Document:

Exhibit 10.1

 

MCORP CX, INC.

(a California corporation)

AMENDED AND RESTATED STOCK OPTION PLAN

(the "Plan")

	
1.

	
Purpose. The purpose of this Plan is to promote to the interests of the Company and its stockholders by attracting, retaining, and stimulating the performance of selected employees and consultants, including officers and directors, and giving such employees, management, directors, and consultants the opportunity to acquire a proprietary interest in the Company's business and an increased personal interest in its continued success and progress as well as increasing the productivity of those individuals whom the Committee deems to have the potential to contribute to the success of the Company.

	
2.

	
Definitions. Unless otherwise indicated, the following words when used herein will have the following meanings:

 

	
(a)

	
"Board of Directors" means the board of directors of the Company.

 

	
(b)

	
"Code" means the Internal Revenue Code of 1986, as amended from time to time.

 

	
(c)

	
"Common Stock" means the shares of common stock, no par value in the capital of the Company.

 

	
(d)

	
"Company" means McorpCX, Inc., a California corporation and its directly and indirectly-controlled subsidiaries, if any.

 

	
(e)

	
"Committee" means the body appointed by the Board of Directors which will be comprised in such a manner as to comply with the requirements, if any, of Rule 16b-3 (or any successor rule) under the Exchange Act and of Section 162 of the Code.

 

	
(f)

	
"Compensation Committee" means the compensation committee of the Board of Directors.

 

	
(g)

 

	
"Consultant" has the meaning set out in the policies of the TSX-V.

	
(h)

 

	
"Director" means a member of the Board of Directors.

	
(i)

 

	
"Discounted Market Price" has the meaning set out in the policies of the TSX-V.

	
(j)

	
"Effective Date" means February 3, 2016.

	
(k)

 

	
"Eligible Participant" has the meaning set forth in Section 4 hereto.

	
(l)

 

	
"Employee" means:

	
(i)

 

	
an individual who is considered an employee under the Code;

	
(ii)

	
an individual who works full-time for the Company or an affiliate of the

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Company providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

 

	
(iii)

	
an individual who works for the Company or an affiliate on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions need not be made at source,

 

and may include an Officer.

	
(m)

	
"Exchange Act" means the Securities Exchange Act of 1934.

	
(n)

	
"Fair Market Value" means, subject to Section 7(d) of this Plan, the per share value of the Common Stock determined as follows:

	
(i)

	
if the Common Stock is listed on the TSX-V, then the Fair Market Value will be determined as being the "Market Price" as determined in accordance with the policies of the TSX-V;

 

	
(ii)

	
if the Common Stock is not listed on the TSX-V but is listed on an established stock exchange, exchanges, or a NASDAQ market, the closing price per share on the last trading day immediately preceding such date on the principal exchange on which the Common Stock is traded or as reported by NASDAQ;

 

	
(iii)

	
if the Common Stock is not then listed on the TSX-V, an established exchange or a NASDAQ market, but is quoted on the OTCQB or the OTC pink sheets, the average of the closing bid and asked prices per share for the Common Stock as quoted by OTCQB or the OTC, as the case may be, on the last trading day immediately preceding such date; or

	
(iv)

	
if there is no such reported market for the Common Stock for the date in question, then an amount determined in good faith by the Committee.

 

	
(o)

	
"Incentive Stock Option" means any option granted to an Eligible Participant under the Plan which the Company intends at the time the option is granted to be an Incentive Stock Option within the meaning of Section 422 of the Code.

	
(p)

	
"Insider" has the meaning set out in the policies of the TSX-V.

	
(q)

	
"Investor Relations Activities" has the meaning set out in the policies of the TSX-V.

	
(r)

	
"Management Company Employee" means an individual employed by a Company or individual providing management services to the Company, which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Company or individual engaged in Investor Relations Activities.

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(s)

	
"Nonqualified Stock Option" means any option granted to an Eligible Participant under the Plan which is not an Incentive Stock Option.

	
(t)

	
"Officer" means a duly-appointed senior officer of the Company, including the President, Vice-President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer and/or Principal Financial Officer of the Company.

	
(u)

	
"Option" means and refers collectively to Incentive Stock Options and Nonqualified Stock Options.

	
(v)

	
"Option Agreement" means such Option agreement or agreements as are approved from time to time by the Board and as are not inconsistent with the terms of this Plan.

	
(w)

	
"Option Share" means any share of Common Stock issuable upon exercise of an Option.

	
(x)

	
"Optionee" means any Eligible Participant who is granted an Option under the Plan. "Optionee" will also mean the personal representative of an Optionee and any other person who acquires the right to exercise an Option by bequest or inheritance or pursuant to a QDRO.

	
(y)

	
"Subsidiary" means a subsidiary corporation of the Company as defined in Section 425(f) of the Code.

 

	
(z)

	
"TSX-V" means the Toronto Stock Venture Exchange.

	
3.

	
Administration.

 

	
(a)

	
This Plan will be administered by the Compensation Committee or if there is no Compensation Committee appointed by the Board of Directors, then by the Board of Directors as a whole (the "Committee"). Except for the terms and conditions explicitly set forth in this Plan, the Committee will have the authority, in its discretion, to determine all matters relating to the award and issuance of Common Stock or the grant of Options to be granted under this Plan, including the selection of individuals to be granted Options, the number of shares of Common Stock to be subject to each grant, the date of grant, the termination of the Options, the term of Options, vesting schedules, and all other terms and conditions thereof. Such authority will also include the authority in the event of a spin-off or other corporate transaction to permit substitution of an Option with a stock option from another company or an award denominated in other than shares of Common Stock. Grants under this Plan to Eligible Participants need not be identical in any respect, even when made simultaneously. The Committee will also determine and approve whether the grant of Options will consist of an Incentive Stock Option as described in Section 422 of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the "Code"), or a Non-Qualified Stock Option, which will consist of any Option other than an Incentive Stock Option.

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(b)

	
Options will be evidenced by written agreements ("Option Agreements") which will contain such terms and conditions as may be determined by the Committee. Each Option Agreement will be signed on behalf of the Company by an officer or officers delegated such authority by the Committee.

 

	
(c)

	
All decisions made by the Committee pursuant to the provisions of this Plan and all determinations and selections made by the Committee pursuant to such provisions and related orders or resolutions of the Board of Directors will be final and conclusive, subject to regulatory approval, including the approval of the TSX-V.

 

	
(d)

	
No member of the Committee will be liable for any action, failure to act, determination or interpretation made in good faith with respect to this Plan or any transaction hereunder, except for liability arising from his or her own willful misfeasance, gross negligence or reckless disregard of his or her duties.  The Company will indemnify each member of the Committee for all costs and expenses and, to the extent permitted by applicable law, any liability incurred in connection with defending against, responding to, negotiation for the settlement of or otherwise dealing with any claim, cause of action or dispute of any kind arising in connection with any actions in administering this Plan or in authorizing or denying authorization to any transaction hereunder.

	
4.

	
Eligibility and Participation. The group of individuals eligible to receive Options will consist only of the following (the "Eligible Participants"):

 

	
(a)

	
Directors and Officers of the Company,

 

	
(b)

	
Employees of the Company and Management Company Employees, and

 

	
(c)

	
Consultants of the Company, except as provided herein,

and includes a company of which 100% of the share capital is beneficially owned by one or more individual Eligible Participants.

Consultants will only be eligible to receive Options if they have furnished bona fide services to the  Company and such services are not in connection with the offer or sale of securities in a capital-raising transaction.

 

	
5.

	
Shares Subject to This Plan.

	
(a)

	
The stock to be offered under the Plan will be shares of Common Stock. The aggregate number of shares reserved for issuance under this Plan will be fixed at 10% of the total number of issued and outstanding shares of Common Stock from time to time, such that the Common Stock reserved for issuance under this Plan will increase automatically with increases in the total number of shares of Common Stock issued and outstanding. The prescribed maximum percentage may be subsequently increased to any other specified amount, provided the change is authorized by a vote of the stockholders of the Company in accordance with the policies of the TSX-V.

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(b)

	
If an Option expires, is surrendered in exchange for another Option, or terminates for any reason during the term of this Plan prior to its exercise in full, the shares subject to but not delivered under such Option will be available for Options thereafter granted and for replacement Options which may be granted in exchange for such surrendered or terminated Options. Common Stock which has been issued pursuant to the exercise of Options granted under this Plan since the inception of the Plan will not be considered to reduce the maximum number of Shares which may be issued to Eligible Participants under Options issued and outstanding pursuant to this Plan.

	
6.

	
Grants of Options

	
(a)

	
At any time and from time to time prior to the termination of the Plan, Options may be granted by the Committee to any individual who is an Eligible Participant at the time of grant.  Options granted pursuant to the Plan will be contained in an Option Agreement in a form approved by the Committee and, except as hereinafter provided, will be subject to the provisions of this Plan, in addition to such other terms and conditions as the Committee may specify.

 

	
(b)

	
In addition, for as long as the Common Stock of the Company is listed on the TSX-V, the Company will comply with the following requirements in addition to any other requirements imposed under the policies of the TSX-V:

 

	
(i)

	
Options to acquire more than 2% of the issued and outstanding Common Stock of the Company will not be granted to any one Consultant in any 12 month period, calculated at the date the Option was granted;

 

	
(ii)

	
Options to acquire more than an aggregate of 2% of the issued and outstanding Common Shares of the Company may not be granted to persons employed to provide Investor Relations Activities in any 12 month period, calculated at the date the Option was granted;

 

	
(iii)

	
Options issued to Eligible Persons performing Investor Relations Activities must vest in stages over 12 months with no more than one-quarter (1/4) of the Options vesting in any three-month period;

 

	
(iv)

	
For Options granted to Employees, Consultants or Management Company Employees, the Company and the Optionee are responsible for confirming that the Optionee is a bona fide Employee, Consultant or Management Company;

 

	
(v)

	
Any Options granted to an Eligible Participant must expire within a reasonable period following the date that the Optionee ceases to occupy such role;

 

	
(vi)

	
No term of any Option may exceed 10 years; and

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(vii)

	
The Company will obtain disinterested shareholder approval in accordance with the policies of the TSX-V in the following circumstances:

 

	
(A)

	
for Options granted to any one individual in any 12-month period to acquire Option Shares exceeding 5% of the issued and outstanding Common Stock of the Company;

 

	
(B)

	
for Options granted to Insiders within a 12-month period to acquire Option Shares exceeding 10% of the issued and outstanding Common Shares of the Company;

 

	
(C)

	
for any amendment to or reduction in the exercise price of an Option if the Optionee is an Insider of the Company at the time of the amendment; and

 

	
(D)

	
for the Plan, if the Plan, together with all of the Company's previously established and outstanding stock option plans or grants, could result at any time in the grant to Insiders of the Company of a number of Option Shares exceeding 10% of the Company's issued Common Shares.

	
7.

	
Incentive Stock Options.

 

	
(a)

	
An Option designated by the Committee as an "Incentive Stock Option" is intended to qualify as an "Incentive Stock Option" within the meaning of Subsection (b) of Section 422 of the Code.  Any Option that is not designated by the Committee as an "Incentive Stock Option" will be deemed to not be an "Incentive Stock Option".

 

	
(b)

	
To the extent that the aggregate fair market value (determined at the time the option is granted) of the Common Stock with respect to which Incentive Stock Options (determined without regard to this Subsection 7(b)) are exercisable for the first time by the Optionee during any calendar year (under this Plan and all other Incentive Stock Option Plans of the Company) exceed $100,000, such Options will be treated as Non-Qualified Options and will not qualify as incentive Stock Options.

 

	
(c)

	
Should Section 422 of the Code or regulations or pronouncements thereunder be modified during the term of this Plan, this Plan and any outstanding Options may be amended to conform to such modification, if approved by the Board of Directors, upon recommendation by the Committee.

 

	
(d)

	
Notwithstanding the definition of "Fair Market Value" in this Plan, fair market value in connection with any Incentive Stock Options will be determined under the applicable method provided by Regulations under Section 2031 of the Code.

 

	
(e)

	
In the case of an Incentive Stock Option: (a) granted to a Eligible Participant who at the time of the grant owns Common Stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of

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the Company, the per share exercise price will be no less than 110% of the fair market value per share on the date of grant; or (b) granted to any other Eligible Participant, the per share exercise price will be no less than 100% of the fair market value per share of Common Stock on the date of grant.

 

	
(f)

	
In the case of an Incentive Stock Option  granted to a Eligible Participant who at the time of the grant of such Incentive Stock Option owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, such Incentive Stock Option may not be exercised after the expiration of five (5) years from the date the Incentive Stock Option is granted.

 

	
(g)

	
If Common Stock acquired upon exercise of an Incentive Stock Option is disposed of by an Optionee prior to the expiration of either two years from the date of grant of such Option, one year from the transfer of shares of Common Stock to the Optionee pursuant to the exercise of such Option or in any other disqualifying disposition, within the meaning of Section 422 of the code, such Optionee will notify the Company in writing of the date and terms of such disposition.  A disqualifying disposition by an Optionee will not affect the status of any other Incentive Stock Option granted under the Plan.

 

	
(h)

	
No Incentive Stock Options will be granted under this Plan more than 10 years after the date that the Plan is adopted or approved by the shareholders of the Company, whichever is earlier.

 

	
(i)

	
No Incentive Stock Option will be exercisable more than 10 years from the date it is granted; provided, however, that the case of an Eligible Participant who at the time of grant owns Common Stock representing more than 10% of the voting power of all classes of stock of the Company or any subsidiary, the Incentive Stock Option may not be exercised after the expiration of five (5) years from the date of grant.

 

	
(j)

	
Incentive Stock Options will only be granted to Eligible Participants who qualify as  employees of the Company or any subsidiary of the Company under the meaning of "employee" for the purposes of the Code. A subsidiary of the Company means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each corporation (other than the last corporation) in such chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  The preceding definition of the term "subsidiary" is intended to comply with, and will be interpreted consistently with, section 424(f) of the Code.

 

	
8.

	
Term of Option Period. The term during which Options may be exercised will be determined in the discretion of the Committee, except that the period during which each Option may be exercised will expire no later than on the tenth anniversary of the date of grant.

	
9.

	
Exercise Price. Subject to any limitations provided for in Section 7 herein and to any additional limitations imposed by the TSX-V, the price at which shares of Common Stock may be purchased upon the exercise of an Option will be such price as fixed by the Committee, provided that such

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exercise price will not be less than:

 

	
(a)

	
the Discounted Market Price if the Common Stock is listed on the TSX-V at the time of the grant (noting that an "Exchange Hold Period" may apply under the policies of the TSX-V if the exercise price is below the Market Price), and

 

	
(b)

	
85% of the Fair Market Value if the Common Stock is not listed on the TSX-V at the time of the grant of the Option.

If the shares of Common Stock become listed on another stock exchange, then the exercise price will not be less than the exercise price permitted by such exchange.

	
10.

	
Payment of Exercise Price. The Committee will determine the terms of payment by each Eligible Participant for shares of Common Stock to be purchased upon the exercise of Stock Options. Such terms will be set forth or referred to in the Option Agreement.  No Option Share may be issued until payment in full of the exercise price has been received by the Company.

	
11.

	
Form of Exercise Payment. An Option may be exercised by payment of cash, cashier's check or wired funds, or any combination of the foregoing methods, as approved by the Committee.

	
12.

	
Vesting; Exercise of Options and Rights.

 

	
(a)

	
Subject to the provisions of subsection 12(g) herein, an Option will vest and become nonforfeitable and exercisable, pursuant to such vesting schedules as determined by the Committee, but in no event later than 5 years from the date of grant. Eligible Participants may be credited with prior years of service for purposes of any vesting schedules, at the discretion of the Committee.

 

	
(b)

	
Each Option granted will be exercisable in whole or  in part at any time or from time to time during the option period as the Committee may determine, provided that the election to exercise an Option will be made in accordance with applicable Federal laws and regulations, and further provided that each Option will contain a provision that will prevent exercise of the Option unless the Optionee remains in the employ of the Company or its subsidiary at least one year after the granting of the Option. However, the Committee may in its discretion accelerate the vesting schedule of any option at any time.

 

	
(c)

	
No Option may at any time be exercised with respect to a fractional share of Common Stock.

 

	
(d)

	
As a condition to the exercise of an Option, Optionees will make such arrangements as the Committee may require for the satisfaction of any federal, state, or local withholding tax obligations that my arise in connection with such exercise.

 

	
(e)

	
No shares of Common Stock will be delivered pursuant to the exercise of any Option, in whole or in part, until qualified for delivery under such securities laws

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and regulations as may be deemed by the Committee to be applicable thereto.

 

	
(f)

	
Notwithstanding any vesting requirements contained in any Option and the restrictions on trading imposed on Option Shares under Section 19 of this Plan, all outstanding Options will become immediately exercisable and any Option Shares issued upon exercise immediately tradeable (a) following the first purchase of Common Stock pursuant to a tender offer or exchange offer (other than an offer made by the Company) for all or part of the Common Stock, (b) at such time as a third person, including a "group" as defined in Section 13(d) of the Exchange Act, becomes the beneficial owner of shares of the Company having 25% or more of the total number of votes that may be cast for the election of Directors of the Company, (c) on the date on which the shareholders of the Company approve (i) any agreement for a merger or consolidation in which the Company will not survive as  an independent, publicly-owned corporation or (ii) any sale, exchange or other disposition of all or substantially all of the Company's assets. The Committee's reasonable determination as to whether such an event has occurred will be final and conclusive.

 

	
(g)

	
Notwithstanding any other provisions of this Agreement to the contrary, the right of any Eligible Participant to receive any benefits hereunder will terminate and will be forever forfeited if such Eligible Participant's employment with the Company is terminated because of his/her fraud, embezzlement, dishonesty, or breach of fiduciary duty. In such an event, all unexercised Options will be deemed null and void.

	
13.

	
Transferability of Options. The right of any Optionee to exercise an Option granted under the Plan will, during the lifetime of such Optionee, be exercisable only by such Optionee or pursuant to a qualified domestic relations order as defined by the Code, or Title I of the Employee Retirement Income Security Act, or the rules thereunder (a "QDRO") and will not be assignable or transferable by such Optionee other than by will or the laws of descent and distribution or a QDRO.

 

	
14.

	
Termination of Relationship. No Option may be exercised after the Optionee, if a Director or Officer, has ceased to be a Director or Officer or, if an Employee or other Eligible Participant has left the employ or service of the Company or an affiliate of the Company, except as follows:

 

	
(a)

	
notwithstanding any other provision of this Section 14, if and to the extent provided in the Optionee's employment agreement;

 

	
(b)

	
in the case of the death of an Optionee, any vested Option held by him or her at the date of death will become exercisable by the Optionee's lawful personal representatives, heirs or executors until the earlier of one year after the date of death of such Optionee and the expiry date of such Option;

 

	
(c)

	
subject to the other provisions of this Section 14, including the proviso below, vested Options will expire 90 days after the date the Optionee ceases to be employed by, provide services to, or be a Director or Officer of, the Company or an affiliate of the Company, and all unvested Options will immediately terminate without right to exercise same; and

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(d)

	
in the case of an Optionee being dismissed from employment or service for cause, such Optionee's Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise same,

provided that in no event may the term of the Option exceed 10 years. Notwithstanding the provisions of subsection 14(c), the Board may provide for the vesting of all or any part of the Optionee's Options that are unvested at the date the Optionee ceases to be employed by, provide services to, or be a Director or Officer of, the Company or an affiliate, and may extend the time period for exercise of an Option to a maximum of the original term of the Option, all as the Board deems appropriate in the circumstances contemplated by subsection 14(c).

 

	
15.

	
Changes in Common Stock. The aggregate number and class of shares on which Options may be granted under this Plan, the number and class of shares covered by each outstanding Option, and the exercise price per share thereof (but not the total price), of each such Option, will all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a split-up or consolidation of shares of Common Stock, or any spin-off, spin-out, split-up, or other distribution of assets to shareholders, or any like capital adjustment or the payment of any such stock dividend, or any other increase or decrease in the number of shares of Common Stock without the receipt of consideration by the Company, or assumption and conversion of outstanding grants due to an acquisition.

 

	
16.

	
Amendment and Discontinuance of Options.  The Board of Directors may suspend, discontinue, or amend the Plan to reduce the number of shares of Common Stock under option, increase the exercise price, or cancel an Option.  Except as contemplated below, the Board of Directors may amend other terms of an Option only where approval of the TSX-V has been obtained, and where the following requirements are met:

 

	
(a)

	
If the Optionee is an Insider of the Company at the time of the amendment, the Company obtains disinterested shareholder approval;

 

	
(b)

	
If the Option exercise price is amended, at least six months have elapsed since the later of the date of commencement of the term, the date the Company's shares of Common Stock commenced trading, or the date the Option exercise price was last amended;

 

	
(c)

	
If the option price is amended to the Discounted Market Price, the TSX-V hold period will apply from the date of the amendment (and, for more certainty, if the option price is amended to the Market Price, the Exchange hold period will not apply);

 

	
(d)

	
If the length of the stock option term is amended, any extension of the length of the term of the Option is treated as a grant of a new Option, which must comply with the policies of the TSX-V as it were a newly granted option.  The term of an Option cannot be extended so that the effective term of the Option exceeds 10 years in total.  An Option must be outstanding for at least one year before the Company can extend its term; and

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The TSX-V must accept a proposed amendment before the amended Option is exercised.

The Board may amend the terms of the Plan from time to time subject to the any approval required from the TSX-V and, if required by the policies of the TSX-V, the shareholders of the Company.  However, the Board may amend the terms of the Plan to comply with the requirements of any applicable regulatory authority without obtaining shareholder approval, including (a) amendments of a housekeeping nature to the Plan; (b) a change to the vesting provisions of an Option or the Plan; and (c) a change to the termination provisions of an Option or the Plan which does not entail an extension beyond the original expiry date.

Notwithstanding the foregoing, no amendment to this Plan will, except with the consent of the Optionee, adversely affect the rights under an Option previously granted.

If the amendment of an Option requires regulatory approval or shareholder approval, such amendment may be made prior to such approvals being given, but no such amended Options may be exercised unless and until such approvals are given.

	
17.

	
Term of Plan. This Plan will terminate on the earlier of:

 

	
(a)

	
January 25, 2018; and

 

	
(b)

	
Such earlier date as the Board may determine (the "Termination Date").

No Incentive Stock Options will be granted under this Plan after the Termination Date.

 

	
18.

	
Compliance with Securities Laws. No Option will be exercisable in whole or in part, nor will the Company be obligated to issue any Option Shares pursuant to the exercise of any such Option, if such exercise and issuance would, in the opinion of counsel for the Company, constitute a breach of any applicable laws from time to time, or the rules from time to time of the TSX-V or other securities regulatory authority to which the Company is subject.  Each Option will be subject to the further requirement that if at any time the Board determines that the listing or qualification of the Option Shares under any securities legislation or other applicable law, or the consent or approval of any governmental or other regulatory body (including the TSX-V), is necessary as a condition of, or in connection with, the issue of the Option Shares hereunder, such Option may not be exercised in whole or in part unless such listing, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Board.  If required by the Company in order to ensure compliance with applicable securities laws, the Optionee will deliver to the Company a representation in writing that the purchase of Option Shares upon exercise of an Option is being made for investment only and not for resale or with a view to distribution and containing such other representations and provisions with respect thereto as the Company may require. Each Optionee further acknowledges that any Option Shares issued upon exercise of an Option may be "restricted securities" upon issuance and the certificates representing such shares legended in the event that the issuance of the Option Shares has not been registered by an effective registration statement under the United States Securities Act of 1933, as amended (the "1933 Act").  Each Optionee that is an "affiliate" of the Company, as defined under the 1933 Act, further acknowledges that any Option Shares issued upon exercise of an Option may be "control securities" upon issuance and may be subject to additional restrictions on resale imposed by Rule 144 of the 1933 Act, including (i) the Rule 144 volume restrictions that will limit the maximum number of shares that may be sold in any three month period to the greater of 1% of the outstanding shares of the same class being

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sold, or if the class is listed on a "national securities exchange", as defined in the 1933 Act, the greater of 1% or the average reported weekly trading volume during the four weeks preceding the filing of a notice of sale on Form 144, (ii) the Rule 144 manner of sale requirements, (iii) the Rule 144 current public information requirements, and (iv) the Form 144 notice filing requirements, and the certificates representing such shares may be legended to reflect such status as "control securities".  In addition to any resale restrictions imposed under securities laws, where the exercise price of the Option is based on the Discounted Market Price, any Option Shares will be legended with a four-month hold period under the policies of the TSX-V, which hold will date from the date the Option is granted.

 

	
19.

	
Restrictions on Transfer of Option Shares. All Option Shares will, upon issuance, be subject to the following restrictions on transfer (the "Plan Restrictions on Transfer") unless (i) the Committee has determined in writing that the Plan Restrictions on Transfer will not apply, or (ii) the circumstances in Section 12(f) of this Plan apply.  The Plan Restrictions on Transfer are contractual restrictions on transfer that may be enforced by the Company against the Optionee and will be in addition to any transfer restrictions imposed under applicable securities laws, as referred to above in Section 18 of this Plan.  Under the Plan Restrictions on Transfer, the maximum number of Option Shares that may be sold in any three month period by any Optionee, which three month period will be measured on a "look-back" basis from the date of any sale of the Option Shares, will equal the greater of (i) 1% of the outstanding Common Shares of the Company, or (ii) if the Common Shares of the Company are listed on a stock exchange in the United States or Canada, the greater of 1% or the average reported weekly trading volume on all markets in the United States and Canada (including the OTCQX and the TSX-V) during the four weeks preceding the date of sale.  The certificates representing the Option Shares may be endorsed with legends confirming the Plan Restrictions on Transfer.

 

	
20.

	
Rights as Shareholder and Employee. An Optionee will have no rights as a shareholder of the Company with respect to any shares of Common Stock covered by an Option until the date of the issuance of the stock certificate for such shares. Neither the Plan, nor the granting of an Option or other rights herein, nor any other action taken pursuant to the Plan will constitute or be evidence of any agreement or understanding, express or implied, that a Eligible Participant has a right to continue as an Employee for any period of time or at any particular rate of compensation.

 

	
21.

	
Currency. All references to "$" herein are to the United States Dollar.

 

	
22.

	
Governing Law. This Agreement will be governed and construed in accordance with the laws of the State of California without regard to principles of conflicts of law. 

 

	
23.

	
Limitations on Sale of Stock Purchased Under the Plan. The Plan is intended to provide Common Stock for investment and not for resale. The Company does not, however, intend to restrict or influence any Eligible Participant in the conduct of his own affairs. An Eligible Participant, therefore, may sell stock purchased under the Plan at any time he or she chooses, subject to compliance with any applicable Federal or state securities laws and subject to the restrictions on resale imposed under this Plan. THE PARTICIPANT ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.

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24.

	
Regulatory Approval.  This Plan will be subject to the approval of any regulatory authority whose approval is required, including any approval of the TSX-V. Any Options granted under this Plan prior to such approvals being given will be conditional upon such approvals being given, and no such Options may be exercised unless and until such approvals are given. The Company's  obligation to sell and deliver shares of the Common Stock under this Plan is subject to the regulatory approval required in connection with the authorization, issuance, or sale of such shares.

 

	
25.

	
Other Benefit and Compensation Programs. Unless otherwise specifically determined by the Committee, grants of Options under the Plan will not be deemed a part of an Eligible Participant's regular, recurring compensation for purposes of calculating payments or benefits from any Company benefit plan or severance program. Further, the Company may adopt other compensation programs, plans or arrangements as it deems appropriate or necessary.

 

	
26.

	
Unfunded Plan. Unless otherwise determined by the Board, the Plan will be unfunded and will not create (or be construed to create) a trust or a separate fund or funds.  The Plan will not establish any fiduciary relationship between the Company and any Eligible Participant or other person.  To the extent any person holds any rights by virtue of Options granted under the Plan, such rights will constitute, general unsecured liabilities of the Company and will not confer upon any Optionee any right, title or interest in any assets of the Company.

 

	
27.

	
Arbitration.  Any controversy arising out of, connected to, or relating to any matters herein of the transactions between an Eligible Participant and the Company (including for purposes of arbitration, officers, directors, employees, controlling persons, affiliates, professional advisors, agents, or promoters of the Company), on behalf of the undersigned, or this Agreement, or the breach thereof, including, but not limited to any claims of violations of Federal and/or State Securities Acts, Banking Statutes, Consumer Protection Statutes, Federal and/or State Anti-Racketeering (e.g. RICO) claims as well as any common law claims and any State Law claims of fraud, negligence, negligent misrepresentations, unjust termination, breach of contract, and/or conversion will be settled by arbitration; and in accordance with this paragraph and judgment on the arbitrator's award may be entered in any court having jurisdiction thereof in accordance with the provisions of  California law.  In the event of such a dispute, each party to the conflict will select an arbitrator, which will constitute the three person arbitration board.  Participants will be required to waive any right to an  award of punitive damages. The decision of a majority of the board of arbitrators, who will render their decision within thirty (30) days of appointment of the final arbitrator, will be binding upon the parties. Venue for arbitration will lie in Boise, Idaho.

 

	
28.

	
Amendment and Restatement.  This Plan amends and restates the original stock option plan of the Company dated for reference January 25, 2008 (the "Original Plan").  All options granted under the Original Plan (the "Original Options") will remain in full force and effect as Options under this Plan without amendment other than as required to conform such original Options to the terms and conditions of this Plan.

 

	
29.

	
Shareholder Approval.  The Plan will be submitted to the shareholders of the Company for approval within 12 months of the date of this amended and restated Plan.

-13-Exhibit 10.31

RESTRICTED SHARE AGREEMENT

UNDER THE BROOKDALE SENIOR LIVING INC.

 2014 OMNIBUS INCENTIVE PLAN

This Award Agreement (this "Restricted Share Agreement"), dated as of October 1, 2015 (the "Date of Grant"), is made by and between Brookdale Senior Living Inc., a Delaware corporation (the "Company"), and Daniel A. Decker (the "Participant").  Capitalized terms not defined herein shall have the meaning ascribed to them in the Brookdale Senior Living Inc. 2014 Omnibus Incentive Plan (as amended and/or restated from time to time, the "Plan").  Where the context permits, references to the Company shall include any successor to the Company.  For purposes of this Restricted Share Agreement, references to the Participant's "employment by the Company" or other similar terms shall be references to the Participant's service as a Non-Employee Director.

1.             Grant of Restricted Shares.  The Company hereby grants to the Participant 25,000 shares of Common Stock (such shares, the "Restricted Shares"), subject to all of the terms and conditions of this Restricted Share Agreement and the Plan.

2.              Lapse of Restrictions.

(a)            Vesting.

(i)            General.  Subject to the provisions set forth below, the Restricted Shares granted pursuant to Section 1 hereof shall vest (and the restrictions on transfer set forth in Section 2(b) hereof shall lapse) at such times (each, a "vesting date") and in the amounts set forth below, subject to the continued service of the Participant as a director of the Company as of each such vesting date:

8,333 on February 27, 2016

8,333 on February 27, 2017

 8,334 on February 27, 2018

Notwithstanding the foregoing, upon the occurrence of a Change in Control, provided the Participant is employed by, or providing services to, the Company as of such date, the restrictions on transfer set forth in Section 2(b) hereof with respect to the Restricted Shares subject to vesting shall immediately lapse and such Restricted Shares shall be fully vested effective upon the date of the Change in Control. Notwithstanding anything herein to the contrary, no fractional shares shall be issuable upon any vesting date.  With respect to all Restricted Shares, the Participant shall be entitled to receive, and retain, all ordinary and extraordinary cash and stock dividends which may be declared on the Restricted Shares with a record date on or after the Date of Grant and before any forfeiture thereof (regardless of whether a share later vests or is forfeited).

(ii)            Following Certain Terminations of Service as a Director.  Subject to the following paragraph, upon termination of the Participant's service as a director of the Company for any reason, any Restricted Shares as to which the restrictions on transferability described in this Section shall not already have lapsed shall be immediately forfeited by the

 

Participant and transferred to, and reacquired by, the Company without consideration of any kind and neither the Participant nor any of the Participant's successors, heirs, assigns, or personal representatives shall thereafter have any further rights or interests in such Restricted Shares.

Notwithstanding the foregoing, in the event that the Participant's service as a director is terminated by death or Disability (either before or after a Change in Control), the restrictions on transfer with respect to the Restricted Shares normally subject to vesting at the next vesting date shall immediately lapse and such Restricted Shares shall be fully vested, with any remaining Restricted Shares being forfeited upon the date of such termination.

(b)            Restrictions.  Until the restrictions on transfer of the Restricted Shares lapse as provided in Section 2(a) hereof, or as otherwise provided in the Plan, no transfer of the Restricted Shares or any of the Participant's rights with respect to the Restricted Shares, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted.  Unless the Administrator determines otherwise, upon any attempt to transfer Restricted Shares or any rights in respect of Restricted Shares before the lapse of such restrictions, such Restricted Shares, and all of the rights related thereto, shall be immediately forfeited by the Participant and transferred to, and reacquired by, the Company without consideration of any kind.

3.              Adjustments.  Pursuant to Section 5 of the Plan, in the event of a change in capitalization as described therein, the Administrator shall make such equitable changes or adjustments, as it deems neces-sary or appropriate, in its discretion, to the number and kind of securities or other property (including cash) issued or issuable in respect of out-standing Restricted Shares.

4.              Legend on Certificates.  The Participant agrees that any certificate issued for Restricted Shares (or, if applicable, any book entry statement issued for Restricted Shares) prior to the lapse of any outstanding restrictions relating thereto shall bear the following legend (in addition to any other legend or legends required under applicable federal and state securities laws):

THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE (THE "RESTRICTIONS") AS SET FORTH IN THE BROOKDALE SENIOR LIVING INC. 2014 OMNIBUS INCENTIVE PLAN AND A RESTRICTED SHARE AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND BROOKDALE SENIOR LIVING INC., COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY.  ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT AND SHALL RESULT IN THE FORFEITURE OF SUCH SHARES AS PROVIDED BY SUCH PLAN AND AGREEMENT.

5.              Certain Changes.  The Administrator may accelerate the date on which the restrictions on transfer set forth in Section 2(b) hereof shall lapse or otherwise adjust any of

2

 

the terms of the Restricted Shares; provided that, subject to Section 5 of the Plan, no action under this Section shall adversely affect the Participant's rights hereunder.

6.              Notices.  All notices and other communications under this Restricted Share Agreement shall be in writing and shall be given by facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing or 24 hours after transmission by facsimile to the respective parties, as follows:  (i) if to the Company, at Brookdale Senior Living Inc., 111 Westwood Place, Suite 400, Brentwood, TN 37027, Facsimile: (615) 564-8204, Attn:  General Counsel and (ii) if to the Participant, using the contact information on file with the Company.  Either party hereto may change such party's address for notices by notice duly given pursuant hereto.

7.              Securities Laws Requirements.  The Company shall not be obligated to transfer any Common Stock to the Participant free of the restrictive legend described in Section 4 hereof or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act of 1933, as amended (the "Securities Act") (or any other federal or state statutes having similar requirements as may be in effect at that time).

8.              No Obligation to Register.  The Company shall be under no obligation to register the Restricted Shares pursuant to the Securities Act or any other federal or state securities laws.

9.              Protections Against Violations of Agreement.  No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of the Restricted Shares by any holder thereof in violation of the provisions of this Restricted Share Agreement will be valid, and the Company will not transfer any of said Restricted Shares on its books nor will any of such Restricted Shares be entitled to vote, nor will any distributions be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company.  The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions.

10.              Taxes.  The Participant shall be solely responsible for the payment of any applicable taxes, including but not limited to, estimated taxes and self-employment taxes, as well as any interest or penalties which may be assessed, imposed or incurred with respect to the Restricted Shares.

The Participant may make an election under Section 83(b) of the Code to recognize taxable income with respect to the Restricted Shares on the Date of Grant.  The Participant shall promptly notify the Company of any such election made pursuant to Section 83(b) of the Code.  A form of such election is attached hereto as Exhibit A.

THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICI-PANT'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.

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The Participant acknowledges that the tax laws and regulations applicable to the Restricted Shares and the disposition of the Restricted Shares following vesting are complex and subject to change.

11.              Failure to Enforce Not a Waiver.  The failure of the Company to enforce at any time any provision of this Restricted Share Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

12.              Governing Law.  This Restricted Share Agreement shall be governed by and construed according to the laws of the State of Delaware without regard to its principles of conflict of laws.

13.              Incorporation of Plan.  The Plan is hereby incorporated by reference and made a part hereof, and the Restricted Shares and this Restricted Share Agreement shall be subject to all terms and conditions of the Plan.

14.              Amendments; Construction.  The Administrator may amend the terms of this Restricted Share Agreement prospectively or retroactively at any time, but no such amendment shall impair the rights of the Participant hereunder without his or her consent.  Headings to Sections of this Restricted Share Agreement are intended for convenience of reference only, are not part of this Restricted Share Agreement and shall have no effect on the interpretation hereof.

15.              Survival of Terms.  This Restricted Share Agreement shall apply to and bind the Participant and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

16.              Rights as a Stockholder.  The Participant shall have no right with respect to Restricted Shares to vote as a stockholder of the Company during the period in which such Restricted Shares remain subject to a substantial risk of forfeiture.

17.              Agreement Not a Contract for Services.  Neither the Plan, the granting of the Restricted Shares, this Restricted Share Agreement nor any other action taken pursuant to the Plan shall constitute or be evidence of any agree-ment or understanding, express or implied, that the Participant has a right to continue to provide services as an officer, director, employee, consultant or advisor of the Company or any Subsidiary or Affiliate for any period of time or at any specific rate of compensation.

18.              Authority of the Administrator.  The Administrator shall have full authority to interpret and construe the terms of the Plan and this Restricted Share Agreement.  The determination of the Administrator as to any such matter of interpretation or construction shall be final, binding and conclusive.

19.              Representations.  The Participant has reviewed with the Participant's own tax advisors the Federal, state, local and foreign tax consequences of the transactions contemplated by this Restricted Share Agreement.  The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  The Participant understands that he or she (and not the Company) shall be responsible for any tax

4

 

liability that may arise as a result of the transactions contem-plated by this Restricted Share Agreement.

20.              Severability.  Should any provision of this Restricted Share Agreement be held by a court of competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect the validity of the remainder of this Restricted Share Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification (if any) to become a part hereof and treated as though contained in this original Restricted Share Agreement.  Moreover, if one or more of the provisions contained in this Restricted Share Agreement shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable, in lieu of severing such unenforceable provision, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear, and such determination by such judicial body shall not affect the enforceability of such provision or provisions in any other jurisdiction.

21.              Acceptance.  The Participant hereby acknowledges receipt of a copy of the Plan and this Restricted Share Agreement.  The Participant has read and understands the terms and provisions of the Plan and this Restricted Share Agreement, and accepts the Restricted Shares subject to all the terms and conditions of the Plan and this Restricted Share Agreement.  The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under this Restricted Share Agreement.

[Signature Page to Follow]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Restricted Share Agreement as of the day and year first above written.

 

	 	
BROOKDALE SENIOR LIVING INC.

	 
	 	 	 
	 	 	 
	 	
By:

	
/s/ T. Andrew Smith

	 
	 	
Name:

	
T. Andrew Smith

	 
	 	
Title:

	
Chief Executive Officer

	 
	 	 	 
	 	 	 
	 	
Daniel A. Decker

	 
	 	 	 
	 	
/s/ Daniel A. Decker

	 
	 	
Participant

	 

  

6

 

NOTE:  Should you wish to make an election under Section 83(b), please contact the

Compensation Department

EXHIBIT A

ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer's receipt of the property described below:

1.            The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	 	
NAME OF TAXPAYER:    

	 	 
	 	 	 
	 	
NAME OF SPOUSE:

	 	 
	 	 	 
	 	
ADDRESS:

	 	 
	 	 	 
	 	
IDENTIFICATION NO. OF TAXPAYER:

	 	 
	 	 	 
	 	
IDENTIFICATION NUMBER OF SPOUSE:

	 	 
	 	 	 
	 	
TAXABLE YEAR:

	 	 

 

2.            The property with respect to which the election is made is described as follows:

_______ shares of Common Stock, par value $.01 per share, of Brookdale Senior Living Inc. ("Company").

3.            The date on which the property was transferred is: ________________, 20__.

4.            The property is subject to the following restrictions:

The property may not be transferred and is subject to forfeiture under the terms of an agreement between the taxpayer and the Company.  These restrictions lapse upon the satisfaction of certain conditions in such agreement.

5.            The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:  $ ______________.

6.            The amount (if any) paid for such property is:  $ ______________.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property.  The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: _________________, 20__                                                                         _____________________________________________________________________________                                                                                                             

Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: _________________, 20__                                                                       _______________________________________________________________________________                                                                                                               

Spouse of Taxpayer

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