Document:

Exhibit 4.1

 

Exhibit
4.1

 

ATRM Holdings, Inc.

(f/k/a Aetrium Incorporated)

2014 Incentive Plan

 

Article
1

Establishment and Purpose

	 		 

1.1Establishment
of the Plan. Aetrium Incorporated, a Minnesota corporation (the “Company”), hereby establishes an incentive compensation
plan (the “Plan”), as set forth in this document.

 

1.2Purpose
of the Plan. The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal
interests of Participants (as defined below) to those of the Company’s shareholders, and by providing Participants with
an incentive for outstanding performance.

 

1.3Effective
Date of the Plan. The Plan is effective as of the date the Plan is approved by the Company’s shareholders (the “Effective
Date”). The Plan will be deemed to be approved by shareholders if it receives the affirmative vote of the holders of a majority
of the Shares (as defined below) present, in person or by proxy, and entitled to vote on the matter at a shareholder meeting duly
held in accordance with the applicable provisions of the Company’s Bylaws, as amended (the “Bylaws”).

 

Article
2

Definitions

 

Whenever
used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter
of the word or words are capitalized:

 

(a)“Applicable
Law” means the legal requirements relating to the administration of options and share-based or performance-based awards
under any applicable laws of the United States, any other country, and any provincial, state, or local subdivision, any applicable
stock exchange or automated quotation system rules or regulations, as such laws, rules, regulations and requirements shall be
in place from time to time.

 

(b)“Award”
means, individually or collectively, a grant or award under the Plan of Stock Options, Stock Appreciation Rights, Restricted Stock
(including unrestricted Stock), Restricted Stock Units, Performance Stock Units, Performance Shares, Deferred Stock Awards or
Other Stock-Based Awards, Dividend Equivalents Awards and Performance Bonus Awards.

 

(c)“Award
Agreement” means an agreement which may be entered into by each Participant and the Company, setting forth the terms and
provisions applicable to Awards granted to Participants under the Plan. In the event of any inconsistency between the Plan and
an Award Agreement, the terms of the Plan shall govern.

 

    	 

    	 

    

 

(d)“Board”
or “Board of Directors” means the Company’s Board of Directors.

 

(e)“Cause”
means that Participant (i) pleads “guilty” or “no contest” to or is indicted for or convicted of a felony
under federal or state law or of a crime under federal or state law which involves Participant’s fraud or dishonesty; (ii)
in carrying out Participant’s duties to the Company or any Subsidiary, engages in conduct that constitutes gross negligence
or willful misconduct, as determined by the Company in its sole discretion; or (iii) engages in misconduct that causes material
and demonstrable harm to the reputation of the Company, as determined by the Company in its sole discretion.

 

(f)“Change
in Control” shall be deemed to have occurred if: (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company
or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; (ii) during any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the Board of Directors and any new Director whose election by the Board of Directors
or nomination for election by the Company’s shareholders was approved by a vote of a majority of the Directors then still
in office who either were Directors at the beginning of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority thereof; or (iii) the consummation of a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities
of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all
or substantially all the Company’s assets.

 

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

 

(h)“Committee”
means the committee or committees of the Board of Directors given authority to administer the Plan as provided in Article 3.

 

(i)“Consultant”
means any consultant or adviser if:

 

(i)The
consultant or adviser renders bona fide services to the Company or any Subsidiary;

 

(ii)The
services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and

 

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(iii)The
consultant or adviser is a natural person who has contracted directly with the Company or any Subsidiary to render such services.

 

(j)“Covered
Employee” means an Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of
the Code.

 

(k)“Deferred
Stock” means a right to receive a specified number of Shares during specified time periods pursuant to Article 9.

 

(l)“Director”
means any individual who is a member of the Board of Directors.

 

(m)“Disability”
means absence of an Employee from work under the relevant Company or Subsidiary long term disability plan; provided, however,
that to entitle a Participant to an extended exercise period for an Incentive Stock Option, the Participant must meet the description
in Section 22(e)(3) of the Code.

 

(n)“Dividend
Equivalents” means a right granted pursuant to Article 9 to receive the equivalent value (in cash or Stock) of dividends
paid on Stock.

 

(o)“Employee”
means any employee, as defined in accordance with Section 3401(c) of the Code, of the Company or any Subsidiary. “Employment”
means the employment of an Employee by the Company or any Subsidiary. Directors who are not otherwise employed by the Company
or any Subsidiary shall not be considered Employees under the Plan.

 

(p)“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto.

 

(q)“Exercise
Price” means the price at which a Share may be purchased pursuant to an Option, as determined by the Committee.

 

(r)“Fair
Market Value” means the closing price reported for the Shares on the relevant date as reported on NASDAQ or such other principal
national securities exchange in the United States on which the Shares are then traded, or, if such date is not a trading day,
the last prior day on which the Shares were so traded, or if not so listed, the mean between the closing bid and asked prices
of publicly traded Shares in the over-the-counter market, or, if such bid and asked prices shall not be available, as reported
by any nationally recognized quotation service selected by the Company, or as determined by the Committee in a manner consistent
with the provisions of the Code.

 

(s)“Incentive
Stock Option” means an Option that is intended to meet the requirements of Section 422 of the Code.

 

(t)“Independent
Director” means a member of the Board who is not an Employee of the Company.

 

(u)“Insider”
means an Employee who is, on the relevant date, an officer, director, or ten percent (10%) beneficial owner of the Company, as
those terms are defined under Section 16 of the Exchange Act.

 

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(v)“NASDAQ”
means The NASDAQ Stock Market.

 

(w)“Non-Employee
Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3)
of the Exchange Act, or any successor definition adopted by the Board.

 

(x)“Non-Qualified
Stock Option” means an Option that is not intended to be an Incentive Stock Option.

 

(y)
“Option” means an option to purchase Shares from the Company. An Option may be either an Incentive Stock Option or
Non-Qualified Stock Option.

 

(z)“Other
Stock-Based Award” means an Award granted or denominated in Stock or units of Stock pursuant to Section 9.6.

 

(aa)“Participant”
means an Employee, a Consultant, or a member of the Board who holds an outstanding Award granted under the Plan.

 

(bb)“Performance-Based
Award” means an Award granted to selected Covered Employees pursuant to Articles 7 and 9 (other than SARs awarded under
Section 9.5), but which is subject to the terms and conditions set forth in Article 8. All Performance-Based Awards are intended
to qualify as Qualified Performance-Based Compensation.

 

(cc)“Performance
Criteria” means the criteria provided in Section 8.6.

 

(dd)“Performance
Period” means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s
right to, and the payment of, a Performance-Based Award.

 

(ee)“Performance
Stock Unit” and “Performance Share” each mean an Award granted pursuant to Article 9.

 

(ff)“Plan”
means this 2014 Incentive Plan, as it may be amended from time to time.

 

(gg)“Qualified
Performance-Based Compensation” means any compensation that is intended to qualify as “qualified performance-based
compensation” as described in Section 162(m) of the Code.

 

(hh)“Restricted
Stock” means Stock awarded pursuant to Section 7.1 that is subject to certain restrictions and may be subject to risk of
forfeiture.

 

(ii)“Restricted
Stock Unit” means an Award granted pursuant to Section 7.9.

 

(jj)
“Shares” or “Stock” means the shares of common stock of the Company.

 

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(kk)“Stock
Appreciation Right” or “SAR” means a right granted pursuant to Section 9.5 to receive a payment equal to the
excess of the Fair Market Value of a specified number of shares of Stock on the date the SAR is exercised over the Fair Market
Value on the date the SAR was granted as set forth in the applicable Award Agreement.

 

(ll)“Subsidiary”
means any corporation, partnership, venture or other entity in which the Company holds, directly or indirectly, a fifty percent
(50%) or greater ownership interest, provided, however, that with respect to an Incentive Stock Option, a Subsidiary must be a
corporation. The Committee may, at its sole discretion, designate, on such terms and conditions as the Committee shall determine,
any other corporation, partnership, limited liability company, venture, or other entity a Subsidiary for purposes of the Plan.

 

(mm)“Termination
of Employment” or a similar reference means (i) with respect to an Employee, the event where the Employee is no longer an
Employee of the Company or of any Subsidiary, including but not limited to where the employing company ceases to be a Subsidiary
and (ii) with respect to any Participant who is not an Employee, cessation of the performance of services to the Company or any
Subsidiary. With respect to any Award that provides “non-qualified deferred compensation” within the meaning of Section
409A of the Code, “Termination of Employment” shall mean a “separation from service” as defined under
Section 409A of the Code.

 

(nn)“Treasury
Regulation” or “Treas. Reg.” means any regulation promulgated under the Code, as such regulation may be amended
from to time.

 

Article
3

Administration

 

3.1The
Committee. The Plan shall be administered by the Compensation Committee of the Board. The Committee shall consist of at least
two individuals, each of whom qualifies as (a) a Non-Employee Director, (b) an “outside director” pursuant to Section
162(m) of the Code, and (c) an “independent director” under the listing requirements of NASDAQ, or any similar rule
or listing requirement that may be applicable to the Company from time to time. Reference to the Committee shall refer to the
Board if the Compensation Committee ceases to exist and the Board does not appoint a successor Committee.

 

3.2Authority
of the Committee. The Committee shall have complete control over the administration of the Plan and shall have the authority
in its sole discretion to (a) exercise all of the powers granted to it under the Plan, (b) construe, interpret and implement the
Plan, grant terms and grant notices, and all Award Agreements, (c) prescribe, amend and rescind rules and regulations relating
to the Plan, including rules governing its own operations, (d) make all determinations necessary or advisable in administering
the Plan, (e) correct any defect, supply any omission and reconcile any inconsistency in the Plan, (f) amend the Plan to reflect
changes in applicable law (whether or not the rights of the holder of any Award are adversely affected, unless otherwise provided
by the Committee), (g) grant Awards and determine who shall receive Awards, when such Awards shall be granted and the terms and
conditions of such Awards, including, but not limited to, conditioning the exercise, vesting, payout or other term of condition
of an Award on the achievement of Performance Goals, (h) unless otherwise provided by the Committee, amend any outstanding Award
in any respect, not materially adverse to the Participant, including, without limitation, to (1) accelerate the time or times
at which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee
may provide that any Shares acquired pursuant to such Award shall be Restricted Shares, which are subject to vesting, transfer,
forfeiture or repayment provisions similar to those in the Participant’s underlying Award), (2) accelerate the time or times
at which shares of Stock are delivered under the Award (and, without limitation on the Committee’s rights, in connection
with such acceleration, the Committee may provide that any shares of Stock delivered pursuant to such Award shall be Restricted
Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s
underlying Award), or (3) waive or amend any goals, restrictions or conditions applicable to such Award, or impose new goals,
restrictions and (i) determine at any time whether, to what extent and under what circumstances and method or methods (1) Awards
may be (A) settled in cash, shares of Stock, other securities, other Awards or other property (in which event, the Committee may
specify what other effects such settlement will have on the Participant’s Award), (B) exercised or (C) canceled, forfeited
or suspended, (2) Shares, other securities, cash, other Awards or other property and other amounts payable with respect to an
Award may be deferred either automatically or at the election of the Participant or of the Committee, or (3) Awards may be settled
by the Company or any of its Subsidiaries or any of its or their designees.

 

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No
Award may be made under the Plan after the tenth (10th) anniversary of the Effective Date.

 

All
determinations and decisions made by the Company pursuant to the provisions of the Plan and all related orders or resolutions
of the Committee shall be final, conclusive, and binding on all persons, including but not limited to the Company, its shareholders,
Employees, Participants, and their estates and beneficiaries.

 

Article
4

Shares Subject to the Plan

 

4.1Number
of Shares. Subject to adjustment as provided in Sections 4.2 and 4.3, the aggregate number of shares of Stock which may be
issued or transferred pursuant to Awards under the Plan shall be one hundred thousand (100,000) shares. Notwithstanding the foregoing,
in order that the applicable regulations under the Code relating to Incentive Stock Options be satisfied, the maximum number of
shares of Stock that may be delivered upon exercise of Incentive Stock Options shall be one hundred thousand (100,000), as adjusted
under Sections 4.2 and 4.3.

 

4.2Share
Accounting. Without limiting the discretion of the Committee under this section, the following rules will apply for purposes
of the determination of the number of Shares available for grant under the Plan or compliance with the foregoing limits:

 

(a)If
an outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or
if Shares acquired pursuant to an Award subject to forfeiture are forfeited under the terms of the Plan or the relevant Award,
the Shares allocable to the terminated portion of such Award or such forfeited Shares shall again be available for issuance under
the Plan.

 

(b)Shares
shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash,
other than an Option.

 

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(c)If
the Exercise Price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant,
or an Option is settled without the payment of the Exercise Price, or the payment of taxes with respect to any Award is settled
by a net exercise, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for
which the Option is exercised or other Awards that have vested.

 

4.3Adjustments
in Authorized Plan Shares and Outstanding Awards. In the event of any merger, reorganization, consolidation, recapitalization,
separation, split-up, liquidation, Share combination, Stock split, Stock dividend, or other change in the corporate structure
of the Company affecting the Shares, an adjustment shall be made in a manner consistent with Section 422 of the Code for Incentive
Stock Options and in a manner consistent with Section 409A of the Code for Non-Qualified Stock Options and, for Qualified Performance-Based
Compensation, in accordance with Section 162(m) of the Code in the number and class of Shares which may be delivered under the
Plan (including but not limited to individual limits), and in the number and class of and/or price of Shares subject to outstanding
Awards granted under the Plan, and/or the number of outstanding Options, Shares of Restricted Stock, and Performance Shares (and
Restricted Stock Units, Performance Stock Units and other Awards whose value is based on a number of Shares) constituting outstanding
Awards, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights.

 

4.4Limitation
on Number of Shares Subject to Awards. Notwithstanding any provision in the Plan to the contrary, and subject to Section 4.3,
the maximum number of shares of Stock with respect to one or more Awards that may be granted to any one Participant during each
calendar year shall be fifty thousand (50,000), provided that in no event shall any Participant receive one or more Awards of
Restricted Stock or Other Stock-Based Awards in excess of fifty thousand (50,000) shares of Stock in any calendar year.

 

Article
5

Eligibility and Participation

 

5.1General.
Persons eligible to participate in the Plan include Employees, Consultants and all members of the Board, as determined by the
Committee.

 

5.2Foreign
Participants. In order to assure the viability of Awards granted to Participants employed in foreign countries, the Committee
may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy,
or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the
Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase
the share limitations contained in Section 4.1 of the Plan.

 

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Article
6

Stock Options

 

6.1Grant
of Options. Subject to the terms and provisions of the Plan, Options may be granted at any time and from time to time, and
under such terms and conditions, as shall be determined by the Committee; provided, however, that Incentive Stock Options may
only be awarded to Employees, and provided further, that no Award of an Incentive Stock Option may be made pursuant to the Plan
after the tenth (10th) anniversary of the Effective Date. In addition, the Committee may, from time to time, provide
for the payment of Dividend Equivalents on Options, prospectively and/or retroactively, on such terms and conditions as the Committee
may require. The Committee shall have discretion in determining the number of Shares subject to Options, subject to the limitations
set forth in Article 4.

 

6.2Form
of Issuance. Each Option grant may be issued in the form of an Award Agreement and/or may be recorded on the books and records
of the Company for the account of the Participant. If an Option is not issued in the form of an Award Agreement, then the Option
shall be deemed granted as determined by the Committee. The terms and conditions of an Option shall be set forth in the Award
Agreement, in the notice of the issuance of the grant, or in such other documents as the Committee shall determine. Such terms
and conditions shall include the Exercise Price, the duration of the Option, the number of Shares to which an Option pertains
(unless otherwise provided by the Committee, each Option may be exercised to purchase one Share), and such other provisions as
the Committee shall determine.

 

6.3Exercise
Price. Unless a greater Exercise Price is determined by the Committee, the Exercise Price for each Option awarded under the
Plan shall be equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted. Subject
to adjustment as provided in Section 4.3 herein or as otherwise provided herein, the terms of an Option may not be amended to
reduce the Exercise Price nor may an Option be cancelled or exchanged for cash, other awards or Options with an Exercise Price
that is less than the Exercise Price of the original Option.

 

In
the case of an Incentive Stock Option granted to any individual who, at the date of grant, owns stock possessing more than ten
percent (10%) of the total combined voting power all classes of stock of the Company, such Incentive Stock Option shall be granted
at a price that is not less than one hundred and ten percent (110%) of Fair Market Value on the date of grant and such Incentive
Stock Option shall be exercisable for no more than five (5) years from the date of grant.

 

6.4Duration
of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant (which duration may
be extended by the Committee); provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary
date of its grant. In the event the Committee does not specify the expiration date of an Option, then such Option will expire
on the tenth (10th) anniversary date of its grant, except as otherwise provided herein.

 

In
the case of an Incentive Stock Option, such Incentive Stock Option may not be exercised to any extent by anyone after the first
to occur of the following events:

 

(a)The
expiration date of the Incentive Stock Option.

 

(b)One
(1) year after the date of the Participant’s Termination of Employment on account of Disability or death. Upon the Participant’s
Disability or death, any Incentive Stock Options exercisable at the Participant’s Disability or death may be exercised by
the Participant’s legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant’s
last will and testament, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option or dies
intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant to the applicable laws of descent
and distribution.

 

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(c)Three
(3) months after the date of the Participant’s Termination of Employment for any reason other than Disability or death.
Whether a Participant continues to be an Employee shall be determined in accordance with Treas. Reg. Section 1.421-1(h)(2).

 

6.5Vesting
of Options. A grant of Options shall vest at such times and under such terms and conditions as determined by the Committee
including, without limitation, suspension of a Participant’s vesting during all or a portion of a Participant’s leave
of absence. The Committee shall have the right to accelerate the vesting of any Option. The Chairman of the Board or his successors,
or such other persons designated by the Committee, shall have the authority to accelerate the vesting of Options for any Participant
who is not an Insider.

 

6.6Exercise
of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions
as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant; provided,
however, that during a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant. Exercises
of Options may be effected only on days and during the hours NASDAQ or such other principal national securities exchange in the
United States on which the Shares are then traded is open for regular trading. The Company may change or limit the times or days
Options may be exercised. If an Option expires on a day or at a time when exercises are not permitted, then the Option may be
exercised no later than the immediately preceding date and time that the Option was exercisable.

 

An
Option shall be exercised by providing notice to the designated agent selected by the Company (if no such agent has been designated,
then to the Company), in the manner and form determined by the Company, which notice shall be irrevocable, setting forth the exact
number of Shares with respect to which the Option is being exercised and including with such notice payment of the Exercise Price,
as applicable. When an Option has been transferred, the Company or its designated agent may require appropriate documentation
that the person or persons exercising the Option, if other than the Participant, has the right to exercise the Option. No Option
may be exercised with respect to a fraction of a Share.

 

Additionally,
the Participant shall give the Company prompt notice of any disposition of shares of Stock acquired by exercise of an Incentive
Stock Option within (i) two (2) years from the date of grant of such Incentive Stock Option or (ii) one (1) year after the transfer
of such shares of Stock to the Participant.

 

6.7Individual
Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock
with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not exceed $100,000.00
or such other limitation as imposed by Section 422(d) of the Code. To the extent that Incentive Stock Options are first exercisable
by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Stock Options.

 

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6.8Payment.
Unless otherwise determined by the Committee, the Exercise Price shall be paid in full at the time of exercise. No Shares shall
be issued or transferred until full payment has been received or the next business day thereafter, as determined by the Company.

 

The
Committee may, from time to time, determine or modify the method or methods of exercising Options or the manner in which the Exercise
Price is to be paid.Unless otherwise provided by the Committee in full or in part:

 

(a)Payment
may be made in cash.

 

(b)Payment
may be made by delivery of Shares owned by the Participant in partial (if in partial payment, then together with cash) or full
payment.

 

(c)If
the Company has designated a stockbroker to act as the Company’s agent to process Option exercises, an Option may be exercised
by issuing an exercise notice together with instructions to such stockbroker irrevocably instructing the stockbroker: (i) to immediately
sell (which shall include an exercise notice that becomes effective upon execution of a sale order) a sufficient portion of the
Shares to be received from the Option exercise to pay the Exercise Price of the Options being exercised and the required tax withholding,
and (ii) to deliver on the settlement date the portion of the proceeds of the sale equal to the Exercise Price and tax withholding
to the Company. In the event the stockbroker sells any Shares on behalf of a Participant, the stockbroker shall be acting solely
as the agent of the Participant, and the Company disclaims any responsibility for the actions of the stockbroker in making any
such sales. However, if the Participant is an Insider, then the instruction to the stockbroker to sell in the preceding sentence
is intended to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act to the extent permitted by law. No
Shares shall be issued until the settlement date and until the proceeds (equal to the Exercise Price and tax withholding) are
paid to the Company.

 

(d)At
any time, the Committee may, in addition to or in lieu of the foregoing, provide that an Option may be “stock settled,”
which shall mean upon exercise of an Option, the Company may fully satisfy its obligation under the Option by delivering that
number of shares of Stock found by taking the difference between (i) the Fair Market Value of the Stock on the exercise date,
multiplied by the number of Options being exercised and (ii) the total Exercise Price of the Options being exercised, and dividing
such difference by the Fair Market Value of the Stock on the exercise date.

 

If
payment is made by the delivery of Shares, the value of the Shares delivered shall be equal to the then most recent Fair Market
Value of the Shares established before the exercise of the Option.

 

Restricted
Stock may not be used to pay the Exercise Price.

 

Notwithstanding
any other provision of the Plan to the contrary, no Participant who is a member of the Board or an “Executive Officer”
of the Company shall be permitted to pay the Exercise Price of an Option in any method which would violate Section 13(h) of the
Exchange Act.

 

6.9Termination
of Employment. Unless otherwise provided by the Committee, the following limitations on exercise of Options shall apply upon
Termination of Employment:

 

(a)Termination
by Death or Disability. In the event of the Participant’s Termination of Employment by reason of death or Disability,
all outstanding Options granted to that Participant shall immediately vest as of the date of Termination of Employment and may
be exercised, if at all, no more than one (1) year from the date of the Termination of Employment, unless the Options, by their
terms, expire earlier.

 

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(b)Termination
for Cause. In the event of the Participant’s Termination of Employment by the Company for Cause, all outstanding Options
held by the Participant shall immediately be forfeited to the Company and no additional exercise period shall be allowed, regardless
of the vested status of the Options.

 

(c)Other
Termination of Employment. In the event of the Participant’s Termination of Employment for any reason other than the
reasons set forth in (a) or (b), above:

 

(i)All
outstanding Options which are vested as of the effective date of Termination of Employment may be exercised, if at all, no more
than one (1) year from the date of Termination of Employment if the Participant is eligible to retire, or three (3) months from
the date of the Termination of Employment if the Participant is not eligible to retire, as the case may be, unless in either case
the Options, by their terms, expire earlier; and

 

(ii)In
the event of the death of the Participant after Termination of Employment, this paragraph (c) shall still apply and not paragraph
(a), above.

 

(d)Options
not Vested at Termination. Except as provided in paragraph (a) above, all Options held by the Participant which are not vested
on or before the effective date of Termination of Employment shall immediately be forfeited to the Company (and the Shares subject
to such forfeited Options shall once again become available for issuance under the Plan).

 

(e)Other
Terms and Conditions. Notwithstanding the foregoing, the Committee may, in its sole discretion, establish different, or waive,
terms and conditions pertaining to the effect of Termination of Employment on Options, whether or not the Options are outstanding,
but no such modification shall shorten the terms of Options issued prior to such modification or otherwise be materially adverse
to the Participant.

 

6.10Restrictions
on Exercise and Transfer of Options. Unless otherwise provided by the Committee:

 

(a)During
the Participant’s lifetime, the Participant’s Options shall be exercisable only by the Participant or by the Participant’s
guardian or legal representative. After the death of the Participant, except as otherwise provided by Article 10, an Option shall
only be exercised by the holder thereof (including, but not limited to, an executor or administrator of a decedent’s estate)
or his or her guardian or legal representative.

 

(b)No
Option shall be transferable except: (i) in the case of the Participant, only upon the Participant’s death and in accordance
with Article 10; and (ii) in the case of any holder after the Participant’s death, only by will or by the laws of descent
and distribution; and (iii) pursuant to a domestic relations order.

 

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Article
7

Restricted Stock

 

7.1Grant
of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock in such amounts, subject to the limitations in Article 4, and upon such terms and conditions
as the Committee shall determine. In addition to any other terms and conditions imposed by the Committee, vesting of Restricted
Stock may be conditioned upon the achievement of Performance Goals in the same manner as provided in Section 8.6 with respect
to Performance-Based Awards.

 

7.2Restricted
Stock Agreement. The Committee may require, as a condition to receiving a Restricted Stock Award, that the Participant enter
into a Restricted Stock Award Agreement, setting forth the terms and conditions of the Award. In lieu of a Restricted Stock Award
Agreement, the Committee may provide the terms and conditions of an Award in a notice to the Participant of the Award, on the
stock certificate representing the Restricted Stock, in the resolution approving the Award, or in such other manner as it deems
appropriate. The Committee may further provide that an Award of Restricted Stock is conditioned upon the Participant making or
refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election
pursuant to Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be required to file promptly
a copy of such election with the Company.

 

7.3Transferability.
Except as otherwise provided in this Article 7, and subject to any additional terms in the grant thereof, Shares of Restricted
Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until fully vested.

 

7.4Restrictions.
The Restricted Stock shall be subject to such vesting terms, including the achievement of Performance Goals (as described in Section
8.6), as may be determined by the Committee. Unless otherwise provided by the Committee, to the extent Restricted Stock is subject
to any condition to vesting, if such condition or conditions are not satisfied by the time the period for achieving such condition
has expired, such Restricted Stock shall be forfeited. The Committee may impose such other conditions and/or restrictions on any
Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including but not limited to a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock and/or restrictions under applicable Federal or
state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions.
The Committee may also grant Restricted Stock without any terms or conditions in the form of vested Stock Awards.

 

The
Company shall also have the right to retain the certificates representing Shares of Restricted Stock in the Company’s possession
until such time as the Shares are fully vested and all conditions and/or restrictions applicable to such Shares have been satisfied.

 

7.5Removal
of Restrictions. Except as otherwise provided in this Article 7 or otherwise provided in the grant thereof, Shares of Restricted
Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after completion
of all conditions to vesting, if any. However, the Committee, in its sole discretion, shall have the right to immediately vest
the shares and waive all or part of the restrictions and conditions with regard to all or part of the Shares held by any Participant
at any time.

 

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7.6Voting
Rights, Dividends and Other Distributions. Participants holding Shares of Restricted Stock granted hereunder may exercise
full voting rights and shall receive all dividends and distributions paid with respect to such Shares. The Committee may require
that dividends and other distributions, other than regular cash dividends, paid to Participants with respect to Shares of Restricted
Stock be subject to the same restrictions and conditions as the Shares of Restricted Stock with respect to which they were paid.
If any such dividends or distributions are paid in Shares, the Shares shall automatically be subject to the same restrictions
and conditions as the Shares of Restricted Stock with respect to which they were paid.

 

7.7Termination
of Employment Due to Death or Disability. In the event of the Participant’s Termination of Employment by reason of death
or Disability, unless otherwise determined by the Committee, all restrictions imposed on outstanding Shares of Restricted Stock
held by the Participant shall immediately lapse and the Restricted Stock shall immediately become fully vested as of the date
of Termination of Employment.

 

7.8Termination
of Employment for Other Reasons. Unless otherwise provided by the Committee, in the event of the Participant’s Termination
of Employment for any reason other than those specifically set forth in Section 7.7 herein, all Shares of Restricted Stock held
by the Participant which are not vested as of the effective date of Termination of Employment immediately shall be forfeited and
returned to the Company.

 

7.9Restricted
Stock Units. In lieu of or in addition to Restricted Stock, the Committee may grant Restricted Stock Units under such terms
and conditions as shall be determined by the Committee. Restricted Stock Units shall be subject to the same terms and conditions
under the Plan as Restricted Stock except as otherwise provided in the Plan or as otherwise provided by the Committee. Except
as otherwise provided by the Committee, the award shall be settled and paid out promptly upon vesting (to the extent permitted
by Section 409A of the Code), and the Participant holding such Restricted Stock Units shall receive, as determined by the Committee,
Shares (or cash equal to the Fair Market Value of the number of Shares as of the date the Award becomes payable) equal to the
number of such Restricted Stock Units. Restricted Stock Units shall not be transferable, shall have no voting rights, and shall
not receive dividends, but shall, unless otherwise provided by the Committee, receive Dividend Equivalents at the time and at
the same rate as dividends are paid on Shares with the same record and pay dates. Upon a Participant’s Termination of Employment
due to death or Disability, the Committee will determine whether there should be any acceleration of vesting.

 

Article
8

Performance-Based Awards

 

8.1Purpose.
The purpose of this Article 8 is to provide the Committee the ability to qualify Awards other than Options and SARs and that are
granted pursuant to Articles 7 and 9 (other than SARs awarded under Section 9.5) as Qualified Performance-Based Compensation.
If the Committee, in its discretion, decides to grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 8 shall control over any contrary provision contained in Articles 7 or 9; provided, however, that the Committee may in
its discretion grant Awards to Covered Employees that are based on Performance Criteria or Performance Goals but that do not satisfy
the requirements of this Article 8.

 

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8.2Applicability.
This Article 8 shall apply only to those Covered Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to
receive an Award for the period. Moreover, designation of a Covered Employee as a Participant for a particular Performance Period
shall not require designation of such Covered Employee as a Participant in any subsequent Performance Period and designation of
one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period
or in any other period.

 

8.3Procedures
with Respect to Performance-Based Awards. To the extent necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m) of the Code, with respect to any Award granted under Articles 7 and 9 which may be granted to one
or more Covered Employees, no later than ninety (90) days following the commencement of any fiscal year in question or any other
designated fiscal period or period of service, and not later than after twenty-five percent (25%) of such period has elapsed (or
such other time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (a) designate
one or more Covered Employees, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance
Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (d) specify the relationship
between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered
Employee for such Performance Period. Following the completion of each Performance Period, the Committee shall certify in writing
whether the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned by a
Covered Employee, the Committee shall have the right to reduce or eliminate (but not to increase) the amount payable at a given
level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual
or corporate performance for the Performance Period.

 

8.4Payment
of Performance-Based Awards. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by
the Company or a Subsidiary on the day a Performance-Based Award for such Performance Period is paid to the Participant. Furthermore,
a Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a Performance Period only if the
Performance Goals for such period are achieved.

 

8.5Performance
Period. The Performance Period is set by the Committee for each Award.

 

8.6Performance
Goals. For each Performance-Based Award, the Committee shall establish (and may establish for other Awards) performance objectives
(“Performance Goals”) for the Company, its Subsidiaries, and/or divisions of any of foregoing, using the Performance
Criteria and other factors set forth in (a) and (b), below. It may also use other criteria or factors in establishing Performance
Goals in addition to or in lieu of the foregoing. A Performance Goal may be stated as an absolute value or as a value determined
relative to an index, budget, prior period, similar measures of a peer group of other companies or other standard selected by
the Committee. Performance Goals shall include payout tables, formulas or other standards to be used in determining the extent
to which the Performance Goals are met, and, if met, the number of Performance Shares and/or Performance Stock Units which would
be converted into Stock and/or cash (or the rate of such conversion) and distributed to Participants in accordance with Section
8.6. Unless previously canceled or reduced, Performance Shares and Performance Stock Units which may not be converted because
of failure in whole or in part to satisfy the relevant Performance Goals or for any other reason shall be canceled at the time
they would otherwise be distributable.

 

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The
Performance Criteria which the Committee is authorized to use, in its sole discretion, are any of the following criteria or any
combination thereof, including but not limited to the offset against each other of any combination of the following criteria:

 

(a)Financial
performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or a division of any of the foregoing.
Such financial performance may be based on net income, economic value added (as determined by the Committee), EBITDA (earnings
before interest, taxes, depreciation and amortization), revenues, sales, expenses, costs, gross margin, operating margin, profit
margin, pre-tax profit, market share, volumes of a particular product or service or category thereof, including but not limited
to a product’s life cycle (for example, products introduced in the last two years), number of customers, number of products
for sale, return on net assets, return on assets, return on capital, return on invested capital, cash flow, free cash flow, operating
cash flow, operating revenues, operating expenses, operating income, and/or completion of capital raising transaction.

 

(b)Service
performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or of a division of any of the foregoing.

 

(c)Employee
satisfaction, employee retention, product development, completion of a joint venture or other corporate transaction, completion
of an identified special project, and effectiveness of management.

 

(d)The
Company’s Stock price, return on shareholders’ equity, total shareholder return (Stock price appreciation plus dividends,
assuming the reinvestment of dividends), and/or earnings per Share.

 

(e)Impacts
of acquisitions, dispositions, or restructurings, on any of the foregoing.

 

Unless
otherwise provided by the Committee at any time, no such adjustment shall be made for a current or former executive officer to
the extent such adjustment would cause an Award to fail to satisfy the performance based exemption of Section 162(m) of the Code.

 

If
the material terms of the Performance Criteria are not changed, they will be disclosed to and reported to the shareholders no
later than the first shareholder meeting that occurs in the fifth year following the year in which shareholders previously approved
the Performance Criteria.

 

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8.7Additional
Limitations. Notwithstanding any other provision of the Plan, any Award which is granted to a Covered Employee and is intended
to constitute Qualified Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m)
of the Code that are requirements for qualification as qualified performance-based compensation as described in Section 162(m)
of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

 

8.8Termination
of Employment for Cause. In the event of the Termination of Employment of a Participant by the Company for Cause, all Performance
Stock Units and Performance Shares shall be forfeited by the Participant to the Company.

 

8.9Nontransferability.
Performance Stock Units and Performance Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than in accordance with Article 10 or pursuant to a domestic relations order.

 

Article
9

Other Types of Awards

 

9.1Performance
Share Awards. Any Participant selected by the Committee may be granted one or more Performance Share awards which shall be
denominated in a number of shares of Stock and which may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. In making such determinations, the Committee shall consider (among such other factors as
it deems relevant in light of the specific type of award) the contributions, responsibilities and other compensation of the particular
Participant.

 

9.2Performance
Stock Units. Any Participant selected by the Committee may be granted one or more Performance Stock Unit awards which
shall be denominated in units of value including dollar value of shares of Stock and which may be linked to any one or more of
the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of award) the contributions, responsibilities and
other compensation of the particular Participant.

 

9.3Dividend
Equivalents.

 

(a)Any
Participant selected by the Committee may be granted Dividend Equivalents based on the dividends declared on the shares of Stock
that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted
and the date the Award is exercised, vests or expires, as determined by the Committee. Such Dividend Equivalents shall be converted
to cash or additional shares of Stock by such formula and at such time and subject to such limitations as may be determined by
the Committee, in a matter consistent with the rules of Section 409A of the Code.

 

(b)Dividend
Equivalents granted with respect to Options or SARs shall be payable, with respect to pre-exercise periods, regardless of whether
such Option or SAR is subsequently exercised.

 

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9.4Deferred
Stock. Any Participant selected by the Committee may be granted an award of Deferred Stock in the manner determined from time
to time by the Committee. The number of shares of Deferred Stock shall be determined by the Committee and may be linked to the
Performance Criteria or other specific performance criteria determined to be appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee. Stock underlying a Deferred Stock Award will not be issued
until the Deferred Stock Award has vested, pursuant to a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Participant awarded Deferred Stock shall have no rights as a Company shareholder with respect
to such Deferred Stock until such time as the Deferred Stock Award has vested and the Stock underlying the Deferred Stock Award
has been issued.

 

9.5Stock
Appreciation Rights. Any Participant selected by the Committee may be granted one or more SARs. SARs may be granted alone
or in tandem with Options. With respect to SARs granted in tandem with Options, the exercise of either such Options or such SARs
shall result in the simultaneous cancellation of the same number of tandem SARs or Options, as the case may be. The exercise price
per share of Stock covered by a SAR granted pursuant to the Plan shall be equal to or greater than Fair Market Value on the date
the SAR was granted. The term of each SAR shall be determined by the Committee in its sole discretion, but in no event shall the
term exceed ten (10) years from the date of grant. SARs may be settled in the form of cash, shares of Stock or a combination
of cash and shares of Stock, as determined by the Committee.

 

9.6Other
Stock-Based Awards. Any Participant selected by the Committee may be granted one or more Awards that provide Participants
with shares of Stock or the right to purchase shares of Stock or that have a value derived from the value of, or an exercise or
conversion privilege at a price related to, or that are otherwise payable in shares of Stock and which may be linked to any one
or more of the Performance Criteria or other specific performance criteria determined appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the Committee. In making such determinations, the Committee
shall consider (among such other factors as it deems relevant in light of the specific type of Award) the contributions, responsibilities
and other compensation of the particular Participant.

 

9.7Performance
Bonus Awards. Any Participant selected by the Committee may be granted one or more Performance-Based Awards in the form of
a cash bonus (a “Performance Bonus Award”) payable upon the attainment of Performance Goals that are established
by the Committee and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any
period or periods determined by the Committee. Any such Performance Bonus Award paid to a Covered Employee shall be based upon
objectively determinable bonus formulas established in accordance with Article 8. The maximum amount of any Performance Bonus
Award payable to a Covered Employee with respect to any fiscal year of the Company shall not exceed $500,000.00.

 

9.8Term.
Except as otherwise provided herein, the term of any Award of Performance Shares, Performance Stock Units, Dividend Equivalents,
Deferred Stock, Restricted Stock Units or Other Stock-Based Award shall be set by the Committee in its discretion.

 

9.9Exercise
or Purchase Price. The Committee may establish the exercise or purchase price, if any, of any Award of Performance Shares,
Performance Stock Units, Deferred Stock, Restricted Stock Units or Other Stock-Based Award; provided, however, that such price
shall not be less than the par value of a share of Stock on the date of grant, unless otherwise permitted by applicable state
law.

 

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9.10Exercise
Upon Termination of Employment. An Award of Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred Stock,
Restricted Stock Units and Other Stock-Based Award shall only be exercisable or payable prior to or concurrent with a Participant’s
Termination of Employment unless otherwise provided by the Committee in its sole and absolute discretion; provided, however, that
any such provision with respect to Performance Shares or Performance Stock Units shall be subject to the requirements of Section
162(m) of the Code that apply to Qualified Performance-Based Compensation.

 

9.11Form
of Payment. Payments with respect to any Awards granted under this Article 9 shall be made in cash, in Stock or a combination
of both, as determined by the Committee.

 

9.12Award
Agreement. All Awards under this Article 9 shall be subject to such additional terms and conditions as determined by the Committee
and shall be evidenced by a written Award Agreement.

 

9.13Termination
of Employment for Cause. In the event of the Termination of Employment of a Participant by the Company for Cause, all Awards
under this Article 9 shall be forfeited by the Participant to the Company.

 

9.14Nontransferability.
Unless otherwise provided by the Committee, all Awards under this Article 9 may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than in accordance with Article 10 or pursuant to a domestic relations order.

 

Article
10

Beneficiary Designation

 

Notwithstanding
Section 6.10, 7.3, 7.9, 8.9 and 9.14, a Participant may, in the manner determined by the Committee, designate a beneficiary to
exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s
death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject
to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and
Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the
Participant is married and resides in a community property state, a designation of a person other than the Participant’s
spouse as his or her beneficiary with respect to more than fifty percent (50%) of the Participant’s interest in the Award
shall not be effective without the prior written consent of the Participant’s spouse. If no beneficiary has been designated
or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant’s will or
the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.

 

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Article
11

Employee Matters

 

11.1Employment
Not Guaranteed. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant’s Employment at any time, nor confer upon any Participant any right to continue in the employ
of the Company or one of its Subsidiaries.

 

11.2Participation.
No Employee shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to be selected
to receive a future Award.

 

11.3Reimbursement
of Company for Unearned or Ill-gotten Gains. Unless otherwise specifically provided in an Award Agreement, and to the extent
permitted by Applicable Law, if the Company is required to prepare an accounting restatement due to the material noncompliance
of the Company with any financial reporting requirement under the securities laws, the Committee may, without obtaining the approval
or consent of the Company’s shareholders or of any Participant, require that any Participant who personally engaged in one
of more acts of fraud or misconduct that have caused or partially caused the need for such restatement or any current or former
chief executive officer, chief financial officer, or executive officer, regardless of their conduct, to reimburse the Company
in a manner consistent with Section 409A of the Code, if the Award constitutes “Non-Qualified Deferred Compensation,”
for all or any portion of any Awards granted or settled under the Plan (with each such case being a “Reimbursement”),
or the Committee may require the Termination or Rescission of, or the Recapture associated with, any Award, in excess of the amount
the Participant would have received under the accounting restatement.

 

Article
12

Change in Control

 

Unless
the Committee provides otherwise prior to the grant of an Award, upon the occurrence of a Change in Control, the following shall
apply to such Award:

 

(a)Any
and all Options granted hereunder to a Participant immediately shall become vested and exercisable upon the Termination of Employment
of such Participant by the Company for any reason other than for Cause or by any Participant that is an Employee for “Good
Reason”;

 

(b)Any
restriction periods and all restrictions imposed on Restricted Stock and Restricted Stock Units shall lapse and they shall immediately
become fully vested upon the Termination of Employment of the Participant by the Company for any reason other than for Cause or
by any Participant that is an Employee for “Good Reason”, provided that Restricted Stock Units shall be settled in
accordance with the terms of the grant without regard to the Change in Control unless the Change in Control constitutes a “change
in control event” within the meaning of Section 409A of the Code and such Termination of Employment occurs within one (1)
year following such Change in Control, in which case the Restricted Stock Units shall be settled and paid out with such Termination
of Employment;

 

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(c)Unless
otherwise determined by the Committee, the payout of Performance Stock Units and Performance Shares shall be determined exclusively
by the attainment of the Performance Goals established by the Committee, which may not be modified after the Change in Control,
and the Company shall not have the right to reduce the Awards for any other reason;

 

(d)For
purposes of the Plan, “Good Reason” means in connection with a Termination of Employment by an Employee within one
(1) year following a Change in Control, (a) a material adverse alteration in the Employee’s position or in the nature or
status of the Employee’s responsibilities from those in effect immediately prior to the Change in Control, or (b) any material
reduction in the Employee’s base salary rate or target annual bonus, in each case as in effect immediately prior to the
Change in Control, or (c) the relocation of the Employee’s principal place of employment to a location that is more than
fifty (50) miles from the location where the Employee was principally employed at the time of the Change in Control or materially
increases the time of the Employee’s commute as compared to the Employee’s commute at the time of the Change in Control
(except for required travel on the Company’s business to an extent substantially consistent with the Employee’s customary
business travel obligations in the ordinary course of business prior to the Change in Control).

 

In
order to invoke a Termination of Employment for Good Reason, an Employee must provide written notice to the Company or such Subsidiary
employing the Employee of the existence of one or more of the conditions constituting Good Reason within ninety (90) days following
the Employee’s knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions
constituting Good Reason, and the Company or such Subsidiary shall have thirty (30) days following receipt of such written notice
(the “Cure Period”) during which it may remedy the condition. In the event that the Company or such Subsidiary fails
to remedy the condition constituting Good Reason during the applicable Cure Period, the Employee’s “separation from
service” (within the meaning of Section 409A of the Code) must occur, if at all, within one (1) year following such Cure
Period in order for such termination as a result of such condition to constitute a Termination of Employment for Good Reason.

 

Article
13

Amendment, Modification, and Termination

 

13.1Amendment,
Modification, and Termination. With the approval of the Board, at any time and from time to time, the Committee may terminate,
amend or modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with any applicable law,
regulation, or stock exchange rule, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to
such a degree as required, and (b) shareholder approval is required for any amendment to the Plan that (i) increases the number
of shares available under the Plan (other than any adjustment as provided by Section 4.3), (ii) permits the Committee to grant
Options with an Exercise Price that is below Fair Market Value on the date of grant, (iii) permits the Committee to extend the
exercise period for an Option beyond ten (10) years from the date of grant, (iv) results in a material increase in benefits or
a change in eligibility requirements, (v) changes the granting corporation or (vi) changes the type of stock. Notwithstanding
any provision in the Plan to the contrary, absent approval of the shareholders of the Company, no Option may be amended to reduce
the per share Exercise Price of the shares subject to such Option below the per share exercise price as of the date the Option
is granted and, except as permitted by Section 4.3, no Option may be granted in exchange for, or in connection with, the cancellation
or surrender of an Option having a higher per share Exercise Price.

 

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13.2Awards
Previously Granted. No termination, amendment, or modification of the Plan or any Award (other than Performance Shares or
Performance Stock Units) shall adversely affect in any material way any Award previously granted under the Plan, without the written
consent of the Participant holding such Award; provided, however, that any such modification made for the purpose of complying
with Section 409A of the Code may be made by the Company without the consent of any Participant.

 

13.3Delay
in Payment. To the extent required in order to avoid the imposition of any interest and/or additional tax under Section 409A(a)(1)(B)
of the Code, any amount that is considered deferred compensation under the Plan or Agreement and that is required to be postponed
pursuant to Section 409A of the Code, following a Participant’s Termination of Employment shall be delayed for six (6) months
if a Participant is deemed to be a “specified employee” as defined in Section 409A(a)(2)(i)(B) of the Code; provided
that, if the Participant dies during the postponement period prior to the payment of the postponed amount, the amounts withheld
on account of Section 409A of the Code shall be paid to the executor or administrator of the decedent’s estate within 60
days following the date of his death. A “Specified Employee” means any Participant who is a “key employee”
(as defined in Section 416(i) of the Code without regard to paragraph (5) thereof), as determined by the Company in accordance
with its uniform policy with respect to all arrangements subject to Section 409A of the Code, based upon the twelve (12) month
period ending on each December 31st (such twelve (12) month period is referred to below as the “identification
period”). All Participants who are determined to be key employees under Section 416(i) of the Code (without regard to paragraph
(5) thereof) during the identification period shall be treated as Specified Employees for purposes of the Plan during the twelve
(12) month period that begins on the first day of the 4th month following the close of such identification period.

 

Article
14

Withholding

 

14.1Tax
Withholding. Unless otherwise provided by the Committee, the Company shall deduct or withhold any amount needed to satisfy
any foreign, federal, state, or local tax (including but not limited to the Participant’s employment tax obligations) required
by law to be withheld with respect to any taxable event arising or as a result of the Plan (“Withholding Taxes”).

 

14.2Share
Withholding. Unless otherwise provided by the Committee, upon the exercise of Options, the lapse of restrictions on Restricted
Stock, the vesting of Restricted Stock Units, the distribution of Performance Shares in the form of Stock, or any other taxable
event hereunder involving the transfer of Stock to a Participant, the Company shall withhold Stock equal in value, using the Fair
Market Value on the date determined by the Company to be used to value the Stock for tax purposes, to the Withholding Taxes applicable
to such transaction.

 

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Any
fractional Share of Stock payable to a Participant shall be withheld as additional Federal withholding, or, at the option of the
Company, paid in cash to the Participant.

 

Unless
otherwise determined by the Committee, when the method of payment for the Exercise Price is from the sale by a stockbroker pursuant
to Section 6.8(c), herein, of the Stock acquired through the Option exercise, then the tax withholding shall be satisfied out
of the proceeds. For administrative purposes in determining the amount of taxes due, the sale price of such Stock shall be deemed
to be the Fair Market Value of the Stock.

 

If
permitted by the Committee, prior to the end of any Performance Period a Participant may elect to have a greater amount of Stock
withheld from the distribution of Performance Shares to pay withholding taxes; provided, however, the Committee may prohibit or
limit any individual election or all such elections at any time.

 

Alternatively,
or in combination with the foregoing, the Committee may require Withholding Taxes to be paid in cash by the Participant or by
the sale of a portion of the Stock being distributed in connection with an Award, or by a combination thereof.

 

The
withholding of taxes is intended to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act to the extent
permitted by law.

 

Article
15

Successors

 

All
obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise,
of all or substantially all of the business and/or assets of the Company.

 

Article
16

Legal Construction

 

16.1Gender
and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine;
the plural shall include the singular and the singular shall include the plural.

 

16.2Severability.
In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had
not been included.

 

16.3Requirements
of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to Applicable Law and to such approvals
by any governmental agencies or national securities exchanges as may be required.

 

16.4Errors.
At any time the Company may correct any error made under the Plan without prejudice to the Company. Such corrections may include,
among other things, changing or revoking an issuance of an Award.

 

    	22

    	 

    

 

16.5Elections
and Notices. Notwithstanding anything to the contrary contained in the Plan, all elections and notices of every kind shall
be made on forms prepared by the Company or the Secretary or Assistant Secretary, or their respective delegates or shall be made
in such other manner as permitted or required by the Company or the Secretary or Assistant Secretary, or their respective delegates,
including but not limited to elections or notices through electronic means, over the Internet or otherwise. An election shall
be deemed made when received by the Company (or its designated agent, but only in cases where the designated agent has been appointed
for the purpose of receiving such election), which may waive any defects in form. The Company may limit the time an election may
be made in advance of any deadline.

 

Where
any notice or filing required or permitted to be given to the Company under the Plan, it shall be delivered to the principal office
of the Company, directed to the attention of the Secretary. Such notice shall be deemed given on the date of delivery.

 

Notice
to the Participant shall be deemed given when mailed (or sent by telecopy) to the Participant’s work or home address as
shown on the records of the Company or, at the option of the Company, to the Participant’s e-mail address as shown on the
records of the Company.

 

It
is the Participant’s responsibility to ensure that the Participant’s addresses are kept up to date on the records
of the Company. In the case of notices affecting multiple Participants, the notices may be given by general distribution at the
Participants’ work locations.

 

16.6Governing
Law. To the extent not preempted by Federal law, the Plan, and all awards and agreements hereunder, and any and all disputes
in connection therewith, shall be governed by and construed in accordance with the substantive laws of the State of Minnesota,
without regard to conflict or choice of law principles which might otherwise refer the construction, interpretation or enforceability
of the Plan to the substantive law of another jurisdiction.

 

16.7Venue.
The Company and the Participant to whom an award under the Plan is granted, for themselves and their successors and assigns, irrevocably
submit to the exclusive and sole jurisdiction and venue of the state or federal courts of Minnesota with respect to any and all
disputes arising out of or relating to the Plan, the subject matter of the Plan or any awards under the Plan, including but not
limited to any disputes arising out of or relating to the interpretation and enforceability of any awards or the terms and conditions
of the Plan. To achieve certainty regarding the appropriate forum in which to prosecute and defend actions arising out of or relating
to the Plan, and to ensure consistency in application and interpretation of the Governing Law to the Plan, the parties agree that
(a) sole and exclusive appropriate venue for any such action shall be an appropriate federal or state court in Minnesota, and
no other, (b) all claims with respect to any such action shall be heard and determined exclusively in such Minnesota court, and
no other, (c) such Minnesota court shall have sole and exclusive jurisdiction over the person of such parties and over the subject
matter of any dispute relating hereto and (d) that the parties waive any and all objections and defenses to bringing any such
action before such Minnesota court, including but not limited to those relating to lack of personal jurisdiction, improper venue
or forum non conveniens.

 

16.8409A
Compliance. Awards under the Plan may be structured to be exempt from or be subject to Section 409A of the Code. To the extent
that Awards granted under the Plan are subject to Section 409A of the Code, the Plan will be construed and administered in a manner
that enables the Plan and such Awards to comply with the provisions of Section 409A of the Code.

 

    	23

    	 

    

 

16.9No
Obligation to Notify. The Company shall have no duty or obligation to any holder of an Option to advise such holder as to
the time or manner of exercising such Option. Furthermore, the Company shall have no duty or obligation to warn or otherwise advise
such holder of a pending transaction or expiration of an Option or a possible period in which the Option may not be exercised.
The Company has no duty or obligation to minimize the tax consequences of an Option to the holder of such Option.

 

16.10Indemnification.
To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member
in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or
she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid
by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the
Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled pursuant to the Company’s Amended and Restated Articles of Incorporation or the Bylaws,
as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

16.11Reporting.
The Company will provide grantees who are awarded Incentive Stock Options with statements in accordance with Section 6039(b) of
the Code and will file a return with the Internal Revenue Service with respect to grantees who are awarded Incentive Stock Options
in accordance with Section 6039(a)(1) of the Code. The Company will provide grantees who are awarded Non-Qualified Stock Options
with a statement containing the information set forth in Treas. Reg. Section 1.61-15(c)(3).

 

    	24exhibit_4-1.htm

Exhibit 4.1

 

	
	
INCORPORATED UNDER THE LAWS OF THE STATE OF ISRAEL RADA ELECTRONIC INDUSTRIES LIMITED THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NEW YORK, U.S.A. OR ISRAEL THIS CERTIFIES that is the Registered Holder of FULLY PAID AND NON-ASSESSABLE ORDINARY SHARES OF NIS 0.015 EACH of RADA ELECTRONIC INDUSTRIES LIMITED transferable on the books of the Company by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Memorandum of Association and Articles of Association and amendments thereto of the Company, to all of which the holder by the acceptance hereof assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. IN WITNESS WHEREOF, the Company has caused this Certificate to be issued under the facsimile seal of the Company. Dated: CUSIP M81863 11 6 SEE REVERSE FOR CERTAIN DEFINITIONS President and Chairman of the Board of Directors Secretary

AT THE REQUEST OF AND UPON PRESENTATION BY THE HOLDER, THIS CERTIFICATE WILL BE EXCHANGED FOR A HEBREW LANGUAGE SHARE CERTIFICATE Countersigned and Registered: AMERICAN STOCK TRANSFER & TRUST COMPANY (New York, N.Y.)  Transfer Agent and Registrar By  Authorized Signature AMERICAN BANK NOTE COMPANY

 

  

  

  

 

	
	
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM TEN ENT JT TEN – as tenants in common – as tenants by the entireties  – as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. UNIF GIFT MIN ACT – Custodian (Cust) (Minor) Act (State) under Uniform Gifts to Minors For value received,.............hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE Please print or typewrite name and address including postal zip code of assignee Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within-named Corporation with full power of substitution in the premises. Dated, Notice: The signature to this assignment must correspond with the name as written upon the face of the Certificate, in every particular, without alteration or enlargement, or any change whatever.

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