 months, or (ii) have been Board members for less than 36 months and were appointed or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such appointment or nomination was approved by the Board;

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(o)       "Continuous Service" means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant that is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers between locations of the Company or among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, maternity or paternity leave, military leave, or any other authorized personal leave. For purposes of Incentive Stock Options, no such leave may exceed 90 calendar days, unless reemployment upon expiration of such leave is guaranteed by statute or contract;

(p)       "Corporate Transaction" means any of the following transactions:
(i)       a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is organized;

(ii)       the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company's subsidiary corporations) in connection with the complete liquidation or dissolution of the Company; or

(iii)       any reverse merger in which the Company is the surviving entity but in which securities possessing more than 50% of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger;

(q)       "Covered Employee" means an Employee who is a "covered employee" under Section 162(m)(3) of the Code;

(r)       "Deferred Stock Units" means Awards that are granted to Directors and are subject to the additional provisions set out in Subpart A which is attached hereto and which forms a material part hereof;

(s)       "Director" means a member of the Board or the board of directors of any Related Entity;

(t)       "Disability" or "Disabled" means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment.  A Grantee shall not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.  Notwithstanding the above, (i) with respect to an Incentive Stock Option, Disability or Disabled shall mean permanent and total disability as defined in Section 22(e)(3) of the Code and (ii) to the extent an Option is subject to Section 409A of the Code, and payment or settlement of the Option is to be accelerated solely as a result of the Eligible Participant's Disability, Disability shall have the meaning ascribed thereto under Section 409A of the Code and the Treasury guidance promulgated thereunder;

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(u)       "Disinterested Shareholder Approval" means approval by a majority of the votes cast by all the Company's shareholders at a duly constituted shareholders' meeting, excluding votes attached to shares beneficially owned by Insiders;

(v)       "Eligible Participant" means any person who is an Officer, a Director, an Employee or a Consultant, including individuals who are foreign nationals or are employed or reside outside the United States;

(w)       "Employee" means any person who is a full-time or part-time employee of the Company or any Related Entity;

(x)       "Exchange Act" means the United States Securities Exchange Act of 1934, as amended;

(y)       "Fair Market Value" means, as of any date, the value of a Share determined in good faith by the Administrator.  By way of illustration, but not limitation, for the purpose of this definition, good faith shall be met if the Administrator employs the following methods:
(i)       Listed Stock. If the Common Stock is traded on any established stock exchange or quoted on a national market system, Fair Market Value shall be (A) the closing sales price for the Common Stock as quoted on that stock exchange or system for the date the value is to be determined (the "Value Date") as reported in The Wall Street Journal or a similar publication, or (B) if the rules of the applicable stock exchange require, the volume-weighted average trading price for five days prior to the date the Board approves the grant of the Award.  If no sales are reported as having occurred on the Value Date, Fair Market Value shall be that closing sales price for the last preceding trading day on which sales of Common Stock are reported as having occurred.  If no sales are reported as having occurred during the five trading days before the Value Date, Fair Market Value shall be the closing bid for Common Stock on the Value Date.  If the Common Stock is listed on multiple exchanges or systems, Fair Market Value shall be based on sales or bids on the primary exchange or system on which Common Stock is traded or quoted.  If the rules of any applicable stock exchange or system require a different method of calculating Fair Market Value, then such method as required by those rules shall be used;

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(ii)       Stock Quoted by Securities Dealer. If Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported on any established stock exchange or quoted on a national market system, Fair Market Value shall be the mean between the high bid and low asked prices on the Value Date.  If no prices are quoted for the Value Date, Fair Market Value shall be the mean between the high bid and low asked prices on the last preceding trading day on which any bid and asked prices were quoted;

(iii)       No Established Market. If Common Stock is not traded on any established stock exchange or quoted on a national market system and is not quoted by a recognized securities dealer, the Administrator will determine Fair Market Value in good faith.  The Administrator will consider the following factors, and any others it considers significant, in determining Fair Market Value: (A) the price at which other securities of the Company have been issued to purchasers other than Employees, Directors, or Consultants; (B) the Company's net worth, prospective earning power, dividend-paying capacity, and non-operating assets, if any; and (C) any other relevant factors, including the economic outlook for the Company and the Company's industry, the Company's position in that industry, the Company's goodwill and other intellectual property, and the values of securities of other businesses in the same industry;

(iv)       Additional Valuation.  For publicly traded companies, any valuation method permitted under Section 20.2031-2 of the Estate Tax Regulations; or

(v)       Non-Publicly Traded Stock.  For non-publicly traded stock, the Fair Market Value of the Common Stock at the Grant Date based on an average of the Fair Market Values as of such date set forth in the opinions of completely independent and well-qualified experts (the Eligible Participant's status as a majority or minority shareholder may be taken into consideration).

Regardless of whether the Common Stock offered under the Award is publicly traded, a good faith attempt under this definition shall not be met unless the Fair Market Value of the Common Stock on the Grant Date is determined with regard to nonlapse restrictions (as defined in Section 1.83-3(h) of the Treasury Regulations) and without regard to lapse restrictions (as defined in Section 1.83-3(i) of the Treasury Regulations);

(z)       "Grantee" means an Eligible Participant who receives an Award pursuant to an Award Agreement;

(aa)       "Grant Date" means the date the Administrator approves that grant of an Award.  However, if the Administrator specifies that an Award's Grant Date is a future date or the date on which a condition is satisfied, the Grant Date for such Award is that future date or the date that the condition is satisfied;

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(bb)       "Incentive Stock Option" means an Option within the meaning of Section 422 of the Code;

(cc)       "Insider" means:
(i)       a Director or Senior Officer of the Company;

(ii)       a Director or Senior Officer of a person that is itself an Insider or Subsidiary of the Company;

(iii)       a person that has
(A)       direct or indirect beneficial ownership of, 

(B)       control or direction over, or

(C)       a combination of direct or indirect beneficial ownership of and control or direction over,

securities of the Company carrying more than 10% of the voting rights attached to all the Company's outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution; or 

(iv)       the Company itself, if it has purchased, redeemed or otherwise acquired any securities of its own issue, for so long as it continues to hold those securities;

(dd)       "Named Executive Officer" means, if applicable, an Eligible Participant who, as of the date of vesting and/or payout of an Award, is one of the group of Covered Employees as defined;

(ee)       "Non-Qualified Stock Option" means an Option which is not an Incentive Stock Option;

(ff)       "Officer" means a person who is an officer, including a Senior Officer, of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder;

(gg)       "Option" means an option to purchase Shares pursuant to an Award Agreement granted under the Plan;

(hh)       "Parent" means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the Code;

(ii)       "Performance-Based Compensation" means compensation qualifying as "performance-based compensation" under Section 162(m) of the Code;

(jj)       "Plan" means this 2016 Stock Incentive Plan as amended from time to time;

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(kk)       "Related Entity" means any Parent or Subsidiary, and includes any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or a Subsidiary holds a greater than 50% ownership interest, directly or indirectly;

(ll)       "Related Entity Disposition" means the sale, distribution or other disposition by the Company of all or substantially all of the Company's interests in any Related Entity effected by a sale, merger or consolidation or other transaction involving that Related Entity or the sale of all or substantially all of the assets of that Related Entity;

(mm)       "Restricted Stock" means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as, established by the Administrator and specified in the related Award Agreement;

(nn)       "Restricted Stock Unit" means a notional account established pursuant to an Award granted to a Grantee, as described in this Plan, that is (i) valued solely by reference to Shares, (ii) subject to restrictions specified in the Award Agreement, and (iii) payable only in Shares; 

(oo)       "Restriction Period" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance objectives, or the occurrence of other events as determined by the Administrator, in its sole discretion) or the Restricted Stock is not vested; 

(pp)       "SAR" means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock;

(qq)       "SEC" means the United States Securities and Exchange Commission;

(rr)       "Senior Officer" means:
(i)       the chair or vice chair of the Board, the president, the chief executive officer, the chief financial officer, a vice-president, the secretary, the treasurer or the general manager of the Company or a Related Entity;

(ii)       any individual who performs functions for a person similar to those normally performed by an individual occupying any office specified in Section 2.1(rr)(i) above; and

(iii)       the five highest paid employees of the Company or a Related Entity, including any individual referred to in Section 2.1(rr)(i) or 2.1(rr)(ii) and excluding a commissioned salesperson who does not act in a managerial capacity;

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(ss)       "Share" means a share of the Common Stock; and

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

3.                      STOCK SUBJECT TO THE PLAN

                        Number of Shares Available

3.1
(a)       Subject to the provisions of Section 18, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) under this Plan is 18,892,856 (the "Maximum Number").  The Maximum Number consists of (i) 10,467,134 Shares issuable pursuant to Awards previously granted and, if applicable, outstanding under the Company's 2015 Stock Incentive Plan as of the date of this Plan as first written above, which Awards are covered by this Plan, (ii) 7,225,722 Shares remaining available for issuance under the 2015 Stock Incentive Plan as of the date of this Plan as first written above and (iii)  1,200,000 additional Shares that may be issued pursuant to Awards to be granted under this Plan.  Refer to Section 29 for Reservation of Shares.  For the purposes of calculating the Maximum Number of Shares that may be issued pursuant to all Awards: (i) every one (1) Share issuable pursuant to the exercise of an Option or SAR shall count as one (1) Share; and (ii) every one (1) Share underlying Restricted Stock, an unrestricted Share, Restricted Stock Unit, Deferred Stock Unit or other right or benefit under this Plan shall count as two (2) Shares.  Shares reacquired by the Company in the open market using cash proceeds from the exercise of Options will not be available for Awards under the Plan.

(b)       Shares that have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that Shares covered by an Award (or portion of an Award) which is forfeited, cancelled, expired or settled in cash (which cash settlement is only available with respect to Shares or in-the-money Options or SARs) shall be deemed not to have been issued for the purposes of determining the Maximum Number of Shares which may be issued under the Plan.  For the avoidance of doubt: (i) the Company shall not return to the Plan any Shares tendered for the exercise of any Award under the Plan; (ii) Shares withheld to satisfy a Grantee's tax withholding obligations shall be deemed to have been issued under the Plan for the purposes of determining the Maximum Number of Shares; (iii) the gross (not net) number of Shares that are issued pursuant to the exercise of an Award shall be deemed to have been issued under the Plan for the purposes of determining the Maximum Number of Shares; and (iv) if any stock-settled SARs are exercised, the aggregate number of Shares subject to such SARs shall be deemed issued under the Plan for the purposes of determining the Maximum Number of Shares.  

(c)       However, in the event that prior to the Award's cancellation, termination, expiration, forfeiture or lapse, the holder of the Award at any time received one or more elements of beneficial ownership pursuant to such Award (as defined by the SEC, pursuant to any rule or interpretations promulgated under Section 16 of the Exchange Act), the Shares subject to such Award shall not again be made available for regrant under the Plan.

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                        Shares to Insiders

3.2                 Subject to Section 15.1(b) and 15.1(c), no Insider of the Company is eligible to receive an Award where:
(a)       the Insider is not a Director or Senior Officer of the Company;

(b)       any Award, together with all of the Company's other previously established or proposed Awards under the Plan could result at any time in:
(i)       the number of Shares reserved for issuance pursuant to Options granted to Insiders exceeding 50% of the outstanding issue of Common Stock; or

(ii)       the issuance to Insiders pursuant to the exercise of Options, within a one year period of a number of Shares exceeding 50% of the outstanding issue of the Common Stock;

provided, however, that this restriction on the eligibility of Insiders to receive an Award shall cease to apply if it is no longer required under any Applicable Laws.

                        Limitations on Award

3.3                 Unless and until the Administrator determines that an Award to a Grantee is not designed to qualify as Performance-Based Compensation, the following limits (the "Award Limits") shall apply to grants of Awards to Grantees subject to the Award Limits by Applicable Laws under this Plan: 
(a)       Options and SARs.  Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 18), the maximum number of Shares with respect to one or more Options and/or SARs that may be granted during any one calendar year under the Plan to any one Grantee shall be 1,000,000; all of which may be granted as Incentive Stock Options); and 

(b)       Other Awards.  The maximum aggregate grant with respect to Awards of Restricted Stock, unrestricted Shares, Restricted Stock Units and Deferred Stock Units (or used to provide a basis of measurement for or to determine the value of Restricted Stock Units and Deferred Stock Units) in any one calendar year to any one Grantee (determined on the date of payment of settlement) shall be 1,000,000.  

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4.                      ADMINISTRATION

                        Authority of Plan Administrator

4.1                 Authority to control and manage the operation and administration of this Plan shall be vested in the Administrator.

                        Powers of the Administrator

4.2                 Subject to Applicable Laws and the provisions of the Plan or subplans hereof (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the exclusive power and authority, in its discretion: 
(a)       to construe and interpret this Plan and any agreements defining the rights and obligations of the Company and Grantees under this Plan; 

(b)       to select the Eligible Participants to whom Awards may be granted from time to time hereunder;

(c)       to determine whether and to what extent Awards are granted hereunder;

(d)       to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder; 

(e)       to approve forms of Award Agreements for use under the Plan, which need not be identical for each Grantee;

(f)       to determine the terms and conditions of any Award granted under the Plan, including, but not limited to, the exercise price, grant price or purchase price based on the Fair Market Value of the same, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award, and acceleration or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does not disqualify an Incentive Stock Option under applicable regulations;

(g)       to amend the terms of any outstanding Award granted under the Plan (other than the exercise price of outstanding Awards), provided that any amendment that would adversely affect the Grantee's rights under an existing Award shall not be made without the Grantee's consent unless as a result of a change in Applicable Law; 

(h)       to suspend the right of a holder to exercise all or part of an Award for any reason that the Administrator considers in the best interest of the Company;

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(i)       to, subject to regulatory approval, amend or suspend the Plan, or revoke or alter any action taken in connection therewith, except that no general amendment or suspension of the Plan, shall, without the written consent of all Grantees, alter or impair any Award granted under the Plan unless as a result of a change in the Applicable Law;

(j)       to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan; 

(k)       to further define the terms used in this Plan; 

(l)       to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award Agreement; 

(m)       to provide for rights of refusal and/or repurchase rights; 

(n)       to amend outstanding Award Agreements to provide for, among other things, any change or modification which the Administrator could have provided for upon the grant of an Award or in furtherance of the powers provided for herein that does not disqualify an Incentive Stock Option under applicable regulations unless the Grantee so consents;

(o)       to prescribe, amend and rescind rules and regulations relating to the administration of this Plan; and 

(p)       to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), (i) the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or SARs, and (ii) outstanding Options or SARs may not be cancelled, exchanged, bought out or surrendered in exchange for cash, other awards or Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs, in each of cases (i) or (ii) without stockholder approval. 

                        Effect of Administrator's Decision

4.3                 All decisions, determinations and interpretations of the Administrator shall be conclusive and binding on all persons.  The Administrator shall not be liable for any decision, action or omission respecting this Plan, or any Awards granted or Shares sold under this Plan.  In the event an Award is granted in a manner inconsistent with the provisions of this Section 4, such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.

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                        Action by Committee

4.4                 Except as otherwise provided by committee charter or other similar corporate governance documents, for the purposes of administering the Plan, the following rules of procedure shall govern the Committee.  A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved unanimously in writing by the members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Parent or Affiliate, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

                        Limitation on Liability

4.5                 To the extent permitted by applicable law in effect from time to time, no member of the Administrator shall be liable for any action or omission of any other member of the Administrator nor for any act or omission on the member's own part, excepting only the member's own wilful misconduct or gross negligence, arising out of or related to this Plan.  The Company shall pay expenses incurred by, and satisfy a judgment or fine rendered or levied against, a present or former member of the Administrator in any action against such person (whether or not the Company is joined as a party defendant) to impose liability or a penalty on such person for an act alleged to have been committed by such person while a member of the Administrator arising with respect to this Plan or administration thereof or out of membership on the Administrator or by the Company, or all or any combination of the preceding, provided, the member was acting in good faith, within what such member reasonably believed to have been within the scope of his or her employment or authority and for a purpose which he or she reasonably believed to be in the best interests of the Company or its stockholders.  Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action.  The provisions of this Section 4.5 shall apply to the estate, executor, administrator, heirs, legatees or devisees of a member of the Administrator, and the term "person" as used on this Section 4.5 shall include the estate, executor, administrator, heirs, legatees, or devisees of such person.

5.                      ELIGIBILITY

                        Except as otherwise provided, all types of Awards may be granted to Eligible Participants. An Eligible Participant who has been granted an Award may be, if he or she continues to be eligible, granted additional Awards.

6.                      AWARDS

                        Type of Awards

6.1                 The Administrator is authorized to award any type of arrangement to an Eligible Participant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of:

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(a)       Shares, including unrestricted Shares; 

(b)       Options;

(c)       SARs or similar rights with a fixed price at no less than a grant date Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions;

(d)       any other security with the value derived from the value of the Shares, such as Restricted Stock and Restricted Stock Units;

(e)       Deferred Stock Units;

(f)       Dividend Equivalent Rights, as defined in Section 13; or

(g)       any combination of the foregoing.

                        Designation of Award

6.2                 Each type of Award shall be designated in the Award Agreement.  In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option.  Refer to Section 7.3(a) regarding exceeding the Incentive Stock Option threshold.

7.                      GRANT OF OPTIONS; TERMS AND CONDITIONS OF GRANT

                        Grant of Options

7.1
(a)       One or more Options may be granted to any Eligible Participant.  Subject to the express provisions of this Plan, the Administrator shall determine from the Eligible Participants those individuals to whom Options under this Plan may be granted.  The Shares underlying a grant of an Option may be in the form of Restricted Stock or unrestricted Stock.

(b)       Further, subject to the express provisions of this Plan, the Administrator shall specify the Grant Date, the number of Shares covered by the Option, the exercise price and the terms and conditions for exercise of the Options.  As soon as practicable after the Grant Date, the Company shall provide the Grantee with a written Award Agreement in the form approved by the Administrator, which sets out the Grant Date, the number of Shares covered by the Option, the exercise price and the terms and conditions for exercise of the Option.

(c)       The Administrator may, in its absolute discretion, grant Options under this Plan at any time and from time to time before the expiration of this Plan.

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                        General Terms and Conditions

7.2                 Except as otherwise provided herein, the Options shall be subject to the following terms and conditions and such other terms and conditions not inconsistent with this Plan as the Administrator may impose:
(a)       Exercise of Option. The Administrator may determine in its discretion whether any Option shall be subject to vesting and the terms and conditions of any such vesting.  The Award Agreement shall contain any such vesting schedule;

(b)       Option Term.  Each Option and all rights or obligations thereunder shall expire on such date as shall be determined by the Administrator, but not later than ten years after the Grant Date (five years in the case of an Incentive Stock Option when the Optionee beneficially owns more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary (a "Ten Percent Stockholder"), as determined with reference to Rule 13d-3 of the Exchange Act), and shall be subject to earlier termination as hereinafter provided;

(c)       Exercise Price.  The exercise price of any Option shall be determined by the Administrator when the Option is granted, at such exercise price as may be determined by the Administrator in the Administrator's sole and absolute discretion; provided, however, that the exercise price may not be less than 100% of the Fair Market Value of the Shares on the Grant Date with respect to any Options which are granted and, provided further, that the exercise price of any Incentive Stock Option granted to a Ten Percent Stockholder shall not be less than 110% of the Fair Market Value of the Shares on the Grant Date.  Payment for the Shares purchased shall be made in accordance with Section 16 of this Plan.  The Administrator is authorized to issue Options, whether Incentive Stock Options or Non-qualified Stock Options, at an option price in excess of the Fair Market Value on the Grant Date, to determine the terms and conditions of any Award granted under the Plan, including, but not limited to, the exercise price, grant price or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award, and acceleration or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does not disqualify an Incentive Stock Option under applicable regulations;

(d)       Method of Exercise.  Options may be exercised only by delivery to the Company of a stock option exercise agreement (the "Exercise Agreement") in a form approved by the Administrator (which need not be the same for each Grantee), stating the number of Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and such representations and agreements regarding the Grantee's investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the exercise price for the number of Shares being purchased;

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(e)       Exercise After Certain Events.
(i)       Termination of Continuous Services.
(A)       Options.
(I)       Termination of Continuous Services.  If for any reason other than Disability or death, a Grantee terminates Continuous Services with the Company or a Subsidiary, vested Options held at the date of such termination may be exercised, in whole or in part, either (i) at any time within three months after the date of such termination, or (ii) during any lesser period as specified in the Award Agreement or (iii) during any lesser period as may be determined by the Administrator, in its sole and absolute discretion, prior to the date of such termination (but in no event after the earlier of (A) the expiration date of the Option as set forth in the Award Agreement and (B) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option)).

(II)       Continuation of Services as Consultant/Advisor.  If a Grantee granted an Incentive Stock Option terminates employment but continues as a Consultant (no termination of Continuous Services), the Grantee need not exercise an Incentive Stock Option within either of the termination periods provided for immediately hereinabove but shall be entitled to exercise, in whole or in part, either (i) at any time within three months after the then date of termination of Continuous Services to the Company or a Subsidiary, or (ii) during any lesser period as specified in the Award Agreement or (iii) during any lesser period as may be determined by the Administrator, in its sole and absolute discretion, prior to the date of such then termination of Continuous Services to the Company or the Subsidiary (one year in the event of Disability or death) (but in no event after the earlier of (A) the expiration date of the Option as set forth in the Award Agreement and (B) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option)).  However, if the Grantee does not exercise within three months of termination of employment, pursuant to Section 422 of the Code the Option shall not qualify as an Incentive Stock Option.

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(B)       Disability and Death.  If a Grantee becomes Disabled while rendering Continuous Services to the Company or a Subsidiary, or dies while employed by the Company or Subsidiary or within three months thereafter, vested Options then held may be exercised by the Grantee, the Grantee's personal representative, or by the person to whom the Option is transferred by the laws of descent and distribution, in whole or in part, at any time within one year after the termination because of the Disability or death or any lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten years from the Grant Date (five years for a Ten Percent Stockholder if the Option is an Incentive Stock Option).

                        Limitations on Grant of Incentive Stock Options

7.3
(a)       Threshold.  The aggregate Fair Market Value (determined as of the Grant Date) of the Shares for which Incentive Stock Options may first become exercisable by any Grantee during any calendar year under this Plan, together with that of Shares subject to Incentive Stock Options first exercisable by such Grantee under any other plan of the Company or any Parent or Subsidiary, shall not exceed $100,000.  For purposes of this Section 7.3(a), all Options in excess of the $100,000 threshold shall be treated as Non-Qualified Stock Options notwithstanding the designation as Incentive Stock Options.  For this purpose, Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is granted.

(b)       Compliance with Section 422 of the Code.  There shall be imposed in the Award Agreement relating to Incentive Stock Options such terms and conditions as are required in order that the Option be an "incentive stock option" as that term is defined in Section 422 of the Code.

(c)       Requirement of Employment.  No Incentive Stock Option may be granted to any person who is not an Employee of the Company or a Parent or Subsidiary of the Company.

8.                      RESTRICTED STOCK AWARDS

                        Grant of Restricted Stock Awards

8.1                 Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock to any Eligible Participant in such amounts and subject to such terms and conditions as may be selected by the Administrator.  The restrictions may lapse separately or in combination at such times, under such circumstances, in such instalments, time-based or upon the satisfaction of performance goals or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter. (Refer to Performance Goals, Section 14.4).  All awards of Restricted Stock shall be evidenced by Award Agreements.

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                        Consideration

8.2                 Restricted Stock may be issued in connection with:
(a)       Services.  Services rendered to the Company or an Affiliate (i.e. bonus); and/or

(b)       Purchase Price.  A purchase price, as specified in the Award Agreement related to such Restricted Stock, equal to not less than 100% of the Fair Market Value of the Shares underlying the Restricted Stock on the date of issuance.

                        Voting and Dividends

8.3                 Unless the Administrator in its sole and absolute discretion otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Restricted Stock and the right to receive any dividends declared or paid with respect to such Restricted Stock.  The Administrator may provide that any dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and restrictions applicable to such Restricted Stock.  All distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award.  

                        Forfeiture

8.4                 In the case of an event of forfeiture pursuant to the Award Agreement, including failure to satisfy the restriction period or a performance objective during the applicable restriction period, any Restricted Stock that has not vested prior to the event of forfeiture shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety including but not limited to any right to vote and receive dividends with respect to the Restricted Stock.  Notwithstanding the foregoing, the Administrator may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Administrator may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock, provided such waiver is in accordance with the Applicable Laws. 

                        Certificates for Restricted Stock

8.5                 Restricted Stock granted under this Plan may be evidenced in such manner as the Administrator shall determine, including by way of certificates.  The Administrator may provide in an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the Grantee's benefit until such time as the Restricted Stock is forfeited to the Company or the restrictions lapse, (Refer to Escrow; Pledge of Shares, Section 23) or (ii) such certificates shall be delivered to the Grantee, provided, however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and make appropriate reference to the restrictions imposed under this Plan and the Award Agreement.

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9.                      UNRESTRICTED STOCK AWARDS

                        Except as otherwise provided for in Section 21, the Administrator may, in its sole discretion, grant (or sell at not less than 100% of the Fair Market Value or such other higher purchase price determined by the Administrator in the Award Agreement) an Award of unrestricted Shares to any Grantee pursuant to which such Grantee may receive Shares free of any restrictions under this Plan.

10.                    RESTRICTED STOCK UNITS

                        Grant of Restricted Stock Units

10.1               Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock Units to any Eligible Participant in such amounts and subject to such terms and conditions as may be selected by the Administrator.  These restrictions may lapse separately or in combination at such times, under such circumstances, in such instalments, time-based or upon the satisfaction of performance goals or otherwise, as the Administrator determines at the time of the grant of the Award or thereafter. (Refer to Performance Goals, Section 14.4).  All awards of Restricted Stock Units shall be evidenced by Award Agreements. 

                        Number of Restricted Stock Units

10.2               The Award Agreement shall specify the number of Share equivalent units granted and such other provisions as the Administrator determines.

                        Consideration

10.3               Restricted Stock Units may be issued in connection with: 
(a)       Services.  Services rendered to the Company or an Affiliate (i.e. bonus); and/or

(b)       Purchase Price.  A purchase price as specified in the Award Agreement related to such Restricted Stock Units, equal to not less than 100% of the Fair Market Value of the Shares underlying the Restricted Stock Units on the date of issuance.

                        No Voting Rights

10.4               The holders of Restricted Stock Units shall have no rights as stockholders of the Company.

                       Dividend Equivalency

10.5               The Administrator, in its sole and absolute discretion, may provide in an Award Agreement evidencing a grant of Restricted Stock Units that the holder shall be entitled to receive, upon the Company's payment of a cash dividend on its outstanding Shares, a cash payment for each Restricted Stock Unit.  (Refer to Section 13, Dividend Equivalent Right).  Such Award Agreement may also provide that such cash payment shall be deemed reinvested in additional Restricted Stock Units at a price per unit equal to the Fair Market Value of a Share on the date that such dividend is paid.

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                        Creditor's Rights

10.6               A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company.  Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement.

                        Settlement of Restricted Stock Units

10.7               Each Restricted Stock Unit shall be paid and settled by the issuance of Restricted Stock or unrestricted Shares in accordance with the Award Agreement and if such settlement is subject to Section 409A of the Code only upon any one or more of the following as provided for in the Award Agreement:
(a)       a specific date or date determinable by a fixed schedule; 

(b)       upon the Eligible Participant's termination of Continuous Services to the extent the same constitutes a separation from services for purposes of Section 409A of the Code except that if an Eligible Participant is a "key employee" as defined in Section 409A of the Code for such purposes, then payment or settlement shall occur 6 months following such separation of service;

(c)       as a result of the Eligible Participant's death or Disability; or

(d)       in connection with or as a result of a Change of Control in compliance with Section 409A of the Code.

                        Forfeiture

10.8               Upon failure to satisfy any requirement for settlement as set forth in the Award Agreement, including failure to satisfy any restriction period or performance objective, any Restricted Stock Units held by the Grantee shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety including but not limited to any right to receive dividends with respect to the Restricted Stock Units.

11.                    DIRECTOR SHARES AND DIRECTOR DEFERRED STOCK UNITS

                        Except as otherwise provided for in Section 21, the grant of Awards of Shares to Directors and the election by Directors to defer the receipt of the Awards of Shares (the "Deferred Stock Units") shall be governed by the provisions of Subpart A which is attached hereto.  The provisions of Subpart A are attached hereto as part of this Plan and are incorporated herein by reference.

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12.                    STOCK APPRECIATION RIGHTS

                        Awards of SARs

12.1               A SAR is an award to receive a number of Shares (which may consist of Restricted Stock), or cash, or Shares and cash, as determined by the Administrator in accordance with Section 12.4 below, for services rendered to the Company.  A SAR may be awarded pursuant to an Award Agreement that shall be in such form (which need not be the same for each Grantee) as the Administrator shall from time to time approve, and shall comply with and be subject to the terms and conditions of this Plan.  A SAR may vary from Grantee to Grantee and between groups of Grantees, and may be based upon performance objectives (Refer to Performance Goals in Section 14.4).

                        Term

12.2               The term of a SAR shall be set forth in the Award Agreement as determined by the Administrator, provided that the term of a SAR shall expire not later than ten years after the Grant Date of such SAR.

                        Exercise

12.3               A Grantee desiring to exercise a SAR shall give written notice of such exercise to the Company, which notice shall state the proportion of Shares and cash that the Grantee desires to receive pursuant to the SAR exercised, subject to the discretion of the Administrator.  Upon receipt of the notice from the Grantee, subject to the Administrator's election to pay cash as provided in Section 12.4 below, the Company shall deliver to the person entitled thereto (i) a certificate or certificates for Shares and/or (ii) a cash payment, in accordance with Section 12.4 below.  The date the Company receives written notice of such exercise hereunder is referred to in this Section 12 as the "exercise date". 

                        Number of Shares or Amount of Cash

12.4               Subject to the discretion of the Administrator to substitute cash for Shares, or some portion of the Shares for cash, the amount of Shares that may be issued pursuant to the exercise of a SAR shall be determined by dividing: (i) the total number of Shares as to which the SAR is exercised, multiplied by the amount by which the Fair Market Value of the Shares on the exercise date exceeds the Fair Market Value of a Share on the date of grant of the SAR; by (ii) the Fair Market Value of a Share on the exercise date; provided, however, that fractional Shares shall not be issued and in lieu thereof, a cash adjustment shall be paid.  In lieu of issuing Shares upon the exercise of a SAR, the Administrator in its sole discretion may elect to pay the cash equivalent of the Fair Market Value of the Shares on the exercise date for any or all of the Shares that would otherwise be issuable upon exercise of the SAR. 

                        Effect of Exercise

12.5               A partial exercise of a SAR shall not affect the right to exercise the remaining SAR from time to time in accordance with this Plan and the applicable Award Agreement with respect to the remaining shares subject to the SAR.

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                        Forfeiture

12.6               In the case of an event of forfeiture pursuant to the Award Agreement, including failure to satisfy any restriction period or a performance objective, any SAR that has not vested prior to the date of termination shall automatically expire, and all of the rights, title and interest of the Grantee thereunder shall be forfeited in their entirety.

13.                    DIVIDEND EQUIVALENT RIGHT

                        A dividend equivalent right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the Shares specified in the dividend equivalent right (or other Award to which it relates) if such Shares had been issued to and held by the recipient (a "Dividend Equivalent Right").  A Dividend Equivalent Right may be granted hereunder to any Grantee as a component of another Award or as a freestanding Award.  The terms and conditions of a Dividend Equivalent Right shall be specified in the grant.  Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional Shares, which may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single instalment or instalments, all determined in the sole discretion of the Administrator.  A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.  A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award. 

14.                    TERMS AND CONDITIONS OF AWARDS

                        In General

14.1               Subject to the terms of the Plan and Applicable Laws, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. 

                        Term of Award

14.2               The term of each Award shall be the term stated in the Award Agreement.

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                        Transferability

14.3
(a)       Limits on Transfer.  No Award granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, to a Grantee's spouse, former spouse or dependent pursuant to a court-approved domestic relations order which relates to the provision of child support, alimony payments or marital property rights or to the limited extent provided in this Section 14.3(a).  All rights with respect to an Award granted to a Grantee shall be available during his or her lifetime only to the Grantee.  Notwithstanding the foregoing, the Grantee may, in a manner specified by the Administrator, if the Administrator so permits, transfer an Award by bona fide gift and not for any consideration, to (i) a member or members of the Grantee's immediate family, (ii) a trust established for the exclusive benefit of the Grantee and or member(s) of the Grantee's immediate family, (iii) a partnership, limited liability company or other entity whose only members are the Grantee and/or member(s) of the Grantee's immediate family, or (iv) a foundation in which the Grantee and/or member(s) of the Grantee's immediate family control the management of the foundation's assets.  Any such transfer shall be made in accordance with such procedures as the Administrator may specify from time to time.

(b)       Beneficiaries.  Notwithstanding Section 14.3(a), a Grantee may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Grantee and to receive any distribution with respect to any Award upon the Grantee's death.  A beneficiary, legal guardian, legal representative or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Grantee, except to the extent the Plan and such Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator.  If no beneficiary has been designated or survives the Grantee, payment shall be made to the Grantee's estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Grantee at any time, provided the change or revocation is filed with the Administrator.

                        Performance Goals

14.4               In order to preserve the deductibility of an Award under Section 162(m) of the Code, the Administrator may determine that any Award granted pursuant to this Plan to a Grantee that is or is expected to become a Covered Employee shall be determined solely on the basis of (a) the achievement by the Company or Subsidiary of a specified target return, or target growth in return, on equity or assets, (b) the Company's stock price, (c) the Company's total shareholder return (stock price appreciation plus reinvested dividends) relative to a defined comparison group or target over a specific performance period, (d) the achievement by the Company or a Parent or Subsidiary, or a business unit of any such entity, of a specified target, or target growth in, net income, earnings per share, earnings before income and taxes, and earnings before income, taxes, depreciation and amortization, or (e) any combination of the goals set forth in (a) through (d) above.  If an Award is made on such basis, the Administrator shall establish goals prior to the beginning of the period for which such performance goal relates (or such later date as may be permitted under Section 162(m) of the Code or the regulations thereunder but not later than 90 days after commencement of the period of services to which the performance goal relates), and the Administrator has the right for any reason to reduce (but not increase) the Award, notwithstanding the achievement of a specified goal.  Any payment of an Award granted with performance goals shall be conditioned on the written certification of the Administrator in each case that the performance goals and any other material conditions were satisfied.

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                        In addition, to the extent that Section 409A is applicable, (i) performance-based compensation shall also be contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months in which the Eligible Participant performs services and (ii) performance goals shall be established not later than 90 calendar days after the beginning of any performance period to which the performance goal relates, provided that the outcome is substantially uncertain at the time the criteria are established.

                        Acceleration and Lapse of Restrictions

14.5               The Administrator may, in its sole discretion (but subject to the limitations of and compliance with Section 409A of the Code and Section 14.7 in connection therewith), in the event of a dissolution or liquidation of the Company, or a Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is not the surviving corporation, accelerate the time within which outstanding Awards may be exercised, provided that no outstanding unvested Awards shall vest prior to the effectiveness of such dissolution or liquidation of the Company or Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is not the surviving corporation.  Refer to Section 19.

The Administrator may, in its sole discretion (but subject to the limitations of and compliance with Section 409A of the Code and Section 14.7 in connection therewith), at any time (including, without limitation, prior to, coincident with or subsequent to a Change of Control) determine that all or a part of the restrictions on all or a portion of the outstanding Awards shall lapse, as of such date as the Administrator may, in its sole discretion, declare.  

The Administrator may discriminate among Grantees and among Awards granted to a Grantee in exercising its discretion pursuant to this Section 14.5.

                        Compliance with Section 162(m) of the Code

14.6               Notwithstanding any provision of this Plan to the contrary, if the Administrator determines that compliance with Section 162(m) of the Code is required or desired, all Awards granted under this Plan to Named Executive Officers shall comply with the requirements of Section 162(m) of the Code.  In addition, in the event that changes are made to Section 162(m) of the Code to permit greater flexibility with respect to any Award or Awards under this Plan, the Administrator may make any adjustments it deems appropriate.  

                        Compliance with Section 409A of the Code

14.7               Notwithstanding any provision of this Plan to the contrary, if any provision of this Plan or an Award Agreement contravenes any regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award to be subject to the interest and penalties under Section 409A of the Code, such provision of this Plan or any Award Agreement shall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code.  In addition, in the event that changes are made to Section 409A of the Code to permit greater flexibility with respect to any Award under this Plan, the Administrator may make any adjustments it deems appropriate. 

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                        Section 280G of the Code

14.8               Notwithstanding any other provision of this Plan to the contrary, unless expressly provided otherwise in the Award Agreement, if the right to receive or benefit from an Award under this Plan, either alone or together with payments that a Grantee has a right to receive from the Company, would constitute a "parachute payment" (as defined in Section 280G of the Code), all such payments shall be reduced to the largest amount that shall result in no portion being subject to the excise tax imposed by Section 4999 of the Code.

                        Exercise of Award Following Termination of Continuous Service

14.9               An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee's Continuous Service only to the extent provided in the Award Agreement.  Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee's Continuous Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.

                        Cancellation of Awards

14.10             In the event a Grantee's Continuous Services has been terminated for "Cause", he or she shall immediately forfeit all rights to any and all Awards outstanding.  The determination that termination was for Cause shall be final and conclusive.  In making its determination, the Board shall give the Grantee an opportunity to appear and be heard at a hearing before the full Board and present evidence on the Grantee's behalf.  Should any provision to this Section 14.10. be held to be invalid or illegal, such illegality shall not invalidate the whole of this Section 14, but, rather, this Plan shall be construed as if it did not contain the illegal part or narrowed to permit its enforcement, and the rights and obligations of the parties shall be construed and enforced accordingly.

15.                    ADDITIONAL TERMS FOR SO LONG AS THE SHARES ARE LISTED ON A STOCK EXCHANGE

15.1               For so long as the Shares are listed on a stock exchange, and to the extent required by the rules of such stock exchange, the following terms and conditions shall apply to an Award in addition to those contained herein, as applicable:
(a)       the exercise price of an Award must not be lower than 100% of the Fair Market Value (without discount) of the Shares on the stock exchange at the time the Award is granted;

(b)       the number of securities issuable to Insiders, at any time, under all of the Company's security based compensation arrangements (whether entered into prior to or subsequent to such listing), cannot exceed 10% of the Company's total issued and outstanding Common Stock, unless the Company obtains Disinterested Shareholder Approval; and

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(c)       the number of securities issued to Insiders, within any one year period, under all of the Company's security based compensation arrangements (whether entered into prior to or subsequent to such listing), cannot exceed 10% of the issued and outstanding Common Stock, unless the Company obtains Disinterested Shareholder Approval.

16.                    PAYMENT FOR SHARE PURCHASES

                        Payment

16.1               Payment for Shares purchased pursuant to this Plan may be made:
(a)       Cash.  By cash, cashier's check or wire transfer or, at the discretion of the Administrator expressly for the Grantee and where permitted by law as follows:

(b)       Surrender of Shares.  By surrender of shares of Common Stock of the Company that have been owned by the Grantee for more than six months, or lesser period if the surrender of shares is otherwise exempt from Section 16 of the Exchange Act, (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares);

(c)       Deemed Net-Stock Exercise.  By forfeiture of Shares equal to the value of the exercise price pursuant to a "deemed net-stock exercise" by requiring the Grantee to accept that number of Shares determined in accordance with the following formula, rounded down to the nearest whole integer:

where:
a  =  net Shares to be issued to Grantee;

b  =  number of Awards being exercised;

c  =  Fair Market Value of a Share; and

d  =  Exercise price of the Awards; or

(d)       Broker-Assisted.  By delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay the exercise price and the amount of any required tax or other withholding obligations.

                        Combination of Methods

16.2               By any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable corporate law.

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17.                    WITHHOLDING TAXES

                        Withholding Generally

17.1               Whenever Shares are to be issued in satisfaction of Awards granted under this Plan or Shares are forfeited pursuant to a deemed net-stock exercise, the Company may require the Grantee to remit to the Company an amount sufficient to satisfy the foreign, federal, state, provincial, or local income and employment tax withholding obligations, including, without limitation, on exercise of an Award.  When, under applicable tax laws, a Grantee incurs tax liability in connection with the exercise or vesting of any Award, the disposition by a Grantee or other person of an Award or an Option prior to satisfaction of the holding period requirements of Section 422 of the Code, or upon the exercise of a Non-Qualified Stock Option, the Company shall have the right to require such Grantee or such other person to pay by cash, or check payable to the Company, the amount of any such withholding with respect to such transactions.  Any such payment must be made promptly when the amount of such obligation becomes determinable.

                        Stock for Withholding

17.2               To the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Grantee to satisfy his or her obligation to pay any withholding tax, in whole or in part, with Shares up to an amount not greater than the Company's minimum statutory withholding rate for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income.  The Administrator may exercise its discretion, by (i) directing the Company to apply Shares to which the Grantee is entitled as a result of the exercise of an Award, or (ii) delivering to the Company Shares that have been owned by the Grantee for more than six months, unless the delivery of Shares is otherwise exempt from Section 16 of the Exchange Act.  A Grantee who has made an election pursuant to this Section 17.2 may satisfy his or her withholding obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.  The Shares so applied or delivered for the withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding.

18.                    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

                        In General

18.1               Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. The Administrator shall make the appropriate adjustments to (i) the maximum number and/or class of securities issuable under this Plan; and (ii) the number and/or class of securities and the exercise price per Share in effect under each outstanding Award in order to prevent the dilution or enlargement of benefits thereunder; provided, however, that the number of Shares subject to any Award shall always be a whole number and the Administrator shall make such adjustments as are necessary to insure Awards of whole Shares. Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive. 

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                        Company's Right to Effect Changes in Capitalization

18.2               The existence of outstanding Awards shall not affect the Company's right to effect adjustments, recapitalizations, reorganizations or other changes in its or any other corporation's capital structure or business, any merger or consolidation, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares, the dissolution or liquidation of the Company's or any other corporation's assets or business or any other corporate act whether similar to the events described above or otherwise.  

19.                    CORPORATE TRANSACTIONS/CHANGES IN CONTROL/RELATED ENTITY DISPOSITIONS

                        Company is Not the Survivor

19.1               Subject to Section 19.3 and except as may otherwise be provided in an Award Agreement, the Administrator shall have the authority, in its absolute discretion, exercisable either in advance of any actual or anticipated Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is not the surviving corporation, or at the time of an actual Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is not the surviving corporation (a) to cancel each outstanding in-the-money Award upon payment in cash to the Grantee of the amount by which any cash and the Fair Market Value of any other property which the Grantee would have received as consideration for the Shares covered by the Award if the Award had been exercised before such Corporate Transaction, Change of Control or Related Entity Disposition exceeds the exercise price of the Award, or (b) to negotiate to have such Award assumed by the surviving corporation.  The determination as to whether the Company is the surviving corporation is at the sole and absolute discretion of the Administrator.  

                        In addition to the foregoing, in the event of a dissolution or liquidation of the Company, or a Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is not the surviving corporation, the Administrator may accelerate the time within which each outstanding Award may be exercised, provided that no outstanding unvested Awards shall vest prior to the effectiveness of such dissolution or liquidation of the Company or Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is not the surviving corporation.

                        The Administrator shall also have the authority:

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(a)       to release the Awards from restrictions on transfer and repurchase or forfeiture rights of such Awards on such terms and conditions as the Administrator may specify; and

(b)       to condition any such Award's vesting and exercisability or release from such limitations upon the subsequent termination of the Continuous Service of the Grantee within a specified period following the effective date of the Corporate Transaction, Change of Control or Related Entity Disposition. 

                        Effective upon the consummation of a Corporate Transaction, Change of Control or Related Entity Disposition governed by this Section 19.1, all outstanding Awards under this Plan not exercised by the Grantee or assumed by the successor corporation shall terminate.

                        Company is the Survivor

19.2               In the event of a Corporate Transaction, Change of Control or Related Entity Disposition in which the Company is the surviving corporation, the Administrator shall determine the appropriate adjustment of the number and kind of securities with respect to which outstanding Awards may be exercised, and the exercise price at which outstanding Awards may be exercised.  The Administrator shall determine, in its sole and absolute discretion, when the Company shall be deemed to survive for purposes of this Plan.  Subject to any contrary language in an Award Agreement evidencing an Award, any restrictions applicable to such Award shall apply as well to any replacement shares received by the Grantee as a result.

                        Change of Control

19.3               If there is a Change of Control, the Administrator, acting in its sole discretion without the consent or approval of any Eligible Participant, shall affect one or more of the following alternatives, which may vary among individual Eligible Participants and which may vary among Awards held by any individual Eligible Participant: (i) provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Administrator determines) for an Award or the assumption of the Award, regardless of whether in a transaction to which Section 424(a) of the Code applies; (ii) provide for acceleration of the vesting and exercisability of, or lapse of restrictions, in whole or in part, with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction; or (iii) cancel any such Awards and to deliver to the Eligible Participants cash in an amount that the Administrator shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value of Shares on such date over the exercise price of such Award.

20.                    PRIVILEGES OF STOCK OWNERSHIP

                        No Grantee shall have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Grantee.  After Shares are issued to the Grantee, the Grantee shall be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Grantee may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company shall be subject to the same restrictions as the Restricted Stock.  The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Award.

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21.                    RESTRICTION ON AND VESTING OF SHARES

Except as otherwise provided for in this Section 21, the Award Agreements with respect to Restricted Stock, unrestricted Shares, Restricted Stock Units, Deferred Stock Units or any right or benefit under this Plan, other than Options or SARs, shall provide that the Grantee may not dispose of any such Awards (or the underlying Shares) for a minimum restriction period of one year from the date of grant; provided, however, that the Administrator may provide for earlier termination of such restriction period in its discretion.  Notwithstanding the foregoing, up to 5% of the Maximum Number of Shares available for allotment and issuance, transfer or delivery as either unrestricted Shares or Deferred Stock Units under the Plan (the "Excepted Shares") shall not be subject to the minimum one-year restriction period described in the preceding sentence, it being understood that the Administrator may, in its discretion, and at the time an Award is granted, designate any Shares that are subject to such Award as Excepted Shares; provided that, in no event shall the Administrator designate any such Shares as Excepted Shares after the time such Award is granted. 

In addition, at the discretion of the Administrator, the Company may reserve to itself and/or its assignee(s) in the Award Agreement that the Shares are subject to a right of first refusal or a right to repurchase by the Company at the Shares' Fair Market Value at the time of sale.  The terms and conditions of any such rights or other restrictions shall be set forth in the Award Agreement evidencing the Award.

22.                    CERTIFICATES

                        All certificates for Shares or other securities delivered under this Plan shall be subject to such stock transfer orders, legends and other restrictions as the Administrator may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

23.                    ESCROW; PLEDGE OF SHARES

                        To enforce any restrictions on a Grantee's Shares, the Administrator may require the Grantee to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Administrator, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Administrator may cause a legend or legends referencing such restrictions to be placed on the certificates.  

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24.                    SECURITIES LAW AND OTHER REGULATORY COMPLIANCE

                        Compliance With Applicable Law

24.1               An Award shall not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the Grant Date and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company shall have no obligation to issue or deliver certificates for Shares under this Plan prior to (i) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (ii) completion of any registration or other qualification of such Shares under any state or federal laws or rulings of any governmental body that the Company determines to be necessary or advisable.  The Company shall be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company shall have no liability for any inability or failure to do so.  Evidences of ownership of Shares acquired pursuant to an Award shall bear any legend required by, or useful for purposes of compliance with, applicable securities laws, this Plan or the Award Agreement.

                        During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards pursuant to this Plan and the exercise of Awards granted hereunder shall qualify for the exemption provided by Rule 16b-3 under the Exchange Act.  To the extent that any provision of this Plan or action by the Board or the Administrator does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board or the Administrator, and shall not affect the validity of this Plan.  In the event that Rule 16b-3 is revised or replaced, the Administrator may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement. 

                        Investment Representation

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

25.                    NO OBLIGATION TO EMPLOY

                        Nothing in this Plan or any Award granted under this Plan shall confer or be deemed to confer on any Grantee any right to continue in the employ of, or to continue any other relationship with, the Company or to limit in any way the right of the Company to terminate such Grantee's employment or other relationship at any time, with or without Cause.

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26.                    EFFECTIVE DATE AND TERM OF PLAN

                        This Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall continue in effect for a term of ten years unless sooner terminated.

27.                    SHAREHOLDER APPROVAL

                        This Plan shall be subject to approval by the shareholders of the Company within 12 months from the date the Plan is adopted by the Company's Board for any and all intended Incentive Stock Options granted hereunder.  Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.  The Administrator may grant Awards under this Plan prior to approval by the shareholders, however, until such approval is obtained, all Option Awards granted under this Plan shall be deemed Non-Qualified Stock Options.  In the event that shareholder approval is not obtained within the 12 month period provided above, all Incentive Stock Option Awards previously granted under this Plan shall be deemed Non-Qualified Stock Options.

28.                    AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN OR AWARDS

                        The Board may amend, suspend or terminate this Plan at any time and for any reason.  To the extent necessary to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required.  Shareholder approval shall be required for the following types of amendments to this Plan: (i) any change to those persons who are entitled to become participants under the Plan which would have the potential of broadening or increasing Insider participation; or (ii) the addition of any form of financial assistance or amendment to a financial assistance provision which is more favourable to Grantees.

                        Further, the Board may, in its discretion, determine that any amendment should be effective only if approved by the shareholders even if such approval is not expressly required by this Plan or by law.  No Award may be granted during any suspension of this Plan or after termination of this Plan. 

                        Any amendment, suspension or termination of this Plan shall not affect Awards already granted, and such Awards shall remain in full force and effect as if this Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the Company.  At any time and from time to time, the Administrator may amend, modify, or terminate any outstanding Award or Award Agreement without approval of the Grantee; provided, however, that subject to the applicable Award Agreement, no such amendment, modification or termination shall, without the Grantee's consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment or termination.  

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                        Notwithstanding any provision herein to the contrary, the Administrator shall have broad authority to amend this Plan or any outstanding Award under this Plan without approval of the Grantee to the extent necessary or desirable: (i) to comply with, or take into account changes in, applicable tax laws, securities laws, accounting rules and other applicable laws, rules and regulations; or (ii) to ensure that an Award is not subject to interest and penalties under Section 409A of the Code or the excise tax imposed by Section 4999 of the Code. 

                        Further, notwithstanding any provision herein to the contrary, and subject to Applicable Law, the Administrator may, in its absolute discretion, amend or modify this Plan: (i) to make amendments which are of a "housekeeping" or clerical nature; (ii) to change the vesting provisions of an Award granted hereunder, as applicable; (iii) to change the termination provision of an Award granted hereunder, as applicable, which does not entail an extension beyond the original expiry date of such Award; and (iv) the addition of a cashless exercise feature, payable in cash or securities, which provides for a full deduction of the number of underlying securities from the Maximum Number.  

29.                    RESERVATION OF SHARES

                        The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of this Plan.

                        The Shares to be issued hereunder upon exercise of an Award may be either authorized but unissued; supplied to the Plan through acquisitions of Shares on the open market; or Shares forfeited back to the Plan.

                        The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.  

30.                    BUYOUT OF AWARDS

                        Subject to Section 4.2 hereof, the Administrator may at any time buy from a Grantee an Award previously granted with payment in cash, Shares (including Restricted Stock) or other consideration, based on such terms and conditions as the Administrator and the Grantee may agree.

31.                    APPLICABLE TRADING POLICY

                        The Administrator and each Eligible Participant will ensure that all actions taken and decisions made by the Administrator or an Eligible Participant, as the case may be, pursuant to this Plan comply with any Applicable Laws and policies of the Company relating to insider trading or "blackout" periods.

32.                    GOVERNING LAW

                        The Plan shall be governed by the laws of the State of Nevada; provided, however, that any Award Agreement may provide by its terms that it shall be governed by the laws of any other jurisdiction as may be deemed appropriate by the parties thereto.

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33.                    MISCELLANEOUS

                        Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended.

__________

SUBPART A

STOCK AND DEFERRED STOCK UNITS FOR ELIGIBLE DIRECTORS

A.                      Stock Award.  The Administrator shall pay Eligible Remuneration to each Director pursuant to an Award Agreement.

B.                      Election.  Further, the Administrator may, in its sole discretion, permit each Eligible Director to receive all or any portion of his Eligible Remuneration during the Remuneration Period in the form of Deferred Stock Units under this Plan (an "Election").  All deferrals pursuant to such an Election shall be evidenced by an Award Agreement. 

                        For purposes of this Subpart A, the following definitions shall apply:

"Annual Retainer" for a particular Director means the retainer (including any additional amounts payable for serving as lead Director or on any committee of the Board), payable to that Director for serving as a Director for the relevant Remuneration Period, as determined by the Board;

"Attendance Fee" means amounts payable annually to a Director as a Board meeting attendance fee or a committee meeting attendance fee, or any portion thereof;

"Canadian Director" means a Director who is a resident of Canada for the purposes of the Canadian Tax Act, and whose income from employment by the Company or Related Entity is subject to Canadian income tax, notwithstanding any provision of the Canada-United States Income Tax Convention (1980), as amended;

"Canadian Tax Act" and "Canadian Tax Regulations" means respectively the Income Tax Act (Canada), as amended and the Income Tax Regulation promulgated thereunder, as amended;

"Deferred Stock Unit" means a right granted by the Company to an Eligible Director to receive, on a deferred payment basis, Shares under this Plan; 

"Eligible Director" is any Director of this Company or Related Entity that the Administrator determines is eligible to elect to receive Deferred Stock Units under this Plan;

"Eligible Remuneration" means all amounts payable to an Eligible Director in Shares, including all or part of amounts payable in satisfaction of the Annual Retainer, Attendance Fees or any other fees relating to service on the Board which are payable to an Eligible Director or in satisfaction of rights or property surrendered by an Eligible Director to the Company; it being understood that the amount of Eligible Remuneration payable to any Eligible Director may be calculated by the Administrator in a different manner than Eligible Remuneration payable to another Eligible Director in its sole and absolute discretion;

"Prescribed Plan or Arrangement" means a prescribed plan or arrangement as defined in s.6801(d) of the Canadian Tax Regulation;

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"Remuneration Period" means, as applicable, (a) the period commencing on the Effective Date of this Plan and ending on the last day of the calendar year in which the Effective Date occurs; and (b) thereafter each subsequent calendar year, or where the context requires, any portion of such period; and

"Salary Deferral Arrangement" means a salary deferral arrangement as defined in the Canadian Tax Act.

1.                      Election.  An Eligible Director who desires to defer receipt of all or a portion of his or her Eligible Remuneration in any calendar year shall make such election in writing to the Company specifying:
(a)       the dollar amount or percentage of Eligible Remuneration to be deferred; and

(b)       the deferral period.

                        Otherwise, such election must be made before the first day of the calendar year in which the Eligible Remuneration shall be payable, however a newly appointed Eligible Director shall be eligible to defer payment of future Eligible Remuneration by providing written election to the Company within 30 calendar days of his or her appointment to the Board of Directors.  The elections made pursuant to this Section shall be irrevocable with respect to Eligible Remuneration to which such elections pertain and shall also apply to subsequent Eligible Remuneration payable in future calendar years unless such Eligible Director notifies the Company in writing, before the first day of the applicable calendar year, that he or she desires to change such election.

                        If the Eligible Director does not timely deliver an election in respect of a particular Remuneration Period, the Eligible Director will receive the Eligible Remuneration as provided for in the Award Agreement.  

2.                      Determination of Deferred Stock Units.  The Company will maintain a separate account for each Eligible Director to which it will quarterly credit at the end of March, June, September and December, or as otherwise determined by the Administrator, the Deferred Stock Units granted to the Eligible Director for the relevant Remuneration Period.  The number of Deferred Stock Units (including fractional Deferred Stock Units, computed to three digits) to be credited to an account for an Eligible Director will be determined on the date approved by the Administrator by dividing the appropriate amount of Eligible Remuneration to be deferred into Deferred Stock Units by the Fair Market Value on that date.

3.                      No Voting Rights.  The holders of Deferred Stock Units shall have no rights as stockholders of the Company.

4.                      Dividend Equivalency.  The Company will, on any date on which a cash or stock dividend is paid on its outstanding Shares, credit to each Eligible Director's account that number of additional Deferred Stock Units (including fractional Deferred Stock Units, computed to three digits) calculated by (i) multiplying the amount of the dividend per Share by the number of Deferred Stock Units in the account as of the record date for payment of the dividend, and (ii) dividing the amount obtained by the Fair Market Value on the date on which the dividend is paid.  (See Section 13 of the Plan, Dividend Equivalent Right).

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5.                      Eligible Director's Account.  A written confirmation of the balance in each Eligible Directors' Account will be sent by the Company to the Eligible Director upon request of the Eligible Director.

6.                      Creditor's Rights.  A holder of Deferred Stock Units shall have no rights other than those of a general creditor of the Company.  Deferred Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and condition of the applicable Award Agreement.

7.                      Settlement of Deferred Stock Units.  Subject to Section 8, each Deferred Stock Unit shall be paid and settled by the issuance of Restricted or unrestricted Shares in accordance with the Award Agreement and if such settlement is subject to Section 409A of the Code only upon any one or more of the following as provided for in the Award Agreement:
(a)       a specific date or date determinable by a fixed schedule; 

(b)       upon the Eligible Director's termination of Continuous Services to the extent the same constitutes a separation from services for the purposes of Section 409A of the Code except that if an Eligible Director is a "key employee" as defined in Section 409A of the Code for such purposes, then payment or settlement shall occur 6 months following such separation of service;

(c)       as a result of the Eligible Director's death or Disability; or

(d)       in connection with or as a result of a Change of Control in compliance with 409A of the Code.

                        The Company will issue one Share for each whole Deferred Stock Unit credited to the Eligible Director's account (net of any applicable withholding tax as provided for in this Plan).  Such payment shall be made by the Company as soon as reasonably possible following the settlement date.  Fractional Shares shall not be issued, and where the Eligible Director would be entitled to receive a fractional Shares in respect of any fractional Deferred Stock Unit, the Company shall pay to such Eligible Director, in lieu of such fractional Shares, cash equal to the Fair Market Value of such fractional Shares calculated as of the day before such payment is made, net of any applicable withholding tax.

8.                      Canadian Directors.  If a Deferred Stock Unit granted to an Eligible Director who is a Canadian Director would otherwise constitute a Salary Deferred Arrangement, the Award Agreement pertaining to that Deferred Stock Unit shall contain such other or additional terms as will cause the Deferred Stock Unit to be a Prescribed Plan or Arrangement.

9.                      Issuance of Stock Certificates.  A stock certificate or certificates shall be registered and issued in the name of the holder of Deferred Stock Units and delivered to such holder as soon as practicable after such Deferred Stock Units have become payable or satisfied in accordance with the terms of the Plan.

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10.                    Non-Exclusivity.  Nothing in this Subpart A shall prohibit the Administrator from making discretionary Awards to Eligible Directors pursuant to the other provisions of this Plan or outside this Plan, not otherwise inconsistent with these provisions.

11.                    Defined Terms.  Capitalized terms used in this Subpart A and not defined herein have the meaning given in the Plan.

__________

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