Document:

Exhibit 10.4

 

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”)
is made as of this 7th day of May, 2018, by and between OLD LINE BANK, a Maryland-chartered trust company exercising
the powers of a commercial bank (the “Bank” or “Employer”), and Martin John Miller, a resident of the State
of Maryland (the “Employee”).

 

WHEREAS on February 26, 2014, the Employer and the Employee entered
into an Executive Employment Agreement, as amended by the Third Amendment to Executive Employment Agreement by and between the
Bank and the Employee dated as of February 23, 2017 (together, the “Original Agreement”); and

 

WHEREAS the Employer and the Employee desire to amend and restate
the Original Agreement as provided herein.

 

NOW THEREFORE, in consideration of the premises, the benefits provided
to each party hereunder and the mutual promises made herein, the adequacy and sufficiency of such consideration being hereby acknowledged
by the parties, the parties agree as follows:

 

1.       Employment. The
Bank hereby employs the Employee as an Executive Vice President and agrees to continue to employ the Employee in that position
(or in any other position approved by the Bank) during the term of this Agreement, except as otherwise provided below.

 

2.       Term. The initial
term and any extensions thereof are referred to herein as the “Term.” The initial Term of this Agreement expires on
March 31, 2020. The Term of this Agreement is two years. On September 30, 2018 and on each succeeding consecutive March 31st and
September 30th (each an “Anniversary Date”) while this Agreement is in effect, the Term shall be automatically extended
for a period of six months unless the Employer or the Employee informs the other at least 60 days prior to such Anniversary Date
of their decision to not renew.

 

3.       Compensation.
The Employee’s salary under this Agreement shall be $255,000.00 per annum, payable on a bi-weekly basis (“Base Salary”).
The Employee’s Base Salary will be reviewed by the Board of Directors annually, and the Employee will be entitled to receive
annually an increase in such amount, if any, as may be determined by the Board of Directors.

 

4.       Duties.

 

A.       During the term of this
Agreement, the Employee shall serve as an Executive Vice President. He shall have such powers and shall perform such duties that
are incident and customary to this office, and as granted and assigned to him by the Chief Executive Officer (“CEO”)
and/or the Board of Directors.

 

B.       The Employee shall devote
his full time, attention, skill, and energy to the performance of his duties under this Agreement, and shall comply with all reasonable
professional requests of the Bank; provided, however, that the Employee will be permitted to engage in and manage personal investments
and to participate in community and charitable affairs, so long as such activities in the judgment of the Bank’s CEO do not
create a conflict of interest or interfere with the performance of his duties under this Agreement. In furtherance of this commitment,
the Employee shall disclose all positions he holds with other organizations and any ownership interests he has in other business
entities where he may influence or control management decisions. Such disclosures shall be made at the commencement of the Employee’s
employment and from time-to-time throughout his employment where his circumstances have changed to make such a disclosure appropriate.

 

    

    

    

 

C.       The Employee shall immediately
notify the Company of (i) his own illness and consequent absence from work or (ii) any intended significant change in his plans
to work for the Company.

 

5.       Vacation, Sick and
Personal Leave.

 

A.       The Employee shall be entitled
to a total of 20 days of paid vacation each calendar year, which he may use in accordance with the Bank’s announced policy
that is in effect from time-to-time. The Employee may take his vacation at such times that do not interfere with the performance
of his duties under this Agreement.

 

B.       The Employee shall be entitled
to paid sick leave and paid personal leave as is provided in the Employer’s policies then in effect.

 

6.       Expenses. The
Bank shall reimburse the Employee for all reasonable expenses incurred in connection with his duties on behalf of the Bank, provided
that the Employee shall keep and present to the Bank records and receipts relating to reimbursable expenses incurred by him. Such
records and receipts shall be maintained and presented in a format, and with such regularity, as the Bank reasonably may require
in order to substantiate the Bank’s right to claim income tax deductions for such expenses. For any expenditure in excess
of $500.00, the Employee must obtain written approval from the CEO if he is to be reimbursed for the expense. Without limiting
the generality of the foregoing, the Employee shall be entitled to reimbursement for any business-related travel, business-related
entertainment and other costs and expenses reasonably incident to the performance of his duties on behalf of the Bank.

 

7.       Fringe Benefits.

 

A.       Insurance. The Employee
shall receive health insurance, consistent with the terms set forth in the plan established by the Bank for its employees. The
Bank shall also pay the premiums for Employee to receive the following insurance, consistent with the terms set forth in the plans
established by the Bank for its employees: dental; life; short-term disability; and long-term disability.

 

B.       Banking. The Bank
shall not charge the Employee for use of a savings account, checking account or debit card issued by the Bank. The Employee is
eligible to have his paychecks deposited directly in any account he has with the Bank or elsewhere.

 

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8.       Termination of Employment.

 

A.       This Agreement shall terminate
prior to the expiration of its Term only upon and on the occurrence of the following:

 

(i)       on the death of
the Employee in which event all unvested stock options previously granted to the Employee shall immediately vest and the Employer
shall have no further obligation to the Employee other than payment of any unpaid salary and any contractually committed obligations
to provide the Employee with vested benefits pursuant to a salary continuation agreement, supplemental life insurance agreement,
or other form of retirement plan (“Retirement Benefits”) in effect as of the date of death;

 

(ii)       on the date the
Employee becomes physically or mentally incapacitated to the extent he has been unable to perform his duties under this Agreement
for a period of 60 consecutive days and, in order to assist the Bank in making such determination, the Employee agrees to make
himself available for medical examination by one or more physicians chosen by the Bank and grants to the Bank and such physicians
access to all relevant medical information, including copies of the Employee’s medical records and access to the Employee’s
own physicians, in which event Employer will have no further obligation to the Employee other than payment of any unpaid salary
and Retirement Benefits as of the date of disability;

 

(iii)on the effective date of the Employee’s voluntary
resignation for Good Reason (which for purposes of this Agreement is defined as “a change in location of the Employer’s
principal office that results in the Employee’s commuting distance being at least 50 miles greater than the Employee’s
commuting distance on the date of this Agreement” and which shall not occur unless (a) Employee notified the Employer of
such condition within 90 days of its occurrence, (b) the Employer did not remedy such condition within 30 days, and (c) Employee
resigned for Good Reason within 12 months of the condition) in which event (a) the Employer shall pay to the Employee a lump sum
payment equal to the Employee’s salary (at the amount of such salary on the date of resignation) over the remaining Term,
and the Employer shall pay such lump sum payment within ten business days of the effective date of termination of the Employee’s
employment, (b) all unvested stock options previously granted to the Employee shall immediately vest, and (c) the Employee shall
be entitled to payment of any unpaid salary and Retirement Benefits as of the effective date of termination of the Employee’s
employment pursuant to such resignation;

 

(iv)       on the effective
date of the Employee’s voluntary resignation without Good Reason in which event the Employer will have no further obligation
to the Employee other than payment of any unpaid salary and Retirement Benefits as of the date of voluntary resignation;

 

(v)       on the date the
Employer terminates the Employee for “cause” as defined below in which event the Employee will have no further obligation
to the Employee other than payment of any unpaid salary and Retirement Benefits as of the date of termination; or

 

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(vi)       on the date
the Employer terminates the Employee other than for cause in which event (a) the Employer shall pay to the Employee a lump sum
payment equal to the Employee’s salary (at the amount of such salary on the date of termination) over the remaining Term,
and the Employer shall pay such lump sum payment within ten business days of the effective date of termination of the Employee’s
employment, (b) all unvested stock options previously granted to the Employee shall immediately vest, and (c) the Employee shall
be entitled to payment of any unpaid salary and Retirement Benefits as of the effective date of termination of the Employee’s
employment.

 

B.       Termination for Cause.
Notwithstanding the provisions of Section 2 above, the Employee’s employment (and all of his rights and benefits under this
Agreement) shall terminate immediately after written notice upon the happening of any one or more of the following events, which
constitute “cause”: (i) the Employee has breached, in any material respect, a provision of this Agreement; (ii) the
Employee refuses to perform the duties of his employment under this Agreement in any material respect; (iii) the Employee has committed
any act or omission materially and adversely affecting his reputation or that of the Bank or any of its affiliates or materially
and adversely affecting any product, policy, program or service offered through or developed by the Bank or any of its affiliates;
(iv) the Employee is convicted of or pleads guilty to a charge of any felony or of any lesser crime involving fraud or moral turpitude
or directed against the Bank, its affiliates or any of their shareholders, employees, agents or contractors; (v) the Employee commits
any other act which is inconsistent with the good faith fulfillment of his responsibilities as an employee of the Bank or is done
with the intent to harm the Bank, its affiliates or any of their shareholders, employees, agents or contractors; (vi) the Employee
violates any material statute, rule or regulation of any federal, state or local governmental authority pertaining to the marketing,
sale, solicitation or offer of any product, policy or program of the Bank or its affiliates; and (vii) the Employee commits any
other act or omission which an arbitrator or a court of competent jurisdiction justifies as grounds for dismissal for cause.

 

C.       Unused Vacation, Sick
and Personal Leave. The Employee shall be eligible to receive the remaining balance of his unused vacation and personal leave
at the termination of his employment only if he is not terminated for “cause” as defined above and he returns all Bank
property to the Bank prior to his final day of employment. Employee shall have no right to receive any unused sick leave. If the
Employee fails to return any Bank property prior to his last day of employment, the Employee authorizes the Bank to deduct from
his final paycheck the reasonable cost (not value) of that item. In the event that the Employee elects to terminate his employment,
he must provide the Company with 60 days’ notice as provided above in order to receive the remaining balance of his unused
vacation and personal leave.

 

9.       Non-Competition Agreement.

 

A.       The Employee agrees that,
for one year following termination from the Bank, regardless of reason, he will not, as an individual, stockholder, officer, director,
partner, agent, employee, consultant, or representative, act for or on behalf of or have any interest, direct or indirect, in any
business similar to or competitive with the Bank’s business within a 25-mile radius of the main office of the Bank exclusive
of the State of Virginia or Washington, D.C.

 

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B.       The Employee agrees, during
the period of employment and for one year following the termination of employment, not to solicit or sell or attempt to solicit
or sell, for his own account or on behalf of any person or corporation other than the Bank, services or products that are competitive
with the services or products of the Bank to any customer or client to which the Employee (or employees under her managerial control)
has solicited or sold any services or products on behalf of the Bank during any part of the two years immediately preceding the
termination of his employment. This restriction shall, in the case of a multi-location customer or client, apply to the location
or locations where the Employee (or employees under his managerial control) solicited or sold services or products, as well as
any offices of that customer or client within a 25-mile radius of the main office of the Bank.

 

C.       The Employee agrees, during
the period of employment and for one year following termination, not to perform or render services or attempt to perform or render
services, for his own account or on behalf of any person or corporation other than the Bank, for any customer or client of the
Bank for which the Employee (or employees under his managerial control) has performed any services, during any part of the two
years immediately preceding the termination of his employment. This restriction shall, in the case of a multi-location customer
or client, apply to the location or locations where the Employee (or employees under her managerial control) performed or rendered
services, as well as any offices of that customer or client within a 25-mile radius of the main office of the Bank.

 

D.       The Employee agrees, during
the period of employment and for one year following termination, not to solicit or hire, either directly or indirectly, any current
employee of the Bank to work or perform services for his own account or on behalf of any person or corporation other than the Bank,
or attempt to induce any employee to leave the employ of the Bank to work for the Employee or any other person, firm or corporation.

 

E.        The Employee acknowledges
that any breach of these provisions will cause irreparable harm to the Bank and entitle the Bank to injunctive or other equitable
relief, as well as damages. In the event of a breach of Paragraphs A through C of this Section, the Employee shall pay to the Bank
liquidated damages equal to any money received by the Employee due to violation of these Paragraphs, as well as court costs and
reasonable attorneys’ fees incurred by the Bank to enforce this Agreement. In the event of a breach of Paragraph D of this
Section, the Employee shall pay to the Bank liquidated damages equal to any money received by the Employee due to violation of
this Paragraph or the equivalent of the most recent one year’s salary (at the company) of the hired solicited employee, whichever
is greater. Additionally, the Employee agrees to pay the Bank court costs and reasonable attorneys’ fees incurred by the
Bank to enforce this Agreement.

 

10.       Trade Secrets, Confidential
Information and Intellectual Property. The Employee acknowledges that and as a result of his employment with the Bank, the
Employee has, is and will be making use of, acquiring, and adding to information of a special and unique nature and value relating
to the Bank’s intellectual property, trade secrets and other confidential information. In that regard, the Employee agrees
to the following:

 

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A.       The Employee shall not,
at any time during or following his employment with the Bank, divulge or disclose, or employ for any purpose whatsoever, any of
the Bank’s trade secrets or other confidential information that have been obtained by or disclosed to the Employee as a result
of the Employee’s employment by the Bank. For purposes of this Agreement, “trade secrets or other confidential information”
shall mean all information which is used in the Bank’s business and which gives the Bank the opportunity to obtain advantage
over its competitors who do not know or use such information, regardless of whether written or otherwise, including, but not limited
to, trade secrets, business methods, business plans, financial data, customer lists and contracts, pricing plans, marketing plans
or strategies, security devices, product information, billing procedures, employee lists, salaries and other personnel information,
and other business arrangements. The term “trade secrets or other confidential information” is not meant to include
any information which, at the time of disclosure, is generally known by the public or any competitors of the Bank. If the Employee
has any questions regarding the confidential status of information, he should contact the CEO.

 

B.       All notes, data, reference
items, sketches, drawings, memoranda, records, and other materials in any way relating to any of the information referred to in
the Paragraph above or to the Bank’s business shall belong exclusively to the Bank and the Employee agrees to turn over to
the Bank all copies of such materials in the Employee’s possession or control (whether hard copy or electronic) at the Bank’s
request or upon the termination of the Employee’s employment.

 

C.       All intellectual property,
including, but not limited to, all software (including, without limitation, computer programs, object code, source code, documentation,
notes, records, work papers, and all other materials associated therewith), and all copyrights, trademarks, patents, trade secrets
and other proprietary rights related thereto shall be deemed (i) the sole and exclusive property of the Bank (and/or the Bank’s
clients or customers if the Bank so determines), and (ii) “trade secrets or other confidential information.” The Employee
also agrees that any work prepared for the Bank or its customers or clients that are susceptible of copyright protection shall
be a work-made-for-hire for the Bank. If any such work is deemed for any reason not to be a work-made-for-hire, the Employee hereby
agrees to irrevocably assign to the Bank all of the Employee’s right, title and interest in and to the copyright in such
work and the Employee further agrees to execute all such documents and assurances, and to take all such action, as the Bank shall
request, in order to cause the rights assigned hereby fully to vest in the Bank. The Employee hereby waives all so-called “moral
rights” relating to all work developed or produced by the Employee hereunder, including, without limitation, any and all
rights of attribution, rights of approval, restriction or limitation of use or subsequent modifications. In furtherance of the
foregoing, and not in limitation thereof, the Employee agrees to assign the Bank all of the Employee’s right, title and interest
in and to any and all ideas, concepts, know-how, techniques, processes, methods, inventions, discoveries, developments, innovations
and improvements conceived or made by the Employee, whether alone or with others, during the Employee’s employment with the
Bank, and which either (i) involve or are reasonably related to the Bank’s business or (ii) incorporate or are based on,
in whole or in part, any of the Bank’s trade secrets or other confidential information. (all of the aforesaid sometimes referred
to herein as the “Inventions”). The Employee agrees to disclose all Inventions to the Bank promptly, and to provide
all assistance reasonably requested by the Bank in the preservation of the Bank’s interest in the Inventions, such as by
executing documents, testifying and the like, which assistance shall be provided at the Bank’s expense but without any additional
compensation to the Employee. The Employee shall, at the Bank’s expense, assist the Bank or its nominee to obtain patent
protection for such Inventions in any countries the Bank may elect in its sole discretion throughout the world. All Inventions
shall be the property of the Bank or its nominees, whether patentable or not. The Employee hereby assigns and agrees to assign
to the Bank, all of the Employee’s right title and interest in and to all patent applications, patents and reissues related
to any Inventions. The Employee agrees to execute, acknowledge and deliver all documents, and to provide other assistance, at the
Bank’s request and expense, during and subsequent to the Employee’s employment by the Bank, confirming the complete
ownership by the Bank of any and all Inventions, enabling the Bank or its nominees to apply for and maintain patent protection
(if applicable), and/or any other legal protection that may then be available for the Inventions.

 

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D.        The Employee acknowledges
that any breach of this Section will cause irreparable harm to the Bank and entitle the Bank to injunctive or other equitable relief,
as well as damages. Damages shall include, but are not limited to, the Employee’s payment of the court costs and reasonable
attorneys’ fees incurred by the Bank to enforce this Agreement.

 

E.       Protected Rights.
The Employee understands that nothing contained in this Agreement limits the Employee’s ability to file a charge or complaint
with the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Securities and Exchange
Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). The Employee
further understands that this Agreement does not limit the Employee’s ability to communicate with any Government Agencies
or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing
documents or other information, without notice to the Company. This Agreement does not limit the Employee’s right to receive
an award for information provided to any Government Agencies.

 

11.       Code Section 409A
Exemption. It is the parties’ intent that to the maximum extent possible, the payments contemplated under Sections 8(A)(iii)
and (vi) be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) under the “short-term
deferral” exemption as described under Treas. Reg. § 1.409A-1(b)(4) and/or the “separation pay” exemption
under Treas. Reg. §1.409-1(b)(9) such that the payments shall not be deemed “deferred compensation” within the
meaning of Code Section 409A. To the extent that any amount payable under this Agreement shall not fall within an exception but
shall instead be “deferred compensation” subject to Code Section 409A, the following terms shall apply.

 

A.       Termination of Employment.
Any payments due under this Agreement that are contingent upon the Employee’s “termination of employment” will
not be paid unless and until the Employee incurs a “separation from service” as set forth under Code Section 409A and
the regulations promulgated thereunder.

 

B.       Restriction on Timing
of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Employee is considered a Specified
Employee at termination of employment under such procedures as established by the Employer in accordance with Section 409A of the
Code, distributions of “deferred compensation” that are made upon termination of employment may not commence earlier
than six months after the date of such termination. Therefore, in the event this Subsection (B) is applicable to the Employee,
any distribution of deferred compensation that would otherwise be paid to the Employee within the first six months following the
termination of employment shall be accumulated and paid to the Employee in a lump sum on the first day of the seventh month following
the termination. All subsequent distributions shall be paid in the manner specified. “Specified Employee” shall mean
a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Employer if any stock of
the Employer is publicly traded on an established securities market or otherwise.

 

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C.       Non-Transferability.
The Employee may not sell, assign, or transfer any deferred compensation or any of the benefits hereunder, and the deferred compensation
shall not be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by
the Employee’s creditors.

 

D.       Change in Form or Timing
of Payments. All changes in the form or timing of payments hereunder must comply with the following requirements. The changes:

 

i.       may not accelerate
the time or schedule of any payment, except as provided in Section 409A of the Code and the regulations thereunder;

 

ii.       must be made
at least 12 months prior to the termination of employment;

 

iii.       must delay
the commencement of payment for a minimum of five years from the date the first payment was originally scheduled to be made; and

 

iv.       must take effect
not less than 12 months after the election is made.

 

E.        Compliance with Section
409A. This Agreement shall at all times be administered and the provisions of this Section 11 shall be interpreted consistent
with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be
promulgated after the effective date of this Agreement.

 

12.       Code Section 280G.

 

A. Notwithstanding any other provision of this Agreement or any other
plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Bank or its
affiliates to the Employee or for the Employee’s benefit pursuant to the terms of this Agreement or otherwise (“Covered
Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code
and would, but for this Section 12, be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision
thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively,
the “Excise Tax”), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit
(as defined below) to the Employee of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit payable to the
Employee if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount
calculated under (i) above is less than the amount under (ii) above will the Covered Payments be reduced to the minimum extent
necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”).
“Net Benefit” shall mean the present value of the Covered Payments net of all federal, state, local, foreign income,
employment and excise taxes.

 

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B. The Covered Payments shall be reduced in a manner that maximizes
the Employee’s economic position. In applying this principle, the reduction shall be made in a manner consistent with the
requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at
different times, such amounts shall be reduced on a pro rata basis but not below zero.

 

C. Any determination required under this Section 12, including whether
any payments or benefits are parachute payments, shall be made by the Bank in its sole discretion. The Employee shall provide the
Bank with such information and documents as the Bank may reasonably request in order to make a determination under this Section
12. The Bank’s determination shall be final and binding on the Employee.

 

D. It is possible that after the determinations and selections made
pursuant to this Section 12 the Employee will receive Covered Payments that are in the aggregate more than the amount provided
under this Section 12 (“Overpayment”) or less than the amount provided under this Section 12 (“Underpayment”).

 

i.       In the event
that it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally
and conclusively resolved that an Overpayment has been made, then the Employee shall pay any such Overpayment to the Bank together
with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date of the Employee’s
receipt of the Overpayment until the date of repayment.

 

ii.       In the event
that a court of competent jurisdiction determines that an Underpayment has occurred, any such Underpayment will be paid promptly
by the Bank to or for the benefit of the Employee together with interest at the applicable federal rate (as defined in Section
7872(f)(2)(A) of the Code) from the date the amount would have otherwise been paid to the Employee until the payment date.

 

13.       Withholding.
The Employer may withhold from any amounts payable hereunder such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

 

14.       Applicable Law.
This Agreement will be construed and enforced under and in accordance with the laws of the State of Maryland. The parties agree
that any appropriate state court located in Prince George’s County, Maryland, will have jurisdiction of any case or controversy
arising under or in connection with this Agreement and will be a proper forum in which to adjudicate such case or controversy.
The parties consent to the jurisdiction of such courts.

 

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15.       Entire Agreement.
This Agreement embodies the entire and final agreement of the parties on the subject matter stated in the Agreement. No amendment
or modification of this Agreement will be valid or binding upon the Employer or the Employee unless made in writing and signed
by both parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly
terminated.

 

16.       Severability.
The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions
of this Agreement and that the invalidity or unenforceability of any Agreement provision will not affect the validity or enforceability
of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court
of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision will
be redrawn to make the provision consistent with and valid and enforceable under the law or public policy.

 

17.       No Set-off by the Employee.
The existence of any claim, demand, action or cause of action by the Employee against the Employer, or any affiliate of the Employer,
whether predicated upon this Agreement or otherwise, will not constitute a defense to the enforcement by the Employer of any of
its rights hereunder.

 

18.       Notice. All notices
and other communications required or permitted under this Agreement will be in writing and, if mailed by prepaid first-class mail
or certified mail, return receipt requested, will be deemed to have been received on the earlier of the date shown on the receipt
or three business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand, facsimile transmission
or overnight courier, in which event the notice will be deemed effective when delivered or transmitted. All notices and other communications
under this Agreement must be given to the parties hereto at the following addresses:

 

	 	(i)	If to the Employer, to it at:
	 	 	 
	 	 	1525 Pointer Ridge Road
	 	 	Bowie, Maryland 20716
	 	 	Attn: President
	 	 	 
	 	(ii)	If to the Employee, to the Employee at:
	 	 	 
	 	 	2008 Haverford Drive
	 	 	Crownsville, Maryland  21032

 

19.       Assignment. Neither
party hereto may assign or delegate this Agreement or any of its rights and obligations hereunder without the written consent of
the other party hereto.

 

20.       Waiver. A waiver
by the Employer of any breach of this Agreement by the Employee will not be effective unless in writing, and no waiver will operate
or be construed as a waiver of the same or another breach on a subsequent occasion.

 

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21.       Interpretation.
Words importing the singular form shall include the plural and vice versa. The terms “herein,” “hereunder,”
“hereby,” “hereto,” “hereof” and any similar terms refer to this Agreement. Any captions, titles
or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and will not
constitute part of this Agreement or affect its meaning, construction or effect.

 

22.       Rights of Third Parties.
Nothing herein expressed is intended to or will be construed to confer upon or give to any person, firm or other entity, other
than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.

 

23.       Survival. The
obligations of the Employee pursuant to Sections 5, 6, 7, 8 and 9 will survive the termination of the employment of the Employee
hereunder for the period designated under each of those respective sections.

 

24.       This Agreement shall
extend to, and be binding upon the Employee, and upon the Bank and its successors and assigns and the term “Bank” as
used herein shall include its successors and assigns whether by merger, consolidation, combination or otherwise.

 

[signatures appear on following page]

 

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
to be executed as of the date first set forth above.

 

 

	WITNESS/ATTEST:	 	THE EMPLOYER:
	 	 	OLD LINE BANK
	 	 	 
	 	 	By:  	 
	Name: 	Mark A. Semanie	 	Name: 	James W. Cornelsen
	 	Executive Vice President and	 	Title:	President and Chief Executive Officer
	 	Chief Operating Officer	 	 	 
	 	 	 
	 	 	 
	WITNESS:	 	THE EMPLOYEE:
	 	 	 
	 	 	 
	Name:	 	Martin John Miller

 

 

 

 

 

12modn-ex101_114.htm

Exhibit 10.1

MODEL N, INC.

2013 EQUITY INCENTIVE PLAN 

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 27. 

2. SHARES SUBJECT TO THE PLAN. 

2.1. Number of Shares Available. Subject to Sections 2.6 and 21 and any other applicable provisions hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board, is fifteen million, one hundred thirty-one thousand, nine hundred and thirty-two (15,131,932) Shares, which includes (i) any reserved shares not issued or subject to outstanding grants under the Company’s 2010 Equity Incentive Plan (the “Prior Plan”) on the Effective Date (as defined below), plus (ii) shares that are subject to stock options or other awards granted under the Prior Plan that cease to be subject to such stock options or other awards by forfeiture or otherwise after the Effective Date, (iii) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, (iv) shares issued under the Prior Plan that are repurchased by the Company at the original issue price and (v) shares that are subject to stock options or other awards under the Prior Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award. 

2.2. Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under the Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Shares used to pay the exercise price of an Award or withheld to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof. 

2.3. Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan. 

2.4. Automatic Share Reserve Increase. The number of Shares available for grant and issuance under the Plan shall be increased on October 1, of each of the first four (4) calendar years during the term of the Plan, by the lesser of (i) five percent (5%) of the number of Shares issued and outstanding on each September 30 immediately prior to the date of increase or (ii) such number of Shares determined by the Board. 

2.5. Limitations. No more than eight million (8,000,000) Shares shall be issued pursuant to the exercise of ISOs. 

 

 

2.6. Adjustment of Shares. If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under the Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.5, and (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3, and (f) the maximum number of Shares subject to Awards that may be granted to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued. 

3. ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors; provided such Consultants, Directors and Non-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive more than two million (2,000,000) Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive up to a maximum of four million (4,000,000) Shares in the calendar year in which they commence their employment. 

4. ADMINISTRATION. 

4.1. Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to: 

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan; 

(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award; 

(c) select persons to receive Awards; 

(d) determine the form and terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may vest and be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine; 

(e) determine the number of Shares or other consideration subject to Awards; 

(f) determine the Fair Market Value in good faith and interpret the applicable provisions of this Plan and the definition of Fair Market Value in connection with circumstances that impact the Fair Market Value, if necessary; 

 

(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company; 

(h) grant waivers of Plan or Award conditions; 

 

 

 

(i) determine the vesting, exercisability and payment of Awards; 

(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement; 

(k) determine whether an Award has been earned; 

(l) determine the terms and conditions of any, and to institute any Exchange Program; 

(m) reduce or waive any criteria with respect to Performance Factors; 

(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code; 

(o) adopt rules and/or procedures (including the adoption of any subplan under this Plan) relating to the operation and administration of the Plan to accommodate requirements of local law and procedures outside of the United States; 

(p) make all other determinations necessary or advisable for the administration of this Plan; and 

(q) delegate any of the foregoing to a subcommittee consisting of one or more executive officers pursuant to a specific delegation as permitted by applicable law, including Section 157(c) of the Delaware General Corporation Law. 

4.2. Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of the Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under the Plan. Any dispute regarding the interpretation of the Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant. 

4.3. Section 162(m) of the Code and Section 16 of the Exchange Act. When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without 

 

 

 

limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles. 

4.4. Documentation. The Award Agreement for a given Award, the Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements. 

4.5. Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 2.1 hereof; and (v) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law. 

5. OPTIONS. An Option is the right but not the obligation to purchase a Share, subject to certain conditions, if applicable. The Committee may grant Options to eligible Employees, Consultants and Directors and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may vest and be exercised, and all other terms and conditions of the Option, subject to the terms of this Section. 

5.1. Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NSO. An Option may be, but need not be, awarded upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each Option; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria. 

5.2. Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option. 

 

5.3. Exercise Period. Options may be vested and exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become 

 

 

 

exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines. 

5.4. Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an Option will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased may be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company. 

5.5. Method of Exercise. Any Option granted hereunder will be vested and exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.6 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 

5.6. Termination of Service. 

(a) If the Participant’s Service terminates for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates no later than three (3) months after the date Participant’s Service terminates (or such shorter or longer time period as may be determined by the Committee, with any exercise beyond three (3) months after the date Participant’s Service terminates deemed to be the exercise of an NSO), but in any event no later than the expiration date of the Options. 

(b) If the Participant’s Service terminates because of the Participant’s death (or the Participant dies within three (3) months after Participant’s Service terminates other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant’s legal representative, or authorized assignee, no later than twelve (12) months after the date Participant’s Service terminates (or such shorter time period not less than six (6) months or longer time period as may be determined by the Committee), but in any event no later than the expiration date of the Options. 

 

(c) If the Participant’s Service terminates because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the date Participant’s Service terminates and must be exercised by the Participant (or the Participant’s legal representative or authorized assignee) no later than twelve (12) months after the date Participant’s Service terminates (with any exercise beyond (a) three (3) months after the date Participant’s 

 

 

 

Service terminates when the termination of Service is for a Disability that is not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the date Participant’s Service terminates when the termination of Service is for a Disability that is a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NSO), but in any event no later than the expiration date of the Options. 

(d) If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s date of termination of Service, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options. Unless otherwise provided in the Award Agreement, Cause shall have the meaning set forth in the Plan. 

5.7. Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable. 

5.8. Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment. 

5.9. Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants; provided, however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price. 

5.10. No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code. 

6. RESTRICTED STOCK AWARDS. A Restricted Stock Award is an offer by the Company to sell to an eligible Employee, Consultant, or Director Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to the Plan. 

6.1. Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise. 

 

 

 

6.2. Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee and may be less than Fair Market Value on the date the Restricted Stock Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of the Plan, and the Award Agreement and in accordance with any procedures established by the Company. 

6.3. Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria. 

6.4. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 

7. STOCK BONUS AWARDS. A Stock Bonus Award is an award to an eligible Employee, Consultant, or Director of Shares for Services to be rendered or for past Services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to an Award Agreement. No payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award. 

7.1. Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria. 

7.2. Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee. 

7.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 

8. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right (“SAR”) is an award to an eligible Employee, Consultant, or Director that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement. 

8.1. Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s termination of Service on each SAR. The Exercise Price of the SAR will be 

 

 

 

determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria. 

8.2. Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs. 

8.3. Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code. 

8.4. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 

9. RESTRICTED STOCK UNITS. A Restricted Stock Unit (“RSU”) is an award to an eligible Employee, Consultant, or Director covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement. 

9.1. Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; (c) the consideration to be distributed on settlement; and (d) the effect of the Participant’s termination of Service on each RSU. An RSU may be awarded upon satisfaction of such performance goals based on Performance Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU.  Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria. 

9.2. Form and Timing of Settlement.  Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement.  The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee may 

 

 

 

also permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code. 

9.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such date Participant’s Service terminates (unless determined otherwise by the Committee). 

10. PERFORMANCE AWARDS. A Performance Award is an award to an eligible Employee, Consultant, or Director of a cash bonus or an award of Performance Shares denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Awards shall be made pursuant to an Award Agreement. 

10.1. Terms of Performance Shares. The Committee will determine, and each Award Agreement shall set forth, the terms of each Performance Award including, without limitation: (a) the amount of any cash bonus; (b) the number of Shares deemed subject to an award of Performance Shares; (c) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (d) the consideration to be distributed on settlement; and (e) the effect of the Participant’s termination of Service on each Performance Award. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee shall determine the extent to which Performance Awards have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Awards that are subject to different Performance Periods and different performance goals and other criteria. No Participant will be eligible to receive more than $5,000,000 in Performance Awards in any calendar year under this Plan. 

10.2. Value, Earning and Timing of Performance Shares. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof. 

10.3. Termination of Service. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on the date Participant’s Service terminates (unless determined otherwise by the Committee). 

11. PAYMENT FOR SHARE PURCHASES. Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement): 

 

(a) by cancellation of indebtedness of the Company to the Participant; 

(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled; 

(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company; 

 

 

 

(d) by consideration received by the Company pursuant to a broker-assisted or other form of cashless exercise program implemented by the Company in connection with the Plan; 

(e) by any combination of the foregoing; or 

(f) by any other method of payment as is permitted by applicable law. 

12. GRANTS TO NON-EMPLOYEE DIRECTORS. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate number of Shares subject to Awards granted to any Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed 250,000.

12.1. Eligibility. Awards pursuant to this Section 12 shall be granted only to Non-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12. 

12.2. Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted. 

12.3. Election to receive Awards in Lieu of Cash. A Non-Employee Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash or Awards or a combination thereof, as determined by the Committee. Such Awards shall be issued under the Plan. An election under this Section 12.3 shall be filed with the Company on the form prescribed by the Company. 

13. WITHHOLDING TAXES. 

13.1. Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company, or to the Parent or Subsidiary employing the Participant, an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable U.S. federal, state, local and international withholding tax requirements or any other tax liability legally due from the Participant. 

13.2. Stock Withholding. The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time and to limitations of local law, may require or permit a Participant to satisfy such tax withholding obligation or any other tax liability legally due from the Participant, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. 

14. TRANSFERABILITY. 

14.1. Transfer Generally. Unless determined otherwise by the Committee or pursuant to Section 14.2, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution. If the Committee makes an Award transferable, including, without limitation, by instrument to an inter vivos or testamentary trust in which the Awards are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to a Permitted Transferee, such 

 

 

 

Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; (ii) after the Participant’s death, by the legal representative of the Participant’s heirs or legatees; and (iii) in the case of all awards except ISOs, by a Permitted Transferee. 

14.2. Award Transfer Program. Notwithstanding any contrary provision of the Plan, the Committee shall have all discretion and authority to determine and implement the terms and conditions of any Award Transfer Program instituted pursuant to this Section 14.2 and shall have the authority to amend the terms of any Award participating, or otherwise eligible to participate in, the Award Transfer Program, including (but not limited to) the authority to (i) amend (including to extend) the expiration date, post-termination exercise period and/or forfeiture conditions of any such Award, (ii) amend or remove any provisions of the Award relating to the Award holder’s continued service to the Company, (iii) amend the permissible payment methods with respect to the exercise or purchase of any such Award, (iv) amend the adjustments to be implemented in the event of changes in the capitalization and other similar events with respect to such Award, and (v) make such other changes to the terms of such Award as the Committee deems necessary or appropriate in its sole discretion. 

15. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES. 

15.1. Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant, except for any dividend equivalent rights permitted by an applicable Award Agreement. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2. 

15.2. Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s termination of Service at any time within ninety (90) days (or such longer or shorter time determined by the Committee) after the later of the date Participant’s Service terminates and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. 

16. CERTIFICATES. All Shares or other securities whether or not certificated, delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable U.S. federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted and any non-U.S. exchange controls or securities law restrictions to which the Shares are subject. 

17. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the 

 

 

 

Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid. 

18. REPRICING; EXCHANGE AND BUYOUT OF AWARDS. Without prior stockholder approval the Committee may (i) reprice Options or SARs (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARs, the consent of the affected Participants is not required provided written notice is provided to them), and (ii) with the consent of the respective Participants (unless not required pursuant to Section 5.9 of the Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards. 

19. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable U.S. and foreign federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any foreign or state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so. 

20. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time. 

21. CORPORATE TRANSACTIONS. 

21.1. Assumption or Replacement of Awards by Successor. In the event that the Company is subject to a Corporate Transaction, outstanding Awards acquired under the Plan shall be subject to the agreement evidencing the Corporate Transaction, which need not treat all outstanding Awards in an identical manner. Such agreement, without the Participant’s consent, shall provide for one or more of the following with respect to all outstanding Awards as of the effective date of such Corporate Transaction: 

 

(a) The continuation of an outstanding Award by the Company (if the Company is the successor entity). 

(b) The assumption of an outstanding Award by the successor or acquiring entity (if any) of such Corporate Transaction (or by its parents, if any), which assumption, will be binding on all selected Participants; provided that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code. 

 

 

 

(c) The substitution by the successor or acquiring entity in such Corporate Transaction (or by its parents, if any) of equivalent awards with substantially the same terms for such outstanding Awards (except that the exercise price and the number and nature of shares issuable upon exercise of any such option or stock appreciation right, or any award that is subject to Section 409A of the Code, will be adjusted appropriately pursuant to Section 424(a) of the Code). 

(d) The full exercisability or vesting and accelerated expiration of an outstanding Award and lapse in full of the Company’s right to repurchase or re-acquire shares acquired under an Award or lapse in full of forfeiture rights with respect to shares acquired under an Award. 

(e) The settlement of the full value of such outstanding Award (whether or not then vested or exercisable) in cash, cash equivalents, or securities of the successor entity (or its parent, if any) with a Fair Market Value equal to the required amount, followed by the cancellation of such Awards; provided however, that such Award may be cancelled if such Award has no value, as determined by the Committee, in its discretion. Subject to Section 409A of the Code, such payment may be made in installments and may be deferred until the date or dates the Award would have become exercisable or vested. Such payment may be subject to vesting based on the Participant’s continued service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which the Award would have become vested or exercisable. For purposes of this Section 21.1(e), the Fair Market value of any security shall be determined without regard to any vesting conditions that may apply to such security. 

(f) The cancellation of outstanding Awards in exchange for no consideration. 

The Board shall have full power and authority to assign the Company’s right to repurchase or re-acquire or forfeiture rights to such successor or acquiring corporation. In addition, in the event such successor or acquiring corporation refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction. 

21.2. Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the number of Shares authorized for grant under the Plan or authorized for grant to a Participant in a calendar year. 

21.3. Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted to Non-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines. 

 

 

 

22. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board. 

23. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware (excluding its conflict of law rules). 

24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval; provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted. 

25. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 

26. INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company. 

27. DEFINITIONS. As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings: 

27.1. “Award” means any award under the Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares. 

27.2. “Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan. 

27.3. “Award Transfer Program” means any program instituted by the Committee which would permit Participants the opportunity to transfer any outstanding Awards to a financial institution or other person or entity approved by the Committee. 

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

 

27.5. “Cause” means (i) Participant’s willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Participant’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Participant of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination as to whether a Participant is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing 

 

 

 

definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time as provided in Section 20 above, and the term “Company” will be interpreted to include any Subsidiary or Parent, as appropriate. 

27.6. “Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. 

27.7. “Committee” means the Compensation Committee of the Board or those persons to whom administration of the Plan, or part of the Plan, has been delegated as permitted by law. 

27.8. “Common Stock” means the common stock of the Company. 

27.9. “Company” means Model N, Inc., or any successor corporation. 

27.10. “Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity. 

27.11. “Corporate Transaction” means the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then-outstanding voting securities; provided, however, that for purposes of this subclause (i) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the Company will not be considered a Corporate Transaction; (ii) the consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (iv) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company) or (v) a change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by member of the Board whose appointment or election is not endorsed by as majority of the members of the Board prior to the date of the appointment or election. For purpose of this subclause (v), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Corporate Transaction. For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction will not be deemed a Corporate Transaction unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time. 

27.12. “Director” means a member of the Board. 

27.13. “Disability” means in the case of incentive stock options, total and permanent disability as defined in Section 22(e)(3) of the Code and in the case of other Awards, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. 

 

 

 

27.14. “Effective Date” means the day immediately prior to the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC. 

27.15. “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. 

27.16. “Exchange Act” means the United States Securities Exchange Act of 1934, as amended. 

27.17. “Exchange Program” means a program pursuant to which outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof). 

27.18. “Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option and with respect to a SAR, the price at which the SAR is granted to the holder thereof. 

27.19. “Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows: 

(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal or such other source as the Committee deems reliable; 

(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; 

(c) in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or 

(d) if none of the foregoing is applicable, by the Board or the Committee in good faith. 

27.20. “Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act. 

27.21. “IRS” means the United States Internal Revenue Service. 

 

27.22. “Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary. 

27.23. “Option” means an award of an option to purchase Shares pursuant to Section 5. 

27.24. “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

27.25. “Participant” means a person who holds an Award under this Plan. 

 

 

 

27.26. “Performance Award” means cash or stock granted pursuant to Section 10 or Section 12 of the Plan. 

27.27. “Performance Factors” means any of the factors selected by the Committee and specified in an Award Agreement, from among the following objective measures, either individually, alternatively or in any combination, applied to the Company as a whole or any business unit or Subsidiary, either individually, alternatively, or in any combination, on a GAAP or non-GAAP basis, and measured, to the extent applicable on an absolute basis or relative to a pre-established target, to determine whether the performance goals established by the Committee with respect to applicable Awards have been satisfied: 

(a) Profit Before Tax; 

(b) Billings; 

(c) Revenue; 

(d) Net revenue; 

(e) Earnings (which may include earnings before interest and taxes, earnings before taxes, and net earnings); 

(f) Operating income; 

(g) Operating margin; 

(h) Operating profit; 

(i) Controllable operating profit, or net operating profit; 

(j) Net Profit; 

(k) Gross margin; 

(l) Operating expenses or operating expenses as a percentage of revenue; 

(m) Net income; 

(n) Earnings per share; 

(o) Total stockholder return; 

(p) Market share; 

 

 (q) Return on assets or net assets; 

(r) The Company’s stock price; 

(s) Growth in stockholder value relative to a pre-determined index; 

(t) Return on equity; 

(u) Return on invested capital; 

(v) Cash Flow (including free cash flow or operating cash flows) 

(w) Cash conversion cycle; 

(x) Economic value added; 

 

 

 

(y) Individual confidential business objectives; 

(z) Contract awards or backlog; 

(aa) Overhead or other expense reduction; 

(bb) Credit rating; 

(cc) Strategic plan development and implementation; 

(dd) Succession plan development and implementation; 

(ee) Improvement in workforce diversity; 

(ff) Customer indicators; 

(gg) New product invention or innovation; 

(hh) Attainment of research and development milestones; 

(ii) Improvements in productivity; 

(jj) Bookings; and 

(kk) Attainment of objective operating goals and employee metrics. 

The Committee may, in recognition of unusual or non-recurring items such as acquisition-related activities or changes in applicable accounting rules, provide for one or more equitable adjustments (based on objective standards) to the Performance Factors to preserve the Committee’s original intent regarding the Performance Factors at the time of the initial award grant. It is within the sole discretion of the Committee to make or not make any such equitable adjustments. 

27.28. “Performance Period” means the period of service determined by the Committee, during which years of service or performance is to be measured for the Award. 

27.29. “Performance Share” means an Award granted pursuant to Section 10 or Section 12 of the Plan. 

 

27.30. “Permitted Transferee” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Employee, any person sharing the Employee’s household (other than a tenant or employee), a trust in which these persons (or the Employee) have more than 50% of the beneficial interest, a foundation in which these persons (or the Employee) control the management of assets, and any other entity in which these persons (or the Employee) own more than 50% of the voting interests. 

27.31. “Plan” means this Model N, Inc. 2013 Equity Incentive Plan. 

27.32. “Purchase Price” means the price to be paid for Shares acquired under the Plan, other than Shares acquired upon exercise of an Option or SAR. 

27.33. “Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of the Plan, or issued pursuant to the early exercise of an Option. 

27.34. “Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of the Plan. 

 

 

 

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

27.36. “Securities Act” means the United States Securities Act of 1933, as amended. 

27.37. “Service” shall mean Service as an Employee, Consultant, Director or Non-Employee Director, to the Company or a Parent or Subsidiary of the Company, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. An Employee will not be deemed to have ceased to provide Service in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee; provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any Employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. In the event of military leave, if required by applicable laws, vesting shall continue for the longest period that vesting continues under any other statutory or Company approved leave of absence and, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Awards to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave. An employee shall have terminated employment as of the date he or she ceases to be employed (regardless of whether the termination is in breach of local laws or is later found to be invalid) and employment shall not be extended by any notice period or garden leave mandated by local law. The Committee will have sole discretion to determine whether a Participant has ceased to provide Services and the effective date on which the Participant ceased to provide Services. 

27.38. “Shares” means shares of the Company’s Common Stock and the common stock of any successor security. 

27.39. “Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of the Plan. 

27.40. “Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of the Plan. 

 

27.41. “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

27.42. “Treasury Regulations” means regulations promulgated by the United States Treasury Department. 

27.43. “Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).

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