Document:

Blueprint

Exhibit
4.5

RELM WIRELESS
CORPORATION

2017 INCENTIVE COMPENSATION PLAN

 

1. Establishment,
Purpose, Duration.

 

a. Establishment. RELM Wireless
Corporation (the “Company”) hereby establishes an
equity compensation plan to be known as the RELM Wireless
Corporation 2017 Incentive Compensation Plan (the
“Plan”). The Plan is effective as of March 27, 2017
(the “Effective Date”), subject to the approval of the
Plan by the shareholders of the Company (the date of such
shareholder approval being the “Approval Date”).
Definitions of capitalized terms used in the Plan are contained in
Section 2 of the
Plan.

 

b. Purpose. The purpose of the
Plan is to attract and retain Directors, Consultants, officers and
other key Employees of the Company and its Subsidiaries and to
provide to such persons incentives and rewards for superior
performance.

 

c. Duration. No Award may be
granted under the Plan after the day immediately preceding the
tenth (10th) anniversary of the Effective Date, or such earlier
date as the Board shall determine. The Plan will remain in effect
with respect to outstanding Awards until no Awards remain
outstanding.

 

d. Prior Plans. If the
Company’s shareholders approve the Plan, the RELM Wireless
Corporation 2007 Incentive Compensation Plan (the “Prior
Plan”) will terminate in its entirety effective on the
Approval Date; provided
that all outstanding awards under the Prior Plan as of the Approval
Date shall remain outstanding and shall be administered and settled
in accordance with the provisions of the Prior
Plan.

 

2. Definitions. As used in the
Plan, the following definitions shall apply.

 

a. “Applicable Laws” means
the applicable requirements relating to the administration of
equity-based compensation plans under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, the rules of any
stock exchange or quotation system on which the Shares are listed
or quoted and the applicable laws of any other country or
jurisdiction where Awards are granted under the
Plan.

 

b. “Approval Date” has the meaning
given such term in Section 1(a).

 

c. “Award” means an award
of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Shares, Restricted Share Units,
Other Share-Based Awards, or Cash-Based Awards granted pursuant to
the terms and conditions of the Plan.

 

d. “Award Agreement” means
either: (a) an agreement, in written or electronic format, entered
into by the Company and a Participant setting forth the terms and
provisions applicable to an Award granted under the Plan; or (b) a
statement, in written or electronic format, issued by the Company
to a Participant describing the terms and provisions of such Award,
which need not be signed by the Participant.

 

 

 

 

e. “Beneficial Owner”
shall have the meaning ascribed to such term in Rule 13d-3
under the Exchange Act and any successor to such
Rule.

 

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

 

g. “Business
Combination” has the meaning given such term in
Section 2(j).

 

h. “Cash-Based Award”
shall mean a cash Award granted pursuant to Section 11 of the
Plan.

 

i. “Cause” as a reason for
a Participant’s termination of a Participant’s
Continuous Service shall have
the meaning specified in the Award Agreement. In the absence of any
definition in the Award Agreement, “Cause” shall have
the equivalent meaning or the same meaning as “cause”
or “for cause” set forth in any employment, consulting,
or other agreement for the performance of services between the
Participant and the Company or a Subsidiary or, in the absence of
any such agreement or any such definition in such agreement, such
term shall mean (a) the failure by the Participant to perform, in a
reasonable manner, his or her duties as assigned by the Company or
a Subsidiary, (b) any violation or breach by the Participant of his
or her employment, consulting or other similar agreement with the
Company or a Subsidiary, if any, (c) any violation or breach by the
Participant of any non-competition, non-solicitation,
non-disclosure and/or other similar agreement with the Company or a
Subsidiary, (d) any act by the Participant of dishonesty or bad
faith with respect to the Company or a Subsidiary, (e) breach of
fiduciary duties owed to the Company, (e) use of alcohol, drugs or
other similar substances in a manner that adversely affects the
Participant’s work performance, or (f) the commission by the
Participant of any act, misdemeanor, or crime reflecting
unfavorably upon the Participant or the Company or any Subsidiary.
The good faith determination by the Committee of whether the
Participant’s Continuous Service was terminated by the
Company for “Cause” shall be final and binding for all
purposes hereunder.

 

j. “Change in Control” shall mean, unless
otherwise specified in an Award Agreement, the occurrence of any of
the following:

 

a.           The
acquisition by any Person of Beneficial Ownership of more than
fifty percent (50%) of either (i) the then outstanding shares
of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities) (the foregoing Beneficial Ownership
hereinafter being referred to as a “Controlling
Interest”); provided,
however, that for purposes of this paragraph, the following
acquisitions shall not constitute or result in a Change in Control:
(u) any acquisition directly from the Company, (v) any acquisition
by Fundamental Global Investors, LLC, Ballantyne Strong, Inc. and
their affiliates), (w) any acquisition by the Company, (x) any
acquisition by any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest, (y) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, or (z) any acquisition
by any entity pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of paragraph (c) below; or

 

 

2

 

 

b.           Individuals
who constitute the Board on the Effective Date (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board 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 an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
or

 

c.           Consummation
of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any
of its Subsidiaries, or a sale or other disposition of all or
substantially all of the assets of the Company (each a
“Business Combination”), in each case, unless,
following such Business Combination, (i) no Person (other than
Fundamental Global Investors, LLC, Ballantyne Strong, Inc. and
their affiliates, any employee benefit plan (or related trust) of
the Company or such entity resulting from such Business Combination
or any Person that as of the Effective Date owns Beneficial
Ownership of a Controlling Interest) beneficially owns, directly or
indirectly, fifty percent (50%) or more of the value of the
then outstanding equity securities of the entity resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such entity except to the extent
that such ownership existed prior to the Business Combination; and
(ii) at least a majority of the members of the board of directors
or other governing body of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

 

d.           A
complete liquidation or dissolution of the
Company.

 

k. “Code” means the
Internal Revenue Code of 1986, as amended.

 

l. “Committee” means the
Compensation Committee of the Board or such other committee or
subcommittee of the Board as may be duly appointed to administer
the Plan and having such powers in each instance as shall be
specified by the Board. To the extent required by Applicable Laws,
the Committee shall consist of two or more members of the Board,
each of whom is a “non-employee director” within the
meaning of Rule 16b-3 promulgated under the Exchange Act, an
“outside director” within the meaning of regulations
promulgated under Section 162(m) of the Code, and an
“independent director” within the meaning of applicable
rules of any securities exchange upon which Shares are
listed.

 

m. “Company” has the
meaning given such term in Section 1(a) and any successor
thereto.

 

n. “Consultant” means an
independent contractor that (a) performs services for the Company
or a Subsidiary in a capacity other than as an Employee or Director
and (b) qualifies as a consultant under the applicable rules of the
SEC for registration of shares on a Form S-8 Registration
Statement.

 

 

3

 

 

o. “Continuous Service”
means the uninterrupted provision of services to the Company or any
Subsidiary in any capacity of Employee, Director, Consultant or
other service provider. Continuous Service shall not be considered
to be interrupted in the case of (i) any approved leave of absence,
(ii) transfers among the Company, any Subsidiaries, or any
successor entities, in any capacity of Employee, Director,
Consultant or other service provider, or (iii) any change in status
as long as the individual remains in the service of the Company or
a Subsidiary in any capacity of Employee, Director, Consultant or
other service provider (except as otherwise provided in the Award
Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal
leave.

 

p. “Controlling
Interest” has the meaning given such term in
Section 2(j).

 

q. “Date of Grant” means
the date specified by the Committee on which the grant of an Award
is to be effective. The Date of Grant shall not be earlier than the
date of the resolution and action therein by the Committee. In no
event shall the Date of Grant be earlier than the Effective
Date.

 

r. “Director” means any
individual who is a member of the Board and who is not an
Employee.

 

s. “Effective Date” has
the meaning given such term in Section 1(a).

 

t. “Employee” means any
employee of the Company or a Subsidiary; provided, however, that for purposes of
determining whether any person may be a Participant for purposes of
any grant of Incentive Stock Options, the term
“Employee” has the meaning given to such term in
Section 3401(c) of the Code, as interpreted by the regulations
thereunder and Applicable Laws.

 

u. “Exchange Act” means
the Securities Exchange Act of 1934 and the rules and regulations
thereunder, as such law, rules and regulations may be amended from
time to time.

 

v. “Fair Market Value”
means the value of one Share on any relevant date, determined under
the following rules: (a) the closing sale price per Share on that
date as reported on the principal exchange on which Shares are then
trading, if any, or if applicable the NYSE MKT, or if there are no
sales on that date, on the next preceding trading day during which
a sale occurred; (b) if the Shares are not reported on a principal
exchange or national market system, the average of the closing bid
and asked prices last quoted on that date by an established
quotation service for over-the-counter securities; or (c) if
neither (a) nor (b) applies, (i) with respect to Stock Options,
Stock Appreciation Rights and any Award of stock rights that is
subject to Section 409A of the Code, the value as determined by the
Committee through the reasonable application of a reasonable
valuation method, taking into account all information material to
the value of the Company, within the meaning of Section 409A of the
Code, and (ii) with respect to all other Awards, the fair market
value as determined by the Committee in good
faith.

 

 

4

 

 

w. “Good Reason” shall,
with respect to any Participant, have the meaning specified in the
applicable Award Agreement. In the absence of any definition in the
Award Agreement, “Good Reason” shall have the
equivalent meaning or the same meaning as “good reason”
or “for good reason” set forth in any employment,
consulting or other agreement for the performance of services
between the Participant and the Company or a Subsidiary or, in the
absence of any such agreement or any such definition in such
agreement, such term shall mean (i) the assignment to the
Participant of any duties inconsistent in any material respect with the Participant's duties or
responsibilities as assigned by the Company or a Subsidiary,
or any other action by the Company or a Subsidiary which results in
a material diminution in such duties or responsibilities, excluding
for this purpose any action which is remedied by the Company or a
Subsidiary promptly after receipt of notice thereof given by the
Participant; or (ii) any material failure by the Company or a
Subsidiary to comply with its obligations to the Participant as
agreed upon, other than an isolated, insubstantial and inadvertent
failure which is remedied by the Company or a Subsidiary promptly
after receipt of notice thereof given by the
Participant.

 

x. “Incentive Stock
Option” or “ISO” means a Stock Option that is
designated as an Incentive Stock Option and that is intended to
meet the requirements of Section 422 of the
Code.

 

y. “Incumbent Board” has the meaning given such term
in Section 2(j).

 

z. “Nonqualified Stock
Option” means a Stock Option that is not intended to meet the
requirements of Section 422 of the Code or otherwise does not
meet such requirements.

 

aa. “Other Share-Based
Award” means an equity-based or equity-related Award not
otherwise described by the terms of the Plan, granted in accordance
with the terms and conditions set forth in
Section 10.

 

bb. “Outstanding
Company Common Stock” has the meaning given such term in
Section 2(j).

 

cc. “Outstanding
Company Voting Securities” has the meaning given such term in
Section 2(j).

 

dd. “Participant” means any
eligible individual as set forth in Section 5 who holds one or
more outstanding Awards.

 

ee. “Performance-Based
Exception” means the performance-based exception from the tax
deductibility limitations of Section 162(m) of the
Code.

 

ff. “Performance
Objectives” means the performance objective or objectives
established by the Committee with respect to an Award granted
pursuant to the Plan. Any Performance Objectives may relate to the
performance of the Company or one or more of its Subsidiaries,
divisions, departments, units, functions, partnerships, joint
ventures or minority investments, product lines or products, or the
performance of the individual Participant, and may include, without
limitation, the Performance Objectives set forth in Section 14(b).
The Performance Objectives may be made relative to the performance
of a group of comparable companies, or a published or special index
that the Committee, in its sole discretion, deems appropriate, or
the Company may select Performance Objectives as compared to
various stock market indices. Performance Objectives may be stated
as a combination of the listed factors. Any Performance Objectives
that are financial metrics may be determined in accordance with
United States Generally Accepted Accounting Principles
(“GAAP”), if applicable, or may be adjusted when
established to include or exclude any items otherwise includable or
excludable under GAAP.

 

 

5

 

 

gg. “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include
a “group” as defined in Section 13(d)
thereof.

 

hh. “Plan” means this RELM
Wireless Corporation 2017 Incentive Compensation Plan, as amended
from time to time.

 

ii. “Prior Plan” has the
meaning given such term in Section 1(d).

 

jj. “Qualified Termination”
means any termination of a Participant’s Continuous Service
during the two-year period commencing on a Change in Control (a) by
the Company, any of its Subsidiaries or the resulting entity in
connection with a Change in Control other than for Cause, or (b) by
the Participant for Good Reason.

 

kk. “Restricted Shares”
means Shares granted or sold pursuant to Section 8 as to which neither the substantial risk of
forfeiture nor the prohibition on transfers referred to in such
Section 8 has
expired.

 

ll. “Restricted Share Unit”
means a grant or sale of the right to receive Shares or cash at the
end of a specified restricted period made pursuant to
Section 9.

 

mm. “SEC” means the United
States Securities and Exchange Commission.

 

nn. “Share” means a share
of common stock of the Company, par value $.60 per share, or any
security into which such Share may be changed by reason of any
transaction or event of the type referred to in Section
16.

 

oo. “Stock Appreciation
Right” means a right granted pursuant to
Section 7.

 

pp. “Stock Option” means a
right to purchase a Share granted to a Participant under the Plan
in accordance with the terms and conditions set forth in
Section 6. Stock Options may be
either Incentive Stock Options or Nonqualified Stock
Options.

 

qq. “Subsidiary”
means: (a) with respect to an Incentive Stock Option, a
“subsidiary corporation” as defined under Section
424(f) of the Code; and (b) for all other purposes under the Plan,
any corporation or other entity in which the Company owns, directly
or indirectly, a proprietary interest of more than fifty percent
(50%) by reason of stock ownership or
otherwise.

 

 

6

 

 

rr. “Ten Percent
Shareholder” shall mean any Participant who owns more than
10% of the combined voting power of all classes of stock of the
Company, within the meaning of Section 422 of the Code.

 

3.
Shares Available
Under the Plan.

 

a. Shares Available for Awards.
The maximum number of Shares that may be granted pursuant to Awards
under the Plan shall be 1,000,000 Shares, reduced by Shares covered
by an award granted under the Prior Plan after December 31, 2016
but prior to the Approval Date, and increased by Shares covered by
an award outstanding under the Prior Plan after December 31, 2016
that is forfeited, canceled, surrendered, settled in cash or
otherwise terminated without the issuance of such Share. All of the
Shares authorized for grant under the Plan may be issued pursuant
to Incentive Stock Options. Shares issued or delivered pursuant to
an Award may be authorized but unissued Shares, treasury Shares,
including Shares purchased in the open market, or a combination of
the foregoing. The aggregate number of Shares available for
issuance or delivery under the Plan shall be subject to adjustment
as provided in Section 16.

 

b. Share Counting. The following
Shares shall not count against the Share limit in Section 3(a): (i)
Shares covered by an Award that expires or is forfeited, canceled,
surrendered, or otherwise terminated without the issuance of such
Shares; (ii) Shares covered by an Award that is settled only in
cash; and (iii) Shares granted through the assumption of, or in
substitution for, outstanding awards granted by a company to
individuals who become Employees, Directors or Consultants as the
result of a merger, consolidation, acquisition or other corporate
transaction involving such company and the Company or any of its
Affiliates (except as may be required by reason of the rules and
regulations of any stock exchange or other trading market on which
the Shares are listed). This Section 3(b) shall apply to the number
of Shares reserved and available for Incentive Stock Options only
to the extent consistent with applicable Treasury regulations
relating to Incentive Stock Options under the
Code.

 

c. Prohibition of Share
Recycling. The following Shares subject to an Award shall
not again be available for grant as described above, regardless of
whether those Shares are actually issued or delivered to the
Participant: (i) Shares tendered in payment of the exercise price
of a Stock Option; (ii) Shares withheld by the Company or any
Subsidiary to satisfy a tax withholding obligation; and (iii)
Shares that are repurchased by the Company with Stock Option
proceeds. Without limiting the foregoing, with respect to any Stock
Appreciation Right that is settled in Shares, the full number of
Shares subject to the Award shall count against the number of
Shares available for Awards under the Plan regardless of the number
of Shares used to settle the Stock Appreciation Right upon
exercise.

 

d. Per-Person Limits. Subject to
adjustment as provided in Section 16 of the Plan, the following
limits shall apply with respect to Awards that are intended to
qualify for the Performance-Based Exception: (i) the maximum
aggregate number of Shares that may be subject to Stock Options or
Stock Appreciation Rights granted in any calendar year to any one
Participant shall be 500,000 Shares; (ii) the maximum aggregate
number of Restricted Shares and Shares issuable or deliverable
under Restricted Share Units and Other Share-Based Awards granted
in any calendar year to any one Participant shall be 500,000
Shares; (iii) the maximum aggregate cash compensation that can be
paid pursuant to Cash-Based Awards or Other Share-Based Awards
granted in any calendar year to any one Participant shall be (x)
$5,000,000 with respect to any 12 month performance period
(pro-rated for any performance period that is less than 12 months
based upon the ratio of the number of days in the performance
period as compared to 365), and (y) with respect to any performance
period that is more than 12 months, $5,000,000 multiplied by the
number of full 12 months periods that are in the performance
period.

 

 

7

 

 

e. Director Limits.
Notwithstanding any other provision of the Plan to the contrary,
the aggregate grant date fair value (determined as of the
applicable Date(s) of Grant in accordance with applicable financial
accounting rules) of all Awards granted to any Director during any
single calendar year, taken together with any cash fees paid to
such person during such calendar year, shall not exceed
$200,000.

 

4. Administration of the
Plan.

 

a. In General. The Plan shall be
administered by the Committee. Except as otherwise provided by the
Board, the Committee shall have full and final authority in its
discretion to take all actions determined by the Committee to be
necessary in the administration of the Plan, including, without
limitation, discretion to: select Award recipients; determine the
sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan; grant waivers of
terms, conditions, restrictions and limitations applicable to any
Award, or accelerate the vesting or exercisability of any Award, in
a manner consistent with the Plan; construe and interpret the Plan
and any Award Agreement or other agreement or instrument entered
into under the Plan; establish, amend, or waive rules and
regulations for the Plan’s administration; and take such
other action, not inconsistent with the terms of the Plan, as the
Committee deems appropriate. To the extent permitted by Applicable
Laws, the Committee may, in its discretion, delegate to one or more
Directors or Employees any of the Committee’s authority under
the Plan. The acts of any such delegates shall be treated hereunder
as acts of the Committee with respect to any matters so
delegated.

 

b. Determinations. The Committee
shall have no obligation to treat Participants or eligible
Participants uniformly, and the Committee may make determinations
under the Plan selectively among Participants who receive, or
Employees, Directors or Consultants who are eligible to receive,
Awards (whether or not such Participants or eligible Employees,
Directors or Consultants are similarly situated). All
determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of
the Committee shall be final, conclusive and binding on all
persons, including the Company, its Subsidiaries, shareholders,
Directors, Consultants, Employees, Participants and their estates
and beneficiaries.

 

c. Authority of the Board. The
Board may reserve to itself any or all of the authority or
responsibility of the Committee under the Plan or may act as the
administrator of the Plan for any and all purposes. To the extent
the Board has reserved any such authority or responsibility or
during any time that the Board is acting as administrator of the
Plan, it shall have all the powers of the Committee hereunder, and
any reference herein to the Committee (other than in this Section
4(c)) shall include the Board. To the extent that any action of the
Board under the Plan conflicts with any action taken by the
Committee, the action of the Board shall
control.

 

 

8

 

 

5. Eligibility and Participation. Each
Employee, Director and Consultant is eligible to participate in the
Plan. Subject to the provisions of the Plan, the Committee may,
from time to time, select from all eligible Employees, Directors
and Consultants those to whom Awards shall be granted and shall
determine, in its sole discretion, the nature of any and all terms
permissible by Applicable Laws and the amount of each Award. No
Employee, Director or Consultant shall have the right to be
selected to receive an Award under the Plan, or, having been so
selected, to be selected to receive future Awards.

 

6. Stock Options. Subject to the terms
and conditions of the Plan, Stock Options may be granted to
Participants in such number, and upon such terms and conditions, as
shall be determined by the Committee in its sole
discretion.

 

a. Award Agreement. Each Stock
Option shall be evidenced by an Award Agreement that shall specify
the exercise price, the term of the Stock Option, the number of
Shares covered by the Stock Option, the conditions upon which the
Stock Option shall become vested and exercisable and such other
terms and conditions as the Committee shall determine and which are
not inconsistent with the terms and conditions of the Plan
(including, but not limited to, the minimum vesting provisions of
Section 12). The Award Agreement also shall specify whether the
Stock Option is intended to be an Incentive Stock Option or a
Nonqualified Stock Option. No dividend equivalents may be granted
with respect to the Shares underlying a Stock
Option.

 

b. Exercise Price. The exercise
price per Share of a Stock Option shall be determined by the
Committee at the time the Stock Option is granted and shall be
specified in the related Award Agreement; provided, however, that in no event
shall the exercise price per Share of any Stock Option be less than
one hundred percent (100%) of the Fair Market Value of a Share on
the Date of Grant.

 

c. Term. The term of a Stock
Option shall be determined by the Committee and set forth in the
related Award Agreement; provided, however, that in no event
shall the term of any Stock Option exceed ten (10) years from its
Date of Grant.

 

d. Exercisability. Stock Options
shall become vested and exercisable at such times and upon such
terms and conditions as shall be determined by the Committee and
set forth in the related Award Agreement. Such terms and conditions
may include, without limitation, the satisfaction of (a)
performance goals based on one or more Performance Objectives, and
(b) time-based vesting requirements.

 

e. Exercise of Stock Options.
Except as otherwise provided in the Plan or in a related Award
Agreement, a Stock Option may be exercised for all or any portion
of the Shares for which it is then exercisable. A Stock Option
shall be exercised by the delivery of a notice of exercise to the
Company or its designee in a form specified by the Company which
sets forth the number of Shares with respect to which the Stock
Option is to be exercised and full payment of the exercise price
for such Shares. The exercise price of a Stock Option may be paid,
in the discretion of the Committee and as set forth in the
applicable Award Agreement: (i) in cash or its equivalent; (ii) by
tendering (either by actual delivery or attestation) previously
acquired Shares having an aggregate Fair Market Value at the time
of exercise equal to the aggregate exercise price; (iii) by a
cashless exercise (including by withholding Shares deliverable upon
exercise and through a broker-assisted arrangement to the extent
permitted by Applicable Laws); (iv) by a combination of the methods
described in clauses (i), (ii) and/or (iii); or (v) through any
other method approved by the Committee in its sole discretion. As
soon as practicable after receipt of the notification of exercise
and full payment of the exercise price, the Company shall cause the
appropriate number of Shares to be issued to the
Participant.

 

 

9

 

 

f. Special Rules Applicable to Incentive
Stock Options. Notwithstanding any other provision in the
Plan to the contrary:

 

(i)           Incentive
Stock Options may be granted only to Employees of the Company and
its Subsidiaries. The terms and conditions of Incentive Stock
Options shall be subject to and comply with the requirements of
Section 422 of the Code.

 

(ii)           To
the extent that the aggregate Fair Market Value of the Shares
(determined as of the Date of Grant) with respect to which an
Incentive Stock Option is exercisable for the first time by any
Participant during any calendar year (under all plans of the
Company and its Subsidiaries) is greater than $100,000 (or such
other amount specified in Section 422 of the Code), as calculated
under Section 422 of the Code, then the Stock Option shall be
treated as a Nonqualified Stock Option.

 

(iii)           No
Incentive Stock Option shall be granted to any Participant who, on
the Date of Grant, is a Ten Percent Shareholder, unless (x) the
exercise price per Share of such Incentive Stock Option is at least
one hundred and ten percent (110%) of the Fair Market Value of a
Share on the Date of Grant, and (y) the term of such Incentive
Stock Option shall not exceed five (5) years from the Date of
Grant.

 

7. Stock Appreciation Rights. Subject
to the terms and conditions of the Plan, Stock Appreciation Rights
may be granted to Participants in such number, and upon such terms
and conditions, as shall be determined by the Committee in its sole
discretion.

 

a. Award Agreement. Each Stock
Appreciation Right shall be evidenced by an Award Agreement that
shall specify the exercise price, the term of the Stock
Appreciation Right, the number of Shares covered by the Stock
Appreciation Right, the conditions upon which the Stock
Appreciation Right shall become vested and exercisable and such
other terms and conditions as the Committee shall determine and
which are not inconsistent with the terms and conditions of the
Plan (including, but not limited to, the minimum vesting provisions
of Section 12). No dividend equivalents may be granted with respect
to the Shares underlying a Stock Appreciation
Right.

 

b. Exercise Price. The exercise
price per Share of a Stock Appreciation Right shall be determined
by the Committee at the time the Stock Appreciation Right is
granted and shall be specified in the related Award Agreement;
provided, however, that in
no event shall the exercise price per Share of any Stock
Appreciation Right be less than one hundred percent (100%) of the
Fair Market Value of a Share on the Date of
Grant.

 

 

10

 

 

c. Term. The term of a Stock
Appreciation Right shall be determined by the Committee and set
forth in the related Award Agreement; provided, however, that in no event
shall the term of any Stock Appreciation Right exceed ten (10)
years from its Date of Grant.

 

d. Exercisability of Stock Appreciation
Rights. A Stock Appreciation Right shall become vested and
exercisable at such times and upon such terms and conditions as may
be determined by the Committee and set forth in the related Award
Agreement. Such terms and conditions may include, without
limitation, the satisfaction of (i) performance goals based on one
or more Performance Objectives, and (ii) time-based vesting
requirements.

 

e. Exercise of
Stock Appreciation Rights. Except as otherwise provided in the Plan
or in a related Award Agreement, a Stock Appreciation Right may be
exercised for all or any portion of the Shares for which it is then
exercisable. A Stock Appreciation Right shall be exercised by the
delivery of a notice of exercise to the Company or its designee in
a form specified by the Company which sets forth the number of
Shares with respect to which the Stock Appreciation Right is to be
exercised. Upon exercise, a Stock Appreciation Right shall entitle
a Participant to an amount equal to (a) the excess of (i) the Fair
Market Value of a Share on the exercise date over (ii) the exercise
price per Share, multiplied by (b) the number of Shares with
respect to which the Stock Appreciation Right is exercised. A Stock
Appreciation Right may be settled in whole Shares, cash or a
combination thereof, as specified by the Committee in the related
Award Agreement.

 

8. Restricted Shares. Subject to the
terms and conditions of the Plan, Restricted Shares may be granted
or sold to Participants in such number, and upon such terms and
conditions, as shall be determined by the Committee in its sole
discretion.

 

a. Award Agreement. Each
Restricted Shares Award shall be evidenced by an Award Agreement
that shall specify the number of Restricted Shares, the restricted
period(s) applicable to the Restricted Shares, the conditions upon
which the restrictions on the Restricted Shares will lapse and such
other terms and conditions as the Committee shall determine and
which are not inconsistent with the terms and conditions of the
Plan (including, but not limited to, the minimum vesting provisions
of Section 12).

 

b. Terms, Conditions and
Restrictions. The Committee shall impose such other terms,
conditions and/or restrictions on any Restricted Shares as it may
deem advisable, including, without limitation, a requirement that
the Participant pay a purchase price for each Restricted Share,
restrictions based on the achievement of specific Performance
Objectives, time-based restrictions or holding requirements or sale
restrictions placed on the Shares by the Company upon vesting of
such Restricted Shares. Unless otherwise provided in the related
Award Agreement or required by applicable law, the restrictions
imposed on Restricted Shares shall lapse upon the expiration or
termination of the applicable restricted period and the
satisfaction of any other applicable terms and
conditions.

 

 

11

 

 

c. Custody of Certificates. To
the extent deemed appropriate by the Committee, the Company may
retain any certificates representing Restricted Shares in the
Company’s possession until such time as all terms, conditions
and/or restrictions applicable to such Shares have been satisfied
or lapse.

 

d. Rights Associated with Restricted
Shares during Restricted Period. During any restricted
period applicable to Restricted Shares: (i) the Restricted Shares
may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated; (ii) unless otherwise provided in the
related Award Agreement, the Participant shall be entitled to
exercise full voting rights associated with such Restricted Shares;
and (iii) the Participant shall be entitled to all dividends and
other distributions paid with respect to such Restricted Shares
during the restricted period; provided, however, that any dividends
with respect to unvested Restricted Shares shall be accumulated or
deemed reinvested in additional Restricted Shares, subject to the
same terms and conditions as the original Award (including
service-based vesting conditions and any Performance Objectives)
until such Award is earned and vested.

 

9.
Restricted Share Units. Subject to the
terms and conditions of the Plan, Restricted Share Units may be
granted or sold to Participants in such number, and upon such terms
and conditions, as shall be determined by the Committee in its sole
discretion.

 

a. Award Agreement. Each
Restricted Share Unit Award shall be evidenced by an Award
Agreement that shall specify the number of units, the restricted
period(s) applicable to the Restricted Share Units, the conditions
upon which the restrictions on the Restricted Share Units will
lapse, the time and method of payment of the Restricted Share
Units, and such other terms and conditions as the Committee shall
determine and which are not inconsistent with the terms and
conditions of the Plan (including, but not limited to, the minimum
vesting provisions of Section 12).

 

b. Terms, Conditions and
Restrictions. The Committee shall impose such other terms,
conditions and/or restrictions on any Restricted Share Units as it
may deem advisable, including, without limitation, a requirement
that the Participant pay a purchase price for each Restricted Share
Unit, restrictions based on the achievement of specific Performance
Objectives or time-based restrictions or holding
requirements.

 

c. Form of Settlement. Restricted
Share Units may be settled in whole Shares, cash or a combination
thereof, as specified by the Committee in the related Award
Agreement.

 

d.  Dividend Equivalents.
Restricted Share Units may provide the Participant with dividend
equivalents, payable either in cash or in additional Shares, as
determined by the Committee in its sole discretion and set forth in
the related Award Agreement; provided, however, that any dividend
equivalents with respect to unvested Restricted Share Units shall
be accumulated or deemed reinvested in additional Restricted Share
Units, subject to the same terms and conditions as the original
Award (including service-based vesting conditions and any
Performance Objectives) until such Award is earned and
vested.

 

 

12

 

 

10.
Other Share-Based Awards. Subject to
the terms and conditions of the Plan, Other Share-Based Awards may
be granted to Participants in such number, and upon such terms and
conditions, as shall be determined by the Committee in its sole
discretion. Other Share-Based Awards are Awards that are valued in
whole or in part by reference to, or otherwise based on the Fair
Market Value of, Shares, and shall be in such form as the Committee
shall determine, including without limitation, unrestricted Shares
or time-based or performance-based units that are settled in Shares
and/or cash.

 

a. Award Agreement. Each Other
Share-Based Award shall be evidenced by an Award Agreement that
shall specify the terms and conditions upon which the Other
Share-Based Award shall become vested, if applicable, the time and
method of settlement, the form of settlement and such other terms
and conditions as the Committee shall determine and which are not
inconsistent with the terms and conditions of the Plan (including,
but not limited to, the minimum vesting provisions of Section
12).

 

b. Form of Settlement. An Other
Share-Based Award may be settled in whole Shares, cash or a
combination thereof, as specified by the Committee in the related
Award Agreement.

 

c. Dividend Equivalents. Other
Share-Based Awards may provide the Participant with dividend
equivalents, on payable either in cash or in additional Shares, as
determined by the Committee in its sole discretion and set forth in
the related Award Agreement; provided, however, that any dividend
equivalents with respect to unvested Other Share-Based Awards shall
be accumulated or deemed reinvested, subject to the same terms and
conditions as the original Award (including service-based vesting
conditions and any Performance Objectives) until such Award is
earned and vested.

 

11.
Cash-Based Awards. Subject to the terms
and conditions of the Plan, Cash-Based Awards may be granted to
Participants in such amounts and upon such other terms and
conditions as shall be determined by the Committee in its sole
discretion. Each Cash-Based Award shall be evidenced by an Award
Agreement that shall specify the payment amount or payment range,
the time and method of settlement and the other terms and
conditions, as applicable, of such Award which may include, without
limitation, restrictions based on the achievement of specific
Performance Objectives and such other terms and conditions as the
Committee shall determine and which are not inconsistent with the
terms and conditions of the Plan (including, but not limited to,
the minimum vesting provisions of Section 12).

 

12.
Minimum Vesting Provisions. Subject to
Sections 19, 21 and 22(b) of the Plan, (a) no condition on vesting
or exercisability of an Award, whether based on continued
employment or other service or based upon the achievement of
Performance Objectives, shall be based on service or performance
(as applicable) over a period of less than one year, and (b) upon
and after such minimum one-year period, restrictions on vesting or
exercisability may lapse on a pro-rated, graded, or cliff basis as
specified in the Award Agreement; provided, however, that Awards
covering up to five percent (5%) of the Shares reserved for
issuance pursuant to Section 3(a) may be granted under the Plan as
unrestricted Shares or otherwise as Awards with a performance
period or vesting period of less than one year.

 

 

13

 

 

13.
Compliance with Section 409A. Awards
granted under the Plan shall be designed and administered in such a
manner that they are either exempt from the application of, or
comply with, the requirements of Section 409A of the Code. To the
extent that the Committee determines that any award granted under
the Plan is subject to Section 409A of the Code, the Award
Agreement shall incorporate the terms and conditions necessary to
avoid the imposition of an additional tax under Section 409A of the
Code upon a Participant. Notwithstanding any other provision of the
Plan or any Award Agreement (unless the Award Agreement provides
otherwise with specific reference to this Section 13): (i) an Award
shall not be granted, deferred, accelerated, extended, paid out,
settled, substituted or modified under the Plan in a manner that
would result in the imposition of an additional tax under Section
409A of the Code upon a Participant; and (ii) if an Award is
subject to Section 409A of the Code, and if the Participant holding
the award is a “specified employee” (as defined in
Section 409A of the Code, with such classification to be determined
in accordance with the methodology established by the Company),
then, to the extent required to avoid the imposition of an
additional tax under Section 409A of the Code upon a Participant,
no distribution or payment of any amount shall be made before the
date that is six (6) months following the date of such
Participant’s “separation from service” (as
defined in Section 409A of the Code) or, if earlier, the date of
the Participant’s death. Although the Company intends to
administer the Plan so that Awards will be exempt from, or will
comply with, the requirements of Section 409A of the Code, the
Company does not warrant that any Award under the Plan will qualify
for favorable tax treatment under Section 409A of the Code or any
other provision of federal, state, local, or non-United States law.
The Company shall not be liable to any Participant for any tax,
interest, or penalties the Participant might owe as a result of the
grant, holding, vesting, exercise, or payment of any Award under
the Plan.

 

14.
Compliance with Section
162(m).

 

a. In General. Notwithstanding
anything in the Plan to the contrary, Awards may be granted in a
manner that is intended to qualify for the Performance-Based
Exception. As determined by the Committee in its sole discretion,
the grant, vesting, exercisability and/or settlement of any
Restricted Shares, Restricted Share Units, Other Share-Based Awards
and Cash-Based Awards intended to qualify for the Performance-Based
Exception shall be conditioned on the attainment of one or more
Performance Objectives during a performance period established by
the Committee and must satisfy the requirements of this Section
14.

 

b. Performance Objectives.
If an Award is intended to
qualify for the Performance-Based Exception, then the Performance
Objectives shall be based on specified levels of or growth in one
or more of the following criteria: (i) earnings per share; (ii)
revenues or margins; (iii) cash flow; (iv) operating margin; (v)
return on net assets, investment, capital, or equity; (vi) economic
value added; (vii) direct contribution; (viii) net income; pretax
income; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after
interest expense and before extraordinary or special items;
operating income; income before interest income or expense, unusual
items and income taxes, local, state or federal and excluding
budgeted and actual bonuses which might be paid under any ongoing
bonus plans of the Company; (ix) working capital; (x) management of
fixed costs or variable costs; (xi) identification or consummation
of investment opportunities or completion of specified projects in
accordance with corporate business plans, including strategic
mergers, acquisitions or divestitures; (xii) total shareholder
return; (xiii) debt reduction; (xiv) market share; (xv) entry into
new markets, either geographically or by business unit; (xvi)
customer retention and satisfaction; (xvii) strategic plan
development and implementation, including turnaround plans; and/or
(xviii) the Fair Market Value of a
Share.

 

 

14

 

 

c.  Establishment of Performance
Objectives. With respect to Awards intended to qualify for
the Performance-Based Exception, the Committee shall establish: (i)
the applicable Performance Objectives and performance period, and
(ii) the formula for computing the payout. Such terms and
conditions shall be established in writing while the outcome of the
applicable performance period is substantially uncertain, but in no
event later than the earlier of: (x) ninety days after the
beginning of the applicable performance period; or (y) the
expiration of twenty-five percent (25%) of the applicable
performance period.

 

d.  Certification of Performance.
With respect to any Award intended to qualify for the
Performance-Based Exception, the Committee shall certify in writing
whether the applicable Performance Objectives and other material
terms imposed on such Award have been satisfied, and, if they have,
ascertain the amount of the payout or vesting of the Award.
Notwithstanding any other provision of the Plan, payment or vesting
of any such Award shall not be made until the Committee certifies
in writing that the applicable Performance Objectives and any other
material terms of such Award were in fact satisfied in a manner
conforming to applicable regulations under Section 162(m) of the
Code.

 

e. Adjustments. If the Committee
determines that a change in the Company’s business,
operations, corporate structure or capital structure, or in the
manner in which it conducts its business, or other events or
circumstances render the Performance Objectives unsuitable, the
Committee may in its discretion adjust such Performance Objectives
or the related level of achievement, in whole or in part, as the
Committee deems appropriate and equitable, including, without
limitation, to exclude the effects of events that are unusual in
nature or infrequent in occurrence (as determined in accordance
with applicable financial accounting standards), cumulative effects
of tax or accounting changes, discontinued operations,
acquisitions, divestitures and material restructuring or asset
impairment charges; provided,
however, that in no event will any such adjustment be made
that would cause an Award intended to qualify for the
Performance-Based Exception to fail to so
qualify.

 

f. Negative Discretion. With
respect to any Award intended to qualify for the Performance-Based
Exception, after the date that the Performance Objectives are
required to be established in writing pursuant to Section 14(c),
the Committee shall not have discretion to increase the amount of
compensation that is payable upon achievement of the designated
Performance Objectives. However, the Committee may, in its sole
discretion, reduce the amount of compensation that is payable upon
achievement of the designated Performance
Objectives.

 

15.
Transferability. Except as otherwise
determined by the Committee, no Award or dividend equivalents paid
with respect to any Award shall be transferable by the Participant
except by will or the laws of descent and distribution;
provided, that if so
determined by the Committee, each Participant may, in a manner
established by the Board or the Committee, designate a beneficiary
to exercise the rights of the Participant with respect to any Award
upon the death of the Participant and to receive Shares or other
property issued or delivered under such Award. Except as otherwise
determined by the Committee, Stock Options and Stock Appreciation
Rights will be exercisable during a Participant’s lifetime
only by the Participant or, in the event of the Participant’s
legal incapacity to do so, by the Participant’s guardian or
legal representative acting on behalf of the Participant in a
fiduciary capacity under state law and/or court
supervision.

 

 

15

 

 

16.
Adjustments. In the event of any equity
restructuring (within the meaning of Financial Accounting Standards
Board Accounting Standards Codification Topic 718, or any successor
thereto), such as a stock dividend, stock split, reverse stock
split, spinoff, rights offering, or recapitalization through a
large, nonrecurring cash dividend, the Committee shall cause there
to be an equitable adjustment in the number and kind of Shares
specified in Section 3 of the Plan and, with respect to outstanding
Awards, in the number and kind of Shares subject to outstanding
Awards and the exercise price or other price of Shares subject to
outstanding Awards, in each case to prevent dilution or enlargement
of the rights of Participants. In the event of any other change in
corporate capitalization, or in the event of a merger,
consolidation, liquidation, or similar transaction, the Committee
may, in its sole discretion, cause there to be an equitable
adjustment as described in the foregoing sentence, to prevent
dilution or enlargement of rights; provided, however, that, unless otherwise
determined by the Committee, the number of Shares subject to any
Award shall always be rounded down to a whole number.
Notwithstanding the foregoing, the Committee shall not make any
adjustment pursuant to this Section 16 that would (i) cause any
Stock Option intended to qualify as an ISO to fail to so qualify,
(ii) cause an Award that is otherwise exempt from Section 409A of
the Code to become subject to Section 409A, or (iii) cause an Award
that is subject to Section 409A of the Code to fail to satisfy the
requirements of Section 409A. The determination of the Committee as
to the foregoing adjustments, if any, shall be conclusive and
binding on all Participants and any other persons claiming under or
through any Participant.

 

17.
Fractional Shares. The Company shall
not be required to issue or deliver any fractional Shares pursuant
to the Plan and, unless otherwise provided by the Committee,
fractional shares shall be settled in cash.

 

18.
Withholding Taxes. To the extent
required by Applicable Laws, a Participant shall be required to
satisfy, in a manner satisfactory to the Company or Subsidiary, as
applicable, any withholding tax obligations that arise by reason of
the exercise of a Stock Option or Stock Appreciation Right, the
vesting of or settlement of Shares under an Award, an election
pursuant to Section 83(b) of the Code or otherwise with
respect to an Award. The Company and its Subsidiaries shall not be
required to issue or deliver Shares, make any payment or to
recognize the transfer or disposition of Shares until such
obligations are satisfied. The Committee may permit or require
these obligations to be satisfied by having the Company withhold a
portion of the Shares that otherwise would be issued or delivered
to a Participant upon exercise of a Stock Option or Stock
Appreciation Right or upon the vesting or settlement of an Award,
or by tendering Shares previously acquired, in each case having a
Fair Market Value equal to the amount required to be withheld. Any
such elections are subject to such conditions or procedures as may
be established by the Committee and may be subject to disapproval
by the Committee. In no event will the Fair Market Value of the
Shares to be withheld or tendered pursuant to this Section 18 to
satisfy applicable withholding taxes exceed the amount of taxes
required to be withheld based on the maximum statutory tax rates in
the applicable taxing jurisdictions.

 

 

16

 

 

19.
Foreign Participants. Without amending
the Plan, the Committee may grant Awards to Participants who are
foreign nationals, or who are subject to Applicable Laws of one or
more non-United States jurisdictions, on such terms and conditions
different from those specified in the Plan as may in the judgment
of the Committee be necessary or desirable to foster and promote
achievement of the purposes of the Plan, and, in furtherance of
such purposes, the Committee may approve such sub-plans,
supplements to or amendments, modifications, restatements or
alternative versions of this Plan as may be necessary or advisable
to comply with provisions of Applicable Laws of other countries in
which the Company or its Subsidiaries operate or have Employees or
Consultants.

 

20. Compensation Recovery Policy.
Any Award granted to a
Participant shall be subject to forfeiture or repayment
pursuant to the terms of any applicable compensation recovery
policy maintained by the Company from time to time, including any
such policy that may be maintained to comply with the Dodd-Frank
Wall Street Reform and Consumer Protection Act or any rules or
regulations issued by the SEC or applicable securities
exchange.

 

21. Change in Control.

 

a.           Committee
Discretion. The Committee may, in its sole discretion and
without the consent of Participants, either by the terms of the
Award Agreement applicable to any Award or by resolution adopted
prior to the occurrence of the Change in Control, determine whether
and to what extent outstanding Awards under the Plan shall be
assumed, converted or replaced by the resulting entity in
connection with a Change in Control (or, if the Company is the
resulting entity, whether such Awards shall be continued by the
Company), in each case subject to equitable adjustments in
accordance with Section 16 of the Plan.

 

b.           Awards
that are Assumed. To the extent outstanding Awards granted
under this Plan are assumed, converted or replaced by the resulting
entity in the event of a Change in Control (or, if the Company is
the resulting entity, to the extent such Awards are continued by
the Company) as provided in Section 21(a) of the Plan, then, except
as otherwise provided in the applicable Award Agreement or in
another written agreement with the Participant, or in a Company
severance plan applicable to the Participant: (i) any outstanding
Awards that are subject to Performance Objectives shall be
converted by the resulting entity, as if “target”
performance had been achieved as of the date of the Change in
Control, and shall continue to vest during the remaining
performance period or other period of required service, and (ii)
all other Awards shall continue to vest during the applicable
vesting period, if any. Notwithstanding the preceding sentence, if
a Participant incurs a Qualified Termination, then upon such
termination (A) all outstanding Awards held by the Participant that
may be exercised shall become fully exercisable and shall remain
exercisable for the full duration of their term, (B) all
restrictions with respect to outstanding Awards shall lapse, with
any specified Performance Objectives with respect to outstanding
Awards deemed to be satisfied at the “target” level,
and (C) all outstanding Awards shall become fully
vested.

 

c.           Awards
that are not Assumed. To the extent outstanding Awards
granted under this Plan are not assumed, converted or replaced by
the resulting entity in connection with a Change in Control (or, if
the Company is the resulting entity, to the extent such Awards are
not continued by the Company) in accordance with Section 21(a) of
the Plan, then effective immediately prior to the Change in
Control, except as otherwise provided in the applicable Award
Agreement or in another written agreement with the Participant, or
in a Company severance plan applicable to the Participant: (i) all
outstanding Awards held by the Participant that may be exercised
shall become fully exercisable and shall remain exercisable for the
full duration of their term, (ii) all restrictions with respect to
outstanding Awards shall lapse, with any specified Performance
Objectives with respect to outstanding Awards deemed to be
satisfied at the “target” level, and (iii) all
outstanding Awards shall become fully vested.

 

 

17

 

 

d.    Cancellation Right. The
Committee may, in its sole discretion and without the consent of
Participants, either by the terms of the Award Agreement applicable
to any Award or by resolution adopted prior to the occurrence of
the Change in Control, provide that any outstanding Award (or a
portion thereof) shall, upon the occurrence of such Change in
Control, be cancelled in exchange for a payment in cash or other
property (including shares of the resulting entity in connection
with a Change in Control) in an amount equal to the excess, if any,
of the Fair Market Value of the Shares subject to the Award, over
any exercise price related to the Award, which amount may be zero
if the Fair Market Value of a Share on the date of the Change in
Control does not exceed the exercise price per Share of the
applicable Awards.

 

22. Amendment, Modification and
Termination.

 

a. In General. The Board may at
any time and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part; provided, however, that no alteration or
amendment that requires shareholder approval in order for the Plan
to comply with any rule promulgated by the SEC or any securities
exchange on which Shares are listed or any other Applicable Laws
shall be effective unless such amendment shall be approved by the
requisite vote of shareholders of the Company entitled to vote
thereon within the time period required under such applicable
listing standard or rule.

 

b. Adjustments to Outstanding
Awards. The Committee may in its sole discretion at any time
(i) provide that all or a portion of a Participant’s Stock
Options, Stock Appreciation Rights and other Awards in the nature
of rights that may be exercised shall become fully or partially
exercisable; (ii) provide that all or a part of the time-based
vesting restrictions on all or a portion of the outstanding Awards
shall lapse, and/or that any Performance Objectives or other
performance-based criteria with respect to any Awards shall be
deemed to be wholly or partially satisfied; or (iii) waive any
other limitation or requirement under any such Award, in each case,
as of such date as the Committee may, in its sole discretion,
declare. Unless otherwise determined by the Committee, any such
adjustment that is made with respect to an Award that is intended
to qualify for the Performance-Based Exception shall be made at
such times and in such manner as will not cause such Awards to fail
to qualify under the Performance-Based Exception. Additionally, the
Committee shall not make any adjustment pursuant to this Section
22(b) that would cause an Award that is otherwise exempt from
Section 409A of the Code to become subject to Section 409A, or
that would cause an Award that is subject to Section 409A of
the Code to fail to satisfy the requirements of
Section 409A.

 

c. Prohibition on Repricing.
Except for adjustments made pursuant to Sections 16 or 21, the
Board or the Committee will not, without the further approval of
the shareholders of the Company, authorize the amendment of any
outstanding Stock Option or Stock Appreciation Right to reduce the
exercise price. No Stock Option or Stock Appreciation Right will be
cancelled and replaced with an Award having a lower exercise price,
or for another Award, or for cash without further approval of the
shareholders of the Company, except as provided in Sections 16 or
21. Furthermore, no Stock Option or Stock Appreciation Right will
provide for the payment, at the time of exercise, of a cash bonus
or grant or sale of another Award without further approval of the
shareholders of the Company. This Section 22(c) is intended to
prohibit the repricing of “underwater” Stock Options or
Stock Appreciation Rights without shareholder approval and will not
be construed to prohibit the adjustments provided for in Sections
16 or 21.

 

 

18

 

 

d. Effect on Outstanding Awards.
Notwithstanding any other provision of the Plan to the contrary
(other than Sections 16, 21, 22(b) and 24(d)), no termination,
amendment, suspension, or modification of the Plan or an Award
Agreement shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of
the Participant holding such Award; provided that the Committee may modify
an ISO held by a Participant to disqualify such Stock Option from
treatment as an “incentive stock option” under Section
422 of the Code without the Participant’s
consent.

 

23. Applicable Laws. The obligations of
the Company with respect to Awards under the Plan shall be subject
to all Applicable Laws and such approvals by any governmental
agencies as the Committee determines may be required. The Plan and
each Award Agreement shall be governed by the laws of the State of
Nevada, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of the
Plan to the substantive law of another
jurisdiction.

 

24. Miscellaneous.

 

a.    Deferral of Awards. Except
with respect to Stock Options, Stock Appreciation Rights and
Restricted Shares, the Committee may permit Participants to elect
to defer the issuance or delivery of Shares or the settlement of
Awards in cash under the Plan pursuant to such rules, procedures or
programs as it may establish for purposes of the Plan. The
Committee also may provide that deferred issuances and settlements
include the payment or crediting of dividend equivalents or
interest on the deferral amounts. All elections and deferrals
permitted under this provision shall comply with Section 409A
of the Code, including setting forth the time and manner of the
election (including a compliant time and form of payment), the date
on which the election is irrevocable, and whether the election can
be changed until the date it is irrevocable.

 

b.    No Right of Continued Service.
The Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the
Company or any Subsidiary, nor shall it interfere in any way with
any right the Company or any Subsidiary would otherwise have to
terminate such Participant’s employment or other service at
any time. Awards granted under the Plan shall not be considered a
part of any Participant’s normal or expected compensation or
salary for any purposes, including, but not limited to, calculating
any severance, resignation, termination, redundancy, dismissal, end
of service payments, bonuses, long-service awards, pension or
retirement or welfare benefits or similar payments, and in no event
shall any Award be considered as compensation for, or relating in
any way to, past services for the Company or any Subsidiary or
affiliate.

 

 

19

 

 

c.    Unfunded, Unsecured Plan.
Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right or title to any
assets, funds or property of the Company or any Subsidiary,
including without limitation, any specific funds, assets or other
property which the Company or any Subsidiary may set aside in
anticipation of any liability under the Plan. A Participant shall
have only a contractual right to an Award or the amounts, if any,
payable under the Plan, unsecured by any assets of the Company or
any Subsidiary, and nothing contained in the Plan shall constitute
a guarantee that the assets of the Company or any Subsidiary shall
be sufficient to pay any benefits to any
person.

 

d.    Severability. If any provision
of the Plan is or becomes invalid, illegal or unenforceable in any
jurisdiction, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be
construed or deemed amended or limited in scope to conform to
Applicable Laws or, in the discretion of the Committee, it shall be
stricken and the remainder of the Plan shall remain in full force
and effect.

 

e.   
Acceptance of Plan. By
accepting any benefit under the Plan, each Participant and each
person claiming under or through any such Participant shall be
conclusively deemed to have indicated their acceptance and
ratification of, and consent to, all of the terms and conditions of
the Plan and any action taken under the Plan by the Committee, the
Board or the Company, in any case in accordance with the terms and
conditions of the Plan.

 

f.   
Successors. All obligations of
the Company under the Plan and with respect to Awards shall be
binding on any successor to the Company, whether the existence of
such successor is the result of a direct or indirect purchase,
merger, consolidation, or other event, or a sale or disposition of
all or substantially all of the business and/or assets of the
Company and references to the “Company” herein and in
any Award Agreements shall be deemed to refer to such
successors.

 

 

[END OF
DOCUMENT]

 

20Blueprint

Exhibit 4.6

RELM
Wireless Corporation

 

2017 Incentive Compensation
Plan

STOCK OPTION AGREEMENT

 

All
capitalized terms used in this Stock Option Agreement, but not
otherwise defined herein, shall have the meanings ascribed to them
in the RELM Wireless Corporation 2017 Incentive Compensation Plan
(the “Plan”).

 

I. NOTICE OF STOCK OPTION
GRANT

 

	

Optionholder Name:

	
 

	
 

	

Address:

	
 

	
 

 

The
Optionholder (as designated above) has been granted an Option to
purchase Shares of the Company, subject to the terms and conditions
of the Plan and this Option Agreement, as follows:

 

	

Date of Grant:

	
 

	
 

	

Type of Grant:

	
 

	
 

	

Exercise Price per Share:

	
 

	
 

	

Total Number of Shares Granted:

	
 

	
 

	

Total Exercise Price:

	
 

	
 

	

Type of Option:

	
 

	
 

	
Expiration Date:
	
 

	
 

	Vesting Schedule:  This
Option shall be vested based on the Grantee’s Continuous
Service according to the following vesting schedule:	

 

	   	

 

	

Termination Period:  The term
of this Option shall end as provided in Section 3 of the Stock
Option Agreement.  

 

II. STOCK OPTION AGREEMENT

 

1. Grant of Option. The
Company hereby grants to the Optionholder named in the Notice of
Stock Option Grant (the “Optionholder”), an option (the
“Option”) to
purchase the number of Shares set forth in the Notice of Stock
Option Grant, at the exercise price per Share set forth in the
Notice of Stock Option Grant (the “Exercise Price”), and subject to
the terms and conditions of the Plan, which is incorporated herein
by reference.  Subject to Section 22(d) of the Plan, in
the event of a conflict between the terms and conditions of
the Plan and this Stock Option Agreement (the “Option Agreement”), the terms and
conditions of the Plan shall prevail.

 

 

1

 

 

2. Exercise of
Option.

 

(a) Right to
Exercise.  This Option shall be exercisable during
its term in accordance with the applicable provisions of the Plan
and this Option Agreement. Notwithstanding the vesting schedule set
forth above, (i) in the event of a Change in Control, the
exercisability of this Option will be subject to the applicable
provisions of Section 21 of the Plan; and (ii) the Committee may,
in its sole discretion, provide for the full or partial
acceleration of vesting and exercisability of this Option in
connection with the termination of the Optionholder’s
Continuous Service for any reason prior to a vesting date,
including, but not limited to, termination of Continuous Service as
a result of the Optionholder’s death or “Disability”, defined as the
Optionholder’s permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical
doctor satisfactory to the Committee.

 

(b) Method of
Exercise.  This Option shall be exercisable by
delivery of an exercise notice in the form attached as Exhibit A (the
“Exercise
Notice”) which shall state the election to exercise
the Option, the number of Shares with respect to which the Option
is being exercised, and such other representations and agreements
as may be required by the Company.

 

The
Option shall be deemed exercised when the Company receives
(i) written or electronic notice of exercise (in accordance
with this Option Agreement) from the Optionholder (or other person
entitled to exercise the Option); (ii) full payment for the
Shares with respect to which the Option is exercised; (iii) payment
of any required tax withholding; and (iv) any other documents
required by this Option Agreement or the Exercise
Notice.  Full payment may consist of any consideration
and method of payment permitted by this Option
Agreement.  Shares issued upon exercise of an Option
shall be issued in the name of the Optionholder or, if requested by
the Optionholder and permitted under applicable law, in the name of
the Optionholder and his or her spouse.  Until the Shares
are issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company),
no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares, notwithstanding
the exercise of the Option.  The Company shall issue (or
cause to be issued) such Shares promptly after the Option is
exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 16 of the
Plan.

 

Exercise of this
Option in any manner shall result in a decrease in the number of
Shares thereafter available for sale under the Option, by the
number of Shares as to which the Option is exercised.

 

(c) Legal Compliance. No Shares
shall be issued pursuant to the exercise of this Option unless such
issuance and such exercise complies with applicable laws and the
requirements of any governmental or regulatory agency or stock
exchange.  Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the
Optionholder on the date on which the Option is exercised with
respect to such Shares.

 

3. Term.  Optionholder
may not exercise the Option before the commencement of its term or
after its term expires.  During the term of the Option,
Optionholder may only exercise the Option to the extent
vested.  The term of the Option commences on the Date of
Grant and, except as otherwise provided pursuant to Section 21 of
the Plan in connection with a Change in Control, expires upon the
earliest
of the following:

 

 

2

 

 

(a) With respect to the unvested portion
of the Option, upon termination of Optionholder’s Continuous
Service;

 

(b) With respect to the vested portion of
the Option, three (3) months after the termination of
Optionholder’s Continuous Service for any reason other than
Optionholder’s death or Disability;

 

(c) With respect to the vested portion of
the Option, twelve (12) months after the termination of
Optionholder’s Continuous Service by reason of
Optionholder’s death or Disability; or

 

(d) The day before the tenth (10th)
anniversary of the Date of Grant.

 

4. Method of
Payment.  Payment of the aggregate Exercise Price
shall be, to the extent permitted by applicable law, any
combination of:

 

(a) cash or check;

 

(b) subject to the Company’s
approval at the time of exercise, consideration received by the
Company under a formal cashless exercise program adopted by the
Company in connection with the Plan; or

 

(c) surrender to the Company of other
Shares which, (i) in the case of Shares acquired from the
Company, either directly or indirectly, have been owned by the
Optionholder for such period of time on the date of surrender such
that will avoid an expense for financial accounting purposes, and
(ii) have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of Shares being acquired pursuant to
exercise of  this Option.  Shares from the
portion of this Option to be exercised may be used to pay the
exercise price to the extent that such use will not increase the
compensation expense related to this Option for financial
accounting purposes.

 

5. Non-Transferability of Option.
This Option is transferable by will or by the laws of descent and
distribution.  This Option also may be transferable to
Optionholder’s “family member” upon written
consent of the Company if the transfer is not for value and at the
time of transfer, a Form S-8 registration statement under the
Securities Act of 1933, as amended (the “Securities Act”) is available for
the exercise of the Option and the subsequent resale of the
underlying Shares after such transfer.  In addition,
Optionholder may, by delivering written notice to the Company, in a
form provided by or otherwise satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the
Option.  For purposes hereof, the term “family
member” shall have the meaning assigned to it in the general
instructions of a Form S-8 registration statement (or any successor
form adopted under the Securities Act).

 

 

3

 

 

6. Tax Obligations.

 

(a) Tax
Consequences.  Optionholder has reviewed with
Optionholder’s own tax advisors the federal, state, local and
foreign tax consequences of this Option.  Optionholder is
relying solely on such advisors and not on any statements or
representations of the Company or any of its
agents.  Optionholder understands that Optionholder (and
not the Company) shall be responsible for any tax liability that
may arise as a result of the transactions contemplated by this
Option Agreement and the Plan.

 

(b) Withholding
Taxes.  Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise
or acquisition of Shares under this Option by any of the following
means (in addition to the Company’s right to withhold from
any compensation paid to the Optionholder by the Company) or by a
combination of such means:  (i) tendering a cash payment;
(ii) authorizing the Company to withhold Shares from the Shares
otherwise issuable to Optionholder as a result of the exercise or
acquisition of stock under this Option; provided, however, that no
Shares are withheld with a value exceeding the amount of tax
required to be withheld by law based on the maximum statutory tax
rates in the applicable taxing jurisdictions; or (iii) delivering
to the Company owned and unencumbered
Shares.  Optionholder agrees to make appropriate
arrangements with the Company for the satisfaction of all federal,
state, local and foreign income and employment tax withholding
requirements applicable to the Option
exercise.  Optionholder acknowledges and agrees that the
Company may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the time of
exercise.

 

7. Entire Agreement; Governing
Law.  The Plan and this Option Agreement
constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionholder with
respect to the subject matter hereof, and may not be modified
adversely to the Optionholder’s interest except by means of a
writing signed by the Company and Optionholder.  This
Option Agreement shall be construed and enforced under the laws of
the State of Nevada, without regard to choice of law provisions
thereof.

 

8. No Guarantee of Continued
Service.  Optionholder acknowledges and agrees
that nothing in this Option Agreement or the Plan confer upon
Optionholder any right to continued employment or other service
with the Company or any Subsidiary or affiliate.

 

9.
Data Privacy. In
order to administer the Plan, the Company may process personal data
about the Optionholder. Such data includes, but is not limited to
the information provided in this Option Agreement and any changes
thereto, other appropriate personal and financial data about the
Optionholder such as home address and business addresses and other
contact information and any other information that might be deemed
appropriate by the Company to facilitate the administration of the
Plan. By signing this Option Agreement, the Optionholder gives
explicit consent to the Company to process any such personal data.
The Optionholder also gives explicit consent to the Company to
transfer any such personal data outside the country in which the
Optionholder works or is employed, including, if the Optionholder
is not a U.S. resident, to the United States, to transferees that
shall include the Company and other persons who are designated by
the Company to administer the Plan.

 

 

4

 

 

10.
Plan and Prospectus
Delivery. By signing this Option Agreement, the Optionholder
acknowledges that a copy of the Plan, the Plan Summary and
Prospectus, and the Company's most recent Annual Report and Proxy
Statement (the “Prospectus
Information”) either have been received by or provided
to the Optionholder, and the Optionholder consents to receiving the
Prospectus Information electronically, or, in the alternative,
agrees to contact the Chief Financial Officer of the Company to
request a paper copy of the Prospectus Information at no charge.
The Optionholder also represents that he or she is familiar with
the terms and provisions of the Prospectus Information and hereby
accepts the Option on the terms and subject to the conditions set
forth herein and in the Plan. The Optionholder hereby agrees to
accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under
the Plan or this Option. The Optionholder further agrees to notify
the Company upon any change in the residence address indicated
below.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the Date of Grant.

 

 

	

 

	
RELM
WIRELESS CORPORATION

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
 

	

 

	

 

	Name:	
 

	

 

	

 

	Title:	

 

	

 

	

 

	 	

 

	

 

	

 

	

OPTION
HOLDER 

	

 

	

 

	 	

 

	

 

	

 

	Name:	

 

	

 

	

 

	Address:	

 

	

 

	

 

	 	

 

	

 

	

 

	 	

 

	

 

 

 

 

5

 

 

EXHIBIT A

 

RELM Wireless
Corporation

2017 INCENTIVE COMPENSATION PLAN

 

EXERCISE NOTICE

 

RELM
Wireless Corporation

7100
Technology Drive

West
Melbourne, Florida 32904

 

Attention:  Chief
Financial Officer

 

1. Exercise of
Option.  Effective as of today, _____________,
20__, the undersigned (“Optionholder”) hereby elects to
exercise Optionholder’s option to purchase _________ shares
of the Common Stock (the “Shares”) of RELM Wireless
Corporation (the “Company”) under and pursuant to
the Company’s 2017 Incentive Compensation Plan (the
“Plan”) and the
Stock Option Agreement dated ____________, 20__ (the
“Option
Agreement”).

 

2. Delivery of Payment and Required
Documents.  Optionholder herewith delivers to the
Company the full purchase price of the Shares, as set forth in the
Notice of Stock Option Grant in Part I of the Option Agreement, and
any and all withholding taxes due in connection with the exercise
of the Option.  In addition, Optionholder herewith
delivers any other documents required by the Company.

 

3. Representations of
Optionholder.  Optionholder acknowledges that
Optionholder has received, read and understood the Plan and the
Option Agreement and agrees to abide by and be bound by their terms
and conditions.

 

4. Rights as
Stockholder.  Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder
shall exist with respect to the Shares, notwithstanding the
exercise of the Option.  The Shares shall be issued to
the Optionholder as soon as practicable after the Option is
exercised in accordance with the Option Agreement.  No
adjustment shall be made for a dividend or other right for which
the record date is prior to the date of issuance except as provided
in Section 16 of the Plan.

 

5. Tax
Consultation.  Optionholder understands that
Optionholder may suffer adverse tax consequences as a result of
Optionholder’s purchase or disposition of the
Shares.  Optionholder represents that Optionholder has
consulted with any tax consultants Optionholder deems advisable in
connection with the purchase or disposition of the Shares and that
Optionholder is not relying on the Company for any tax
advice.

 

 

6

 

 

6. Successors and
Assigns.  The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and
this Exercise Notice shall inure to the benefit of the successors
and assigns of the Company.  Subject to the restrictions
on transfer set forth in the Option Agreement, this Exercise Notice
shall be binding upon Optionholder and his or her heirs, executors,
administrators, successors and assigns.

 

7. Interpretation.  Any
dispute regarding the interpretation of this Exercise Notice shall
be submitted by Optionholder or by the Company forthwith to the
Committee which shall review such dispute at its next regular
meeting.  The resolution of such a dispute by the
Committee shall be final and binding on all parties.

 

8. Governing Law.  This
Exercise Notice shall be construed and enforced under the laws of
the State of Nevada, without regard to choice of law provisions
thereof.

 

9. Entire
Agreement.  The Plan and Option Agreement are
incorporated herein by reference.  All capitalized terms
used herein but not otherwise defined herein shall have the
meanings ascribed to them in the Option Agreement.  This
Exercise Notice, the Plan and the Option Agreement constitute the
entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionholder with respect to the
subject matter hereof, and may not be modified adversely to the
Optionholder’s interest except by means of a writing signed
by the Company and Optionholder.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Exercise
Notice as of the Date of Grant.

 

	

 

	
RELM
WIRELESS CORPORATION

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
 

	

 

	

 

	Name:	
 

	

 

	

 

	Title:	

 

	

 

	

 

	 	

 

	

 

	

 

	

OPTION
HOLDER 

	

 

	

 

	 	

 

	

 

	

 

	Name:	

 

	

 

	

 

	Address:	

 

	

 

	

 

	 	

 

	

 

	

 

	 	

 

	

 

  

 

7

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