Document:

Exhibit 10.2

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT
(this “Agreement”) is made on May 10, 2017, between LAKELAND INDUSTRIES, INC., a Delaware corporation
(“Borrower”) and SUNTRUST BANK, a Georgia banking corporation (together with its successors or
assigns, “Lender”).

 

Recitals:

 

Lender and Borrower
are parties to a certain Loan Agreement dated of even date herewith (as at any time amended, restated, supplemented or otherwise
modified, the “Loan Agreement”), pursuant to which Lender has made, or may from time to time hereafter make,
loans and other financial accommodations available to Borrower. A condition to the provision of financing by Lender to Borrower
under the Loan Agreement is Borrower’s execution of this Agreement.

 

NOW, THEREFORE, for
Ten Dollars ($10.00) and other valuable consideration, receipt whereof is hereby acknowledged, Lender and Borrower hereby agree
as follows:

 

1.           Definitions;
Rules of Construction. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed
to such terms in the Loan Agreement or, if not otherwise defined in the Loan Agreement, the UCC to the extent the same are used
or defined therein. The word “including” shall mean “including, without limitation,” and the words “herein,”
“hereof,” and “hereunder” shall have reference to this Agreement taken as a whole and not to any particular
provision hereof.

 

2.           Grant
of Security Interest. To secure the prompt payment and performance of all of the Obligations, Borrower hereby grants to
Lender a continuing security interest in and Lien upon all personal property of Borrower, including all of Borrower’s right,
title and interest in and to the following property, whether now owned or existing or hereafter created, acquired or arising and
wheresoever located: all Accounts; all Goods (including all Inventory and Equipment (including Fixtures)); all Instruments; all
Chattel Paper (including Electronic Chattel Paper); all Documents; all General Intangibles (including Payment Intangibles and Software);
all Deposit Accounts; all Investment Property (including all Securities and Securities Accounts but excluding any Securities that
constitute Margin Stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) unless otherwise expressly
provided in a Security Document and, in the case of Securities of a Foreign Subsidiary, limited to 65% of such Securities); all
Letter-of-Credit Rights; all Commercial Tort Claims (including Commercial Tort Claims, if any, listed in the Information Certificate);
all monies now or at any time or times hereafter in the possession or under the control of Lender; all accessions to, substitutions
for and all replacements, products and cash and non-cash proceeds of any of the foregoing, including proceeds of and unearned premiums
with respect to insurance policies insuring any of the Collateral and claims against any Person for loss of, damage to or destruction
of any of the Collateral; and all of Borrower’s Books. Borrower represents that the foregoing security interest is a first
priority security interest in Borrower’s Collateral and that there shall be no other Liens on the Collateral except in each
case for the Permitted Liens and third party liens on Inventory that is not Eligible Inventory solely on account of a lien waiver/subordination
not being received from the consignee/warehouseman in possession thereof.

 

     

     

    

 

Notwithstanding anything
contained in this Agreement to the contrary, Lender shall not have a security interest in voting Equity Interests of any controlled
foreign corporation (as that term is defined in the Internal Revenue Code (a “CFC”)), solely to the extent that (a)
such Equity Interests represent more than 65% of the outstanding voting Equity Interests of such CFC, and (b) pledging or hypothecating
more than 65% of the total outstanding voting Equity Interests of such CFC would result in material adverse tax consequences; provided,
that, the foregoing exclusion shall in no way be construed to limit, impair, or otherwise affect any of Lender’s continuing
security interests in and liens upon any rights or interests of Borrower in or to (i) monies due or to become due under or in connection
with any described contract, lease, permit, license, license agreement, or Equity Interest (including any Accounts or Equity Interests),
or (ii) any proceeds from the sale, license, lease, or other dispositions of any such contract, lease, permit, license, license
agreement, or Equity Interest).

 

3.           Setoff.
All sums at any time standing to Borrower’s credit on Lender’s books and all of Borrower’s property at any time
in Lender’s possession, or upon or in which Lender has a Lien shall be security for the Obligations. In addition to and not
in limitation of the above, with respect to any deposits of property of Borrower in Lender’s possession or control, now or
in the future, to the extent consistent with the terms of the Loan Agreement, Lender shall have the right to setoff all or any
portion thereof, at any time, against any Obligations, even though unmatured, without prior notice or demand to Borrower.

 

4.           Location
of Collateral. All tangible items of Collateral, other than Inventory in transit and Inventory located outside the United
States for processing and fabrication, shall at all times be kept at one or more of the business locations of Borrower or other
third party locations set forth in the Information Certificate and shall not be moved therefrom, without the prior written approval
of Lender, not to be unreasonably withheld, except that, in the absence of an Event of Default and acceleration of the maturity
of the Obligations in consequence thereof, Borrower may (i) make sales or other dispositions of any Collateral to the extent
not prohibited by the Loan Agreement and (ii) move Inventory or Equipment or any record relating to any Collateral to a location
in the United States other than those shown on the Information Certificate so long as Borrower has given Lender at least 30 days
prior written notice of such new location, provided that Borrower shall not maintain any Collateral having a value in excess of
$50,000 at any location unless (i) Borrower is the owner of such location, (ii) Borrower has obtained a Lien Waiver from the owner
and each other Person in possession or control of any Collateral at such location (or Lender has expressly waived the requirement
for the delivery of a Lien Waiver with respect to such location), or (iii) the Collateral consists of Inventory placed with a warehouseman,
bailee or processor and Lender has received from such warehouseman, bailee or processor an acceptable Lien Waiver/Access Agreement
(or Lender has expressly waived the requirement for the delivery of a Lien Waiver/Access Agreement with respect to such location).

 

     

     

    

 

5.           Insurance.
Borrower shall maintain and pay for insurance upon all Collateral covering such risks in such amounts on such conditions and with
such insurance companies as are reasonably satisfactory to Lender. All proceeds payable under each such policy shall be payable
to Lender for application to the Obligations. Borrower shall deliver a certificate of insurance (and, upon Lender’s request
the originals or certified copies of such policies) to Lender with satisfactory lender’s loss payable endorsements reasonably
satisfactory to Lender, naming Lender as loss payee, assignee or additional insured, as appropriate. Unless Lender has otherwise
agreed, each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days (or
ten (10) days in the case of non-payment of premium) prior written notice to Lender in the event of cancellation of the policy
for any reason whatsoever and a clause specifying that the interest of Lender shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of the premises for purposes more hazardous than are permitted
by said policy. If Borrower fails to provide and pay for such insurance, Lender may, at its option, but shall not be required
to, procure the same and charge Borrower therefor. At any time that an Event of Default exists and is continuing, Lender alone
shall be authorized to settle, adjust and compromise all insurance claims and Lender shall have all rights and remedies with respect
to such policies of insurance as are provided in the Loan Documents.

 

6.           Expenses;
Safeguarding Collateral. All reasonable expenses of protecting, storing, warehousing, insuring, handling, maintaining and
shipping any Collateral, all Taxes imposed under any applicable law on any of the Collateral or in respect of the sale thereof,
and all other payments required to be made by Lender to any Person to realize upon any Collateral shall be borne and paid by Borrower.
Lender shall not be responsible in any way for the safeguarding of any Collateral not in its possession or control and the same
shall be at Borrower’s sole risk.

 

7.           Accounts.
Lender may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account. Unless otherwise indicated in writing to Lender or excluded by Borrower in its calculation of the Borrowing
Base in any Borrowing Base Certificate, with respect to each Eligible Account, the Borrower warrants that:

 

(a)          It
is genuine and in all respects what it purports to be, and it is not evidenced by a judgment;

 

(b)          It
arises out of a bona fide sale and delivery of goods by Borrower in the Ordinary Course of Business and substantially in accordance
with the terms and conditions of all purchase orders, contracts or other documents relating thereto;

 

(c)          It
is for a sum certain maturing as stated in the duplicate invoice covering such sale, a copy of which has been furnished or is available
to Lender on request;

 

(d)          It
is not, and, to the best of Borrower’s knowledge, will not (by voluntary act or omission of Borrower) be in the future, subject
to any offset, Lien, deduction, defense, dispute, counterclaim or any other adverse condition except as arising in the Ordinary
Course of Business and for disputes resulting in returned goods where the amount in controversy is immaterial, and each such Account
is absolutely owing to Borrower and is not contingent in any respect or for any reason;

 

(e)          Borrower
has not made any agreement with any Account Debtor thereunder for any extension, compromise, settlement or modification of any
such Account or any deduction therefrom, except discounts or allowances which are granted by Borrower in the Ordinary Course of
Business for prompt payment and which are reflected in the calculation of the net amount of each respective invoice related thereto
and are reflected in the Schedules of Accounts submitted to Lender pursuant to Section 8 hereof or which are otherwise disclosed
to Lender in writing;

 

     

     

    

 

(f)          To
the best of the Borrower’s knowledge, there are no facts, events or occurrences which are reasonably likely to impair the
validity or enforceability of such Account or reduce in any material respect the amount payable thereunder from the face amount
of the invoice and statements delivered to Lender with respect thereto, except as otherwise disclosed to Lender in writing; and

 

(g)          To
the best of the Borrower’s knowledge, except as otherwise disclosed to Lender in writing, the Account Debtor thereunder (1) had
the capacity to contract at the time any contract or other document giving rise to the Account was executed and (2) is Solvent.

 

8.           Administration
of Accounts. 

 

(a)          Borrower
shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit to Lender on
such periodic basis as Lender shall reasonably request in writing a sales and collections report for the preceding period, in form
reasonably satisfactory to Lender. In addition, if Accounts in an aggregate face amount in excess of $75,000 cease to
be Eligible Accounts in whole or in part, Borrower shall notify Lender of such occurrence promptly (and in any event within 15
days of each month end) after Borrower’s having obtained knowledge of such occurrence and the Borrowing Base shall thereupon
be adjusted to reflect such occurrence.

 

(b)          If
Borrower grants any discounts, allowances or credits that are not shown on the face of the invoice for the Account involved, Borrower
shall report such discounts, allowances or credits, as the case may be, to Lender as part of the next required Schedule of Accounts.
If any amounts due and owing in excess of $50,000 are in dispute between Borrower and any Account Debtor, or if any returns are
made in excess of $50,000 with respect to any Accounts owing from an Account Debtor, Borrower shall provide Lender with written
notice thereof at the time of submission of the next Schedule of Accounts, explaining in reasonable detail the reason for the dispute
or return, all claims related thereto and the amount in controversy. At any time an Event of Default exists, Lender shall have
the right to settle or adjust all disputes and claims directly with the Account Debtor and to compromise the amount or extend the
time for payment of any Accounts comprising a part of the Collateral upon such terms and conditions as Lender may deem advisable,
and to charge the deficiencies, and reasonable costs and expenses thereof, including reasonable attorneys’ fees, to Borrower.

 

(c)          If
an Account of Borrower includes a charge for any Taxes payable to any governmental authority, and unless the payment of such
Taxes is being Properly Contested, Lender is authorized, in its sole discretion, upon notice to Borrower and after Borrower’s
failure or inability to pay such Tax, to pay such Tax (without duplication of other payments made with respect to any such Tax)
to the proper taxing authority for the account of Borrower and to charge Borrower therefor; provided, however, that Lender
shall not be liable for any Taxes that may be due by Borrower.

 

     

     

    

 

(d)          Whether
or not a Default or an Event of Default exists, Lender shall have the right at any time, in the name of Lender, any designee
of Lender or Borrower to verify the validity, amount or any other matter relating to any Accounts of Borrower by mail, telephone,
telegraph or otherwise.

 

(e)          Borrower
shall maintain a Dominion Account at Lender pursuant to arrangements acceptable to Lender (including, without limitation, lockbox
arrangements and lockbox accounts). Borrower shall issue to Lender an irrevocable letter of instruction effective during the Term
directing the remittance of all Payment Items or other remittances received by Lender or such other bank in the Dominion Account
to Lender for application to the Obligations. All funds deposited in the Dominion Account shall be subject to Lender’s Lien.
Borrower shall obtain the agreement (in favor of and in form and content satisfactory to Lender) by each bank at which a Dominion
Account is maintained to waive any offset rights against the funds deposited into such Dominion Account, except offset rights in
respect of charges incurred in the administration of such Dominion Account. Lender assumes no responsibility to Borrower for
such Dominion Account, including any claim of accord and satisfaction or release with respect to deposits accepted by any bank
thereunder.

 

(f)          Borrower
shall request in writing and otherwise take such reasonable steps to ensure that all Account Debtors forward payment directly to
the Dominion Account (or other collection arrangements related to the Dominion Account), and deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, all cash, checks, drafts or other Payment Items relating to or constituting payments
made in respect of any and all Collateral (whether or not otherwise delivered to pursuant to such collection arrangements) into
the Dominion Account. Borrower shall issue to each bank servicing such collection arrangements an irrevocable letter of instruction
effective during the Term directing such bank to deposit all payments or other remittances received by it to the Dominion Account.
All Payment Items received by Borrower in respect of its Accounts, together with the proceeds of any other Collateral,
shall be held by Borrower as trustee of an express trust for Lender’s benefit; Borrower shall promptly deposit same in kind
in the Dominion Account.

 

(g)          If,
as a result of such application, a credit balance exists, the balance shall not accrue interest in favor of Borrower and shall
be made available to Borrower for withdrawal as long as no Default or Event of Default exists. Borrower irrevocably waives the
right to direct the application of any payments or Collateral proceeds, and agrees that Lender shall have the continuing, exclusive
right to apply and reapply same against the Obligations, in the manner set forth herein.

 

(h)          Lender
retains the right at all times after an Event of Default has occurred and is continuing to notify Account Debtors of
Borrower that Accounts have been assigned to Lender and to collect Accounts directly in its own name and to charge to Borrower
the reasonable collection costs and expenses actually incurred by Lender, including reasonable attorneys’ fees.

 

     

     

    

 

(i)          Except
as otherwise disclosed in the Loan Agreement, Borrower and its Subsidiaries shall not open any other deposit account unless Lender
shall have consented thereto, such consent to not be unreasonably withheld, and the depository bank for such deposit account shall
have entered into an Account Control Agreement reasonably acceptable to Lender. As of the Closing Date, all bank accounts of any
nature of Borrower and its Subsidiaries are listed on Schedule 8 to the Information Certificate, which Schedule shall
designate the depository accounts.         

 

9.           Administration
of Inventory. 

 

(a)          Borrower
shall keep accurate and complete records of its Inventory. Borrower shall furnish Lender inventory reports respecting such Inventory
(including in-transit inventory) in form and detail satisfactory to Lender at such times as Lender may reasonably request, but
in any event on or before the 15th day of such month. Borrower shall, at its own expense, conduct periodic physical and cycle counts
consistent with Borrower’s historical practices and shall provide to Lender a report based on each such physical and cycle
count promptly after completion thereof, together with such supporting information as Lender shall request. Lender may participate
in and observe each physical or cycle count of inventory, which participation shall be at Borrowers' expense at any time that an
Event of Default exists.

 

(b)          Borrower
shall not acquire or accept any Inventory on consignment or approval having a market value of more than $25,000 in the aggregate
without Lender's prior written consent, which may not be unreasonably withheld, and Borrower will use its commercially reasonable
efforts to insure that all Inventory that is produced in the United States of America will be produced in material compliance
with the Fair Labor Standards Act; shall produce, use, store and maintain all Inventory with reasonable care in accordance with
applicable standards of its insurance policies and in material conformity with applicable law; and shall maintain current rent
payments (within applicable grace periods provided for in leases) at all locations at which any Inventory is maintained or stored
(other than consigned locations).

 

10.         Administration
of Equipment. 

 

(a)          Borrower
shall keep accurate records itemizing and describing the material items and cost of Equipment and all dispositions made in accordance
with Section 10(b) below (all of which records shall be available to Lender upon demand for inspection and copying
at any reasonable time), and, on Lender’s request, shall furnish Lender with a current schedule containing such information.
Promptly after Lender’s request, Borrower shall deliver to Lender evidence of ownership of the Equipment.

 

     

     

    

 

(b)          Borrower
shall not sell, lease or otherwise dispose of or transfer any Equipment without the prior written consent of Lender, which may
not be unreasonably withheld, other than in accordance with the terms of the Loan Agreement or (i) a disposition of Equipment that
is no longer useful in Borrower’s business so long as the aggregate fair market value or book value (whichever is greater)
of all such dispositions by Borrower during any one year during the Term does not exceed $300,000, no Default or Event of Default
exists at the time of such disposition and all proceeds thereof are remitted to Lender for application to the Obligations, (ii)
a replacement of Equipment that is substantially worn, damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired within 30 days after any disposition of the Equipment that is to be replaced,
the replacement Equipment shall be free and clear of Liens other than Permitted Liens, and Borrower shall have given Lender at
least 10 days prior written notice of such disposition, or (iii) a disposition of a Subsidiary or operation of Borrower with the
consent of Lender, which may not be unreasonably withheld.

 

11.         Perfection
of Liens; Further Assurances. Borrower shall execute all documents and take whatever actions are requested by Lender
to perfect and continue the perfection of Lender’s Liens in Borrower’s Collateral. Promptly after Lender’s request
therefor, Borrower shall execute or cause to be executed and delivered to Lender such instruments, assignments, title certificates
or other documents as are necessary under the UCC or other applicable law (including any necessary motor vehicle certificates of
title act) to perfect (or continue the perfection of) Lender’s Liens upon Borrower’s Collateral and shall take such
other action as may be requested by Lender to give effect to or carry out the intent and purposes of the Loan Agreement and the
other Loan Documents. Upon reasonable request of Lender, Borrower shall deliver to Lender any and all of the documents evidencing
or constituting Borrower’s Collateral, and Borrower shall note Lender’s interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by Lender. Unless prohibited by applicable law and except as provided in,
and consistent with, any Loan Document, Borrower hereby irrevocably authorizes Lender to execute (if necessary) and file in any
jurisdiction any financing statement or amendment thereto on Borrower’s behalf, including UCC financing statements that indicate
Borrower’s Collateral (i) as “all assets” or “all personal property” of Borrower or words to
similar effect. Borrower hereby appoints Lender as Borrower’s irrevocable attorney in fact for the purpose of executing any
documents necessary to perfect of continue the perfection of any Liens. Borrower shall reimburse Lender for all reasonable out-of-pocket
expenses actually incurred for the perfection, termination, and continuing of the perfection of Lender’s Liens in the Collateral.

 

12.         Events
of Default. The occurrence or existence of any one or more of the following events or conditions shall constitute
an event of default under this Agreement: (a) any representation or other statement made by Borrower herein proves to have
been false or misleading in any material respect when made; (b)  Borrower fails to perform or discharge in any material respect
any of its covenants or obligations under this Agreement contained in Sections 5, 8(a), 8(b), 8(f)
and 11 if the breach of any such covenant is not cured to Lender’s satisfaction within 5 Business Days of any Senior
Officer’s receipt of written notice of such breach from Lender, provided that such notice and opportunity to cure shall not
apply in the case of any failure to perform, keep or observe any covenant that is not capable of being cured at all; (c) Borrower
fails to perform or discharge in any material respect any other covenant contained in this Agreement if the breach of such other
covenant is not cured to Lender’s satisfaction within 30 days after any Senior Officer’s receipt of written notice
of such breach from Lender, provided that such written notice and opportunity to cure shall not apply in the case of any failure
to perform, keep or observe any covenant that is not capable of being cured at all; or (d) an Event of Default under (and
as defined in) the Loan Agreement shall occur or exist.

 

     

     

    

 

13.         Rights
and Remedies Upon Default.

 

(a)          Upon
or after the occurrence of any event of default referenced in Section 12 above and during the continuance thereof,
all of the Obligations shall, at the option of Lender and upon written notice to Borrower, become immediately due and payable,
and Lender shall thereupon have and may exercise from time to time any and all rights and remedies afforded to a secured party
under the UCC, together with every right and remedy available to Lender under any other applicable law. In addition to, and without
limiting the generality of the foregoing, Lender shall have the right: (i) to enforce the remedies described in the Loan Agreement,
(ii) to bid and be the purchaser at any sale of Collateral if permitted by law; (iii) to incur reasonable attorney’s
fees and expenses in exercising any of the rights, remedies, powers or privileges provided hereunder, and to pay, satisfy and discharge,
or to bond, deposit or indemnify against, any tax or other Lien which in the reasonable opinion of Lender or its counsel may in
any manner or to any extent be a Lien upon any of the Collateral, all of which fees, payments and expenses shall become part of
Lender’s expenses of retaking, holding, preparing for sale and the like, and shall be added to and become a part of the principal
amount of the Obligations; and (iv) to apply the proceeds realized from any collection, sale, lease or other disposition of
the Collateral first to the reasonable costs, expenses and attorney’s fees actually incurred by Lender for collection
and for acquisition, protection, removal, storage, sale and delivery of the Collateral, second, to interest due upon the
principal amount of the Obligations, and third, to the principal amount of the Obligations. If any deficiency shall arise,
Borrower shall remain bound and liable to Lender therefor.

 

(b)          Lender
shall not be liable or responsible to Borrower in any way for the safeguarding of any of the Collateral, for any loss or damage
thereto, for any diminution in the value thereof, or for any act or default of any carrier, warehouseman, forwarding agency, or
other Person whomsoever, but the same shall be at all times at Borrower’s risk, except to the extent that any loss or damage
to such Collateral shall have been caused by the gross negligence or willful misconduct of Lender. All rights, remedies, powers,
and privileges of Lender hereunder are cumulative and not alternative, and may be exercised concurrently or seriatim, and, so long
as not inconsistent herewith, are in addition to and not in lieu of any other rights of Lender at law, in equity, under statute
or under any other agreement with Borrower.

 

14.         Indulgences
Not Waivers. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege
hereunder shall operate as a waiver thereof or give rise to any estoppel, nor be construed as an agreement to modify the terms
of this Agreement, nor shall any single or partial exercise by a party of any right, remedy, power or privilege preclude any other
or further exercise by a party of the same or of any other right, remedy, power, or privilege; nor shall any waiver by a party
of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver by a party hereunder shall be effective unless it is in writing and signed
by the party making such waiver, and then only to the extent specifically stated in such writing.

 

     

     

    

 

15.         Notices.
All notices, requests and demands to or upon a party hereto shall be in writing and sent in accordance with the Loan Agreement.
Notice sent at least 10 Business Days before the date of any intended public sale or the date after which any private sale or other
intended disposition of the Collateral is to be made by Lender shall be deemed to be reasonable notice of such sale or other disposition,
provided that notice is hereby waived with respect to any of the Collateral which threatens to decline speedily in value or is
of a type customarily sold on a recognized market.

 

16.         Entire
Agreement; Amendments; Counterparts. This Agreement, along with the Loan Agreement, constitute and express the entire understanding
between the parties hereto with respect to the subject matter hereof; this Agreement may not be changed, altered, waived, modified,
supplemented, discharged, canceled, terminated, or amended orally or in any manner other than by an agreement in writing signed
by the parties hereto; and may be executed in any number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered (including by facsimile or electronic mail) shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same instrument.

 

17.         Section
Headings; Severability. The section headings in this Agreement are for convenience of reference only; they form no part
of this Agreement and shall not affect its interpretation. The provisions of this Agreement are independent of and separable from
each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision hereof, but this Agreement shall be construed as if such
invalid or unenforceable provision had never been contained herein.

 

18.         Successors
and Assigns. The rights, remedies, powers, and privileges of the parties hereunder shall inure to the benefit of the respective
successors and assigns of each such parties, and the duties and obligations of the parties hereunder shall bind the respective
successors and assigns of each such parties; provided, that Borrower may not assign this Agreement or any rights or obligations
hereunder without Lender’s prior written consent and any prohibited assignment shall be absolutely void.

 

19.         Term
of Agreement. This Agreement shall continue in full force and effect until the sooner to occur of (a) the date on
which Lender and Borrower, in writing, mutually agree to terminate this Agreement or (b) the date on which all of the Obligations
have been paid in full (other than indemnities and similar contingent Obligations not then due and payable) and the commitments
under the Loan Agreement have been terminated in accordance with the terms thereof.

 

     

     

    

 

20.         Governing
Law; Forum Selection. This Agreement shall be governed in all respect by, and construed in accordance with, the laws of
the State of New York, including the UCC (except, when the laws of any other state govern the method or manner of the perfection
or enforcement of any security interest in any of the Collateral, the laws of such other state shall govern as to such matters).
Borrower hereby consents to the non-exclusive jurisdiction of any United States federal court sitting in or with direct or indirect
jurisdiction over the Southern District of New York or any state or superior court sitting in New York County, New York, in any
action, suit or other proceeding arising out of or relating to this Agreement or any of the other Loan Documents; and Borrower
irrevocably agrees that all claims and demands in respect of any such action, suit or proceeding may be heard and determined in
any such court and irrevocably waives any objection it may now or hereafter have as to the venue of any such action, suit or proceeding
brought in any such court or that such court is an inconvenient forum. Lender reserves the right to bring proceedings against any
Obligor in the courts of any other competent jurisdiction which has subject matter jurisdiction. Nothing in this Agreement shall
be deemed or operate to affect the right of Lender to serve legal process in any other manner permitted by law or to preclude the
enforcement by Lender of any judgment or order obtained in such forum or the taking of any action under this Agreement to enforce
same in any other appropriate forum or jurisdiction.

 

21.         Waivers.
To the fullest extent permitted by applicable law, Borrower waives notice of Lender’s acceptance of this Agreement and notice
of any hearing in connection with, and the requirement to post bond as a condition to, the issuance of an immediate writ of possession
with respect to any of the Collateral. Borrower and Lender each hereby waives the right to trial by jury in any action, suit, proceeding
or counterclaim concerning this Agreement or any of the Obligations. 

 

IN WITNESS WHEREOF,
Borrower has caused this Agreement to be signed, sealed and delivered on the day and year first written above.

 

	 	BORROWER:
	 	 
	 	LAKELAND INDUSTRIES, INC.
	 	 	 
	 	By:	/s/ Christopher J. Ryan
	 	Name:	Christopher J. Ryan
	 	Title:	CEO & President

 

[Signatures continued on following page]

 

     

     

    

 

	 	Accepted by Lender in Atlanta, Georgia:
	 	 
	 	SUNTRUST BANK
	 	 	 
	 	By:	/s/ William M. Sykstus
	 	Name:	 William M. Sykstus
	 	Title:	Directorex10-1.htm

Exhibit 10.1

CELSION CORPORATION
2007 STOCK INCENTIVE PLAN

 

Effective: May 16, 2017

 

Amended: May 16, 2017

 

TABLE OF CONTENTS

 

	
 
	
 
	
 
	
 
	
Page
	
 

	
1.
	
 
	
Establishment, Purpose and Types of Awards
	
 
	
 
	
A-3
	
 

	
2.
	
 
	
Definitions
	
 
	
 
	
A-3
	
 

	
3.
	
 
	
Administration
	
 
	
 
	
A-5
	
 

	
  
	
 
	
(a) Procedure
	
 
	
 
	
A-5
	
 

	
  
	
 
	
(b) Secondary Committees and Sub-Plans
	
 
	
 
	
A-6
	
 

	
  
	
 
	
(c) Powers of the Committee
	
 
	
 
	
A-6
	
 

	
  
	
 
	
(d) Limited Liability
	
 
	
 
	
A-7
	
 

	
  
	
 
	
(e) Indemnification
	
 
	
 
	
A-7
	
 

	
  
	
 
	
(f) Effect of Committee's Decision
	
 
	
 
	
A-7
	
 

	
  
	
 
	
(g) Apprising the Board
	
 
	
 
	
A-7
	
 

	
4.
	
 
	
Stock Available Under the Plan; Maximum Awards
	
 
	
 
	
A-7
	
 

	
  
	
 
	
(a) Stock Available Under the Plan
	
 
	
 
	
A-7
	
 

	
  
	
 
	
(b) Maximum Awards to Covered Employees
	
 
	
 
	
A-8
	
 

	
5.
	
 
	
Participation
	
 
	
 
	
A-8
	
 

	
6.
	
 
	
Stock Options
	
 
	
 
	
A-8
	
 

	
  
	
 
	
(a) Grant of Option
	
 
	
 
	
A-8
	
 

	
  
	
 
	
(b) Exercise Price
	
 
	
 
	
A-8
	
 

	
  
	
 
	
(c) Payment
	
 
	
 
	
A-8
	
 

	
  
	
 
	
(d) Term of Options
	
 
	
 
	
A-9
	
 

	
  
	
 
	
(e) Restrictions on Incentive Stock Options
	
 
	
 
	
A-9
	
 

	
  
	
 
	
(f) Other Terms and Conditions
	
 
	
 
	
A-9
	
 

	
7.
	
 
	
Restricted Stock and Restricted Stock Units
	
 
	
 
	
A-9
	
 

	
  
	
 
	
(a) In General
	
 
	
 
	
A-9
	
 

	
  
	
 
	
(b) Vesting Conditions and Other Restrictions
	
 
	
 
	
A-9
	
 

	
  
	
 
	
(c) Stock Issuance and Stockholder Rights
	
 
	
 
	
A-10
	
 

	
8.
	
 
	
Stock Appreciation Rights
	
 
	
 
	
A-10
	
 

	
  
	
 
	
(a) Award of Stock Appreciation Rights
	
 
	
 
	
A-10
	
 

	
  
	
 
	
(b) Restrictions of Tandem SARs
	
 
	
 
	
A-10
	
 

	
  
	
 
	
(c) Amount of Payment upon Exercise of SARs
	
 
	
 
	
A-11
	
 

	
  
	
 
	
(d) Form of Payment upon Exercise of SARs
	
 
	
 
	
A-11
	
 

	
9.
	
 
	
Phantom Stock
	
 
	
 
	
A-11
	
 

	
10.
	
 
	
Performance Awards
	
 
	
 
	
A-11
	
 

	
  
	
 
	
(a) In General
	
 
	
 
	
A-11
	
 

	
  
	
 
	
(b) Covered Employee Targets
	
 
	
 
	
A-11
	
 

	
11.
	
 
	
Withholding and Reporting of Taxes
	
 
	
 
	
A-12
	
 

	
12.
	
 
	
Transferability
	
 
	
 
	
A-12
	
 

  

 

A-1

 

 

	
 
	
 
	
 
	
 
	
Page
	
 

	
13.
	
 
	
Adjustments; Business Combinations
	
 
	
 
	
A-12
	
 

	
  
	
 
	
(a) Adjustments
	
 
	
 
	
A-12
	
 

	
  
	
 
	
(b) Change in Control
	
 
	
 
	
A-12
	
 

	
  
	
 
	
(c) Dissolution and Liquidation
	
 
	
 
	
A-13
	
 

	
  
	
 
	
(d) Other Adjustments
	
 
	
 
	
A-13
	
 

	
14.
	
 
	
Termination and Amendment
	
 
	
 
	
A-13
	
 

	
  
	
 
	
(a) Amendment or Termination by the Board
	
 
	
 
	
A-13
	
 

	
  
	
 
	
(b) Amendments by the Committee
	
 
	
 
	
A-13
	
 

	
  
	
 
	
(c) Approval of Grantees
	
 
	
 
	
A-13
	
 

	
15.
	
 
	
Non-Guarantee of Employment
	
 
	
 
	
A-14
	
 

	
16.
	
 
	
Termination of Employment
	
 
	
 
	
A-14
	
 

	
17.
	
 
	
Written Agreement
	
 
	
 
	
A-14
	
 

	
18.
	
 
	
Non-Uniform Determinations
	
 
	
 
	
A-14
	
 

	
19.
	
 
	
Limitation on Benefits
	
 
	
 
	
A-14
	
 

	
20.
	
 
	
Listing and Registration
	
 
	
 
	
A-14
	
 

	
21.
	
 
	
Compliance with Securities Law
	
 
	
 
	
A-15
	
 

	
22.
	
 
	
No Trust or Fund Created
	
 
	
 
	
A-15
	
 

	
23.
	
 
	
No Limit on Other Compensation Arrangements
	
 
	
 
	
A-15
	
 

	
24.
	
 
	
No Restriction of Corporate Action
	
 
	
 
	
A-15
	
 

	
25.
	
 
	
Governing Law
	
 
	
 
	
A-15
	
 

	
26.
	
 
	
Plan Subject to Charter and Bylaws
	
 
	
 
	
A-15
	
 

	
27.
	
 
	
Effective Date; Termination Date
	
 
	
 
	
A-16
	
 

  

 

A-2

 

  
CELSION CORPORATION
2007 STOCK INCENTIVE PLAN

 

1.     Establishment, Purpose and Types of Awards

 

        Celsion Corporation, a Delaware corporation (the Company), hereby establishes the Celsion Corporation 2007 Stock Incentive Plan (the "Plan"). The purpose of the Plan is to promote the long-term growth and profitability of the "Company" by (i) providing incentives to improve stockholder value and to contribute to the growth and financial success of the Company, and (ii) enabling the Company to attract, retain and reward the best available persons for positions of substantial responsibility.

 

        The Plan permits the granting of Awards in the form of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Phantom Stock, and Performance Awards, in each case as such term is defined below, and any combination of the foregoing.

 

2.     Definitions

 

        Under this Plan, except where the context otherwise indicates, the following definitions apply:

 

         (a)    "Affiliate"   shall mean any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own directly or indirectly not less than fifty percent (50%) of such entity.

 

         (b)    "Awards"   shall mean Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Phantom Stock, and Performance Awards, and any combination of the foregoing.

 

         (c)    "Board"   shall mean the Board of Directors of the Company.

 

         (d)    "Change in Control"   shall mean:

 

         (i)    The consummation of an amalgamation, merger or consolidation of the Company with or into another entity or any other corporate reorganization of the Company, if more than fifty percent (50%) of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such amalgamation, merger, consolidation or other reorganization (or, if applicable, more than fifty percent (50%) of the combined voting power of the ultimate parent company that directly or indirectly has beneficial ownership of the securities of such continuing or surviving entity) is not owned directly or indirectly by persons who were holders of the Company's then-outstanding voting securities immediately prior to such amalgamation, merger, consolidation or other reorganization;

 

         (ii)   The sale, transfer or other disposition of all or substantially all of the Company's assets to an entity that is not a Parent, a Subsidiary or an Affiliate of the Company;

 

         (iii)  Any transaction as a result of which any person becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total voting power represented by the Company's then-outstanding voting securities. For purposes of this subsection, the term "person" shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude: (A) any Parent, Subsidiary or Affiliate of the Company, (B) any employee benefit plan (or related trust) sponsored or maintained by the Company, a Parent, or any Subsidiary or Affiliate, and (C) any underwriter temporarily holding securities pursuant to an offering of such securities; or

 

 

A-3

 

 

         (iv)  A change in the composition of the Board over a period of twenty four (24) consecutive months or less as a result of which individuals who, at the beginning of such period, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual subsequently becoming a director whose election, or nomination for election by the Company's Stockholders, was approved by a vote of at least a majority of the directors then comprising the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board.

 

        (e)    "Code"   shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder.

 

        (f)     "Committee"   shall mean the Board or a committee of the Board appointed pursuant to Section 3 of the Plan to administer the Plan.

 

        (g)    "Committee Delegate"   shall mean the Chief Executive Officer or other senior officer of the Company to whom duties and powers of the Board or Committee hereunder have been delegated pursuant to Section 3(c).

 

        (h)    "Covered Employee"   shall mean an employee of the Company or any Parent, Subsidiary or Affiliate who is subject to Code Section 162(m).

 

        (i)     "Exchange Act"   shall mean the U.S. Securities Exchange Act of 1934, as amended and any rules or regulations promulgated thereunder.

 

        (j)     "Fair Market Value"   of the Stock for any purpose on a particular date shall mean:

 

        (i)    if the Stock is traded on a public securities exchange or a national automated quotation system, the closing price for Stock on the relevant date, or (if there were no sales on such date) the closing price on the nearest day before the relevant date, as reported in The Wall Street Journal or a similar publication selected by the Committee; or

 

        (ii)   if the Stock is not traded on a public securities exchange or a national quotation system on such date, the price determined in a manner such as the Committee shall in good faith determine to be appropriate.

 

        (k)    "Grant Agreement"   shall mean a written agreement between the Company and a grantee memorializing the terms and conditions of an Award granted pursuant to the Plan.

 

        (l)     "Grant Date"   shall mean the date on which the Committee formally acts to grant an Award to a grantee or such other date as the Committee shall so designate at the time of taking such formal action.

 

        (m)   "Incentive Stock Options"   shall mean Stock options that meet the requirements of Code Section 422.

 

        (n)    "Nonqualified Stock Options"   shall mean Stock options that do not meet the requirements of Code Section 422.

 

        (o)    "Parent"   shall mean a company, whether now or hereafter existing, within the meaning of the definition of "parent company" provided in Section 424(e) of the Code, or any successor thereto of similar import.

 

        (p)    "Participant"   shall mean a director, officer, employee or consultant of the Company, or any Parent, Subsidiary or Affiliate, who is granted an Award under the Plan.

 

        (q)    "Performance Award"   shall mean an Award under Section 10 hereof.

 

 

A-4

 

 

         (r)    "Performance Measure"   shall mean one or more of the following criteria selected by the Committee to measure performance of the Company or any Parent, Subsidiary or Affiliate or other business division of same for a Performance Period, whether in absolute or relative terms: basic or diluted earnings per share of Stock; earnings per share of Stock growth; revenue; operating income; net income (either before or after taxes); earnings and/or net income before interest and taxes; earnings and/or net income before interest, taxes, depreciation and amortization; return on capital; return on equity; return on assets; net cash provided by operations; free cash flow; Stock price; economic profit; economic value; total stockholder return; gross margins and costs. Each such measure shall be determined in accordance with generally accepted accounting principles as consistently applied and, if so determined by the Committee and, in the case of a Performance Award to a Covered Employee, to the extent permitted under Code Section 162(m), adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects of changes in accounting principles.

 

        (s)    "Performance Period"   means a period of not less than three months nor more than ten years over which the achievement of targets for Performance Measures is determined.

 

        (t)    " Phantom Stock"   shall mean Awards under Section 9.

 

        (u)    "Restricted Stock" and "Restricted Stock Units"   shall mean Awards under Section 7. 

 

        (v)    "Rule 16b-3"   shall mean Rule 16b-3 as in effect under the Exchange Act on the effective date of the Plan, or any successor provision prescribing conditions necessary to exempt the issuance of securities under the Plan (and further transactions in such securities) from Section 16(b) of the Exchange Act.

 

        (w)   "Securities Act"   shall mean the U.S. Securities Act of 1933, as amended and any rules or regulations promulgated thereunder.

 

        (x)    "Stock"   shall mean common stock of the Company, par value $0.01 per share.

 

        (y)    "Stock Appreciation Rights"   shall mean Awards under Section 8.

 

        (z)    "Subsidiary" and "Subsidiaries"   shall mean only a company or companies, whether now or hereafter existing, within the meaning of the definition of "subsidiary company" provided in Section 424(f) of the Code, or any successor thereto of similar import.

  

3.     Administration

 

        (a)     Procedure.     The Plan shall be administered by the Board. In the alternative, the Board may delegate authority to a Committee to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. Such Committee shall consist of not less than two (2) members of the Board each of whom is a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act, or any successor rule of similar import, and an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.

 

        Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and, thereafter, directly administer the Plan. In the event that the Board is the administrator of the Plan in lieu of a Committee, the term "Committee" as used herein shall be deemed to mean the Board. 

 

        Members of the Board or Committee who are either eligible for Awards or have been granted Awards may vote on any matters affecting the administration of the Plan or the grant of Awards pursuant to the Plan, except that no such member shall act upon the granting of an Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board or the Committee during which action is taken with respect to the granting of an Award to him or her.

 

 

A-5

 

 

         The Committee shall meet at such times and places and upon such notice as it may determine. A majority of the Committee shall constitute a quorum. Any acts by the Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all of the members of the Committee shall be valid acts of the Committee.

 

        (b)     Secondary Committees and Sub-Plans.     The Board may, in its sole discretion, divide the duties and powers of the Committee by establishing one or more secondary Committees to which certain duties and powers of the Board hereunder are delegated (each of which shall be regarded as a "Committee" under the Plan with respect to such duties and powers), or delegate all of its duties and powers hereunder to a single Committee. Additionally, if permitted by applicable law, the Board or Committee may delegate any or all of its duties and powers hereunder to the Chief Executive Officer and/or to other senior officers of the Company subject to such conditions and limitations as the Board or Committee shall prescribe. However, only the Committee described under Subsection 3(a) may designate and grant Awards to Participants who are subject to Section 16 of the Exchange Act or Section 162(m) of the Code. The Committee shall also have the power to establish sub-plans (which may be included as appendices to the Plan or the respective Grant Agreements), which may constitute separate schemes, for the purpose of establishing schemes which meet any special tax or regulatory requirements of jurisdictions other than the United States and its subdivisions. Any such interpretations, rules, administration and sub-plans shall be consistent with the basic purposes of the Plan.

        (c)     Powers of the Committee.     The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards. The Committee shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to:

 

        (i)    determine the Participants to whom, and the time or times at which, Awards shall be granted,

 

        (ii)   determine the types of Awards to be granted,

 

        (iii)  determine the number of shares of Stock and/or amount of cash to be covered by or used for reference purposes for each Award,

 

        (iv)  impose such terms, limitations, vesting schedules, restrictions and conditions upon any such Award as the Committee shall deem appropriate, including without limitation establishing, in its discretion, Performance Measures that must be satisfied before an Award vests and/or becomes payable, the term during which an Award is exercisable, the purchase price, if any, under an Award and the period, if any, following a grantee's termination of employment or service with the Company or any Parent, Subsidiary or Affiliate during which the Award shall remain exercisable,

 

        (v)   modify, extend or renew outstanding Awards, accept the surrender of outstanding Awards and substitute new Awards (subject to the no-repricing provision below),

 

        (vi) accelerate the time in which an Award may be exercised or in which an Award becomes payable and waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to an Award,

 

        (vii)  establish objectives and conditions, including targets for Performance Measures, if any, for earning Awards and determining whether Awards will be paid after the end of a Performance Period, and

 

        (viii)  permit the deferral of, or require a Participant to defer such Participant's receipt of, the delivery of Stock and/or cash under an Award that would otherwise be due to such Participant and establish rules and procedures for such payment deferrals, provided the requirements of Code Section 409A are met with respect to any such deferral.

 

        The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan as the Committee deems necessary, desirable or appropriate in accordance with the Bylaws of the Company.

 

 

A-6

 

 

         Notwithstanding the foregoing and except for an adjustment pursuant to Section 13 or a repricing approved by stockholders, in no case may the Committee (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the Award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other Awards for the purpose of repricing the Award, or (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for a stock option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original Award.

 

        (d)     Limited Liability.     To the maximum extent permitted by law, no member of the Board or Committee or a Committee Delegate shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder.

 

        (e)     Indemnification.     The members of the Board and Committee and any Committee Delegate shall be indemnified by the Company in respect of all their activities under the Plan in accordance with the procedures and terms and conditions set forth in the Certificate of Incorporation Bylaws of the Company as in effect from time to time. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation, as a matter of law, or otherwise.

 

        (f)     Effect of Committee's Decision.     All actions taken and decisions and determinations made by the Committee or a Committee Delegate on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Committee's or Committee Delegate's sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Company, its stockholders, any Participants in the Plan and any other employee of the Company, and their respective successors in interest.

 

        (g)     Apprising the Board.     The Committee will inform the Board regarding its activities under the Plan not less frequently than at each scheduled Board meeting and at such other times as the Board may request.

 

4.     Stock Available Under the Plan; Maximum Awards

 

        (a)     Stock Available Under the Plan.   Subject to adjustments as provided in Section 13 of the Plan, the Stock that may be delivered or purchased or used for reference purposes (with respect to Stock Appreciation Rights, or Phantom Stock) with respect to Awards granted under the Plan, including with respect to Incentive Stock Options, shall not exceed an aggregate of nine million six hundred thirty nine thousand, four hundred forty-four (9,639,444) shares of Stock. Stock available under the Plan may be, in any combination, authorized but unissued Stock, treasury Stock and Stock that is repurchased, in the market, and canceled by the Company. 

 

           The Company shall reserve said number of shares of Stock for Awards under the Plan, subject to adjustments as provided in Section 13 of the Plan. If any Award, or portion of an Award, issued under the Plan, expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares of Stock without the delivery by the Company (or, in the case of Restricted Shares, without vesting) of Stock, the Stock subject to such Award shall thereafter be available for further Awards under the Plan. Notwithstanding the foregoing, if a Stock option or Stock Appreciation Right is settled by the delivery of a net number of shares of Stock, the full number of shares underlying such Stock option or Stock Appreciation Right will not be available for subsequent awards under the Plan. Shares repurchased on the open market with the proceeds of an exercise price will not again be made available for issuance under the Plan. In addition, (i) shares withheld by the Company to satisfy the tax obligations related to an Award granted under the Plan will again be available for grants of Awards under the Plan, (ii) to the extent an Award is paid or settled in cash, the number of shares with respect to which such payment or settlement is made will again be available for grants of Awards under the Plan and (iii) shares underlying Awards that can only be settled in cash will not be counted against the aggregate number of shares of Stock available for Awards under the Plan.

 

 

A-7

 

 

       (b)     Maximum Awards to Covered Employees.     The maximum number of shares of Stock subject to Awards that may be granted during any one calendar year to any one Covered Employee (including, for purposes of clarity, the aggregate number of shares of Stock subject to Stock options and Stock Appreciation Rights granted during any calendar year to any Covered Employee) shall be limited to three hundred fifty thousand (350,000) shares, not subject to adjustments as provided in Section 13. To the extent required by Section 162(m) of the Code and so long as Section 162(m) of the Code is applicable to persons eligible to participate in the Plan, shares of Stock subject to the foregoing maximum with respect to which the related Award is terminated, surrendered or canceled shall nonetheless continue to be taken into account with respect to such maximum for the calendar year in which granted.

 

5.     Participation

 

        Participation in the Plan shall be open to all directors, officers, employees and consultants of the Company, or of any Parent, Subsidiary or Affiliate of the Company, as may be selected by the Committee from time to time. Notwithstanding the foregoing, participation in the Plan with respect to Awards of Incentive Stock Options shall be limited to employees of the Company or of any Parent or Subsidiary of the Company.

 

        Awards may be granted to such Participants and for or with respect to such number of shares of Stock as the Committee shall determine, subject to the limitations in Section 4 of the Plan. A grant of any type of Award made in any one year to a Participant shall neither guarantee nor preclude a further grant of that or any other type of Award to such person in that year or subsequent years.

 

6.     Stock Options

 

        Subject to the other applicable provisions of the Plan, the Committee may from time to time grant to Participants Awards of Nonqualified Stock Options and/or Incentive Stock Options. The stock option Awards granted shall be subject to the following terms and conditions.

 

        (a)     Grant of Option.     The grant of a stock option shall be evidenced by a Grant Agreement, executed by the Company and the grantee, stating the number of shares of Stock subject to the stock option evidenced thereby, the exercise price and the terms and conditions of such stock option, in such form as the Committee may from time to time determine.

 

        (b)     Exercise Price.     The price per share payable upon the exercise of each stock option shall be determined by the Committee, but shall not be less than the Fair Market Value of the shares on the Grant Date, unless the stock option complies with Section 409A of the Code.

 

        (c)     Payment.     Stock options may be exercised in whole or in part by payment of the exercise price of the Stock to be acquired in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may have prescribed, and/or such determinations, orders, or decisions as the Committee may have made. Payment may be made in cash (or cash equivalents acceptable to the Committee) or, if provided in the Grant Agreement and permitted by applicable law, in shares of Stock which have been held by grantee for at least six (6) months, or a combination of cash and such Stock, or by such other means as the Committee may prescribe. The Fair Market Value of Stock delivered on exercise of stock options shall be determined as of the date of exercise.

 

        If the Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Committee, subject to such limitations as it may determine, may authorize payment of the exercise price, in whole or in part, by delivery of a properly executed exercise notice, together with irrevocable instructions, to: (i) a brokerage firm to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the exercise price and any withholding tax obligations that may arise in connection with the exercise, and (ii) the Company to deliver the certificates for such purchased Stock directly to such brokerage firm.

 

 

A-8

 

 

        (d)     Term of Options.     The term during which each stock option may be exercised shall be determined by the Committee; provided, however, that in no event shall a stock option be exercisable more than ten years from the date it is granted. Prior to the exercise of the stock option and delivery of the Stock certificates represented thereby, the grantee shall have none of the rights of a stockholder with respect to any Stock represented by an outstanding stock option.

 

        (e)     Restrictions on Incentive Stock Options.     Incentive Stock Option Awards granted under the Plan shall comply in all respects with Code Section 422 and, as such, shall meet the following additional requirements:

 

         (i)     Grant Date.     An Incentive Stock Option must be granted within ten (10) years of the earlier of the Plan's adoption by the Board of Directors or approval by the Company's stockholders.

 

         (ii)     Exercise Price and Term.     The exercise price of an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of the Stock on the date the stock option is granted and the term of the stock option shall not exceed ten (10) years. Also, the exercise price of any Incentive Stock Option granted to a grantee who owns (within the meaning of Section 422(b)(6) of the Code, after the application of the attribution rules in Section 424(d) of the Code) more than ten percent (10%) of the total combined voting power of all classes of shares of Stock of the Company or any Parent or Subsidiary of the Company shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Stock on the grant date and the term of such stock option shall not exceed five (5) years.

 

         (iii)     Maximum Grant.     The aggregate Fair Market Value (determined as of the Grant Date) of Stock of the Company with respect to which all Incentive Stock Options first become exercisable by any grantee in any calendar year under this or any other plan of the Company and its Parent and Subsidiaries may not exceed One Hundred Thousand Dollars ($100,000) or such other amount as may be permitted from time to time under Section 422 of the Code. To the extent that such aggregate Fair Market Value shall exceed One Hundred Thousand Dollars ($100,000), or other applicable amount, such stock options to the extent of the Stock in excess of such limit shall be treated as Nonqualified Stock Options. In such case, the Company may designate the shares of Stock that are to be treated as Stock acquired pursuant to the exercise of an Incentive Stock Option.

 

         (iv)     Grantee.     Incentive Stock Options shall only be issued to employees of the Company or of a Parent, Subsidiary or Affiliate of the Company.

  

         (v)     Designation.     No stock option shall be an Incentive Stock Option unless so designated by the Committee at the time of grant or in the Grant Agreement evidencing such stock option.

 

         (vi)     Stockholder Approval.     No stock option issued under the Plan shall be an Incentive Stock Option unless the Plan is approved by the stockholders of the Company within twelve (12) months of its adoption by the Board in accordance with the Bylaws of the Company and governing law relating to such matters.

 

        (f)     Other Terms and Conditions.     Stock options may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine appropriate from time to time.

 

7.     Restricted Stock and Restricted Stock Units

 

        (a)     In General.     Subject to the other applicable provisions of the Plan and applicable law, the Committee may at any time and from time to time grant Restricted Stock or Restricted Stock Units to Participants, in such amounts and subject to such vesting conditions, other restrictions and conditions for removal of restrictions as it determines. Unless determined otherwise by the Committee, Participants receiving Restricted Stock or Restricted Stock Units are not required to pay the Company cash consideration therefor (except as may be required for applicable tax withholding).

 

        (b)     Vesting Conditions and Other Restrictions.     Each Award for Restricted Stock and Restricted Stock Units shall be evidenced by a Grant Agreement that specifies the applicable vesting conditions and other restrictions, if any, on such Award, the duration of such restrictions, and the time or times at which such restrictions shall lapse with respect to all or a specified number of the shares of Stock that are part of the Award. Notwithstanding the foregoing, the Committee may reduce or shorten the duration of any vesting or other restriction applicable to any Restricted Stock or Restricted Stock Units awarded to any grantee under the Plan. 

 

        (c)     Stock Issuance and Stockholder Rights.     

 

 

A-9

 

 

        (i)    Restricted Stock. Stock certificates with respect to Stock granted pursuant to a Restricted Stock Award shall be issued, and/or Stock shall be registered, at the time of grant of the Restricted Stock Award, subject to forfeiture if the Restricted Stock does not vest or other restrictions do not lapse. Any Stock certificates shall bear an appropriate legend with respect to the restrictions applicable to such Restricted Stock Award and the grantee may be required to deposit the certificates with the Company during the period of any restriction thereon and to execute a blank stock power or other instrument of transfer therefor. Except as otherwise provided by the Committee, during the period of restriction following issuance of Restricted Stock certificates, the grantee shall have all of the rights of a holder of Stock, including but not limited to the rights to receive dividends (or amounts equivalent to dividends) and to vote with respect to the Restricted Stock. The Committee, in its discretion, may provide that any dividends or distributions paid with respect to Stock subject to the unvested portion of a Restricted Stock Award will be subject to the same restrictions as the Restricted Stock to which such dividends or distributions relate.

 

        (ii)   Restricted Stock Units. Stock certificates for the shares of Stock subject to a Restricted Stock Unit shall be issued, and/or Stock shall be registered, upon vesting and lapse of any other restrictions with respect to the issuance of Stock under such Award. The grantee will not be entitled to vote such Stock or to any of the other rights of stockholders during the period prior to issuance of the certificates for such Stock and/or the registration of the Stock. An Award of Restricted Stock Units may provide the Participant with the right to receive amounts equivalent to dividends and distributions paid with respect to Stock subject to the Award while the Award is outstanding, which payments may, in the Committee's discretion, either be made currently or credited to an account for the Participant, and may be settled in cash or Stock, all as determined by the Committee. Unless otherwise determined by the Committee with respect to a particular Award, each outstanding Restricted Stock Unit shall accrue such dividend equivalents, deferred as equivalent amounts of additional Restricted Stock Units, which amounts will be paid only when and if the Restricted Stock Unit (on which such dividend equivalents were accrued) vests and becomes payable. To the extent that a Restricted Stock Unit does not vest or is otherwise forfeited, any accrued and unpaid dividend equivalents shall be forfeited.

 

        (i)    Certain Dividend and Dividend Equivalent Rights. Notwithstanding the foregoing provisions of this Section 7, any dividends and/or dividend equivalents as to the unvested portion of a Restricted Stock Award that is subject to performance-based vesting requirements or the unvested portion of a Restricted Stock Unit Award that is subject to performance-based vesting requirements will be subject to termination and forfeiture to the same extent as the corresponding portion of the award to which they relate.

 

8.     Stock Appreciation Rights

 

        (a)     Award of Stock Appreciation Rights.     Subject to the other applicable provisions of the Plan, the Committee may at any time and from time to time grant Stock Appreciation Rights ("SARs") to Participants, either on a free-standing basis (without regard to or in addition to the grant of a stock option) or on a tandem basis (related to the grant of an underlying stock option), as it determines. SARs granted in tandem with or in addition to a stock option may be granted either at the same time as the stock option or at a later time; provided, however, that a tandem SAR shall not be granted with respect to any outstanding Incentive Stock Option Award without the consent of the grantee. SARs shall be evidenced by Grant Agreements, executed by the Company and the grantee, stating the number of shares of Stock subject to the SAR evidenced thereby and the terms and conditions of such SAR, in such form as the Committee may from time to time determine. The term during which each SAR may be exercised shall be determined by the Committee. In no event shall a SAR be exercisable more than ten years from the date it is granted. The grantee shall have none of the rights of a stockholder with respect to any Stock represented by a SAR.

  

        (b)     Restrictions of Tandem SARs.     No Incentive Stock Option may be surrendered in connection with the exercise of a tandem SAR unless the Fair Market Value of the Stock subject to the Incentive Stock Option is greater than the exercise price for such Incentive Stock Option. SARs granted in tandem with stock options shall be exercisable only to the same extent and subject to the same conditions as the stock options related thereto are exercisable. The Committee may, in its discretion, prescribe additional conditions to the exercise of any such tandem SAR.

 

 

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(c)     Amount of Payment upon Exercise of SARs.     A SAR shall entitle the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Stock over (B) the base price per share of Stock specified in the Grant Agreement, times (ii) the number of shares of Stock specified by the SAR, or portion thereof, that is exercised. In the case of exercise of a tandem SAR, such payment shall be made in exchange for the surrender of the unexercised related stock option (or any portion or portions thereof which the grantee from time to time determines to surrender for this purpose). The base price per share under a SAR shall not be less than the Fair Market Value of a share of Stock on the Grant Date, unless the SAR complies with Section 409A of the Code.

 

        (d)     Form of Payment upon Exercise of SARs.     Payment by the Company of the amount receivable upon any exercise of a SAR may be made by the delivery of Stock or cash, or any combination of Stock and cash, as determined in the sole discretion of the Committee from time to time. If upon settlement of the exercise of a SAR a grantee is to receive a portion of such payment in Stock, the number of shares of Stock shall be determined by dividing such portion by the Fair Market Value of a share of Stock on the exercise date. No fractional shares shall be used for such payment and the Committee shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated.

 

9.     Phantom Stock

 

        The grant of Phantom Stock shall be evidenced by a Grant Agreement, executed by the Company and the grantee, that incorporates the terms of the Plan and states the number of shares of Phantom Stock evidenced thereby and the terms and conditions of such Phantom Stock in such form as the Committee may from time to time determine. Phantom Stock granted to a Participant shall be credited to a bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Company's assets. Each share of Phantom Stock shall represent the value of one share of Stock. Phantom Stock shall become payable in whole or in part in such form, at such time or times and pursuant to such conditions in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may prescribe, and/or such determinations, orders or decisions as the Committee may make. Except as otherwise provided in the applicable Grant Agreement, the grantee shall have none of the rights of a stockholder with respect to any shares represented by Phantom Stock as a result of the grant of Phantom Stock to the grantee. Phantom Stock may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine desirable or appropriate from time to time.

 

10.   Performance Awards

 

        (a)     In General.     The Committee, in its discretion, may establish targets for Performance Measures for selected Participants and authorize the granting, vesting, payment and/or delivery of Performance Awards in the form of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, and/or Phantom Stock to such Participants upon achievement of such targets for Performance Measures during a Performance Period. The Committee, in its discretion, shall determine the Participants eligible for Performance Awards, the targets for Performance Measures to be achieved during each Performance Period, and the type, amount, and terms and conditions of any Performance Awards. Performance Awards may be granted either alone or in addition to other Awards made under the Plan.

 

        (b)     Covered Employee Targets.     After the Company is subject to Code Section 162(m), in connection with any Performance Awards granted to a Covered Employee, the Committee shall (i) establish in the applicable Grant Agreement the specific targets relative to the Performance Measures which must be attained before the respective Performance Award is granted, vests, or is otherwise paid or delivered, (ii) provide in the applicable Grant Agreement the method for computing the portion of the Performance Award which shall be granted, vested, paid and/or delivered if the target or targets are attained in full or part, and (iii) at the end of the relevant Performance Period and prior to any such grant, vesting, payment or delivery certify the extent to which the applicable target or targets were achieved and whether any other material terms were in fact satisfied. The specific targets and the method for computing the portion of such Performance Award which shall be granted, vested, paid or delivered to any Covered Employee shall be established by the Committee prior to the earlier to occur of (A) ninety (90) days after the commencement of the Performance Period to which the Performance Measure applies and (B) the elapse of twenty-five percent (25%) of the Performance Period and in any event while the outcome is substantially uncertain. In interpreting Plan provisions applicable to Performance Measures and Performance Awards with respect to Covered Employees, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(2)(i), and the Committee in interpreting the Plan shall be guided by such provisions.                     

 

 

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11.   Withholding and Reporting of Taxes

 

        The Company may require, as a condition to the grant of any Award under the Plan, vesting or exercise pursuant to such Award or to the delivery of certificates for shares of Stock issued or payments of cash to a grantee pursuant to the Plan or a Grant Agreement, that the grantee pay to the Company, in cash or, if approved by the Company, in Stock, including Stock acquired upon grant of the Award or exercise of the Award, valued at Fair Market Value on the date as of which the withholding tax liability is determined, any federal, state or local taxes of any kind or any applicable taxes or other required withholding of any other jurisdiction required by law to be withheld with respect to any taxable event under the Plan. The Company, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a grantee any federal, state or local taxes of any kind or any applicable taxes or other required withholding of any other jurisdiction required by law to be withheld with respect to the grant, vesting, exercise or payment of or under any Award under the Plan or a Grant Agreement, or to retain or sell a sufficient number of the shares of Stock to be issued to such grantee to cover any such taxes. The Company or any Parent, Subsidiary or Affiliate shall comply with any applicable tax reporting requirements of any jurisdiction imposed on it by law with respect to the granting, vesting, exercise and/or payment of Awards.

 

12.   Transferability

 

        No Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Committee in accordance with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee only by the grantee or, during the period the grantee is under a legal disability, by the grantee's guardian or legal representative. Notwithstanding the foregoing, an Award other than an Incentive Stock Option may, in the Committee's sole discretion, be transferable by gift or domestic relations order to (i) the grantee's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, daughter-in-law, son-in-law, brother-in-law or sister-in-law, including adoptive relationships (such persons, "Family Members"), (ii) a company, partnership, limited liability company or other business entity whose only stockholders, partners or members, as applicable are the grantee and/or Family Members, or (iii) a trust in which the Grantee and/or Family Members have all of the beneficial interests, and subsequent to any such transfer any Award may be exercised by any such transferee.

 

13.   Adjustments; Business Combinations

 

        (a)     Adjustments.     In the event of a reclassification, recapitalization, stock split, reverse stock split, stock dividend, combination of shares or other similar event, the Committee shall equitably and proportionately adjust (i) the number and type of shares of Stock (or other securities) that thereafter may be made the subject of Awards (including the specific share limits set forth in Section 4 of the Plan), (ii) the number, amount and type of shares of Stock (or other securities or property) subject to any outstanding Awards, (iii) the grant, purchase, or exercise price of any outstanding Awards, and/or (iv) the performance standards applicable to any then-outstanding Performance Awards, in each case to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding Awards. 

 

         (b)     Change in Control.     In the event of any proposed Change in Control under Section 2(d)(i), (ii) or (iii), the Committee shall take such action as it deems appropriate and equitable to effectuate the purposes of this Plan and to protect the grantees of Awards, which action may include, without limitation, any one or more of the following, provided such action is in compliance with Code Section 409A if applicable: (i) acceleration or change of the exercise and/or expiration dates of any Award to require that exercise be made, if at all, prior to the Change in Control; (ii) cancellation of any Award upon payment to the holder in cash of the Fair Market Value of the Stock subject to such Award as of the date of (and, to the extent applicable, as established for purposes of) the Change in Control, less the aggregate exercise price, if any, of the Award; and (iii) in any case where equity securities of another entity are proposed to be delivered in exchange for or with respect to Stock of the Company, arrangements to have such other entity replace the Awards granted hereunder with awards with respect to such other securities, with appropriate adjustments in the number of shares subject to, and the exercise prices under, the Award.

 

 

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        (c)     Dissolution and Liquidation.     In the event the Company dissolves and liquidates (other than pursuant to a plan of amalgamation, merger or reorganization), then notwithstanding any restrictions on exercise set forth in this Plan or any Grant Agreement, or other agreement evidencing a stock option, Stock Appreciation Right, Phantom Stock, Restricted Stock or Restricted Stock Unit Award, provided such action is in compliance with Code Section 409A if applicable: (i) each grantee shall have the right to exercise his stock option, Stock Appreciation Right, or Phantom Stock or to require delivery of Stock certificates, and/or registration of the Stock, representing any such Restricted Stock or Restricted Stock Unit Award, at any time up to ten (10) days prior to the effective date of such liquidation and dissolution; and (ii) the Committee may make arrangements with the grantees for the payment of appropriate consideration to them for the cancellation and surrender of any stock option, Stock Appreciation Right, Phantom Stock, Restricted Stock or Restricted Stock Unit Award that is so canceled or surrendered at any time up to ten (10) days prior to the effective date of such liquidation and dissolution. The Committee may establish a different period (and different conditions) for such exercise, delivery, cancellation or surrender to avoid subjecting the grantee to liability under Section 16(b) of the Exchange Act. Any stock option, Stock Appreciation Right or Phantom Stock not so exercised, canceled or surrendered shall terminate on the last day for exercise prior to such effective date; and any Restricted Stock or Restricted Stock Units as to which there has not been such delivery of Stock certificates or that has not been so canceled or surrendered, shall be forfeited on the last day prior to such effective date. The Committee shall give to each grantee written notice of the commencement of any proceedings for such liquidation and dissolution of the Company and the grantee's rights with respect to his outstanding Award.

 

        (d)     Other Adjustments.     The Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in the preceding paragraphs of this Section 13) affecting the Company, or the financial statements of the Company or any Parent, Subsidiary or Affiliate, or of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 

        Except as hereinbefore expressly provided, issuance by the Company of stock of any class or securities convertible into stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warranty to subscribe therefor, or upon conversion of stock or obligations of the Company convertible into such stock or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share of Stock subject to Awards.

 

14.   Termination and Amendment

 

        (a)     Amendment or Termination by the Board.     The Board, without further approval of the stockholders, may amend or terminate the Plan or any portion thereof at any time, except that no amendment shall become effective without prior approval of the stockholders of the Company to increase the number of shares of Stock subject to the Plan or if stockholder approval is necessary to comply with any tax or regulatory requirement or rule of any exchange or national automated quotation system upon which the Stock is listed or quoted (including for this purpose stockholder approval that is required for continued compliance with Rule 16b-3 or stockholder approval that is required to enable the Committee to grant Incentive Stock Options pursuant to the Plan).

 

        (b)     Amendments by the Committee.     The Committee shall be authorized to make minor or administrative amendments to the Plan as well as amendments to the Plan that may be dictated by requirements of U.S. federal or state laws applicable to the Company or that may be authorized or made desirable by such laws. The Committee may amend any outstanding Award in any manner as provided in Sections 3(c) and (d) (subject to the no-repricing provision therein) and to the extent that the Committee would have had the authority to make such Award as so amended.

  

         (c)     Approval of Grantees.     No amendment to the Plan or any Award may be made that would materially adversely affect any outstanding Award previously made under the Plan without the approval of the grantee. Further, no amendment to the Plan or an Award shall be made which would cause any Award to fail to either comply with or meet an exception from Code Section 409A.

 

 

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15.   Non-Guarantee of Employment

 

        Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an employee to continue in the employ of the Company or any Parent, Subsidiary or Affiliate or shall interfere in any way with the right of the Company or any Parent, Subsidiary or Affiliate to terminate an employee at any time.

 

16.   Termination of Employment

 

        For purposes of maintaining a grantee's continuous status as an employee and accrual of rights under any Award, transfer of an employee among the Company and the Company's Parent, Subsidiaries or Affiliates shall not be considered a termination of employment. Nor shall it be considered a termination of employment for such purposes if an employee is placed on military or sick leave or such other leave of absence that is considered as continuing intact the employment relationship; in such a case, the employment relationship shall be continued until the date when an employee's right to reemployment shall no longer be guaranteed either by law or contract.

 

17.   Written Agreement

 

        Each Grant Agreement entered into between the Company and a grantee with respect to an Award granted under the Plan shall incorporate the terms of this Plan and shall contain such provisions, consistent with the provisions of the Plan, as may be established by the Committee.

 

18.   Non-Uniform Determinations

 

        The Committee's determinations under the Plan (including without limitation determinations of the persons to receive Awards, the form, amount and time of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

 

19.   Limitation on Benefits

 

        With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 

 

20.   Listing and Registration

 

        If the Company determines that the listing, registration or qualification upon any securities exchange or upon any listing or quotation system established by the National Association of Securities Dealers, Inc. or under any law of Stock subject to any Award is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of Stock thereunder, no such Award may be exercised in whole or in part and no restrictions on such Award shall lapse, unless such listing, registration or qualification is effected free of any conditions not acceptable to the Company.

 

 

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21.   Compliance with Securities Law

 

        The Company may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any Stock certificate, provide to the Company, at the time of each such exercise and each such delivery, a written representation that the Stock being acquired shall be acquired by the grantee solely for investment and will not be sold or transferred without registration or the availability of an exemption from registration under the Securities Act and applicable state securities laws. The Company may also require that a grantee submit other written representations that will permit the Company to comply with applicable federal and state securities laws in connection with the issuance of the Stock, including representations as to the knowledge and experience in financial and business matters of the grantee and the grantee's ability to bear the economic risk of the grantee's investment. The Company may require that the grantee obtain a "purchaser representative" as that term is defined in applicable federal and state securities laws. Any Stock certificates for shares issued pursuant to this Plan may bear a legend restricting transferability of the Stock unless such shares are registered or an exemption from registration is available under the Securities Act and applicable securities laws of the states of the U.S. The Company may notify its transfer agent to stop any transfer of Stock not made in compliance with these restrictions. Stock shall not be issued with respect to an Award granted under the Plan unless the exercise of such Award and the issuance and delivery of Stock certificates for such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder and the requirements of any national securities exchange or Nasdaq System upon which the Stock may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance to the extent such approval is sought by the Committee.

 

22.   No Trust or Fund Created

 

        Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

 

23.   No Limit on Other Compensation Arrangements

 

        Nothing contained in the Plan shall prevent the Company or any Parent, Subsidiary or Affiliate from adopting or continuing in effect other compensation arrangements (whether such arrangements be generally applicable or applicable only in specific cases), including without limitation the granting of stock options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights or Phantom Stock Units otherwise than under the Plan. 

 

24.   No Restriction of Corporate Action

 

        Nothing contained in the Plan shall be construed to limit or impair the power of the Company or any Parent, Subsidiary or Affiliate to make adjustments, reclassifications, reorganizations, or changes in its capital or business structure, or to amalgamate, merge or consolidate, liquidate, sell or transfer all or any part of its business or assets or, except as otherwise provided herein, or in a Grant Agreement, to take other actions which it deems to be necessary or appropriate. No employee, beneficiary or other person shall have any claim against the Company or any Parent, Subsidiary or Affiliate as a result of such action.

 

25.   Governing Law

 

        The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Board or Committee relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined in accordance with applicable federal laws and the laws of the State of Maryland. Unless otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or local courts of the State of Maryland, to resolve any and all issues that may arise out of or relate to the Plan or any related Grant Agreement. The Awards under the Plan are intended to either comply with or meet an exception from Code Section 409A and shall be so interpreted.

 

26.   Plan Subject to Charter and Bylaws

 

This Plan is subject to the Certificate of Incorporation and Bylaws of the Company, as they may be in effect from time to time.                                  

 

 

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27.   Effective Date; Termination Date

 

        The Plan is effective as of the date on which the Plan is approved by the stockholders of the Company. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth (10 th ) anniversary of the effective date of the Plan (subject to any extension of the Plan term that may be approved by stockholders). Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.

 

Date Initially Approved by the Board: March 12, 2007

 

Date Initially Approved by the Stockholders: June 13, 2007

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