Document:

EX-10.1

 Exhibit 10.1 

TREX COMPANY, INC. 
 2014
STOCK INCENTIVE PLAN 

 TABLE OF CONTENTS 
  

									
	 	 	 	  	 	  	Page	 
			
	 1.
	 	 PURPOSE
	  	 	1	  
	 2.
	 	 DEFINITIONS
	  	 	1	  
	 3.
	 	 ADMINISTRATION OF THE PLAN
	  	 	3	  
		 	 3.1
	  	 Committee
	  	 	3	  
		 	 3.2
	  	 Grants
	  	 	3	  
		 	 3.3
	  	 No Liability
	  	 	4	  
		 	 3.4
	  	 Applicability of Rule 16b-3
	  	 	4	  
		 	 3.5
	  	 Termination of Employment or Other Relationship
	  	 	4	  
	 4.
	 	 STOCK SUBJECT TO THE PLAN
	  	 	4	  
		 	 4.1
	  	 Aggregate Limitation
	  	 	4	  
		 	 4.2
	  	 Application of Aggregate Limitation
	  	 	5	  
		 	 4.3
	  	 Per-Grantee Limitation
	  	 	5	  
	 5.
	 	 EFFECTIVE DATE AND TERM OF THE PLAN
	  	 	5	  
		 	 5.1
	  	 Effective Date
	  	 	5	  
		 	 5.2
	  	 Term
	  	 	5	  
	 6.
	 	 PERMISSIBLE GRANTEES
	  	 	5	  
		 	 6.1
	  	 Employees and Service Providers
	  	 	5	  
		 	 6.2
	  	 Multiple Grants
	  	 	5	  
		 	 6.3
	  	 LIMITATIONS ON GRANTS OF INCENTIVE STOCK OPTIONS
	  	 	6	  
	 7.
	 	 AWARD AGREEMENT
	  	 	6	  
	 8.
	 	 OPTIONS
	  	 	6	  
		 	 8.1
	  	 Option Price
	  	 	6	  
		 	 8.2
	  	 Vesting
	  	 	6	  
		 	 8.3
	  	 Option Term
	  	 	6	  
		 	 8.4
	  	 Termination of Employment or Other Relationship for a Reason Other than Retirement, Death or Disability
	  	 	6	  
		 	 8.5
	  	 Rights in the Event of Death
	  	 	7	  
		 	 8.6
	  	 Rights in the Event of Disability
	  	 	7	  
		 	 8.7
	  	 Rights in the Event of Retirement
	  	 	7	  
		 	 8.8
	  	 Limitations on Exercise of Option
	  	 	7	  
		 	 8.9
	  	 Method of Exercise
	  	 	7	  
		 	 8.10
	  	 Rights as a Stockholder; Dividend Equivalents
	  	 	7	  
		 	 8.11
	  	 Delivery of Stock Certificates
	  	 	8	  
	 9.
	 	 STOCK APPRECIATION RIGHTS
	  	 	8	  
		 	 9.1
	  	 SAR Price
	  	 	8	  
		 	 9.2
	  	 Vesting, and Terms and Conditions Governing SARs
	  	 	8	  
		 	 9.3
	  	 SAR Term
	  	 	8	  
		 	 9.4
	  	 Termination of Employment or Other Relationship for a Reason Other than Retirement, Death or Disability
	  	 	8	  
		 	 9.5
	  	 Rights in the Event of Death
	  	 	8	  
		 	 9.6
	  	 Rights in the Event of Disability
	  	 	9	  
		 	 9.7
	  	 Rights in the Event of Retirement
	  	 	9	  
		 	 9.8
	  	 Limitations on Exercise of SAR
	  	 	9	  
	 10.
	 	 TRANSFERABILITY OF OPTIONS AND SARS
	  	 	9	  
		 	 10.1
	  	 General Rule
	  	 	9	  
		 	 10.2
	  	 Family Transfers
	  	 	9	  
	 11.    
	 	 RESTRICTED STOCK
	  	 	9	  
		 	 11.1
	  	 Grant of Restricted Stock or Restricted Stock Units
	  	 	9	  
		 	 11.2
	  	 Restrictions
	  	 	10	  
		 	 11.3
	  	 Restricted Stock Certificates
	  	 	10	  
		 	 11.4
	  	 Rights of Holders of Restricted Stock
	  	 	10	  

  
 i 

									
		 	 11.5
	  	 Rights of Holders of Restricted Stock Units
	  	 	10	  
		 	 11.6
	  	 Termination of Employment or Other Relationship for a Reason Other than Death, Disability or Retirement
	  	 	10	  
		 	 11.7
	  	 Rights in the Event of Death
	  	 	11	  
		 	 11.8
	  	 Rights in the Event of Disability
	  	 	11	  
		 	 11.9
	  	 Rights in the Event of Retirement
	  	 	11	  
		 	 11.10
	  	 Delivery of Shares and Payment Therefor
	  	 	11	  
	 12.    
	 	 UNRESTRICTED STOCK
	  	 	11	  
	 13.
	 	 PARACHUTE LIMITATIONS
	  	 	11	  
	 14.
	 	 REQUIREMENTS OF LAW
	  	 	12	  
		 	 14.1
	  	 General
	  	 	12	  
		 	 14.2
	  	 Rule 16b-3
	  	 	12	  
	 15.
	 	 AMENDMENT AND TERMINATION OF THE PLAN
	  	 	12	  
	 16.
	 	 EFFECT OF CHANGES IN CAPITALIZATION
	  	 	13	  
		 	 16.1
	  	 Changes in Stock
	  	 	13	  
		 	 16.2
	  	 Reorganization, Sale of Assets or Sale of Stock
	  	 	13	  
		 	 16.3
	  	 Adjustments
	  	 	14	  
		 	 16.4
	  	 No Limitations on Company
	  	 	14	  
	 17.
	 	 DISCLAIMER OF RIGHTS
	  	 	14	  
	 18.
	 	 NONEXCLUSIVITY OF THE PLAN
	  	 	14	  
	 19.
	 	 WITHHOLDING TAXES
	  	 	14	  
	 20.
	 	 CAPTIONS
	  	 	14	  
	 21.
	 	 OTHER PROVISIONS
	  	 	15	  
	 22.
	 	 NUMBER AND GENDER
	  	 	15	  
	 23.
	 	 SEVERABILITY
	  	 	15	  
	 24.
	 	 GOVERNING LAW
	  	 	15	  
	 25.
	 	 SECTION 409A
	  	 	15	  

  
 ii 

 TREX COMPANY, INC. 

2014 STOCK INCENTIVE PLAN 

Trex Company, Inc., a Delaware corporation (the “Company”), sets forth herein the terms of the Trex Company, Inc. 2014 Stock
Incentive Plan (the “Plan”), which amends and restates the Trex Company, Inc. 2005 Stock Incentive Plan, as follows: 
  

	1.	PURPOSE 

 The Plan is intended to enhance the Company’s ability to attract and
retain highly qualified officers, key employees, outside directors and other persons, and to motivate such officers, key employees, outside directors and other persons to serve the Company and its affiliates (as defined herein) and to expend maximum
effort to improve the business results and earnings of the Company, by providing to such officers, key employees, outside directors and other persons an opportunity to acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock options, restricted stock, restricted stock units, unrestricted stock and stock appreciation rights in accordance with the terms hereof. Stock options granted under the
Plan may be non-qualified stock options or incentive stock options, as provided herein, except that stock options granted to outside directors and all Service Providers shall in all cases be non-qualified stock options. With respect to persons
subject to Section 16 of the Exchange Act (as defined below), transactions under this Plan are intended to satisfy the requirements of Rule 16b-3 of the Act. 
  

	2.	DEFINITIONS 

 For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply: 
  

	2.1	“Affiliate” of, or person “affiliated” with, a person means any company or other trade or business that controls, is controlled by or is under common control with such person within the meaning of
Rule 405 of Regulation C under the Securities Act. 

  

	2.2	“Award Agreement” means the stock option agreement, restricted stock agreement, restricted stock unit agreement, stock appreciation right agreement or other written agreement between the Company and a Grantee
that evidences and sets out the terms and conditions of a Grant. 

  

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

  

	2.4	“Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. 

  

	2.5	“Committee” means the Compensation Committee of the Board (or any successor Committee designated by the Board to administer the Plan), provided that, if any member of the Compensation Committee does not
qualify as (i) an outside director for purposes of Code Section 162(m), (ii) a non-employee director for purposes of Rule 16b-3 under the Exchange Act, and (iii) an independent director for purposes of the rules of the exchange
on which the Stock is traded, the remaining members of the Committee (but not less than two members) shall be constituted as a subcommittee to act as the Committee for purposes of the Plan. 

 

	2.6	“Company” means Trex Company, Inc., a Delaware corporation. 

  

	2.7	“Disability” means, as to an Incentive Stock Option, a Disability within the meaning of Code section 22(e)(3). As to all other incentive awards, Disability (or variations thereof) means, unless otherwise
provided in the Award Agreement with respect to the Grant, a Disability within the meaning of Code Section 409A(a)(2)(C) and Section 1.409A-3(i)(4) of the applicable treasury regulations (or any successor provision). The Committee shall
determine whether a Disability exists and the determination shall be conclusive. 

  

	2.8	“Effective Date” means the date on which the Plan, as herein amended and restated and adopted by the Board on February 20, 2014, is approved by the Company’s stockholders. 

 

	2.9	“Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. 

  
 1 

	2.10	“Fair Market Value” means the closing price of a share of Stock reported on the New York Stock Exchange (“NYSE”) on the date Fair Market Value is being determined, provided that if there should be no
closing price reported on such date, the Fair Market Value of a share of Stock on such date shall be deemed equal to the closing price as reported by the NYSE for the last preceding date on which sales of shares were reported. Notwithstanding the
foregoing, in the event that the shares of Stock are listed upon more than one established stock exchange, Fair Market Value means the closing price of a share of Stock reported on the exchange that trades the largest volume of shares on such date.
If the Stock is not at the time listed or admitted to trading on a stock exchange, Fair Market Value means the mean between the lowest reported bid price and highest reported asked price of the Stock on the date in question in the over-the-counter
market, as such prices are reported in a publication of general circulation selected by the Committee and regularly reporting the market price of Stock in such market. If the Stock is not listed or admitted to trading on any stock exchange or traded
in the over-the-counter market, Fair Market Value shall be as determined in good faith by the Committee. 

  

	2.11	“Grant” means an award of an Option, Restricted Stock, Restricted Stock Unit, Unrestricted Stock, or Stock Appreciation Right under the Plan. 

 

	2.12	“Grant Date” means, as determined by the Committee, (i) the date as of which the Committee approves a Grant or (ii) such other date as may be specified by the Committee. 

 

	2.13	“Grantee” means a person who receives or holds an Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right or Unrestricted Stock under the Plan. 

 

	2.14	“Immediate Family Members” means the spouse, children, grandchildren, parents and siblings of the Grantee. 

  

	2.15	“Incentive Stock Option” means an “incentive stock option” within the meaning of Section 422 of the Code. 

  

	2.16	“Option” means an option to purchase one or more shares of Stock pursuant to the Plan. 

  

	2.17	“Option Price” means the purchase price for each share of Stock subject to an Option. 

  

	2.18	“Outside Director” means a member of the Board who is not an officer or employee of the Company or any Subsidiary. 

  

	2.19	“Plan” means this Trex Company, Inc. 2014 Stock Incentive Plan, which amends and restates the Trex Company, Inc. 2005 Stock Incentive Plan, as may be further amended from time to time. 

 

	2.20	“Reporting Person” means a person who is required to file reports under Section 16(a) of the Exchange Act. 

  

	2.21	“Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to restrictions or conditions pursuant to Section 11.2 hereof. 

 

	2.22	“Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to Section 11 hereof, that are subject to restrictions and to a risk of forfeiture. 

 

	2.23	“Restricted Stock Unit” means a unit awarded to a Grantee pursuant to Section 11 hereof, which represents a conditional right to receive a share of Stock in the future, and which is subject to
restrictions and to a risk of forfeiture. 

  

	2.24	“Retirement’ means termination of employment with the Company and its Subsidiaries on or after age 65. 

  

	2.25	“Securities Act” means the Securities Act of 1933, as now in effect or as hereafter amended. 

  

	2.26	“Service Provider” means a consultant or adviser to the Company, a manager of the Company’s properties or affairs, or other similar service provider or Affiliate of the Company, and employees of any of
the foregoing, as such persons may be designated from time to time by the Committee pursuant to Section 6 hereof. 

  

	2.27	“Stock” means the common stock, par value $0.01 per share, of the Company. 

  

	2.28	“Stock Appreciation Right” or “SAR” means a right granted to a Grantee pursuant to Section 9 hereof. 

  
 2 

	2.29	“Subsidiary” means any “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code. 

 

	2.30	“Unrestricted Stock” means an award of Stock granted to a Grantee pursuant to Section 12 hereof. 

  

	3.	ADMINISTRATION OF THE PLAN 

  

	 	3.1	Committee 

 The Committee shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of incorporation, bylaws and applicable law. The Committee shall have full power and authority to take all actions and to make all determinations required or provided
for under the Plan, any Grant or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the
Committee deems to be necessary or appropriate to the administration of the Plan, any Grant or any Award Agreement. All such actions and determinations shall be by the affirmative vote of a majority of the members of the Committee present at a
meeting or by unanimous consent of the Committee executed in writing in accordance with the Company’s certificate of incorporation, bylaws and applicable law. The interpretation and construction by the Committee of any provision of the Plan,
any Grant or any Award Agreement shall be final and conclusive. As permitted by law, the Committee may delegate its authority under the Plan to a member of the Committee or an executive officer of the Company; provided, however, that, unless
otherwise provided by resolution of the Committee, only the Committee may make a Grant to an executive officer of the Company and establish the number of shares of Stock that may be subject to Grants with respect to any fiscal period. In the absence
of Committee action, the Board is authorized to take any action permitted to be taken by the Committee hereunder. 
  

	 	3.2	Grants. 

 Subject to the other terms and conditions of the Plan, the Committee shall have
full and final authority (i) to designate Grantees, (ii) to determine the types of Grants to be made to a Grantee, (iii) to determine the number of shares of Stock to be subject to a Grant, (iv) to establish the terms and
conditions of each Grant, including, but not limited to, the Option Price of any Option, the nature and duration of any restriction or condition (or provision for lapse thereof, including lapse relating to a change in control of the Company)
relating to the vesting, exercise, transfer or forfeiture of a Grant or the shares of Stock subject thereto, and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options, (v) to prescribe the form of each
Award Agreement evidencing a Grant, and (vi) to make Grants alone, in addition to, or in tandem with, any other Grant or any other award granted under another plan of the Company or a Subsidiary. Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but without amending the Plan, to modify Grants to eligible individuals who are foreign nationals or are individuals who are employed outside the United States to recognize differences in
local law, tax policy or custom. As a condition to any subsequent Grant, the Committee shall have the right, at its discretion, to require Grantees to return to the Company any Grants previously awarded under the Plan. Subject to the terms and
conditions of the Plan, any such subsequent Grant shall be upon such terms and conditions as are specified by the Committee at the time the subsequent Grant is made. 

The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of actions taken by
the Grantee in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees or clients of the Company or any affiliate thereof or any confidentiality obligation with respect to the
Company or any affiliate thereof or otherwise in competition with the Company, to the extent specified in such Award Agreement applicable to the Grantee. Furthermore, the Company may annul a Grant if the Grantee is an employee of the Company or an
affiliate thereof and is terminated “for cause” as defined in the applicable Award Agreement. The Committee may permit or require the deferral of any award payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Stock equivalents. 

Except as provided in Section 16 hereof, the terms of outstanding Grants may not be amended to reduce the exercise price of outstanding
Options or SARs, and outstanding Options or SARs may not be cancelled, exchanged, repurchased or surrendered in exchange for cash, other Grants, or Options or SARs with an exercise price that is less than the exercise price of the original Options
or SARs, without stockholder approval. 

  
 3 

	 	3.3	No Liability. 

 No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Grant or Award Agreement. 
  

	 	3.4	Applicability of Rule 16b-3. 

 Those provisions of the Plan that make express reference
to Rule 16b-3 under the Exchange Act shall apply only to Reporting Persons. 
  

	 	3.5	Termination of Employment or Other Relationship. 

 (i) Whether a
termination of a Grantee’s employment or other relationship with the Company and its Subsidiaries shall have occurred and whether such termination is by reason of Disability shall be determined by the Committee, whose determination shall be
final and conclusive. 
 (ii) Whether a leave of absence or leave on military or government service shall constitute a
termination of employment or other relationship for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive. 

(iii) For purposes of the Plan, a termination of employment or other relationship shall not be deemed to occur if the Grantee
is immediately thereafter employed with the Company, a Subsidiary or a Service Provider, or is engaged as a Service Provider or an Outside Director. 
  

	4.	STOCK SUBJECT TO THE PLAN 

  

	 	4.1	Aggregate Limitation. 

 (i) Effective as of a two-for-one stock split of
the Stock of the Company (in the form of a stock dividend) on May 7, 2014, and subject to adjustment as provided in Section 16 hereof, the aggregate number of shares of Stock available for issuance under the Plan pursuant to Options or
other Grants shall be six million four hundred and twenty thousand (6,420,000) Shares. Shares may be authorized but unissued shares, treasury shares or issued and outstanding shares that are purchased in the open market. 

(ii) Any shares of Stock granted under the Plan which are forfeited to the Company because of the failure to meet an award
contingency or condition shall again be available for issuance pursuant to new awards granted under the Plan. Any shares of Stock covered by an award (or portion of an award) granted under the Plan which are forfeited or canceled, expire or are
settled in cash, or are withheld by the Company to cover withholding taxes (as provided in Section 19), shall be deemed not to have been issued for purposes of determining the maximum number of shares of Stock available for issuance under the
Plan. 
 (iii) If any Option is exercised by tendering shares of Stock, by withholding shares of Stock subject to the Option
being exercised, by tendering or withholding shares of Stock, either actually or by attestation, to the Company as full or partial payment in connection with the exercise of an Option or a stock option under any prior plan of the Company as
hereinabove described, only the number of shares of Stock issued net of the shares of Stock tendered or withheld shall be deemed issued for purposes of determining the maximum number of shares of Stock available for issuance under the Plan. In the
case of a SAR, only the actual number of shares of Stock issued upon exercise of the SAR shall be deemed issued for purposes of determining the maximum number of shares of Stock available for issuance under the Plan. Shares of Stock issued under the
Plan through the settlement, assumption or substitution of outstanding awards or obligations to grant future awards resulting from the acquisition of another entity shall not reduce the maximum number of shares available for issuance under the Plan.

 (iv) The number of shares of Stock reserved under this Section 4 shall be increased by the number of any shares of
Stock that are repurchased by the Company with Option Proceeds (as defined herein) in respect of the exercise of an Option; provided, however, that the number of shares of Stock contributed to the number of shares of Stock reserved under this
Section 4 in respect of the use of Option Proceeds for repurchase shall not be greater than the number obtained by dividing the amount of such Option Proceeds by the Fair Market Value on the date of exercise of the applicable Option.
“Option Proceeds” means, with respect to an Option, the sum of (x) the Option Price paid in cash, if any, to purchase shares of Stock under such Option, plus (y) the value of all federal, state and local tax deductions to which
the Company is entitled with respect to the exercise of such Option, determined using 

  
 4 

 
the highest Federal tax rate applicable to corporations and a blended tax rate for state and local taxes based on the jurisdictions in which the Company does business and giving effect to the
deduction of state and local taxes for Federal tax purposes. 
 (v) The number of shares of Stock available for grant as
incentive stock options shall not exceed six million four hundred and twenty thousand (6,420,000), subject to adjustment as provided in Section 16 hereof, and shall not be increased by reason of the application of subsection (iii) or
(iv) of this Section 4.1. 
  

	 	4.2	Application of Aggregate Limitation. 

 The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares of Stock
previously counted in connection with a Grant. 
  

	 	4.3	Per-Grantee Limitation. 

 During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act: 
 (i) no person eligible for a Grant under Section 6 hereof may
be awarded Options and SARs under the Plan exercisable for greater than three hundred thousand (300,000) shares of Stock in any single calendar year, except that in the case of a newly hired employee, such limit shall be six hundred thousand
(600,000) shares of Stock (in each case, subject to adjustment as provided in Section 16 hereof); and 
 (ii) the
maximum number of shares of Restricted Stock or Unrestricted Stock that are earned based on achievement of performance objectives that may be awarded under the Plan (including for this purpose any shares of Stock represented by Restricted Stock
Units) to any person eligible for a Grant under Section 11 hereof is one hundred fifty thousand (150,000) shares of Stock in any single calendar year, except that in the case of a newly hired employee, such limit shall be three hundred
thousand (300,000) shares of Stock (in each case, subject to adjustment as provided in Section 16 hereof). 
  

	5.	EFFECTIVE DATE AND TERM OF THE PLAN 

  

	 	5.1	Effective Date. 

 The Plan as herein amended and restated was approved by the Board on
February 19, 2014 and shall be effective as of the date the Plan is approved by the Company’s stockholders (the “Effective Date”). Until such Effective Date, the terms of the Plan prior to its amendment and restatement herein
(known as the “Trex Company, Inc. 2005 Stock Incentive Plan”) shall remain in effect. The approval of the Plan as herein amended and restated by the Board and stockholders shall have no effect on Grants made under the Plan prior to the
Effective Date. 
  

	 	5.2	Term. 

 The Plan shall expire on the tenth anniversary of the Effective Date. 

 

	6.	PERMISSIBLE GRANTEES 

  

	 	6.1	Employees and Service Providers. 

 Subject to the provisions of Section 6.3 hereof,
Grants may be made under the Plan to any employee of the Company or any Subsidiary, including any such employee who is an officer or director of the Company, to an Outside Director, to a Service Provider or employee of a Service Provider providing,
or who has provided, services to the Company or any Subsidiary, and to any other individual whose participation in the Plan is determined by the Committee to be in the best interests of the Company, as the Committee shall determine and designate
from time to time. 
  

	 	6.2	Multiple Grants. 

 An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein. 

  
 5 

	 	6.3	Limitations on Grants of Incentive Stock Options. 

 An Option shall constitute an
Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of the shares of Stock with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan
and all other plans of the Grantee’s employer and its affiliates) does not exceed one hundred thousand dollars ($100,000). This limitation shall be applied by taking Options into account in the order in which they were granted. 

 

	7.	AWARD AGREEMENT 

 Each Grant pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Committee shall from time to time determine. Award Agreements issued from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award
Agreement evidencing a Grant of Options shall specify whether such Options are intended to be non-qualified stock options or Incentive Stock Options, and in the absence of such specification such options shall be deemed non-qualified stock options.

  

	8.	OPTIONS 

  

	 	8.1	Option Price. 

 The Option Price of each Option shall be no less than the Fair Market
Value of a share of Stock on the date of grant and stated in the Award Agreement evidencing such Option; provided, however, that in the event that a Grantee would otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent (10%) of the Company’s outstanding shares of Stock), the Option Price of an Option granted to such Grantee that is intended to be an
Incentive Stock Option shall be not less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock. 

 

	 	8.2	Vesting. 

 Subject to Sections 8.3 and 16 hereof, each Option granted under the Plan
shall become exercisable at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement, provided, however, that subject to earlier vesting as otherwise provided herein or except as otherwise
specifically provided by the Committee in an Award Agreement, vesting shall occur over a minimum of a three (3) year period. For purposes of this Section 8.2, fractional numbers of shares of Stock subject to an Option shall be rounded down
to the next nearest whole number. 
  

	 	8.3	Option Term. 

 Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten (10) years (eleven (11) years if the Grantee shall terminate employment or other service due to death in the tenth year of the Option term) from the date such
Option is granted, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and thereafter stated in the Award Agreement relating to such Option; provided, however, that in the event
that the Grantee would otherwise be ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent (10%) of the outstanding shares of
Stock), an Option granted to such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five (5) years from its date of grant. 

 

	 	8.4	Termination of Employment or Other Relationship for a Reason Other than Retirement, Death or Disability. 

Unless otherwise provided by the Committee, upon the termination of a Grantee’s employment or other relationship with the Company and its
Subsidiaries other than by reason of death, Disability or Retirement, any Option or portion thereof held by such Grantee that has not vested in accordance with the provisions of Section 8.2 hereof shall terminate immediately, and any Option or
portion thereof that has vested in accordance with the provisions of Section 8.2 hereof but has not been exercised shall terminate at the close of business on the 90th day following the
Grantee’s termination of employment or other relationship (or, if such 90th day is a Saturday, Sunday or holiday, at the close of business on the next preceding day that is not a Saturday, Sunday or holiday). Upon termination of an Option or
portion thereof, the Grantee shall have no further right to purchase shares of Stock pursuant to such Option or portion thereof. 

  
 6 

	 	8.5	Rights in the Event of Death. 

 Unless otherwise provided by the Committee, if a Grantee
dies while employed by or providing services to the Company or its Subsidiaries, all Options granted to such Grantee that have not previously terminated shall fully vest on the date of death, and the executors or administrators or legatees or
distributees of such Grantee’s estate shall have the right, at any time within five (5) years after the date of such Grantee’s death and prior to termination of the Option pursuant to Section 8.3 hereof, to exercise any Option
held by such Grantee at the date of such Grantee’s death. 
  

	 	8.6	Rights in the Event of Disability. 

 Unless otherwise provided by the Committee, if a
Grantee’s employment or other relationship with the Company or its Subsidiaries is terminated by reason of the Disability of such Grantee, such Grantee’s Options that have not previously terminated shall fully vest, and shall be
exercisable for a period of five (5) years after such termination of employment or other relationship, subject to earlier termination of the Option as provided in Section 8.3 hereof. 

 

	 	8.7	Rights in the Event of Retirement. 

 Unless otherwise provided by the Committee, if a
Grantee’s employment or other relationship with the Company is terminated by reason of the Grantee’s Retirement, all Options granted to such Grantee that have not previously terminated shall fully vest on the date of Retirement, and the
Grantee shall have the right, at any time within five (5) years after the date of such Grantee’s Retirement and prior to termination of the Option pursuant to Section 8.3 hereof, to exercise any Option held by such Grantee at the date
of such Grantee’s Retirement. 
  

	 	8.8	Limitations on Exercise of Option. 

 Notwithstanding any other provision of the Plan, in
no event may any Option be exercised, in whole or in part, prior to the date the Plan is approved by the stockholders of the Company as provided herein, or after ten (10) years following the date upon which the Option is granted (except as
provided in Section 8.3 hereof in the case of death of the Grantee), or after the occurrence of an event referred to in Section 16 hereof which results in termination of the Option. 

 

	 	8.9	Method of Exercise. 

 An Option that is exercisable may be exercised by the
Grantee’s delivery to the Company of written notice of exercise on any business day, at the Company’s principal office, addressed to the attention of the Committee. Such notice shall specify the number of shares of Stock with respect to
which the Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares of Stock for which the Option is being exercised. The minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) one hundred (100) shares or such lesser number set forth in the applicable Award Agreement and (ii) the maximum number of shares of Stock available for purchase
under the Option at the time of exercise. Payment of the Option Price for the shares of Stock purchased pursuant to the exercise of an Option shall be made (i) in cash or in cash equivalents acceptable to the Company; (ii) to the extent
permitted by law and at the Committee’s discretion, through the actual or constructive tender to the Company of shares of Stock, which shares of Stock, if acquired from the Company, shall have been held for at least six months prior to such
tender if necessary to avoid negative accounting treatment (or such shorter period as the Committee may approve) and which shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at their Fair Market
Value on the date of exercise; or (iii) to the extent permitted by law and at the Committee’s discretion, by a combination of the methods described in clauses (i) and (ii) or any other method permitted by law that is approved by
the Committee. An attempt to exercise any Option granted hereunder other than as set forth above shall be invalid and of no force and effect. 
  

	 	8.10	Rights as a Stockholder; Dividend Equivalents. 

 Unless otherwise stated in the
applicable Award Agreement, an individual holding or exercising an Option shall have none of the rights of a stockholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject shares of Stock or to
direct the voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid and issued to such individual. Except as provided in Section 16 hereof, no adjustment shall be

  
 7 

 
made for dividends, distributions or other rights for which the record date is prior to the date of such issuance. However, the Committee may, on such conditions as it deems appropriate, provide
that a Grantee will receive a benefit in lieu of cash dividends that would have been payable on any or all shares of Stock subject to the Grant if such shares of Stock had been outstanding. Without limitation, the Committee may provide for payment
to the Grantee of amounts representing such dividends, either currently or in the future, or for the investment of such amounts on behalf of the Grantee. 
  

	 	8.11	Delivery of Stock Certificates. 

 Promptly after the exercise of an Option by a Grantee
and the payment in full of the Option Price, such Grantee shall be entitled to the issuance of a Stock certificate or certificates evidencing such Grantee’s ownership of the shares of Stock subject to the Option. Notwithstanding any other
provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery of stock certificates through the use of book-entry. 
  

	9.	STOCK APPRECIATION RIGHTS 

  

	 	9.1	SAR Price. 

 A SAR shall confer on the Grantee a right to receive, upon exercise thereof,
the excess of (x) the Fair Market Value of one share of Stock on the date of exercise over (y) the grant price of the SAR, as determined by the Committee. The grant price of a SAR shall not be less than the Fair Market Value of a share of
Stock on the Grant Date. 
  

	 	9.2	Vesting, and Terms and Conditions Governing SARs. 

 Subject to Sections 8.3 and 16
hereof, the Committee shall determine the time or times at which and the circumstances under which a SAR may be exercised in whole or in part (including exercise based on achievement of performance objectives or future service requirements), the
time or times at which and the circumstances under which a SAR shall cease to be exercisable, the method of exercise, the method of settlement, the form of consideration payable in settlement, whether or not a SAR shall be in tandem or in
combination with any other Grant, and any other terms and conditions of any SAR provided, however, that subject to earlier vesting as otherwise provided herein, or except as otherwise specifically provided by the Committee in an Award Agreement,
vesting shall occur over a minimum of a three (3) year period. 
  

	 	9.3	SAR Term 

 Each SAR granted under the Plan shall terminate upon the expiration of ten
(10) years (eleven (11) years if the Grantee shall terminate employment or other service due to death in the tenth (10th) year of the SAR term) from the date such SAR is granted, or
under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and thereafter stated in the Award Agreement relating to such SAR. 

 

	 	9.4	Termination of Employment or Other Relationship for a Reason Other than Retirement, Death or Disability. 

Unless otherwise provided by the Committee, upon the termination of a Grantee’s employment or other relationship with the Company and its
Subsidiaries other than by reason of death, Disability or Retirement, any SAR or portion thereof held by such Grantee that has not vested shall terminate immediately, and any SAR or portion thereof that has vested but has not been exercised shall
terminate at the close of business on the 90th day following the Grantee’s termination of employment or other relationship (or, if such 90th day is a Saturday, Sunday or holiday, at the close of business on the next preceding day that is not a
Saturday, Sunday or holiday). 
  

	 	9.5	Rights in the Event of Death. 

 Unless otherwise provided by the Committee, if a Grantee
dies while employed by or providing services to the Company or its Subsidiaries, all SARs granted to such Grantee that have not previously terminated shall fully vest on the date of death, and the executors or administrators or legatees or
distributees of such Grantee’s estate shall have the right, at any time within five (5) years after the date of such Grantee’s death and prior to termination of the SAR pursuant to Section 9.2 hereof, to exercise any SAR held by
such Grantee at the date of such Grantee’s death. 

  
 8 

	 	9.6	Rights in the Event of Disability. 

 Unless otherwise provided by the Committee, if a
Grantee’s employment or other relationship with the Company is terminated by reason of the Disability of such Grantee, such Grantee’s SARs that have not previously terminated shall fully vest, and shall be exercisable for a period of five
(5) years after such termination of employment or other relationship, subject to earlier termination of the SAR as provided in Section 9.2 hereof. 
  

	 	9.7	Rights in the Event of Retirement. 

 Unless otherwise provided by the Committee, if a
Grantee’s employment or other relationship with the Company or its Subsidiaries is terminated by reason of the Grantee’s Retirement, all SARs granted to such Grantee that have not previously terminated shall fully vest on the date of
Retirement, and the Grantee shall have the right, at any time within five (5) years after the date of such Grantee’s Retirement and prior to termination of the SAR pursuant to Section 9.2 hereof, to exercise any SAR held by such
Grantee at the date of such Grantee’s Retirement. 
  

	 	9.8	Limitations on Exercise of SAR. 

 Notwithstanding any other provision of the Plan, in no
event may any SAR be exercised, in whole or in part, prior to the date the Plan is approved by the stockholders of the Company as provided herein, or after ten (10) years following the date upon which the SAR is granted (except as provided in
Section 9.3 hereof in the case of death of the Grantee), or after the occurrence of an event referred to in Section 16 hereof which results in termination of the SAR. 

 

	10.	TRANSFERABILITY OF OPTIONS AND SARS 

  

	 	10.1	General Rule 

 Except as provided in Section 10.2 hereof, during the lifetime of a
Grantee, only the Grantee (or, in the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may exercise a SAR or Option. Except as provided in Section 10.2 hereof, no Option or SAR shall be assignable
or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution. 
  

	 	10.2	Family Transfers. 

 To the extent permitted by the Committee and under such rules and
conditions as may be imposed by the Committee, a Grantee may transfer all or part of an Option that is not an Incentive Stock Option or a SAR to (i) any Immediate Family Member, (ii) a trust or trusts for the exclusive benefit of any
Immediate Family Member or (iii) a partnership or limited liability company in which Immediate Family Members are the only partners or members, provided that (x) there may be no consideration for any such transfer, and (y) subsequent
transfers of transferred Options or SARs or transfers of an interest in a trust, partnership, or limited liability company to which an Option or SAR has been transferred are prohibited except those in accordance with this Section 10.2 or by
will or the laws of descent and distribution. Following such transfer, any such Option or SAR shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer, provided that, for purposes of this
Section 10.2, the term “Grantee” shall be deemed to refer to the transferee. The events of termination of employment or other relationship referred to in Sections 8.4 through 8.7 and Sections 9.4 through 9.7 hereof, or any agreement
between the Grantee and the Company, shall continue to be applied with respect to the original Grantee, following which the Option or SAR shall be exercisable by the transferee only to the extent and for the periods specified in Section 8.4,
8.5, 8.6 or 8.7 hereof in the case of Options and Section 9.4, 9.5, 9.6 or 9.7 hereof in the case of SARs. 
  

	11.	RESTRICTED STOCK 

  

	 	11.1	Grant of Restricted Stock or Restricted Stock Units. 

 The Committee from time to time
may grant Restricted Stock or Restricted Stock Units to persons eligible to receive Grants under Section 6 hereof, subject to such restrictions, conditions and other terms as the Committee may determine. 

  
 9 

	 	11.2	Restrictions. 

 At the time a Grant of Restricted Stock or Restricted Stock Units is
made, the Committee shall establish a period of time (the “Restricted Period”) applicable to such Restricted Stock or Restricted Stock Units. Unless the Grant is being made in consideration of compensation due under another plan, or unless
vesting is subject to performance, or subject to earlier vesting as otherwise provided herein, or except as otherwise specifically provided by the Committee in an Award Agreement, the Restricted Period will be a minimum of three (3) years
(subject to the accelerated vesting provisions of Section 16 hereof). Each Grant of Restricted Stock or Restricted Stock Units may be subject to a different Restricted Period. At the time a Grant of Restricted Stock or Restricted Stock Units is
made, the Committee may, in its sole discretion, prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the satisfaction of corporate or individual performance objectives, which may be applicable to
all or any portion of the Restricted Stock or Restricted Stock Units. Such performance objectives shall be established in writing by the Committee by not later than the 90th day of the period of service to which such performance objectives relate
and while the outcome is substantially uncertain. Performance objectives may be stated either on an absolute or relative basis and may be based on any of the following criteria: revenue, growth in revenue (in general, by type of product and/or by
type of customer), gross margin, gross profit, operating margin, operating earnings, net income, earnings before interest, taxes, depreciation and amortization (“EBITDA”), earnings before interest and taxes (“EBIT”), earnings per
share (“EPS”), earnings growth, cash flow, growth in assets, return on assets, return on equity, return on capital, retained earnings, total shareholder return (“TSR”), economic value added (“EVA”), market share, stock
price, completion of acquisitions, completion of divestitures and asset sales, cost or expense reductions, introduction or conversion of product brands, achievement of specified management information systems objectives, and any combination of the
foregoing performance objectives (e.g., cash flow return on capital), provided that the performance period may be no less than one (1) year. Performance objectives may include positive results, maintaining the status quo or limiting economic
losses. Neither Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the
Committee with respect to such Restricted Stock or Restricted Stock Units. 
  

	 	11.3	Restricted Stock Certificates. 

 The Company shall issue, in the name of each Grantee to
whom Restricted Stock has been granted, Stock certificates representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Committee 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, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a legend or legends complying with the applicable securities laws and regulations and making appropriate reference to the restrictions imposed under the Plan and the
Award Agreement. 
  

	 	11.4	Rights of Holders of Restricted Stock. 

 Unless the Committee otherwise provides in an
Award Agreement, holders of Restricted Stock shall have the right to vote such shares of Stock and the right to receive any dividends declared or paid with respect to such shares of Stock. The Committee 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 Grant. 

 

	 	11.5	Rights of Holders of Restricted Stock Units. 

 Unless the Committee otherwise provides in
an Award Agreement, holders of Restricted Stock Units shall have no rights as stockholders of the Company. The Committee may provide in an Award Agreement evidencing a Grant of Restricted Stock Units that the holder of such Restricted Stock Units
shall be entitled to receive, upon the Company’s payment of a cash dividend on its outstanding shares of Stock, a cash payment for each Restricted Stock Unit held equal to the per-share dividend paid on the shares of Stock. Such Award Agreement
may also provide that such cash payment will 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. 

 

	 	11.6	Termination of Employment or Other Relationship for a Reason Other than Death, Disability or Retirement. 

Unless otherwise provided by the Committee, upon the termination of a Grantee’s employment or other relationship with the Company and its
Subsidiaries, in either case other than, in the case of individuals, by reason of death, Disability or 

  
 10 

 
Retirement, any Restricted Stock or Restricted Stock Units held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall
immediately be deemed forfeited. Upon forfeiture of Restricted Stock or Restricted Stock Units, the Grantee shall have no further rights with respect to such Grant, including, but not limited to, any right to vote Restricted Stock or any right to
receive dividends with respect to Restricted Stock or Restricted Stock Units. 
  

	 	11.7	Rights in the Event of Death. 

 Unless otherwise provided by the Committee, if a Grantee
dies while employed by the Company or its Subsidiaries or while serving as a Service Provider, all Restricted Stock or Restricted Stock Units granted to such Grantee shall, if vesting is based solely on continued service, fully vest on the date of
death, or if vesting is based in whole or part on performance, shall be immediately forfeited to the extent not yet vested. Upon such vesting, the shares of Stock represented thereby shall be deliverable in accordance with the terms of the Plan to
the executors, administrators, legatees or distributees of the Grantee’s estate. 
  

	 	11.8	Rights in the Event of Disability. 

 Unless otherwise provided by the Committee, if a
Grantee’s employment or other relationship with the Company or its Subsidiaries or a Service Provider, or service as a Service Provider, is terminated by reason of the Disability of such Grantee, such Grantee’s then unvested Restricted
Stock or Restricted Stock Units shall, if vesting is based solely on continued service, fully vest and be paid on the date of termination, or if vesting is based in whole or part on performance, shall be immediately forfeited to the extent not yet
vested. 
  

	 	11.9	Rights in the Event of Retirement. 

 Unless otherwise provided by the Committee, if a
Grantee’s employment with the Company or its Subsidiaries is terminated by reason of Retirement, all Restricted Stock or Restricted Stock Units granted to such Grantee shall, if vesting is based solely on continued service, fully vest and be
paid on the date of termination, or if vesting is based in whole or part on performance, shall be immediately forfeited to the extent not yet vested. 
  

	 	11.10	Delivery of Shares and Payment Therefor. 

 Upon the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to Restricted Stock or Restricted Stock Units shall lapse, and, unless otherwise provided in the Award Agreement, upon payment by
the Grantee to the Company, in cash or by check, of the greater of (i) the aggregate par value of the shares of Stock represented by such Restricted Stock or Restricted Stock Units or (ii) the purchase price, if any, specified in the Award
Agreement relating to such Restricted Stock or Restricted Stock Units, a certificate for such shares shall be delivered, free of all such restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case may be. 

 

	12.	UNRESTRICTED STOCK 

 The Committee may, in its sole discretion, grant Stock (or sell
Stock at par value or such other higher purchase price determined by the Committee) free of restrictions other than those required under federal or state securities laws (“Unrestricted Stock”) to persons eligible to receive grants under
Section 6 hereof. Unrestricted Stock may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration in lieu of any cash compensation due to such Grantee, or in satisfaction of a
performance share award payable in Stock and earned based on the satisfaction of one or more of the performance objectives enumerated in Section 11.2 hereof with respect to Restricted Stock and Restricted Stock Units. 

 

	13.	PARACHUTE LIMITATIONS 

 If the Grantee is a “disqualified individual” (as
defined in Section 280G(c) of the Code), any Option, Restricted Stock, Restricted Stock Unit or SAR and any other right to receive any payment or benefit under the Plan shall not vest or become exercisable (i) to the extent that the right
to vest or any other right to any payment or benefit, taking into account all other rights, payments or benefits to or for the Grantee, would cause any payment or benefit to the Grantee under the Plan to be considered a “parachute payment”
within the meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the Grantee

  
 11 

 
from the Company under any Award Agreements, the Plan, and all other rights, payments or benefits to or for the Grantee would be less than the maximum after-tax amount that could be received by
the Grantee without causing the payment or benefit to be considered a Parachute Payment. In the event that, but for the provisions of this Section 13, the Grantee would be considered to have received a Parachute Payment under any Award
Agreements that would have the effect of decreasing the after-tax amount received by the Grantee as described in clause (ii) of the preceding sentence, then the Grantee shall have the right, in the Grantee’s sole discretion, to designate
any rights, payments or benefits under any Award Agreements, the Plan, any other agreements and any benefit arrangements to be reduced or eliminated so as to avoid having the payment or benefit to the Grantee under any Award Agreements be deemed to
be a Parachute Payment. The Award Agreement, or any agreement entered into by the Grantee with the Company before or after the date of grant, may provide for different treatment of Grants than is set forth in this Section 13 in the event that
the Grantee is a disqualified individual. 
  

	14.	REQUIREMENTS OF LAW 

  

	 	14.1	General. 

 The Company shall not be required to sell or issue any shares of Stock under
any Grant if the sale or issuance of such shares of Stock would constitute a violation by the Grantee, any other person exercising a right emanating from such Grant, or the Company of any provision of any law or regulation of any governmental
authority, including, without limitation, any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares of Stock subject to a Grant
upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares of Stock hereunder, no shares of Stock may be issued or sold to the Grantee
or any other person exercising a right emanating from such Grant unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused
thereby shall in no way affect the date of termination of the Grant. Without limiting the generality of the foregoing, upon the exercise of any Option or any SAR that may be settled in shares of Stock or the delivery of any Restricted Stock or
shares of Stock underlying Restricted Stock Units, unless a registration statement under the Securities Act is in effect with respect to the shares of Stock covered by such Grant, the Company shall not be required to sell or issue such shares of
Stock unless the Committee has received evidence satisfactory to it that the Grantee or any other person exercising a right emanating from such Grant may acquire such shares of Stock pursuant to an exemption from registration under the Securities
Act. Any such determination by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to
take any affirmative action in order to cause the exercise of an Option or a SAR or the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Option (or SAR that may be settled in shares of Stock) shall not be exercisable until the shares of Stock covered by such Option (or SAR) are registered or are exempt from registration, the exercise of such Option (or
SAR) under circumstances in which the laws of such jurisdiction apply shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. 

 

	 	14.2	Rule 16b-3. 

 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 Grants pursuant to the Plan and the exercise of Options and SARs granted hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent that any provision of the Plan or action by the Committee does not comply with the requirements of Rule 16b-3, such provision or action shall be deemed inoperative to the extent permitted by law and deemed advisable by the Committee, and
shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify the Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement. 
  

	15.	AMENDMENT AND TERMINATION OF THE PLAN 

 The Board may, at any time and from time to time,
amend, suspend or terminate the Plan as to any shares of Stock as to which Grants have not been made; provided, that, any amendment that materially increases the benefits available under the Plan or which is required to be submitted for stockholder
approval by applicable law, rule or regulation (including, without limitation, rules of the exchange on which the Stock is traded) shall be adopted subject to stockholder approval. Except as permitted under this Section 15 or Section 16
hereof, no amendment, suspension or termination of the Plan shall, without the consent of the Grantee, alter or impair rights or obligations under any Grant theretofore awarded under the Plan. 

  
 12 

	16.	EFFECT OF CHANGES IN CAPITALIZATION 

  

	 	16.1	Changes in Stock. 

 Subject to Section 16.2 hereof, in the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, spin-off, split-up, share combination or other change in the corporate structure of the Company affecting the shares of Stock, (a) such adjustment shall
be made in the number and class of shares which may be delivered under Section 4 hereof and the Grant limits under Section 4 hereof, and in the number and class of or price of shares subject to outstanding Grants as may be determined to be
appropriate and equitable by the Board or the Committee, in its sole discretion, to prevent dilution or enlargement of existing rights; and (b) the Board or the Committee or, if another legal entity assumes the obligations of the Company
hereunder, the board of directors, compensation committee or similar body of such other legal entity shall either (i) make appropriate provision for the protection of outstanding Grants by the substitution on an equitable basis of appropriate
equity interests or awards similar to the Grants, provided that the substitution neither enlarges nor diminishes the value and rights under the Grants, or (ii) upon written notice to the Grantees, provide that Grants shall be exercised,
distributed, canceled or exchanged for value pursuant to such terms and conditions (including the waiver of any existing terms or conditions) as shall be specified in the notice. Any adjustment of an Incentive Stock Option under this
Section 16.1 shall be made in such a manner so as not to constitute a “modification” within the meaning of Section 424(h)(3) of the Code. The conversion of any convertible securities of the Company shall not be treated as a
change in the corporate structure of the Company affecting the shares of Stock. Subject to any contrary language in an Award Agreement evidencing a Grant of Restricted Stock, any restrictions applicable to such Restricted Stock shall apply as well
to any replacement shares received by the Grantee as a result of the merger, reorganization or other transaction referred to in this Section 16.1. 
  

	 	16.2	Reorganization, Sale of Assets or Sale of Stock. 

 Upon the dissolution or liquidation of
the Company or upon a merger, consolidation or reorganization of the Company with one or more other entities in which the Company is not the surviving entity, or upon a sale of substantially all of the assets of the Company to another entity, or
upon any transaction (including, without limitation, a merger or reorganization in which the Company is the surviving entity) approved by the Board that results in any person or entity (or person or entities acting as a group or otherwise in
concert) owning eighty percent (80%) or more of the combined voting power of all classes of securities of the Company, (i) all outstanding Restricted Stock and Restricted Stock Units shall be deemed to have vested, and all restrictions and
conditions applicable to such Restricted Stock and Restricted Stock Units shall be deemed to have lapsed, immediately prior to the occurrence of such transaction, and (ii) all Options and SARs outstanding hereunder shall become immediately
exercisable for a period of fifteen (15) days immediately prior to the scheduled consummation of such transaction. Any exercise of an Option or SAR during such fifteen (15) day period shall be conditioned upon the consummation of the
transaction and shall be effective only immediately before the consummation of the transaction. 
 This Section 16.2 shall not apply to
any transaction to the extent that (A) provision is made in writing in connection with such transaction for the continuation of the Plan or the assumption of the Options, SARs, Restricted Stock and Restricted Stock Units theretofore granted, or
for the substitution for such Options, SARs, Restricted Stock and Restricted Stock Units of new options, stock appreciation rights, restricted stock and restricted stock units covering the stock of a successor entity, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares or units and exercise prices, in which event the Plan and Options, SARs, Restricted Stock and Restricted Stock Units theretofore granted shall continue in the manner and
under the terms so provided or (B) a majority of the full Board determines that such transaction shall not trigger application of the provisions of this Section 16.2 and limited by any “change in control” provision in any
employment agreement or Award Agreement applicable to the Grantee. Upon consummation of any such transaction, the Plan and all outstanding but unexercised Options and SARs shall terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan or the assumption of such Options and SARs theretofore granted, or for the substitution for such Options and SARs of new options and stock appreciation rights covering the shares of a
successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares or units and exercise prices, in which event the Plan and Options and SARs theretofore granted shall continue in the manner and
under the terms so provided. The Board shall send written notice of an event that will result in such a termination to all individuals who hold Options and SARs not later than the time at which the Company gives notice thereof to its stockholders.

  
 13 

	 	16.3	Adjustments. 

 Adjustments under this Section 16 related to shares of Stock or
securities of the Company shall be made by the Committee, whose determination in that respect shall be final and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from
any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. 
  

	 	16.4	No Limitations on Company. 

 The making of Grants pursuant to the Plan shall not affect
or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer all or any part of
its business or assets. 
  

	17.	DISCLAIMER OF RIGHTS 

 No provision in the Plan or in any Grant or Award Agreement shall
be construed to confer upon any individual the right to remain in the employ or service of the Company or any affiliate thereof, or to interfere in any way with any contractual or other right or authority of the Company or Service Provider either to
increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or other relationship between any individual and the Company or any affiliate thereof. In addition, notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement or employment agreement, no Grant awarded under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee
continues to be a director, officer, consultant or employee of the Company. The obligation of the Company to pay any benefits pursuant to the Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any participant or
beneficiary under the terms of the Plan. No Grantee shall have any of the rights of a stockholder with respect to the shares of Stock subject to an Option or SAR except to the extent such shares of Stock shall have been issued upon the exercise of
the Option or SAR. 
  

	18.	NONEXCLUSIVITY OF THE PLAN 

 Neither the adoption of the Plan nor the submission of the
Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Committee to adopt such other incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Committee in its discretion determines desirable, including, without limitation, the granting of Stock options otherwise than
under the Plan. 
  

	19.	WITHHOLDING TAXES 

 The Company or a Subsidiary, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to a Grantee any federal, state or local taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to Restricted Stock or Restricted
Stock Units or upon the exercise of an Option or SAR or the grant of Unrestricted Stock. At the time of such vesting, lapse or exercise, the Grantee shall pay to the Company or the Subsidiary, as the case may be, any amount that the Company or the
Subsidiary may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the Subsidiary, which may be withheld by the Company or the Subsidiary, as the case may be, in its sole
discretion, the Grantee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company or the Subsidiary to withhold shares of Stock otherwise issuable to the Grantee or (ii) by delivering to the Company or the
Subsidiary shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to satisfy such
withholding obligation shall be determined by the Company or the Subsidiary as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to this Section 19 may satisfy such Grantee’s
withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirement. 
  

	20.	CAPTIONS 

 The use of captions in the Plan or any Award Agreement is for convenience of
reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement. 

  
 14 

	21.	OTHER PROVISIONS 

 Each Grant awarded under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion. 
  

	22.	NUMBER AND GENDER 

 With respect to words used in this Plan, the singular form shall
include the plural form and, the masculine gender shall include the feminine gender, as the context requires. 
  

	23.	SEVERABILITY 

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

	24.	GOVERNING LAW 

 The validity and construction of this Plan and the instruments evidencing
the Grants awarded hereunder shall be governed by the laws of the State of Delaware (without giving effect to the choice of law provisions thereof). 
  

	25.	SECTION 409A 

 To the extent that the Committee determines that a Grantee would be
subject to the additional twenty percent (20%) tax imposed on certain deferred compensation arrangements pursuant to Section 409A of Code as a result of any provision of any Grant, such provision shall be deemed amended to the minimum
extent necessary to avoid application of such additional tax. The Committee shall determine the nature and scope of any such amendment. 

The Plan, prior to its amendment and restatement herein, was duly adopted and approved by the Board of Directors of the Company on
March 12, 1999 and by the stockholders of the Company on April 7, 1999. An amended and restated Plan was approved by the Board of Directors of the Company on March 8, 2005 and by the stockholders of the Company on April 21, 2005.
The Plan was subsequently amended by the Board of Directors of the Company on September 12, 2005, March 13, 2008, and February 26, 2013, and approved by the stockholders on May 7, 2008. The Plan, as amended and restated
herein, was approved by the Board of Directors of the Company on February 19, 2014 and by the stockholders of the Company on April 30, 2014. The Plan was subsequently amended and restated by the Board of Directors as of May 7, 2014.

  
 15Exhibit 4.1

 

WARRANT

 

NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

LIME ENERGY CO.

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.: 163

Number of Shares of Common Stock:  50,000 (subject to adjustment)

Exercise Price:  $[    ] per share (subject to adjustment) (“Exercise Price”)(1)

Date of Issuance:  [       ], 2014 (“Issuance Date”)

 

Lime Energy Co., a Delaware corporation (the  “Company”), hereby certifies that, for value received, Richard P. Kiphart, the registered holder hereof or his permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant (including any Warrants to purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the date hereof, but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), [       ], 2019 (50,000) fully-paid nonassessable shares of Common Stock (as defined below) (the “Warrant Shares”).  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.  This Warrant is being issued pursuant to the Letter of Credit Agreement, dated as of August 1, 2014, by and among the Company and Richard P. Kiphart (the “L/C Agreement”).

 

1.             EXERCISE OF WARRANT.

 

(a)           Mechanics of Exercise.  Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder, in whole or in part, at any time during the Exercise Period by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased and (ii) (A) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by wire transfer of immediately available funds or (B) by notifying the Company that this Warrant is being

 

(1)  NOTE: The exercise price will be the stock price at the time of issuance.

 

 

exercised pursuant to a Cashless Exercise (as defined in Section 1(d)), and (iii) delivery to the Company of this Warrant (or an indemnity and evidence with respect to this Warrant in the case of its loss, theft, mutilation or destruction, as provided in Section 7(c)).  Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares.  On or before the third (3rd) Business Day following the date on which the Company has received Exercise Notice, the Aggregate Exercise Price (or notice of a Cashless Exercise) and this Warrant (or an indemnity and evidence with respect to this Warrant in the case of its loss, theft, mutilation or destruction, as provided in Section 7(c)) (the “Exercise Delivery Documents”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company’s transfer agent (the “Transfer Agent”).  On or before the third (3rd) Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, which balance account shall be specified in the Exercise Notice, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon receipt by the Company of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares.

 

(b)           Partial Exercise.  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than ten (10) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

 

(c)           No Fractional Shares.  No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.  The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

 

(d)        Company’s Failure to Timely Deliver Securities.  Upon the Company’s receipt of an Exercise Delivery Documents or request for removal of restrictive legends on the shares of Common Stock issuable in connection therewith, the Company will deliver, or cause to be delivered, the certificates evidencing such shares of Common Stock to the Holder

 

 

within three (3) Trading Days.  If the certificates have not been delivered by the fifth (5th) Trading Day after valid conversion or request for removal of legend, as the case may be, and the Holder, or any third party on behalf of Holder or for Holder’s account, has purchased (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion or represented by such certificate that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Holder’s request promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay in cash to the Holder (for costs incurred either directly by such Holder or on behalf of a third party) the amount by which the total purchase price paid for Common Stock as a result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by such Holder as a result of the sale to which the Buy-In relates.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.

 

(e)           Cashless Exercise.  Notwithstanding any provisions herein to the contrary, if at the time this Warrant is exercised, (a) there is no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of the Warrant Shares to the Holder, (ii) all of the Warrant Shares are not then registered for resale by the Holder into the market at market prices from time to time on an effective registration statement for use on a continuous basis (or the prospectus contained therein is not available or used) and (iii) the Current Market Price (as defined below) of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), then in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise by surrender of this Warrant at the principal office of the Company (or at such other address as it may designate by notice in writing to the Holder) together with the properly endorsed Notice of Exercise and the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

 

X = Y (B-A)

B

 

Where:     X = the number of shares of Common Stock to be issued to the Holder.

 

Y = the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.

 

A = the Exercise Price.

 

B = the Current Market Price of one share of Common Stock.

 

“Current Market Price” means on any particular date:

 

(a)           if the Common Stock is traded on the NASDAQ Global Market or the NASDAQ Capital Market, the closing price of the Common Stock of the Company on such market on the Trading Day prior to the applicable date of valuation;

 

 

(b)           if the Common Stock is traded on any registered national stock exchange but is not traded on the NASDAQ Global Market or the NASDAQ Capital Market, the closing price of the Common Stock of the Company on such exchange on the Trading Day prior to the applicable date of valuation;

 

(c)           if the Common Stock is traded over-the-counter, but not on the NASDAQ Global Market, the NASDAQ Capital Market or a registered national stock exchange, the closing bid price of the Common Stock of the Company on the day prior to the applicable date of valuation; and

 

(d)           if there is no active public market for the Common Stock, the value thereof, as determined in good faith by the Board of Directors of the Company.

 

(f)            Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 11.

 

(g)           Insufficient Authorized Shares.  If at any time while any of the Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock (an “Authorized Share Failure”) to satisfy its obligation to reserve for issuance upon exercise of the Warrants no less than the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants then outstanding (in addition to all other convertible securities) (the “Required Reserve Amount”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Warrants then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

 

(h)           Limitations on Conversions.  The Company shall not be obligated to issue any shares of Common Stock upon exercise of this Warrant, and no Holder shall be entitled to receive any shares of Common Stock if the issuance of such shares of Common Stock would exceed that number of shares of Common Stock which the Company may issue upon conversion of the Convertible Notes and exercise of the Convertible Note Warrants, this Warrant or otherwise without breaching the Company’s obligations under the rules or regulations of the Principal Market (the “Exchange Cap”), except that such limitation shall not apply in the event that the Company (i) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount or (ii) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of the Convertible Notes, the Convertible Note Warrants and this Warrant.  Until such approval or written opinion is obtained, no Holder shall be issued in the aggregate, upon exercise of this Warrant, shares of

 

 

Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the total number of shares of Common Stock underlying the Convertible Notes, the Convertible Note Warrants and this Warrant determined as of the Issuance Date and the denominator of which is the aggregate number of shares of Common Stock underlying all the outstanding Convertible Notes, the Convertible Note Warrants and this Warrant (with respect to such holder, the “Exchange Cap Allocation”).  In the event that the Holder shall sell or otherwise transfer any of this Warrant, the transferee shall be allocated a pro rata portion of the Holder’s Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee.  In the event that any holder of this Warrant, or portion thereof, shall exercise this Warrant, or a portion thereof, for a number of shares of Common Stock which, in the aggregate, is less than such holder’s Exchange Cap Allocation, then the difference between such holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the remaining holders of any portion of this Warrant on a pro rata basis in proportion to the total number of shares of Common Stock underlying the portion of this Warrant then held by each such holder.

 

2.             ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a)           Adjustment upon Subdivision or Combination of Common Stock.  If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased.  If the Company combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased.  Any adjustment under this Section 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(b)           Minimum Adjustment.  No adjustment in the Exercise Price and the number of Warrants shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price as last adjusted; provided, however that any adjustments which would be required to be made but for this Section 2(b) shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 2 shall be made to the nearest cent, with one half cent being rounded upward.

 

(c)           Notification of Adjustment.  Upon any adjustment of the Warrant Exercise Price or number of issuable Warrant Shares pursuant to this Section 2, the Company shall give written notification to the Holder, setting forth in reasonable detail, the calculation of such adjustment.

 

 

3.             COVENANTS OF THE COMPANY.

 

(a)           Covenants as to Exercise Shares.  The Company covenants and agrees that it will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant.  All Warrant Shares will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.  If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock (or other securities as provided herein) to such number of shares as shall be sufficient for such purposes.

 

(b)           No Impairment.  Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its Certificate of Incorporation (as such may be amended from time to time), or through any means, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.

 

4.             CERTAIN ADJUSTMENTS.

 

(a)        Subdivisions, Combinations and Other Issuances.  In the event the Company pays a dividend in Common Stock or makes a distribution in Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock to holders of its outstanding Common Stock; subdivides its outstanding Common Stock into a greater number of shares; combines its outstanding Common Stock into a smaller number of shares; or issues any shares of its capital stock in a reclassification of the Common Stock, the number and class of shares available under this Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of this Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had this Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment.  The form of this Warrant need not be changed because of any adjustment in the number, class, and kind of shares subject to this Warrant.  Upon request, the Company shall promptly provide to the Holder a certificate from its Chief Financial Officer, which certificate shall specify the Exercise Price and number, class and kind of shares under this Warrant after giving effect to such adjustment.

 

(b)           Pro Rata Distributions.  If the Company, at any time while this Warrant is outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock subject to Section 4(a), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, “Distributed Property”), then in each such case the Holder shall be entitled upon exercise of this Warrant for the purchase of any or all of the Warrant Shares, to receive the amount of Distributed Property which would have been payable to the Holder had such Holder been the holder of such Warrant Shares on the record date for the determination of stockholders entitled to such Distributed Property. The Company will at all times set aside and keep available for

 

 

distribution to the Holder upon exercise of this Warrant a portion of the Distributed Property to satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence.

 

(c)           Fundamental Transactions.  If the Company consummates (i) a merger or consolidation with or into another entity, as a result of which the holders of the Company’s outstanding voting securities as of immediately prior to such merger or consolidation hold less than a majority of the outstanding voting securities of the surviving or successor entity as of immediately after such merger or consolidation or (ii) a sale, transfer or other disposition of all or substantially all its property, assets or business to another person or entity (any such transaction being hereinafter referred to as a “Fundamental Transaction”), then the Company shall ensure that lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of this Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of this Warrant, had such Fundamental Transaction not taken place.  The provisions of this Section 4(c) shall similarly apply to successive consolidations, mergers, sales, transfers or other dispositions.

 

5.             FRACTIONAL SHARES.  No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.  All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share.  If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, at its option, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then Current Market Price of a Warrant Share by such fraction, or round up such fraction to the next whole number of Warrant Shares.

 

6.             NO STOCKHOLDER RIGHTS.  This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.

 

7.             REGISTRATION, TRANSFER AND REISSUANCE.

 

(a)           Registration.  The Company shall register this Warrant, upon the records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.  The Company also shall register any transfer, exchange, reissuance or cancellation of any portion of this Warrant in the Warrant Register.

 

(b)           Transfer.  This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required by applicable securities laws.  Subject to applicable securities laws, if this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, together with all applicable transfer taxes, whereupon the Company will issue and deliver upon the order of the Holder a new Warrant (in

 

 

accordance with Section 7(d), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.  The acceptance of the new Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the new Warrant that the Holder has in respect of this Warrant.

 

(c)           Lost, Stolen, Mutilated or Destroyed Warrant.  If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof to the Company), cause the Company to issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.

 

(d)           Issuance of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall (a) be of like tenor with this Warrant, (b) represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(b) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (c) have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date and (d) have the same rights and conditions as this Warrant.

 

8.             MODIFICATIONS AND WAIVER.  This Warrant and any provision hereof may be waived, modified or amended only by an instrument in writing signed by the Company and the Holder.

 

9.             NOTICES, ETC.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party to be notified, (b) when sent by confirmed email, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or (c) one business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company at the address listed on the signature page and to the Holders at the addresses on the Company records, or at such other address as the Company or Holder may designate by ten days’ advance written notice to the other party hereto.

 

10.          ACCEPTANCE.  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

11.          GOVERNING LAW.  This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware.  The Company hereby irrevocably

 

 

submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Illinois for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  In the event that any provision of this Warrant is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant.  Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder.

 

12.                               CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

13.                               SEVERABILITY.  The invalidity or unenforceability of any provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and effect.

 

14.                               ENTIRE AGREEMENT.  This Warrant constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and undertakings of the parties, whether oral or written, with respect to such subject matter.

 

15.                               CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

 

(a)                                 “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(b)                                 “Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the Options (including the Convertible Note Warrants) or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon exercise of the Warrant.

 

 

(c)                                  “Common Stock” means (i) the Company’s shares of Common Stock, par value $0.0001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(d)                                 “Convertible Notes” means all the 2012 Subordinated Secured Convertible Pay-In-Kind Notes due October 22, 2017, issued by the Company with issuance date of October 22,2012, and shall include all notes issued in exchange therefor or replacement thereof.

 

(e)                                  “Convertible Note Warrants” means all the Warrants granted by the Company with date of issuance of October 22, 2012, in connection with the Convertible Notes.

 

(f)                                   “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable at the option of the holder thereof for shares of Common Stock.

 

(g)                                  “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., the NASDAQ Global Market, the NASDAQ Global Select Market, the NASDAQ Capital Market or the NASD’s OTC Bulletin Board.

 

(h)                                 “Exercise Period” means the period commencing on the Issuance Date and ending at 5:00 p.m. New York time, on the Expiration Date.

 

(i)                                     “Expiration Date” means the date that is the [third] ([3rd]) anniversary of the Issuance Date, or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

 

(j)                                    “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities, other than those that may be issued as part of a compensation package of any employee of the Company or its Subsidiaries and which are exercisable at a price not less than the closing price of the Company’s Common Stock as reported on the Principal Market on the Trading Day immediately preceding the date of grant.

 

(k)                                 “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(l)                                     “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(m)                             “Principal Market” means the NASDAQ Stock Market LLC.

 

(n)                                 “Trading Day” means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the

 

 

Common Stock are then traded; provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than four and one-half (4.5) hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set forth above.

 

	
 
    	
LIME ENERGY CO.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Mary   Colleen Brennan
    
	
 
    	
Title:
    	
Chief   Financial Officer
    

 

 

EXHIBIT A
 EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
 WARRANT TO PURCHASE COMMON STOCK

 

LIME ENERGY CO.

16810 Kenton Drive. Suite 240
 Huntersville, North Carolina 28078

Attention: Chief Executive Officer

Fax No.:

 

The undersigned holder hereby elects to purchase                              (     ) of the shares of Common Stock (“Warrant Shares”) of Lime Energy Co., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.                                      Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as:

 

a “Cash Exercise” with respect to     (             ) Warrant Shares; and/or

a “Cashless Exercise” with respect to                  (           ) Warrant Shares.

 

2.                                      Payment of Exercise Price.  In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder hereby tenders payment of the Aggregate Exercise Price in the sum of $                                   to the Company in accordance with the terms of the Warrant, together with all applicable transfer taxes, if any.

 

3.                                      Accredited Investor.  At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.

 

4.                                      Delivery of Warrant Shares.  The undersigned requests that the certificates for the Warrant Shares be issued in the name of and delivered to the following DWAC Account Numbers or by physical delivery of a certificate to:

 

	
 
    	
 
    	
whose   address is
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Federal   Tax ID or Social Security Number
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    
	
 
    	
 
    
	
(Signature   must conform in all respects to the name of the Holder a specified on the
    	
 
    

 

 

	
face   of the Warrant)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Registered   Owner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
Federal   EIN or SSN:
    	
 
    	
 
    
							

 

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
Name:
    	
 
    
	
 
    	
 
    
	
(Please   Print)
    	
 
    
	
 
    	
 
    
	
Address:
    	
 
    
	
 
    	
 
    
	
(Please   Print)
    	
 
    
	
 
    	
 
    
	
Dated:                         ,   20
    	
 
    
	
 
    	
 
    
	
Holder’s   Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Holder’s   Address:
    	
 
    	
 
    

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing warrant.

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs its transfer agent to issue the above-indicated number of shares of Common Stock.

 

	
 
    	
LIME ENERGY CO.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:

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