Document:

Exhibit 403

Exhibit 4.3

Forward Industries, Inc.
2011 Long Term Incentive Plan

 

ARTICLE 1

Establishment, Purpose, and Duration

1.1                 Establishment. 
Forward Industries, Inc., New York corporation (hereinafter referred to as the
"Company"), establishes an incentive compensation plan to be known as the 2011
Long Term Incentive Plan (hereinafter referred to as the "2011 Plan"), as set
forth in this document.

The 2011 Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units.

The Plan shall become effective upon shareholder approval (the
"Effective Date") and shall remain in effect as provided in Section 1.3 hereof.

1.2                 Purpose
of the 2011 Plan.  The purpose of the 2011 Plan is to promote the
interests of the Company and its shareholders by strengthening the Company's
ability to attract, motivate, and retain Employees, Directors, consultants and
other independent contractors, upon whose judgment, initiative, and efforts the
financial success and growth of the business of the Company largely depend, and
to provide an additional incentive for such individuals through stock ownership
and other rights that promote and recognize the financial success and growth of
the Company and create value for shareholders.

1.3                 Duration
of the 2011 Plan.  Unless sooner terminated as provided herein, the
2011 Plan shall terminate ten years from the Effective Date.  After the
2011 Plan is terminated, no Awards may be granted but Awards previously granted
shall remain outstanding in accordance with their applicable terms and
conditions and the 2011 Plan's terms and conditions.

ARTICLE 2

Definitions

Whenever used in the 2011 Plan, the following terms shall have the
meanings set forth below, and when the meaning is intended, the initial letter
of the word shall be capitalized.

2.1                
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
promulgated under the General Rules and Regulations of the Exchange Act.

2.2                
"Annual Award Limit" or "Annual Award Limits" have the meaning set forth
in Section 4.3.

2.3                
"Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units, in each case subject to the terms of this Plan. 

2.4                
"Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 promulgated under the General Rules and
Regulations under the Exchange Act.

2.5                
"Board" or "Board of Directors" means the Board of Directors of the
Company.

2.6                
"Change in Control" means a Change in Control as defined in Article 14.

 

2.7                
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.

2.8                
"Committee" means the Compensation Committee of the Board, or any other
committee designated by the Board to administer this Plan.  The members of
the Committee shall be appointed from time to time by and shall serve at the
discretion of the Board.  The Committee shall consist of two or more
directors who are Nonemployee Directors and "Outside Directors" (as such
term is defined in Section 162(m) of the Code).

2.9                
"Company" means Forward Industries, Inc., a New York corporation, and
any successor thereto as provided in Article 17 herein.

2.10             
"Covered Employee" means a Participant who is a "covered employee," as
defined in Section 162(m) of the Code and the regulations promulgated under
Section 162(m) of the Code, or any successor statute.

2.11             
"Director" means a member of the Board of Directors of the Company
and/or any of its Affiliates and/or Subsidiaries.

2.12             
"Effective Date" has the meaning set forth in Section 1.1.

2.13             
"Employee" means any employee of the Company, its Affiliates and/or
Subsidiaries.

2.14             
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

2.15             
"Evidence of Award" means an agreement, certificate, resolution or other
type or form of writing or other evidence approved by the Committee which sets
forth the terms and conditions of an Award.  An Evidence of Award may be
in any electronic medium, may be limited to a notation on the books and records
of the Company and, with the approval of the Committee, need not be signed by a
representative of the Company or a Participant.

2.16             
"Fair Market Value" or "FMV" means the last sales price reported for the
Shares on the applicable date as reported on the principal national securities
exchange in the United States on which it is then traded or The NASDAQ Stock
Market (if the Shares are so listed), or, if not so listed, the mean between
the closing bid and asked prices of publicly traded Shares in the over-the-counter
market, or, if such bid and asked prices shall not be available, as reported by
any nationally recognized quotation service selected by the Company, or as
determined by the Committee in a manner consistent with the provisions of the
Code. If, however, the required accounting standards used to account for equity
Awards granted to Participants are substantially modified subsequent to the
Effective Date of the 2011 Plan such that fair value accounting for such Awards
becomes required, the Committee shall have the ability to determine an Award's
FMV based on the relevant facts and circumstances.

2.17             
"Full Value Award" means an Award other than in the form of an Option or
SAR, and which is settled by the issuance of Shares.

2.18             
"Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7.

2.19             
"Grant Price" means the price established at the time of grant of a SAR
pursuant to Article 7, used to determine whether there is any payment due upon
exercise of the SAR.

2.20             
"Incentive Stock Option" means an Option that is intended to qualify as
an "incentive stock option" under Section 422 of the Code or any successor
provision.

2.21             
"Insider" shall mean an individual who is, on the relevant date, an
officer, Director, or more than ten percent (10%) Beneficial Owner of any class
of the Company's equity securities that is registered pursuant to Section 12 of
the Exchange Act, as determined by the Board in accordance with Section 16 of
the Exchange Act.

2.22             
"Nonemployee Director" has the same meaning set forth in Rule 16b-3
promulgated under the Exchange Act, or any successor definition adopted by the
United States Securities and Exchange Commission.

2.23             
"Nonqualified Stock Option" means an Option that is not intended to meet
the requirements of Section 422 of the Code, or that otherwise does not meet
such requirements.

2.24             
"Operating Cash Flow" means cash flow from operating activities.

2.25             
"Option" means the right to purchase Shares granted to a Participant in
accordance with Article 6.  Options granted under this Plan may be
Nonqualified Stock Options, Incentive Stock Option or a combination thereof.

2.26             
"Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.

2.27             
"Participant" means any eligible person as set forth in Article 5 to
whom an Award is granted.

2.28             
"Performance-Based Compensation" means compensation under an Award that
satisfies the requirements of Section 162(m) of the Code for deductibility of
remuneration paid to Covered Employees.

2.29             
"Performance Measures" means measures as described in Article 10 on
which the performance goals are based and which are approved by the Company's
shareholders pursuant to this Plan in order to qualify Awards as
Performance-Based Compensation.

2.30             
"Performance Period" means the period of time during which the
performance goals must be met in order to determine the degree of payout and/or
vesting with respect to an Award.

2.31             
"Performance Share" means an Award granted to a Participant, as
described in Article 9.

2.32             
"Performance Unit" means an Award granted to a Participant, as described
in Article 9.

2.33             
"Period of Restriction" means the period when Restricted Stock or
Restricted Stock Units are subject to a "substantial risk of forfeiture" within
the meaning of Section 83 of the Code (based on the passage of time, the
achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, in its discretion), as provided in Article 8.

2.34             
"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, including a
"group" as defined in Section 13(d) thereof.

2.35             
"Plan" means the Forward Industries, Inc. 2011 Long Term Incentive Plan.

2.36             
"Plan Year" means the Company's fiscal year that begins October 1 and
ends September 30, or such other period if the Company shall change its fiscal
year.

2.37             
"Restricted Stock" means Shares granted or sold to a Participant
pursuant to Article 8 as to which the Period of Restriction has not lapsed.

2.38             
"Restricted Stock Unit" means a unit granted or sold to a Participant
pursuant to Article 8 as to which the Period of Restriction has not lapsed.

2.39             
"Section 409A Rules" means the provisions of Section 409A of the Code
and Treasury Regulations and other Internal Revenue Service guidance
promulgated thereunder.

2.40             
"Share" means a share of common stock of the Company, $.01 par value per
share.

2.41             
"Stock Appreciation Right" or "SAR" means an Award, designated as a SAR
and granted pursuant to the terms of Article 7 herein. 

2.42             
"Subsidiary" means a corporation, company or other entity (i) more than
50 percent (50%) of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority) are,
or (ii) which does not have outstanding shares or securities (as may be the
case in a partnership, joint venture or unincorporated association), but more
than 50 percent (50%) of whose ownership interest representing the right
generally to make decisions for such other entity is, now or hereafter, owned
or controlled, directly or indirectly, by the Company, except that for purposes
of determining whether any person may be a Participant for purposes of any
grant of Incentive Stock Options, "Subsidiary" means any corporation in which
at the time the Company owns or controls, directly or indirectly, more than 50
percent (50%) of the total combined voting power represented by all classes of
stock issued by such corporation.

2.43             
"Ten Percent Shareholder" means a person who owns, or who is deemed to
own under Section 424(d) of the Code, stock possessing more than ten percent (10%)
of the total combined voting power of the Company or any Subsidiary.

ARTICLE 3

Administration

3.1                 General. 
The Committee shall be responsible for administering the 2011 Plan, subject to
this Article 3 and the other provisions of the 2011 Plan.  The act or
determination of a majority of the Committee shall be the act or determination
of the Committee and any decision reduced to writing and signed by all of the
members of the Committee shall be fully effective as if it had been made by a
majority at a meeting duly held.  The Committee may employ attorneys,
consultants, accountants, agents, and other persons, any of whom may be an
Employee, and the Committee, the Company, and its officers and Directors shall
be entitled to rely upon the advice, opinions, or valuations of any such
persons.  All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Participants, the
Company, and all other interested persons.

3.2                 Authority
of the Committee.  The Committee shall have full and exclusive
discretionary power to interpret the terms and the intent of the 2011 Plan and
any Evidence of Award or other agreement or document ancillary to or in
connection with the 2011 Plan, to determine eligibility for Awards and to adopt
such rules, regulations, forms, instruments, and guidelines for administering
the 2011 Plan as the Committee may deem necessary or proper.  Such
authority shall include, but not be limited to, selecting Award recipients,
establishing all Award terms and conditions, including the terms and conditions
set forth in an Evidence of Award, and, subject to Article 15, adopting
modifications and amendments to the 2011 Plan or any Evidence of Award,
including without limitation, any that are necessary to comply with the laws of
the countries and other jurisdictions in which the Company, its Affiliates,
and/or its Subsidiaries operate.  In the event that for any reason the
Committee is unable to act or if the Committee at the time of any grant, Award
or other acquisition under the 2011 Plan does not consist of two or more
Nonemployee Directors, or if there shall be no such Committee, then the 2011
Plan shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to
the Board.

ARTICLE 4

Shares Subject to the 2011 Plan and Maximum Awards

4.1                 Number
of Shares Available for Awards.

(a)                
Subject to adjustment as provided in Section 4.4 herein, the maximum number of
Shares available for issuance to Participants under the 2011 Plan (the "Share
Authorization") shall be one million eight hundred fifty thousand (1,850,000)
Shares, all of which may be Incentive Stock Options;

(b)                
Of the Shares reserved for issuance under Section 4.1(a) of the 2011 Plan, no
more than eight hundred thousand (800,000) of the reserved Shares may be issued
pursuant to Full Value Awards.

(c)                
Subject to the limit set forth in Section 4.1(a) on the number of Shares that
may be issued in the aggregate under the 2011 Plan, the maximum number of
Shares that may be issued to any one Participant in a Plan Year is three
hundred thousand (300,000).

4.2                 Share
Usage.  Shares covered by an Award shall only be counted as used to
the extent they are actually issued.  Any Shares related to Awards which
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of such Shares, are settled in cash in lieu of Shares, or are
exchanged with the Committee's permission, prior to the issuance of Shares, for
Awards not involving Shares, shall be available again for grant under the 2011
Plan.  Moreover, if the Option Price of any Option granted under the 2011
Plan or the tax withholding requirements with respect to any Award granted
under the 2011 Plan are satisfied by tendering Shares to the Company (by either
actual delivery or by attestation), or if an SAR is exercised, only the number
of Shares issued, net of the Shares tendered, if any, will be deemed delivered
for purposes of determining the maximum number of Shares available for delivery
under the 2011 Plan and any Shares so tendered shall again be available for issuance
under the 2011 Plan. The maximum number of Shares available for issuance under
the 2011 Plan shall not be reduced to reflect any dividends or dividend
equivalents that are reinvested into additional Shares or credited as
additional Restricted Stock, Restricted Stock Units, Performance Shares, or
Stock-Based Awards.  The Shares available for issuance under the 2011 Plan
may be authorized and unissued Shares, treasury Shares or a combination
thereof.

4.3                 Annual
Award Limits.  Subject to the terms of Section 4.1 hereof and unless
and until the Committee determines that an Award to a Covered Employee shall
not be designed to qualify as Performance-Based Compensation, the following
limits (each an "Annual Award Limit," and, collectively, "Annual Award Limits")
shall apply to grants of such Awards under the 2011 Plan:

(a)                 Options: 
The maximum aggregate number of Shares subject to Options granted in any one
Plan Year to any one Participant shall be three hundred thousand (300,000).

(b)                 Incentive
Stock Options:  The maximum aggregate number of Shares subject to
Incentive Stock Options granted under the 2011 Plan to any one Participant
shall be three hundred thousand (300,000).

(c)                 SARs: 
The maximum number of Shares subject to Stock Appreciation Rights granted in
any one Plan Year to any one Participant shall be three hundred thousand
(300,000).

(d)                 Restricted
Stock or Restricted Stock Units:  The maximum aggregate grant with
respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan
Year to any one Participant shall be three hundred thousand (300,000).

(e)                 Performance
Units or Performance Shares:  The maximum aggregate Award of
Performance Units or Performance Shares that any one Participant may receive in
any one Plan Year shall be three hundred thousand (300,000) Shares, or equal to
the value of three hundred thousand (300,000) Shares determined as of the date
of vesting or payout, as applicable.

4.4                 Adjustments
in Authorized Shares.  In the event of any corporate event or
transaction (including, but not limited to, a change in the shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, or other distribution of stock or
property of the Company, combination of Shares, exchange of Shares, dividend in
kind, or other like change in capital structure or distribution (other than
normal cash dividends) to shareholders of the Company, or any similar corporate
event or transaction, the Committee, in its sole discretion, in order to
prevent dilution or enlargement of Participants' rights under the 2011 Plan,
shall substitute or adjust, as applicable, the number and kind of Shares that
may be issued under the 2011 Plan or under particular forms of Awards, the
number and kind of Shares subject to outstanding Awards, the Option Price or
Grant Price applicable to outstanding Awards, the Annual Award Limits, and
other value determinations applicable to outstanding Awards.

 

Except as otherwise provided by Section 162(m) of the Code, the
Committee, in its sole discretion, may also make appropriate adjustments in the
terms of any Awards under the 2011 Plan to reflect or related to such changes
or distributions and to modify any other terms of outstanding Awards, including
modifications of performance goals and changes in the length of Performance
Periods.  The determination of the Committee as to the foregoing
adjustments, if any, shall be conclusive and binding on Participants under the
2011 Plan.

Subject to the provisions of Article 15, without affecting the
number of Shares reserved or available hereunder, the Committee may authorize
the issuance or assumption of benefits under this Plan in connection with any
merger, consolidation, acquisition of property or stock, or reorganization upon
such terms and conditions as it may deem appropriate, subject to compliance
with the rules under Section 422 of the Code and the Section 409A Rules, where
applicable.

ARTICLE 5

Eligibility and Participation

5.1                 Eligibility. 
Individuals eligible to participate in this Plan include all Employees, Directors,
consultants and other independent contractors.

5.2                 Actual
Participation.  Subject to the provisions of the 2011 Plan, the
Committee may, from time to time, select from all eligible individuals, those
to whom Awards shall be granted and shall determine, in its sole discretion,
the nature of, any and all terms permissible by law, and the amount of each
Award.  In making this determination, the Committee may consider any
factors it deems relevant, including without limitation, the office or position
held by a Participant or the Participant's relationship to the Company, the
Participant's degree of responsibility for and contribution to the growth and
success of the Company or any Subsidiary or Affiliate, the Participant's length
of service, promotions and potential.

5.3                 Ten
Percent Shareholder.  A Ten Percent Shareholder shall not be granted
an Incentive Stock Option unless the exercise price of such option is at least
one hundred ten percent(110%) of the Fair Market Value of the Shares on the
date of grant and the Option is not exercisable after the expiration of five(5)
years from the date of grant.

ARTICLE 6

Options

6.1                 Grant
of Options.  Subject to the terms and provisions of the 2011 Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee, in
its sole discretion.

6.2                 Evidence
of Award.  Each Option grant shall be evidenced by an Evidence of
Award that shall specify the Option Price, the maximum duration of the Option,
the number of Shares to which the Option pertains, the conditions upon which an
Option shall become vested and exercisable, and such other provisions as the
Committee shall determine which are not inconsistent with the terms of the 2011
Plan.

6.3                 Option
Price.  The Option Price for each grant of an Option under this Plan
shall be as determined by the Committee and shall be specified in the Evidence
of Award.  The Option Price may not be less than 100% of the Fair Market
Value of the Shares on the date of grant.

6.4                 Duration
of Options.  Except as otherwise provided in Section 422 of the Code,
each Option granted to a Participant shall expire at such time as the Committee
shall determine at the time of grant and specify in the Evidence of Award;
provided, however, that no Option shall be exercisable later than the tenth
anniversary date of its grant.

 

6.5                 Exercise
of Options.  Options granted under this Article 6 shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve and specify in the Evidence of Award,
which terms and restrictions need not be the same for each grant or for each
Participant.  The Committee may provide in the Evidence of Award for the
acceleration of the vesting and exercisability of outstanding Options, in whole
or in part, as determined by the Committee in its sole discretion, in the event
of a Change in Control.

6.6                 Payment. 
Options granted under this Article 6 shall be exercised by the delivery of a
notice of exercise to the Company or an agent designated by the Company in a
form specified or accepted by the Committee, or by complying with any
alternative procedures which may be authorized by the Committee, setting forth
the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

A condition of the issuance of the Shares as to which an Option
shall be exercised shall be the payment of the Option Price.  The Option
Price of any Option shall be payable to the Company in full either: (a) in cash
or its equivalent; (b) 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 Option Price; (c) by a combination of (a) and (b); or (d)
any other method approved or accepted by the Committee in its sole discretion,
including, without limitation, if the Committee so determines, (i) a cashless
(broker-assisted) exercise, or (ii) a reduction in the number of Shares that
would otherwise be issued by such number of Shares having in the aggregate a
Fair Market Value at the time of exercise equal to the portion of the Option
Price being so paid.

Subject to any governing rules or regulations, as soon as
practicable after receipt of written notification of exercise and full payment
(including satisfaction of any applicable tax withholding), the Company shall
deliver to the Participant evidence of book entry Shares, or upon the
Participant's request, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option(s).

Unless otherwise determined by the Committee, all payments under
all of the methods indicated above shall be paid in United States dollars.

6.7                 Restrictions
on Share Transferability.  The Committee may impose such restrictions
on any Shares acquired pursuant to the exercise of an Option granted under this
Article 6 as it may deem advisable and specify in the Evidence of Award,
including, without limitation, minimum holding period requirements,
restrictions under applicable federal securities laws, under the requirements
of any stock exchange or market upon which such Shares are then listed and/or
traded, or under any blue sky or state securities laws applicable to such
Shares.

6.8                 Termination
of Employment.  Each Participant's Evidence of Award shall set forth
the extent to which the Participant shall have the right to exercise the Option
following termination of the Participant's employment or provision of services
to the Company, its Affiliates, its Subsidiaries, as the case may be. 
Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Evidence of Award entered into with each Participant,
need not be uniform among all Options issued pursuant to this Article 6, and
may reflect distinctions based on the reasons for termination.

6.9                 Transferability
of Options.  Except as otherwise provided in a Participant's Evidence
of Award or otherwise at any time by the Committee, no Option granted under
this Article 6 may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution or as otherwise required by law; provided that the Board or
Committee may permit further transferability, on a general or a specific basis,
and may impose conditions and limitations on any permitted transferability.
Further, except as otherwise provided in a Participant's Evidence of Award or
otherwise at any time by the Committee, or unless the Board or Committee
decides to permit further transferability, all Options granted to a Participant
under this Article 6 shall be exercisable during his or her lifetime only by
such Participant, and following his or her lifetime, by such Participant's
estate for a period to be determined by the Committee, subject to applicable
Code limits.  With respect to those Options, if any, that are permitted to
be transferred to another person, references in the 2011 Plan to exercise or
payment of the Option Price by the Participant shall be deemed to include, as
determined by the Committee, the Participant's permitted transferee.

ARTICLE 7

Stock Appreciation Rights

7.1                 Grant
of SARs.  Subject to the terms and conditions of the 2011 Plan, SARs,
including Freestanding SARs, may be granted to Participants at any time and
from time to time as shall be determined by the Committee.

Subject to the terms and conditions of the 2011 Plan, the
Committee shall have complete discretion in determining the number of SARs
granted to each Participant and, consistent with the provisions of the 2011
Plan, in determining the terms and conditions pertaining to such SARs.

The Grant Price for each grant of a Freestanding SAR shall be
determined by the Committee and shall be specified in the Evidence of
Award.  The Grant Price may include (but not be limited to) a Grant Price
based on one hundred percent (100%) of the FMV of the Shares on the date of
grant, a Grant Price that is set at a premium to the FMV of the Shares on the
date of grant, or is indexed to the FMV of the Shares on the date of grant,
with the index determined by the Committee, in its discretion to the extent
consistent with the Section 409A Rules.

7.2                 SAR
Agreement.  Each SAR Award shall be evidenced by an Evidence of Award
that shall specify the Grant Price, the term of the SAR, and such other
provisions as the Committee shall determine.

7.3                 Term
of SAR.  The term of an SAR granted under the 2011 Plan shall be
determined by the Committee, in its sole discretion, and except as determined
otherwise by the Committee and specified in the SAR Evidence of Award, no SAR
shall be exercisable later than the tenth anniversary date of its grant.

7.4                 Exercise
of Freestanding SARs.  Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
and specifies in the Evidence of Award.  The Committee may provide in the
Evidence of Award for the earlier exercise of Freestanding SARS in the event of
a Change in Control.

7.5                 Payment
of SAR Amount.  Upon the exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

(a)                
The excess of the Fair Market Value of a Share on the date of exercise over the
Grant Price; by

(b)                
The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise
may be in cash, Shares, or any combination thereof, or in any other manner approved
by the Committee in its sole discretion.  The Committee's determination
regarding the form of SAR payout shall be set forth in the Evidence of Award
pertaining to the grant of the SAR.

7.6                 Termination
of Employment.  Each Evidence of Award shall set forth the extent to
which the Participant shall have the right to exercise the SAR following
termination of the Participant's employment with or provision of services to
the Company, its Affiliates, and/or its Subsidiaries, as the case may be. 
Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Evidence of Award entered into with Participants, need
not be uniform among all SARs issued pursuant to the 2011 Plan, and may reflect
distinctions based on the reasons for termination.

 

7.7                 Nontransferability
of SARs.  Except as otherwise provided in a Participant's Evidence of
Award or otherwise at any time by the Committee, no SAR granted under the 2011
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution or
as otherwise required by law.  Further, except as otherwise provided in a
Participant's Evidence of Award or otherwise at any time by the Committee, all
SARs granted to a Participant under the 2011 Plan shall be exercisable during
his or her lifetime only by such Participant.  With respect to those SARs,
if any, that are permitted to be transferred to another person, references in
the 2011 Plan to exercise of the SAR by the Participant or payment of any
amount to the Participant shall be deemed to include, as determined by the
Committee, the Participant's permitted transferee.

7.8                 Other
Restrictions.  The Committee shall impose such other conditions and/or
restrictions on any Shares received upon exercise of a SAR granted pursuant to
the 2011 Plan as it may deem advisable or desirable.  These restrictions
may include, but shall not be limited to, a requirement that the Participant
hold the Shares received upon exercise of a SAR for a specified period of time.

ARTICLE 8

Restricted Stock and Restricted Stock Units

8.1                 Grant
of Restricted Stock or Restricted Stock Units.  Subject to the terms
and provisions of the 2011 Plan, the Committee, at any time and from time to
time, may grant Shares of Restricted Stock and/or Restricted Stock Units to
Participants in such amounts as the Committee shall determine.  Restricted
Stock Units shall represent the right of a Participant to receive payment upon
the lapse of the Period of Restriction.

8.2                 Restricted
Stock or Restricted Stock Unit Agreement.  Each Restricted Stock
and/or Restricted Stock Unit grant shall be evidenced by an Evidence of Award
that shall specify the Period(s) of Restriction, the number of Shares of
Restricted Stock or the number of Restricted Stock Units granted, and such
other provisions as the Committee shall determine.

8.3                 Transferability. 
Except as provided in this Plan or an Evidence of Award, the Shares of
Restricted Stock and/or Restricted Stock Units granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction established by the Committee
and specified in the Evidence of Award (and in the case of Restricted Stock
Units until the date of delivery or other payment), or upon earlier
satisfaction of any other conditions, as specified by the Committee, in its sole
discretion, and set forth in the Evidence of Award or otherwise at any time by
the Committee. All rights with respect to the Restricted Stock and/or
Restricted Stock Units granted to a Participant under the 2011 Plan shall be
available during his or her lifetime only to such Participant, except as
otherwise provided in an Evidence of Award or at any time by the Committee.

8.4                 Other
Restrictions.  The Committee shall impose such other conditions and/or
restrictions on any Shares of Restricted Stock or Restricted Stock Units
granted pursuant to the 2011 Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock or each Restricted Stock Unit, restrictions
based upon the achievement of specific performance goals, time-based
restrictions on vesting following the attainment of the performance goals,
time-based restrictions, and/or restrictions under applicable laws or under the
requirements of any stock exchange or market upon which such Shares are listed
or traded, or holding requirements or sale restrictions placed on the Shares by
the Company upon vesting of such Restricted Stock or Restricted Stock Units.
The receipt of dividends on account of shares of Restricted Stock or Restricted
Stock Units shall be determined by the Committee.

Except with respect to a maximum of 50% of the Shares authorized
in Section 4.1(a), or as otherwise provided in Section 8.7 hereto, any Awards
of Restricted Stock or Restricted Stock Units which vest on the basis of the
Participant's continued employment with or provision of service to the Company
shall not provide for vesting which is any more rapid than annual pro rata
vesting over a three (3) year period and any Awards of Restricted Stock or
Restricted Stock Units which vest upon the attainment of performance goals
shall provide for a performance period of at least three months. The Committee
may provide in the Evidence of Award for immediate vesting of Restricted Stock
or Restricted Stock Units, in whole or in part, in the event of a Change in
Control.

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

 

Except as otherwise provided in this Article 8, Shares of
Restricted Stock covered by each Restricted Stock Award shall become freely
transferable by the Participant after all conditions and restrictions
applicable to such Shares have been satisfied or lapse (including satisfaction
of any applicable tax withholding obligations), and Restricted Stock Units
shall be paid in cash, Shares, or a combination of cash and Shares as the
Committee, in its sole discretion shall determine.

8.5                 Certificate
Legend.  In addition to any legends placed on certificates pursuant to
Section 8.4, each certificate representing Shares of Restricted Stock granted
pursuant to the 2011 Plan may bear a legend as determined by the Committee in
its sole discretion.

8.6                 Voting
Rights.  Unless otherwise determined by the Committee and set forth in
a Participant's Evidence of Award, to the extent permitted or required by law,
as determined by the Committee, Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction.  A Participant
shall have no voting rights with respect to any Restricted Stock Units granted
hereunder.

8.7                 Termination
of Employment.  To the extent consistent with the Section 409A Rules,
each Evidence of Award shall set forth the extent to which the Participant
shall have the right to retain Restricted Stock and/or Restricted Stock Units
following termination of the Participant's employment with or provision of
services to the Company, its Affiliates, and/or its Subsidiaries, as the case
may be.  Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Evidence of Award entered into with each
Participant, need not be uniform among all Shares of Restricted Stock or
Restricted Stock Units issued pursuant to the 2011 Plan, and may reflect
distinctions based on the reasons for termination.

ARTICLE 9

Performance Units/Performance Shares

9.1                 Grant
of Performance Units/Performance Shares.  Subject to the terms and
provisions of the 2011 Plan, the Committee, at any time and from time to time,
may grant Performance Units and/or Performance Shares to Participants in such
amounts and upon such terms as the Committee shall determine.

9.2                 Value
of Performance Units/Performance Shares.  Each Performance Unit shall
have an initial value that is established by the Committee at the time of
grant.  Each Performance Share shall have an initial value equal to the
Fair Market Value of a Share on the date of grant.  The Committee shall
set performance goals in its discretion as described in Section 10.4 which,
depending on the extent to which they are met, will determine the value and/or
number of Performance Units/Performance Shares that will be paid out to the
Participant.

9.3                 Earning
of Performance Units/Performance Shares.  Subject to the terms of this
Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Performance Shares shall be entitled to receive payout on the
value and number of Performance Units/Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.

9.4                 Form
and Timing of Payment of Performance Units/Performance Shares. 
Payment of earned Performance Units/Performance Shares shall be as determined
by the Committee and as evidenced in the Evidence of Award.  Subject to
the terms of the 2011 Plan, the Committee, in its sole discretion, may pay
earned Performance Units/Performance Shares in the form of cash or in Shares
(or in a combination thereof) equal to the value of the earned Performance
Units/Performance Shares at the close of the applicable Performance Period, or
as soon as practicable after the end of the Performance Period.  Any
Shares may be granted subject to any restrictions deemed appropriate by the
Committee.  The determination of the Committee with respect to the form of
payout of such Awards shall be set forth in the Evidence of Award pertaining to
the grant of the Award.

 

9.5                 Termination
of Employment.  To the extent consistent with the Section 409A Rules
and Section 162(m) of the Code, each Evidence of Award shall set forth the
extent to which the Participant shall have the right to retain Performance
Units and/or Performance Shares following termination of the Participant's
employment with or provision of services to the Company, its Affiliates, and/or
its Subsidiaries, as the case may be.  Such provisions shall be determined
in the sole discretion of the Committee, shall be included in the Evidence of
Award entered into with each Participant, need not be uniform among all Awards
of Performance Units or Performance Shares issued pursuant to the 2011 Plan,
and may reflect distinctions based on the reasons for termination.

9.6                 Nontransferability. 
Except as otherwise provided in a Participant's Evidence of Award or otherwise
at any time by the Committee, Performance Units/Performance Shares may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution or as otherwise
required by law.  Further, except as otherwise provided in a Participant's
Evidence of Award or otherwise at any time by the Committee, a Participant's
rights under the 2011 Plan shall be exercisable during his or her lifetime only
by such Participant.

ARTICLE 10

Performance Measures

10.1              Performance
Measures.  Unless and until the Committee proposes for shareholder
vote and the shareholders approve a change in the general Performance Measures
set forth in this Article 10, the performance goals upon which the payment or
vesting of an Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to one or more of the following
Performance Measures:

(a)                
Net earnings or net income (before or after taxes and interest/investments);

(b)                
Earnings per share;

(c)                
Earnings per share growth;

(d)                
Net sales growth;

(e)                
Net earnings or net income growth (before or after taxes and
interest/investment);

(f)                 
Net operating profit;

(g)                
Return measures (including return on assets, capital, equity, or sales);

(h)                
Cash flow (including Operating Cash Flow , free cash flow, and cash flow return
on capital);

(i)                  Earnings
before or after taxes, interest, depreciation, and/or amortization;

(j)                  Gross
or operating margins or growth thereof;

(k)                
Productivity ratios;

(l)                  Share
price (including growth measures and total shareholder return);

(m)               
Expense targets;

(n)                
Operating efficiency;

(o)                
Customer satisfaction;

(p)                
Revenue or Revenue growth;

(q)                Operating
profit growth;

(r)                 Working
capital targets;

(s)                
Economic value added;

(t)                 
Real estate management objectives;

(u)                
Sale or disposition of assets; and

(v)                
Acquisition of key assets.

Any Performance Measure(s) may be used to measure the performance
of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of
the Company, Subsidiary, and/or Affiliate or any combination thereof, as the
Committee may deem appropriate, or any of the above Performance Measures as
compared to the performance of a group of comparable companies, or published or
special index that the Committee, in its sole discretion, deems appropriate, or
the Company may select Performance Measure (l) above as compared to various
stock market indices. The Committee also has the authority to provide for
accelerated vesting of any Award based on the achievement of performance goals
pursuant to the Performance Measures specified in this Article 10.

10.2              Evaluation
of Performance.  The Committee may provide in any such Award that any
evaluation of performance may include or exclude any of the following events
that occurs during a Performance Period: (a) asset write-downs, (b) litigation
or claim judgments or settlements, (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results,
(d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management's discussion and analysis of financial condition and
results of operations appearing in the Company's annual report to shareholders
for the applicable year, (f) acquisitions or divestitures and (g) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect
Awards to Covered Employees, they shall be prescribed in a form that meets the
requirements of Section 162(m) of the Code for deductibility.

10.3              Adjustment
of Performance-Based Compensation.  The terms of Awards that are
designed to qualify as Performance-Based Compensation, and that are held by
Covered Employees, may not be modified, except to the extent that after such
modification the Award would continue to constitute Performance-Based
Compensation.  The Committee shall retain the discretion to reduce the
amount of any payment under an Award that is designed to qualify as
Performance-Based Compensation that would otherwise be payable to a Covered
Employee, either on a formula or discretionary basis or any combination, as the
Committee determines.

10.4              Committee
Discretion.  In the event that applicable tax and/or securities laws
change to permit Committee discretion to alter the governing Performance
Measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval.  In addition, in the event that the Committee determines that it
is advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Section 162(m) of the Code and may base vesting on Performance
Measures other than those set forth in Section 10.1.

ARTICLE 11

Beneficiary Designation

 

Each Participant under the 2011 Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the 2011 Plan is to be paid in case of
his or her death before he or she receives any or all of such benefit. 
Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Company during
the Participant's lifetime.  In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate. Following a Participant's death, such Participant's
estate may exercise Options or other Awards, if applicable, granted hereunder
for a period to be determined by the Committee, subject to applicable Code
limits.

ARTICLE 12

Deferrals

To the extent permitted by the Section 409A Rules, the Committee
may permit or require a Participant to defer such Participant's receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Participant by virtue of the exercise of an Option or SAR, the lapse or waiver
of restrictions with respect to Restricted Stock or Restricted Stock Units, or
the satisfaction of any requirements or performance goals with respect to
Performance Shares or Performance Unit.  If any such deferral election is
required or permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals, consistent with the Section
409A Rules.

ARTICLE 13

Rights of Participants

13.1              Employment. 
Nothing in the 2011 Plan or an Evidence of Award shall interfere with or limit
in any way the right of the Company, its Affiliates, and/or its Subsidiaries,
to terminate any Participant's employment or service on the Board at any time
or for any reason not prohibited by law, nor confer upon any Participant any
right to continue his or her employment or service for any specified period of
time.

Neither an Award nor any benefits arising under this Plan shall
constitute an employment contract with the Company, its Affiliates, and/or its
Subsidiaries and, accordingly, subject to Articles 3 and 15, this Plan and the
benefits hereunder may be terminated at any time in the sole and exclusive
discretion of the Committee without giving rise to any liability on the part of
the Company, its Affiliates, and/or its Subsidiaries.

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

13.3              Rights
as a Shareholder.  Except as otherwise provided herein, a Participant
shall have none of the rights of a shareholder with respect to Shares covered
by any Award until the Participant becomes the record holder of such Shares.

ARTICLE 14

Change in Control

14.1              Change
in Control.  For purposes of this Plan, a "Change in Control" shall
mean the occurrence during the term of any of the following events:

(a)                
All or substantially all (meaning having a total gross fair market value at
least equal to 50.1% of the total gross fair market value of all of the
Company's assets immediately before such acquisition or acquisitions) of the
assets of the Company are acquired by a Person (during a twelve month period
ending on the date of the most recent acquisition by such Person); or

(b)                
The Company is merged, consolidated, or reorganized into or with another
corporation or entity during a twelve-month period with the result that upon
the conclusion of the transaction less than 50.1% of the outstanding securities
entitled to vote generally in the election of directors or other capital
interests of the surviving, resulting or acquiring corporation are beneficially
owned (as that term is defined in Rule 13-d 3 under the Exchange Act) by the
shareholders of the Company immediately prior to the completion of the
transaction.

 

 

ARTICLE 15

Amendment, Modification, Suspension, and Termination

15.1              Amendment,
Modification, Suspension, and Termination.  Subject to Section 15.3
and 15.4, the Committee may, at any time and from time to time, alter, amend,
modify, accelerate, suspend, or terminate the 2011 Plan or any Evidence of
Award in whole or in part; provided, however, that, without the prior approval
of the Company's shareholders, Options issued under the 2011 Plan will not be
repriced, replaced, or regranted through cancellation, and no amendment of the
2011 Plan shall be made without shareholder approval if shareholder approval is
required by law, regulation, or stock exchange rule.

15.2              Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. 
The Committee may make adjustments, consistent with Section 162(m) of the Code
and the Section 409A Rules, in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4.4 hereof) affecting
the Company or the financial statements of the Company or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent unintended
dilution or enlargement of the benefits or potential benefits intended to be
made available under the 2011 Plan. The determination of the Committee as to
the foregoing adjustments, if any, shall be conclusive and binding on
Participants under the 2011 Plan.

15.3              Awards
Previously Granted.  Notwithstanding any other provision of the 2011
Plan to the contrary, no termination, amendment, suspension, or modification of
the 2011 Plan or an Evidence of Award shall adversely affect in any material
way any Award previously granted under the 2011 Plan, without the written
consent of the Participant holding such Award except as required under the tax
laws.

15.4              Compliance
with the Section 409A Rules.  It is the intention of the Board that
the 2011 Plan comply strictly with the Section 409A Rules and the Committee
shall exercise its discretion in granting Awards hereunder (and the terms of
such grants), accordingly.  The Plan and any grant of an Award hereunder
may be amended from time to time as may be necessary or appropriate to comply
with the Section 409A Rules.

ARTICLE 16

Withholding

16.1              Tax
Withholding.  The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, the minimum
statutory amount to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

16.2              Share
Withholding.  With respect to withholding required upon the exercise
of Options or SARs, upon the lapse of restrictions on Restricted Stock and
Restricted Stock Units, or upon the achievement of performance goals related to
Performance Shares, or any other taxable event arising as a result of an Award
granted hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum statutory total tax that could be
imposed on the transaction. All such elections shall be irrevocable, made in
writing, and signed by the Participant, and shall be subject to any
restrictions or limitations that the Committee, in its sole discretion, deems
appropriate.

ARTICLE 17

Successors

 

All obligations of the Company under the 2011 Plan with respect to
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

ARTICLE 18

General Provisions

18.1              Forfeiture
Events.

(a)                
The Committee may specify in an Evidence of Award that the Participant's
rights, payments, and benefits with respect to an Award shall be subject to
reduction, cancellation, forfeiture, or recoupment upon the occurrence of
certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award.  Such events may include, but shall
not be limited to, termination of employment for cause, termination of the
Participant's provision of services to the Company, Affiliate, and/or
Subsidiary, violation of material Company, Affiliate, and/or Subsidiary
policies, breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of the Company,
its Affiliates, and/or its Subsidiaries.

(b)                
If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, if the Participant knowingly
or grossly negligently engaged in the misconduct, or knowingly or grossly
negligently failed to prevent the misconduct, or if the Participant is one of
the persons subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the
amount of any payment in settlement of an Award earned or accrued during the
twelve-month period following the first public issuance or filing with the United
States Securities and Exchange Commission (whichever just occurred) of the
financial document embodying such financial reporting requirement.

(c)                
Any current or former executive officer who received any incentive-based Awards
within a 36-month period prior to the date the Company is required to prepare
an accounting restatement due to the material noncompliance of the Company with
any financial reporting requirement under the securities laws shall return such
Award to the Company upon demand by the Company. The amount to be recovered
shall be the amount of incentive-based Awards, including equity awards, in
excess of what would have been paid without the restated results. The operation
of this subsection (c) shall be in accordance with the provisions of Section
954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any
applicable guidance.

18.2              Legend. 
The certificates for Shares may include any legend, which the Committee deems
appropriate in its sole discretion to reflect any restrictions on transfer of
such Shares.

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

18.4              Severability. 
In the event any provision of the 2011 Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the 2011 Plan, and the 2011 Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.  To the extent
that any provision of this Plan would prevent any Option that was intended to
qualify as an Incentive Stock Option from qualifying as such, that provision
shall be null and void with respect to such Option.  Such provision,
however, shall remain in effect for other Options and there shall be no further
effect on any provision of this Plan.

18.5              Requirements
of Law.  The granting of Awards and the issuance of Shares under the
2011 Plan shall be subject to all applicable laws, rules, and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.

18.6              Delivery
of Title.  The Company shall have no obligation to issue or deliver
evidence of title for Shares issued under the 2011 Plan prior to:

(a)                
Obtaining any approvals from governmental agencies that the Company determines
are necessary or advisable; and

(b)                
Completion of any registration or other qualification of the Shares under any
applicable national or foreign law or ruling of any governmental body that the
Company determines to be necessary or advisable.

18.7              Inability
to Obtain Authority.  The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.

18.8              Investment
Representations.  The Committee may require any person receiving
Shares pursuant to an Award under this Plan to represent and warrant in writing
that the person is acquiring the securities for his own account for investment
and not with a view to, or for sale in connection with, the distribution of any
part thereof.

18.9              Employees
Based Outside of the United States.  Notwithstanding any provision of
the 2011 Plan to the contrary, in order to comply with the laws in other
countries in which the Company, its Affiliates, and/or its Subsidiaries operate
or have Employees or Directors, the Committee, in its sole discretion, shall
have the power and authority to:

(a)                
Determine which Affiliates and Subsidiaries shall be covered by the 2011 Plan;

(b)                
Determine which Employees and/or Nonemployee Directors outside the United
States are eligible to participate in the 2011 Plan;

(c)                
Modify the terms and conditions of any Award granted to Employees and/or
Nonemployee Directors outside the United States to comply with applicable
foreign laws;

(d)                
Establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable.  Any
subplans and modifications to Plan terms and procedures established under this
Section 18.9 by the Committee shall be attached to this Plan document as
appendices; and

(e)                
Take any action, before or after an Award is made, that it deems advisable to
obtain approval or comply with any necessary local government regulatory
exemptions or approvals.

Notwithstanding the above, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate applicable law.

18.10           Uncertificated
Shares.  To the extent that the 2011 Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may
be effected on a noncertificated basis, to the extent not prohibited by
applicable law or the rules of any stock exchange.

18.11           Unfunded
Plan.  Participants shall have no right, title, or interest whatsoever
in or to any investments that the Company, and/or its Subsidiaries, and/or
Affiliates may make to aid it in meeting its obligations under the 2011
Plan.  Nothing contained in the 2011 Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant, beneficiary,
legal representative, or any other person.  To the extent that any person
acquires a right to receive payments from the Company, and/or its Subsidiaries,
and/or Affiliates under the 2011 Plan, such right shall be no greater than the
right of an unsecured general creditor of the Company, a Subsidiary, or an
Affiliate, as the case may be.  All payments to be made hereunder shall be
paid from the general funds of the Company, a Subsidiary, or an Affiliate, as
the case may be and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts except as
expressly set forth in the 2011 Plan.  The Plan is not subject to ERISA.

18.12           No
Fractional Shares.  No fractional Shares shall be issued or delivered
pursuant to the 2011 Plan or any Award.  The Committee shall determine
whether cash, Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.

18.13           Retirement
and Welfare Plans.  Neither Awards made under the 2011 Plan nor Shares
or cash paid pursuant to such Awards will be included as "compensation" for
purposes of computing the benefits payable to any Participant under the
Company's or any Subsidiary's or Affiliate's retirement plans (both qualified
and non-qualified) or welfare benefit plans unless such other plan expressly
provides that such compensation shall be taken into account in computing a
participant's benefit.

18.14           Nonexclusivity
of the 2011 Plan.  The adoption of this Plan shall not be construed as
creating any limitations on the power of the Board or Committee to adopt such
other compensation arrangements as it may deem desirable for any Participant.

18.15           No
Constraint on Corporate Action.  Nothing in this Plan shall be
construed to: (i) limit, impair, or otherwise affect the Company's or a
Subsidiary's or an Affiliate's right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or
transfer all or any part of its business or assets; or, (ii) limit the right or
power of the Company or a Subsidiary or an Affiliate to take any action which
such entity deems to be necessary or appropriate.

18.16           Governing
Law.  The Plan and each Evidence of Award shall be governed by the
laws of the State of New York, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of the 2011
Plan to the substantive law of another jurisdiction.  Unless otherwise
provided in the Evidence of Award, recipients of an Award under the 2011 Plan
are deemed to submit to the exclusive jurisdiction and venue of the federal or
state courts of New York, to resolve any and all issues that may arise out of
or relate to the 2011 Plan or any related Evidence of Award.Document

AGIOS PHARMACEUTICALS, INC.
Restricted Stock Unit Agreement (Non-Employee Director)
2013 Stock Incentive Plan
NOTICE OF GRANT
This Restricted Stock Unit Agreement (this “Agreement”) is made as of the Agreement Date between Agios Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, and the Participant.
I.          Agreement Date
						
	Date:	

II.        Participant Information
						
	Participant:	
	Participant Address:	

III.       Grant Information
						
	Grant Date:	
	Number of Restricted Stock Units:	

IV.       Vesting Table
						
	Vesting Date	Number of Restricted Stock Units that Vest
		
		
		
		

This Agreement includes this Notice of Grant and the following Exhibit, which is expressly incorporated by reference in its entirety herein:
Exhibit A – General Terms and Conditions
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Agreement Date.
						
	AGIOS PHARMACEUTICALS, INC.

__________________________
Name:
Title:
	PARTICIPANT

__________________________
Name:

Restricted Stock Unit Agreement (Non-Employee Director)
2013 Stock Incentive Plan
EXHIBIT A
GENERAL TERMS AND CONDITIONS
For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:
1. Award of Restricted Stock Units.
In consideration of services rendered and to be rendered to the Company by the Participant, the Company has granted to the Participant, subject to the terms and conditions set forth in this Agreement and in the Company’s 2013 Stock Incentive Plan (the “Plan”), an award with respect to the number of restricted stock units (the “RSUs”) set forth in the Notice of Grant that forms part of this Agreement (the “Notice of Grant”).  Each RSU represents the right to receive one share of common stock, $0.001 par value per share, of the Company (the “Common Stock”) upon vesting of the RSUs, subject to the terms and conditions set forth herein. 
2. Vesting.
(a) The RSUs shall vest in in accordance with the Vesting Table set forth in the Notice of Grant (the “Vesting Table”).  Any fractional shares resulting from the application of the percentages in the Vesting Table shall be rounded down to the nearest whole number of RSUs.
(b) Upon the vesting of the RSUs, the Company will deliver to the Participant, for each RSU that becomes vested, one share of Common Stock, subject to the payment of any withholding taxes pursuant to Section 7.  The Common Stock will be delivered to the Participant as soon as practicable following each vesting date, but in any event within 30 days of such date.  
3. Forfeiture of Unvested RSUs Upon Cessation of Board Service.
In the event that the Participant ceases to perform services to the Company as a non-employee member of the Board of Directors for any reason or no reason, with or without cause, all of the RSUs that are unvested as of the time of such cessation shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such cessation.  The Participant shall have no further rights with respect to the unvested RSUs or any Common Stock that may have been issuable with respect thereto.  
4. Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any RSUs, or any interest therein. The Company shall not be required to treat as the owner of any RSUs or issue any Common

 Stock to any transferee to whom such RSUs have been transferred in violation of any of the provisions of this Agreement.
5. Rights as a Shareholder.
The Participant shall have no rights as a stockholder of the Company with respect to any shares of Common Stock that may be issuable with respect to the RSUs until the issuance of the shares of Common Stock to the Participant following the vesting of the RSUs.  
6. Provisions of the Plan.
This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.  
7. Tax Matters.  
(a) Acknowledgments; No Section 83(b) Election.  The Participant acknowledges that he or she is responsible for obtaining the advice of the Participant’s own tax advisors with respect to the award of RSUs and the Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents with respect to the tax consequences relating to the RSUs.  The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of the RSUs.  The Participant acknowledges that no election under Section 83(b) of the Internal Revenue Code, as amended, is available with respect to RSUs.   
(b) Withholding.  The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with respect to the vesting of the RSUs.  The Company shall not deliver any shares of Common Stock to the Participant until it is satisfied that all required withholdings have been made.
8. Miscellaneous.
(a) Authority of Compensation Committee.  In making any decisions or taking any actions with respect to the matters covered by this Agreement, the Compensation Committee shall have all of the authority and discretion, and shall be subject to all of the protections, provided for in the Plan.  All decisions and actions by the Compensation Committee with respect to this Agreement shall be made in the Compensation Committee’s discretion and shall be final and binding on the Participant.
(b) No Right to Continued Service.  The Participant acknowledges and agrees that, notwithstanding the fact that the vesting of the RSUs is contingent upon his or her continued service to the Company as a non-employee member of the Board of Directors, this Agreement does not constitute an express or implied promise of continued service relationship

 with the Participant or confer upon the Participant any rights with respect to a continued service relationship with the Company.
(c) Section 409A.  The RSUs awarded pursuant to this Agreement are intended to be exempt from or comply with the requirements of Section 409A of the Internal Revenue Code and the Treasury Regulations issued thereunder (“Section 409A”).  The delivery of shares of Common Stock on the vesting of the RSUs may not be accelerated or deferred unless permitted or required by Section 409A.
(d) Participant’s Acknowledgements.  The Participant acknowledges that he or she:  (i) has read this Agreement; (ii) has been represented in the preparation, negotiation and execution of this Agreement by legal counsel of the Participant’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; and (iv) is fully aware of the legal and binding effect of this Agreement.
(e) Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws provisions.

I hereby acknowledge that I have read this Agreement, have received and read the Plan, and understand and agree to comply with the terms and conditions of this Agreement and the Plan.

___________________________

PARTICIPANT ACCEPTANCE

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