Document:

Exhibit 10.1

 

INMUNE BIO, INC.

2021 STOCK INCENTIVE PLAN

(effective June 1, 2021)

 

1 General

 

1.1 Purpose. The purposes
of the INmune Bio, Inc. 2021 Stock Incentive Plan (the “Plan”) is to promote the interests of INmune Bio, Inc. (the “Company”)
and the stockholders of the Company by providing (i) executive officers and other employees of the Company and its Subsidiaries (as defined
below), (ii) certain advisors who perform services for the Company and its Subsidiaries and (iii) non-employee members of the Board of
Directors of the Company (the “Board”) with appropriate incentives and rewards to encourage them to enter into and continue
in the employ and service of the Company and to acquire a proprietary interest in the long-term success of the Company, as well as to
reward the performance of these individuals in fulfilling their personal responsibilities for long-range and annual achievements. The
Plan is intended to be a written compensatory plan within the meaning of Rule 701 promulgated under the Securities Act.

 

1.2 Effective Date and
Term. The Plan will become effective upon the date it is approved by the stockholders of the Company (the “Effective Date”).
Unless terminated earlier by the Committee, the Plan will expire on the tenth (10th) anniversary of the Effective Date.

 

1.3 Definitions. Capitalized
terms in the Plan, unless defined elsewhere in the Plan, shall be defined as set forth below:

 

162(m) Term. The term
“162(m) Term” means the period starting on the date when the Company’s stockholders first approve this Plan and ending
on the date of the first meeting of the Company’s stockholders that occurs in the fifth year following the year in which the Company’s
stockholders first approve this Plan.

 

Exchange Act. The term
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated
thereunder and any successor thereto.

 

Affiliated Company.
The term “Affiliated Company” means any company, partnership, association, organization or other entity controlled by, controlling
or under common control with the Company.

 

Award. The term “Award”
means any award or benefit granted under the Plan, including, without limitation, Options, SARs, Restricted Stock, Restricted Stock Units,
Other Stock-Based Awards and Cash-Based Awards.

 

Award Agreement. The term “Award Agreement”
means a written Award grant agreement under the Plan.

 

Cash -Based Award.
The term “Cash-Based Award” means a right or other interest granted to an Eligible Grantee under Section 4.2(vi) of the Plan
that may be denominated or payable in cash, other than an Award pursuant to which the amount of cash is determined by reference to the
value of a specific number of shares of Stock. For the avoidance of doubt, dividend equivalents constitute Cash-Based Awards.

 

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Change of Control. The term “Change of Control”
shall be deemed to occur if and when:

 

		(i)	any
person, including a “person” as such term is used in Section 14(d)(2) of the Exchange Act (a “Person”), is or
becomes a beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;

 

		(ii)	individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose
any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board;

 

		(iii)	all
or substantially all of the assets of the Company are sold, transferred or distributed, or the Company is dissolved or liquidated; or

 

		(iv)	a
reorganization, merger, consolidation or other corporate transaction involving the Company (a “Transaction”) is consummated,
in each case, with respect to which the stockholders of the Company immediately prior to such Transaction do not, immediately after the
Transaction, own more than 50% of the combined voting power of the Company or other corporation resulting from such Transaction in substantially
the same respective proportions as such stockholders’ ownership of the voting power of the Company immediately before such Transaction.

 

Notwithstanding the foregoing
or any other provision of this Plan, the term Change of Control shall not include a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the Company.

 

Code. The term “Code”
means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor
provision of the Code.

 

Committee. The term
“Committee” means the committee of the Board described in Section 2 hereof and any sub-committee established by such Committee
pursuant to Section 2.4.

 

Covered Employee. The
term “Covered Employee” means an Employee who is, or who is anticipated to become, between the time of grant and payment of
the Award, a “covered employee,” as such term is defined in Section 162(m)(3) of the Code (or any successor section thereof).

 

Disability. The term
“Disability” means “Disability” as defined in any Award Agreement to which the Grantee is a party.

 

Eligible Grantee. The
term “Eligible Grantee” shall mean any Employee, Non-Employee Director or Key Advisor, as determined by the Committee in its
sole discretion.

 

Employee. The term
“Employee” means an active employee of the Company or a Subsidiary, but excluding any person who is classified by the Company
or a Subsidiary as a “contractor” or “consultant,” no matter how characterized by the Internal Revenue Service,
other governmental agency or a court, or any employee who is not actively employed, as determined by the Committee. Any change of characterization
of an individual by the Internal Revenue Service or any court or government agency shall have no effect upon the classification of an
individual as an Employee for purposes of this Plan, unless the Committee determines otherwise.

 

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Fair Market Value. For
purposes of determining the “Fair Market Value” of a share of Stock as of any date, the “Fair Market Value” as
of that date shall be, unless otherwise determined by the Committee, the closing sale price during regular trading hours of the Stock
on the immediately preceding date on the principal securities market in which shares of Stock is then traded; or, if there were no trades
on that date, the closing sale price during regular trading hours of the Stock on the first trading day prior to that date. If the Stock
is not publicly traded at the time a determination of Fair Market Value is required to be made hereunder, the determination of such amount
shall be made by the Committee in such manner as it deems appropriate.

 

Grantee. The term “Grantee”
means an Employee, Non-Employee Director or Key Advisor of the Company or a Subsidiary who has been granted an Award under the Plan.

 

ISO. The term “ISO”
means any Option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code.

 

Key Advisor. The term
“Key Advisor” means a consultant or other key advisor who performs services for the Company or a Subsidiary.

 

Non-Employee Director.
The term “Non-Employee Director” means a member of the Board who is not an Employee.

 

NQSO. The term “NQSO”
means any Option that is not designated as an ISO, or which is designated by the Committee as an ISO but which subsequently fails or ceases
to qualify as an ISO.

 

Option. The term “Option”
means a right, granted to an Eligible Grantee under Section 4.2(i), to purchase shares of Stock. An Option may be either an ISO or an
NQSO.

 

Other Stock-Based Award.
The term “Other Stock-Based Award” means a right or other interest granted to an Eligible Grantee under Section 4.2(v) of
the Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock,
including but not limited to (i) unrestricted Stock awarded as a bonus or upon the attainment of Performance Goals or otherwise as permitted
under the Plan, and (ii) a right granted to an Eligible Grantee to acquire Stock from the Company containing terms and conditions prescribed
by the Committee.

 

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Performance Goals.
The term “Performance Goals” means performance goals based on the attainment by the Company or any Subsidiary of the Company
or any Affiliated Company (or any division or business unit of any such entity), or any two or more of the foregoing, of performance goals
pre-established by the Committee in its sole discretion, based on one or more of the following criteria (if applicable, such criteria
shall be determined in accordance with generally accepted accounting principles (“GAAP”) or based upon the Company’s
GAAP financial statements): (i) the attainment of certain target levels of, or a specified percentage increase in, revenues, earnings,
income before taxes and extraordinary items, net income, operating income, earnings before income tax, earnings before interest, taxes,
depreciation and amortization or a combination of any or all of the foregoing; (ii) the attainment of certain target levels of, or a percentage
increase in, after-tax or pre-tax profits including, without limitation, that attributable to continuing and/or other operations; (iii)
the attainment of certain target levels of, or a specified increase in, operational cash flow; (iv) the achievement of a certain level
of, reduction of, or other specified objectives with regard to limiting the level of increase in, all or a portion of, the Company’s
bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be
calculated net of such cash balances and/or other offsets and adjustments as may be established by the Committee; (v) earnings per share
or the attainment of a specified percentage increase in earnings per share or earnings per share from continuing operations; (vi) the
attainment of certain target levels of, or a specified increase in return on capital employed or return on invested capital; (vii) the
attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax return on stockholders’ equity; (viii)
the attainment of certain target levels of, or a specified increase in, economic value added targets based on a cash flow return on investment
formula; (ix) the attainment of certain target levels in, or specified increases in, the fair market value of the shares of the Company’s
common stock; (x) the growth in the value of an investment in the Company’s common stock; (xi) the attainment of a certain level
of, reduction of, or other specified objectives with regard to limiting the level in or increase in, all or a portion of controllable
expenses or costs or other expenses or costs; (xii) gross or net sales, revenue and growth of sales revenue (either before or after cost
of goods, selling and general administrative expenses, research and development expenses and any other expenses or interest); (xiii) total
stockholder return; (xiv) return on assets or net assets; (xv) return on sales; (xvi) operating profit or net operating profit; (xvii)
operating margin; (xviii) gross or net profit margin; (xix) cost reductions or savings; (xx) productivity; (xxi) operating efficiency;
(xxii) working capital; or (xxiii) market share; (xxiv) customer satisfaction; (xxv) workforce diversity; (xxvi) results of clinical trials;
(xxvii) acceptance of a new drug application by a regulatory body; (xxviii) regulatory body approval for commercialization of a product;
(xxix) launch of a new drug; (xxx) completion of out-licensing, in-licensing or disposition of product candidates or other acquisition
or disposition projects; and (xxxi) to the extent that an Award is not intended to comply with Section 162(m) of the Code, other measures
of performance selected by the Board. Subject to the limitations in Section 4.2, the Committee in its sole discretion may designate additional
business criteria on which the Performance Goals may be based or adjust, or modify or amend the aforementioned business criteria. The
relative weights of the criteria that comprise the Performance Goals shall be determined by the Committee in its sole discretion. In establishing
the Performance Goals for a performance period, the Committee may establish different Performance Goals for individual Grantees or groups
of Grantees. Subject to the limitations in Section 4.2(ix)(d), the Committee in its sole discretion shall have the authority to make equitable
adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Subsidiary of the
Company or any Affiliated Company or the financial statements of the Company or any Subsidiary of the Company or any Affiliated Company,
in response to changes in applicable laws or regulations, including changes in generally accepted accounting principles or practices,
or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related
to the disposal of a segment of a business, as applicable. Performance Goals may include a threshold level of performance below which
no Award will be earned, a level of performance at which the target amount of an Award will be earned and a level of performance at which
the maximum amount of the Award will be earned.

 

Restricted Stock. The
term “Restricted Stock” means an Award of shares of Stock to an Eligible Grantee under Section 4.2(iii) that may be subject
to certain restrictions and to a risk of forfeiture. Stock issued upon the exercise of Options or SARs is not “Restricted Stock”
for purposes of the plan, even if subject to post-issuance transfer restrictions or forfeiture conditions. When Restricted Stock vests,
it ceases to be “Restricted Stock” for purposes of the Plan.

 

Restricted Stock Unit.
The term “Restricted Stock Unit” means a right granted to an Eligible Grantee under Section 4.2(iv) to receive Stock or cash
at the end of a specified deferral period, which right may be conditioned on the satisfaction of specified performance or other criteria.

 

Retirement. The term
“Retirement” means any termination of employment or service as an Employee, Non-Employee Director or Key Advisor as a result
of retirement in good standing under the rules of the Company or a Subsidiary, as applicable, then in effect.

 

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Rule 16b-3. The term
“Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, including any successor to such Rule.

 

Securities Act. The term “Securities Act”
means the Securities Act of 1933, as amended.

 

Stock. The term “Stock” means
shares of the common stock, par value $0.001 per share, of the Company.

 

Stock Appreciation Right
or SAR. The term “Stock Appreciation Right” or “SAR” means the right, granted to an Eligible Grantee under
Section 4.2(ii), to be paid an amount measured by the appreciation in the Fair Market Value of Stock from the date of grant to the date
of exercise of the right.

 

Subsidiary. The term
“Subsidiary” means any present or future subsidiary corporation of the Company within the meaning of Section 424(f) of the
Code, and any present or future business venture designated by the Committee in which the Company has a significant interest, including,
without limitation, any subsidiary corporation in which the Company has at least a 50% ownership interest, as determined in the discretion
of the Committee.

 

2 Administration

 

2.1 Committee. The
authority to manage the operation of and administer the Plan shall be vested in a committee (the “Committee”) in accordance
with this Section 2. The Committee shall be selected by the Board, and shall consist solely of two or more members of the Board who are
non-employee directors within the meaning of Rule 16b-3 and are outside directors within the meaning of Code Section 162(m). Unless otherwise
determined by the Board, the Company’s Compensation Committee shall be designated as the “Committee” hereunder. If the
Board, at any time, consists of only one member, such sole member may take all actions granted to the Committee hereunder.

 

2.2 Powers of the Committee. The Committee’s
administration of the Plan shall be subject to the following:

 

		(i)	Subject
to the provisions of the Plan, the Committee will have the authority and discretion to select from among the Eligible Grantees those
persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares
covered by the Awards, and to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards;

 

		(ii)	The
Committee will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating
to the Plan, to determine the terms and provisions of any Award Agreement made pursuant to the Plan, and to make all other determinations
that may be necessary or advisable for the administration of the Plan;

 

		(iii)	Any
interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons; and

 

		(iv)	In
managing the operation of and administering the Plan, the Committee shall take action in a manner that conforms to the articles of incorporation
and by-laws of the Company, and applicable state corporate law.

 

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2.3 Prohibition Against
Repricing. Notwithstanding any provision of the Plan to the contrary, in no event shall any action be taken under the Plan that constitutes
a Repricing of any Option or SAR granted under the Plan, or of any option or stock appreciation right granted under the any other plan
of the Company or of an acquired company, except with approval of the stockholders of the Company.

 

2.4 Delegation of Authority.
To the extent not inconsistent with applicable law, the rules of the NASDAQ Stock Market or other provisions of the Plan, the Committee
may, at any time, allocate all or any portion of its responsibilities and powers to any one or more of its members or, with respect to
Awards made to Employees other than executive officers, the Chief Executive Officer, including without limitation, the power to designate
Grantees hereunder and determine the amount, timing and terms of Awards hereunder. Any such allocation or delegation may be revoked by
the Committee at any time.

 

2.5 Indemnification.
Each person who is or shall have been a member of the Committee, or the Board, shall be indemnified and held harmless by the Company against
and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting
from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action
taken in good faith or failure to act in good faith under the Plan and against and from any and all amounts paid by him or her in settlement
thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding
against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall be in addition to
any other rights of indemnification or elimination of liability to which such persons may be entitled under the Company’s articles
of incorporation or by-laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

3 Available Shares of Stock Under the Plan

 

3.1 Shares Available for
Awards. Subject to the adjustments described below, the maximum number of shares of Stock reserved for the grant of Awards under the
Plan shall be 2,000,000. Of the maximum number of shares of Stock reserved for the grant of Awards under the Plan, no more than 1,000,000
of such shares may be issued pursuant to stock-settled Awards other than Options (that is, Restricted Stock, Restricted Stock Units, SARs,
Performance Awards, Other Stock-Based Awards and dividend equivalent Awards, in each case to the extent settled in shares of Common Stock).

 

3.2 Forfeited, Cancelled
and Expired Awards. Awards granted under the Plan that are forfeited, expire or are canceled or settled without issuance of Stock
shall not count against the maximum number of shares that may be issued under the Plan as set forth in Section 3.1 and shall be available
for future Awards under the Plan. Notwithstanding the foregoing, any and all Stock that is (i) withheld or tendered in payment of an Option
exercise price; (ii) withheld by the Company to satisfy any tax withholding obligation; (iii) covered by a SAR (to the extent that it
is settled in Stock, without regard to the number of shares of Stock that are actually issued to the Grantee upon exercise); (iv) withheld
by the Company to satisfy any debt or other obligation owed to the Company or any Subsidiary, and (v) any fractional shares of Common
Stock that are cancelled pursuant to the Plan, shall be considered issued pursuant to the Plan and shall not be added to the maximum number
of shares of Stock that may be issued under the Plan as set forth in Section 3.1.

 

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3.3 Adjustments. In
the event of any change in the Company’s capital structure, including but not limited to a change in the number of shares of Stock
outstanding, on account of (i) any stock dividend, stock split, reverse stock split or any similar equity restructuring, or (ii) any combination
or exchange of equity securities, merger, consolidation, recapitalization, reorganization, or divesture or any other similar event affecting
the Company’s capital structure, to reflect such change in the Company’s capital structure, the Committee shall make appropriate
equitable adjustments to the maximum number of shares of Stock that may be issued under the Plan as set forth in Section 3.1. In the event
of any extraordinary dividend, divestiture or other distribution (other than ordinary cash dividends) of assets to stockholders, or any
transaction or event described above, to the extent necessary to prevent the enlargement or diminution of the rights of Grantees, the
Committee shall make appropriate equitable adjustments to the number or kind of shares subject to an outstanding Award, the exercise price
applicable to an outstanding Award, and/or a Performance Goals. Any adjustments under this Section 3.3 shall be consistent with Section
409A or 424 of the Code, to the extent applicable, and made in a manner that does not adversely affect the exemption provided pursuant
to Rule 16b- 3 or qualification under Section 162(m) of the Code, to the extent each may be applicable. The Company shall give each Grantee
notice of an adjustment to an Award hereunder and, upon notice, such adjustment shall be final, binding and conclusive for all purposes.
Notwithstanding the foregoing, the Committee shall decline to adjust any Award made to a Participant if such adjustment would violate
applicable law.

 

3.4 Fractional Shares.
The Company shall not be obligated to issue any fractional shares of Stock in settlement of Awards granted under the Plan. Except as otherwise
provided in an Award Agreement or determined by the Committee, (i) the total number of shares issuable pursuant to the exercise, vesting
or earning of an Award shall be rounded down to the nearest whole share, and (ii) no fractional shares shall be issued. The Committee
may, in its discretion, determine that a fractional share shall be settled in cash.

 

4 Awards

 

4.1 General. The term
of each Award shall be for such period as may be determined by the Committee, subject to the limitations set forth below. Subject to the
terms of the Plan and any applicable Award Agreement, payments to be made by the Company or any Subsidiary of the Company upon the grant,
maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property. In addition to the foregoing, the Committee may impose on any Award or the exercise
thereof, at the date of grant, such additional terms and conditions not inconsistent with the provisions of the Plan, including, but not
limited to forfeiture and clawback provisions, as the Committee shall determine; provided, however, that any such terms and conditions
shall not be inconsistent with Section 409A of the Code.

 

4.2 Types of Awards.
The Committee is authorized to grant the Awards described in this Section 4.2, under such terms and conditions as deemed by the Committee
to be consistent with the purposes of the Plan. Such Awards may be granted with value and payment contingent upon Performance Goals. Each
Award shall be evidenced by an Award Agreement containing such terms and conditions applicable to such Award as the Committee shall determine.

 

		(i)	Options.
The Committee is authorized to grant Options to Grantees on the following terms and conditions:

 

		a.	Type
of Award. The Award Agreement evidencing an Option shall designate the Option as either an ISO or an NQSO, as determined in the discretion
of the Committee. At the time of the grant of Options, the Committee may place restrictions on the exercisability or vesting of Options
that shall lapse, in whole or in part, upon the attainment of Performance Goals; provided that such Performance Goals shall relate to
periods of performance of at least one fiscal year.

 

		b.	Exercise
Price. The exercise price of each Option granted under this Section 4.2 shall be established by the Committee or shall be determined
by a method established by the Committee at the time the Option is granted; provided, however, that the exercise price shall not be less
than 100% of the Fair Market Value of a share of Stock on the date of grant of the Award. No dividends or dividend equivalents will be
paid on shares of Stock subject to an Option.

 

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		c.	Exercise.
Upon satisfaction of the applicable conditions relating to vesting and exercisability, as determined by the Committee and set forth in
the Award Agreement, and upon provision for the payment in full of the exercise price and applicable taxes due, the Grantee shall be
entitled to exercise the Option and receive the number of shares of Stock issuable in connection with the Option exercise provided, however,
that no Option may be exercised more than ten years after its grant date. Except as set forth in Section 4.3, no NQSO granted hereunder
may be exercised after the earlier of (A) the expiration of the NQSO or (B) unless otherwise provided by the Committee in an Award Agreement,
ninety days after the severance of an NQSO holder’s employment or service with the Company or any Subsidiary. The shares issued
in connection with the Option exercise may be subject to such conditions and restrictions as the Committee may determine, from time to
time. An Option may be exercised by any method as may be permitted by the Committee from time to time, including but not limited to any
“net exercise” or other “cashless” exercise method.

  

		d.	Restrictions
Relating to ISOs. In addition to being subject to the terms and conditions of this Section 4.2(i), ISOs shall comply with all other
requirements under Section 422 of the Code. Accordingly, ISOs may be granted only to Eligible Grantees who are employees (as described
in Treasury Regulation Section 1.421-7(h)) of the Company or of any “Parent Corporation” (as defined in Code Section 424(e))
or of any “Subsidiary Corporation” (as defined in Code Section 424(f)) on the date of grant. The aggregate Fair Market Value
(determined as of the time the ISO is granted) of the Stock with respect to which ISOs (under all option plans of the Company and of
any Parent Corporation and of any Subsidiary Corporation) are exercisable for the first time by an Eligible Grantee during any calendar
year shall not exceed $100,000. ISOs shall not be transferable by the Eligible Grantee otherwise than by will or the laws of descent
and distribution and shall be exercisable, during the Eligible Grantee’s lifetime, only by such Eligible Grantee. The Committee
shall not grant ISOs to any Employee who, at the time the ISO is granted, owns stock possessing (after the application of the attribution
rules of Section 424(d) of the Code) more than ten percent (10%) of the total combined voting stock of the Company or of any Parent Corporation
or of any Subsidiary Corporation, unless the exercise price of the ISO is fixed at not less than one hundred and ten percent (110%) of
the Fair Market Value of a share of Common Stock on the date of grant and the exercise of such ISO is prohibited by its terms after the
fifth (5th) anniversary of the ISO’s date of grant. In addition, no ISO shall be issued to an Eligible Grantee in tandem with a
NQSO issued to such Eligible Grantee in accordance with Treasury Regulation Section 14a.422A-1, Q/A-39.

 

		(ii)	SARs.
The Committee is authorized to grant SARs to Grantees on the following terms and conditions:

 

		a.	In
General. SARs may be granted independently or in tandem with an Option at the time of grant of the related Option. An SAR granted
in tandem with an Option shall be exercisable only to the extent the underlying Option is exercisable. Payment of an SAR may be made
in cash, Stock, or a combination of the foregoing, as specified in the Award Agreement or determined in the sole discretion of the Committee.
At the time of the grant of SARs, the Committee may place restrictions on the exercisability or vesting of SARs that shall lapse, in
whole or in part, upon the attainment of Performance Goals; provided that such Performance Goals shall relate to periods of performance
of at least one fiscal year.

 

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		b.	Term
and Exercisability of SARs. SARs shall be exercisable over the exercise period at such times and upon such conditions as the Committee
may determine, as reflected in the Award Agreement; provided, however, that no SAR may be exercised more than ten years after its grant
date. Except as set forth in Section 4.3, no SAR granted hereunder may be exercised after the earlier of (A) the expiration of the SAR
or (B) unless otherwise provided by the Committee in an Award Agreement, ninety days after the severance of an SAR holder’s employment
or service with the Company or any Subsidiary.

 

		c.	Payment.
An SAR shall confer on the Grantee a right to receive an amount with respect to each share of Stock subject thereto, upon exercise thereof,
equal to the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR (which
in the case of an SAR granted in tandem with an Option shall be equal to the exercise price of the underlying Option, and which in the
case of any other SAR shall be such price as the Committee may determine but in no event shall be less than the Fair Market Value of
a share of Stock on the date of grant of such SAR). An SAR may be exercised by giving written notice of such exercise to the Committee
or its designated agent. No dividends or dividend equivalents will be paid on shares of Stock subject to an SAR.

 

		(iii)	Restricted
Stock. The Committee is authorized to grant Restricted Stock to Grantees on the following terms and conditions:

 

		a.	Issuance
and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions, if any, as the
Committee may impose at the date of grant, which restrictions may lapse separately or in combination at such times, under such circumstances,
in such installments, or otherwise, as the Committee may determine. The Committee may place restrictions on Restricted Stock that shall
lapse, in whole or in part, upon the attainment of Performance Goals; provided that such Performance Goals shall relate to periods of
performance of at least one fiscal year. Except to the extent restricted under the Award Agreement relating to the Restricted Stock,
a Grantee granted Restricted Stock shall have all of the rights of a stockholder including, without limitation, the right to vote Restricted
Stock and the right to receive dividends thereon.

 

		b.	Certificates
for Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Grantee, such certificates shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may retain physical possession of the
certificate.

 

		c.	Dividends.
Except to the extent restricted under the applicable Award Agreement, cash dividends paid on Restricted Stock shall be paid at the dividend
payment date subject to no restriction. Unless otherwise determined by the Committee, Stock distributed in connection with a stock split
or stock dividend shall be subject to the transfer restrictions, forfeiture risks and vesting conditions to the same extent as the Restricted
Stock with respect to which such Stock or other property has been distributed. Notwithstanding the foregoing, the Committee may not provide
for the current payment of dividends for Restricted Stock subject to Performance Goals; for such Awards, dividends may accrue but shall
not be payable unless and until the Award vests upon satisfaction of the applicable Performance Goals and all other applicable conditions
to vesting.

 

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		(iv)	Restricted
Stock Units. The Committee is authorized to grant Restricted Stock Units to Grantees, subject to the following terms and conditions:

 

		a.	Conditions
to Vesting. At the time of the grant of Restricted Stock Units, the Committee may place restrictions on Restricted Stock Units that
shall lapse, in whole or in part, upon the attainment of Performance Goals; provided that such Performance Goals shall relate to periods
of performance of at least one fiscal year.

 

		b.	Benefit
Upon Vesting. Unless otherwise provided in an Award Agreement, upon the vesting of a Restricted Stock Unit, there shall be delivered
to the Grantee, within 30 days of the date on which such Award (or any portion thereof) vests, the number of shares of Stock equal to
the number of Restricted Stock Units becoming so vested.

 

		c.	Dividend
Equivalents. To the extent provided in an Award Agreement, subject to the requirements of Section 409A of the Code, an Award of Restricted
Stock Units may provide the Grantee with the right to receive dividend equivalent payments with respect to Stock subject to the Award
(both before and after the Stock subject to the Award is earned, vested, or acquired), which payments may be either made currently or
credited to an account for the Grantee, and may be settled in cash or Stock, as determined by the Committee. Any such settlements and
any such crediting of dividend equivalents may, at the time of grant of the Restricted Stock Unit, be made subject to the transfer restrictions,
forfeiture risks, vesting and conditions of the Restricted Stock Units and subject to such other conditions, restrictions and contingencies
as the Committee shall establish at the time of grant of the Restricted Stock Unit, including the reinvestment of such credited amounts
in Stock equivalents, provided that all such conditions, restrictions and contingencies shall comply with the requirements of Section
409A of the Code. Notwithstanding the foregoing in this Section 4.2(iv)(c), dividend equivalents may accrue on unearned Restricted Stock
Units subject to Performance Goals but shall not be payable unless and until the applicable Performance Goals are met and certified.

 

		(v)	Other
Stock-Based Awards. The Committee is authorized to grant Awards to Grantees in the form of Other Stock-Based Awards, as deemed by
the Committee to be consistent with the purposes of the Plan. At the time of the grant of Other Stock-Based Awards, the Committee may
place restrictions on the payout or vesting of Other Stock-Based Awards that shall lapse, in whole or in part, upon the attainment of
Performance Goals; provided that such Performance Goals shall relate to periods of performance of at least one fiscal year. The Committee
shall determine the terms and conditions of such Awards at the date of grant. Other Stock-Based Awards may not be granted with the right
to receive dividend equivalent payments.

 

		(vi)	Cash-Based
Awards. The Committee is authorized to grant Awards to Grantees in the form of Cash-Based Awards, as deemed by the Committee to be
consistent with the purposes of the Plan. At the time of the grant of Cash-Based Awards, the Committee may place restrictions on the
payout or vesting of Cash-Based Awards that shall lapse, in whole or in part, upon the attainment of Performance Goals. The Committee
shall determine the terms and conditions of such Awards at the date of grant.

 

		(vii) 	Settlement
of Options and SARs. Shares of Stock delivered pursuant to the exercise of an Option or SAR shall be subject to such conditions,
restrictions and contingencies as the Committee may establish in the applicable Award Agreement. Settlement of SARs may be made in shares
of Stock (valued at their Fair Market Value at the time of exercise), in cash, or in a combination thereof, as determined in the discretion
of the Committee and set forth in the Award Agreement. The Committee, in its discretion, may impose such conditions, restrictions and
contingencies with respect to shares of Stock acquired pursuant to the exercise of an Option or an SAR as the Committee determines to
be desirable.

 

    A-10

     

    

 

		(viii) 	Vesting;
Additional Terms. Except as set forth in Section 4.3, other than Options, SARs, Restricted Stock, Restricted Stock Units or Other
Stock-Based Awards conditioned upon the attainment of Performance Goals that relate to performance periods of at least one fiscal year,
Options, SARs, Restricted Stock, Restricted Stock Units or Other Stock-Based Awards granted hereunder shall vest as determined by the
Committee and set forth in the Award Agreement. The term of any Award granted under the Plan will not exceed ten years from the date
of grant.

 

		(ix)	Qualified
Performance-Based Compensation.

 

		a.	The
Committee may determine that Restricted Stock, Restricted Stock Units, Other Stock-Based Awards or Cash-Based Awards granted to a Covered
Employee shall be considered “qualified performance-based compensation” under section 162(m) of the Code, in which case the
provisions of this Section 4.2(ix) shall apply. As required pursuant to Section 162(m) of the Code and the regulations promulgated thereunder,
the Committee’s authority to grant new awards that are intended to qualify as performance-based compensation within the meaning
of Section 162(m) of the Code (other than qualifying Options and qualifying SARs) shall terminate upon the first meeting of the Company’s
stockholders that occurs in the fifth year following the year in which the Company’s stockholders first approve this Plan.

 

		b.	When
Awards are made under this Section 4.2(ix), the Committee shall establish in writing (i) the objective Performance Goals that must be
met, (ii) the period during which performance will be measured, (iii) the maximum amounts that may be paid if the Performance Goals are
met, and (iv) any other conditions that the Committee deems appropriate and consistent with the requirements of Section 162(m) of the
Code for “qualified performance-based compensation.” The Performance Goals shall satisfy the requirements for “qualified
performance-based compensation,” including the requirement that the achievement of the goals be substantially uncertain at the
time they are established and that the Performance Goals be established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the Performance Goals have been met. The Committee shall not have discretion to increase
the amount of compensation that is payable, but may reduce the amount of compensation that is payable, pursuant to Awards identified
by the Committee as “qualified performance-based compensation.”         c.
Performance Goals must be pre-established by the Committee. A Performance Goal is considered pre-established if it is established in
writing not later than 90 days after the commencement of the period of service to which the Performance Goal relates, provided that the
outcome is substantially uncertain at the time the Committee actually established the goal. However, in no event will a Performance Goal
be considered pre-established if it is established after 25% of the period of service (as scheduled in good faith at the time the goal
is established) has elapsed.

 

		d.	The
Committee in its sole discretion shall have the authority to make equitable adjustments to the Performance Goals in recognition of unusual
or non-recurring events affecting the Company or any Subsidiary of the Company or any Affiliated Company or the financial statements
of the Company or any Subsidiary of the Company or any Affiliated Company, in response to changes in applicable laws or regulations,
including changes in generally accepted accounting principles or practices, or to account for items of gain, loss or expense determined
to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business, as applicable,
provided such adjustment occurs in writing not later than 90 days after the commencement of the period of service to which the Performance
Goal relates (and in no event later than the date that 25% of the period of service has elapsed). In addition, the Committee may specify
that certain equitable adjustments to the Performance Goals will be made during the applicable Performance Period, provided such specification
occurs in writing not later than 90 days after the commencement of the period of service to which the Performance Goal relates (and in
no event later than the date that 25% of the period of service has elapsed).

 

    A-11

     

    

 

		e.	The
Committee shall certify the performance results for the performance period specified in the Award Agreement after the performance period
ends. The Committee shall determine the amount, if any, to be paid pursuant to each Award based on the achievement of the Performance
Goals and the satisfaction of all other terms of the Award Agreement. Subject to the provisions of Section 3.3 relating to capitalization
adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, a maximum of 50,000
shares of Stock subject to qualified performance-based compensation may be granted to any Eligible Grantee during any calendar year during
the 162(m) Term.

 

		f.	The
Committee may provide in the Award Agreement that Awards under this Section 4.2(ix) shall be payable, in whole or in part, in the event
of the Grantee’s death or Disability, or under other circumstances consistent with the Treasury regulations and rulings under Section
162(m) of the Code.

 

4.3 Change of Control of the Company.

 

		(i)	The
Committee may, at the time an Award is made or at any time prior to, coincident with or after the time of a Change of Control:

 

		a.	provide
for the adjustment of any Performance Goals as the Committee deems necessary or appropriate to reflect the Change of Control;

 

		b.	provide
for the cancellation of any Awards then outstanding if the surviving entity or acquiring entity (or the surviving or acquiring entity’s
parent company) in the Change of Control replaces the Awards with new rights of substantially equivalent value, as determined by the
Committee;

 

		c.	provide
that upon an involuntary termination of a Participant’s employment as a result of a Change of Control, any time periods shall accelerate,
and any other conditions relating to the vesting, exercise, payment or distribution of an Award shall be waived; or

 

		d.	provide
that Awards shall be purchased for an amount of cash equal to the amount that could have been obtained for the shares covered by a Restricted
Stock Award if it had been vested and or by an Option or SAR if it had been exercised at the time of the Change of Control.

 

		(ii)	Notwithstanding
any other provisions of the Plan or an Award Agreement to the contrary, the vesting, payment, purchase or distribution of an Award may
not be accelerated by reason of a Change of Control for any Grantee unless the Grantee’s employment is involuntarily terminated
as a result of the Change of Control as provided in the Award Agreement or in any other written agreement, including an employment agreement,
between us and the Grantee.

  

5 Operation

 

5.1 Duration. Grants
may be made under the Plan through June 1, 2031. In the event of Plan termination while Awards remain outstanding, the Plan shall remain
in effect as long as any Awards under it are outstanding, although no further grants may be made following Plan termination.

 

    A-12

     

    

 

5.2 Uncertificated Stock.
Nothing contained in the Plan shall prohibit the issuance of Stock on an uncertificated basis, to the extent allowed by the Company’s
Articles of Incorporation and Bylaws, by applicable law and by the applicable rules of any stock exchange.

 

5.3 Tax Withholding.
All distributions under the Plan are subject to withholding of all applicable taxes, and the Committee may condition the delivery of any
shares or other benefits under the Plan on satisfaction of the applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence of such withholding, may permit such withholding obligations
to be satisfied through cash payment by the Grantee, through the surrender of shares of Stock which the Grantee already owns, through
withholding from other compensation payable to the Grantee or through the surrender of unrestricted shares of Stock to which the Grantee
is otherwise entitled under the Plan, but only to the extent of the minimum amount required to be withheld under applicable law.

 

5.4 Use of Shares.
Subject to the limitations on the number of shares of Stock that may be delivered under the Plan, the Committee may use available shares
of Stock as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of
the Company or a Subsidiary, including the plans and arrangements of the Company or a Subsidiary assumed in business combinations.

 

5.5 Nontransferability.
Awards granted under the Plan, and during any period of restriction on transferability, shares of Common Stock issued in connection with
the exercise of an Option or a SAR, or vesting of a Restricted Stock Award may not be sold, pledged, hypothecated, assigned, margined
or otherwise transferred by a Grantee in any manner other than by will or the laws of descent and distribution, unless and until the shares
underlying such Award have been issued, and all restrictions applicable to such shares have lapsed or have been waived by the Committee.
No Award or interest or right therein shall be subject to the debts, contracts or engagements of a Grantee or his or her successors in
interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law, by judgment, lien, levy, attachment, garnishment or any other
legal or equitable proceedings (including bankruptcy and divorce), and any attempted disposition thereof shall be null and void, of no
effect, and not binding on the Company in any way. Notwithstanding the foregoing, the Committee may permit Options and/or shares issued
in connection with an Option or a SAR exercise that are subject to restrictions on transferability, to be transferred one time and without
payment or consideration to a member of a Grantee’s immediate family or to a trust or similar vehicle for the benefit of a Grantee’s
immediate family members. During the lifetime of a Grantee, all rights with respect to Awards shall be exercisable only by such Grantee
or, if applicable pursuant to the preceding sentence, a permitted transferee.

 

5.6 Form and Time of Elections.
Unless otherwise specified herein, each election required or permitted to be made by any Grantee or other person entitled to benefits
under the Plan, and any permitted modification, or revocation thereof, shall be in writing filed with the Committee at such times, in
such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.

 

5.7 Agreement with Company.
An Award under the Plan shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall, in its
sole discretion, prescribe. The terms and conditions of any Award to any Grantee shall be reflected in such form of written document as
is determined by the Committee. A copy of such document shall be provided to the Grantee, and the Committee may, but need not, require
that the Grantee shall sign a copy of such document. Such document is referred to in the Plan as an “Award Agreement” regardless
of whether any Grantee signature is required.

 

    A-13

     

    

 

5.8 Gender and Number.
Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural
shall include the singular.

 

5.9 Limitation of Implied Rights.

 

		(iii)	The
Plan shall at all times be unfunded and neither a Grantee nor any other person shall, by reason of participation in the Plan, acquire
any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation
of a liability under the Plan. Nothing contained in the Plan and no action taken pursuant hereto shall create or be construed to create
a fiduciary relationship between the Company and any Grantee or any other person. A Grantee shall have only a contractual right to the
Stock or amounts, if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in
the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any
person.

 

		(iv)	The
Plan does not constitute a contract of employment or service, and selection as a Grantee will not give any participating Employee, Non-Employee
Director or Key Advisor the right to be retained in the employ or service of the Company or any Subsidiary, nor any right or claim to
any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided
in the Plan or the Award Agreement, no Award under the Plan shall confer upon the holder thereof any rights as a stockholder of the Company
prior to the date on which the individual fulfills all conditions for receipt of such rights.

 

5.10 Section 409A.
It is intended that all Options and SARs granted under the Plan shall be exempt from the provisions of Section 409A of the Code and that
all other Awards under the Plan, to the extent that they constitute “non-qualified deferred compensation” within the meaning
of Section 409A of the Code, will comply with Section 409A of the Code (and any regulations and guidelines issued thereunder). The Plan
and any Award Agreements issued hereunder may be amended in any respect deemed by the Board or the Committee to be necessary in order
to preserve compliance with Section 409A of the Code. Notwithstanding anything in this Plan to the contrary, if required by Section 409A
of the Code, if a Grantee is considered a “specified employee” for purposes of Section 409A of the Code and if payment of
any Award under this Plan is required to be delayed for a period of six months after “separation from service” within the
meaning of Section 409A of the Code, payment of such Award shall be delayed as required by Section 409A of the Code, and the accumulated
amounts with respect to such Award shall be paid in a lump sum payment within ten days after the end of the six month period. If the Grantee
dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Section 409A of the Code shall
be paid to the Grantee’s beneficiary within sixty (60) days after the date of the Grantee’s death. For purposes of Section
409A of the Code, each payment under the Plan shall be treated as a separate payment. In no event shall a Grantee, directly or indirectly,
designate the calendar year of payment. To the extent that any provision of the Plan would cause a conflict with the requirements of section
409A of the Code, or would cause the administration of the Plan to fail to satisfy the requirements of Section 409A of the Code, such
provision shall be deemed null and void to the extent permitted by applicable law. Notwithstanding anything in the Plan or any Award Agreement
to the contrary, each Grantee shall be solely responsible for the tax consequences of Awards under the Plan, and in no event shall the
Company have any responsibility or liability if an Award does not meet any applicable requirements of Section 409A of the Code. Although
the Company intends to administer the Plan to prevent taxation under Section 409A of the Code, the Company does not represent or warrant
that the Plan or any Award complies with any provision of federal, state, local or other tax law.

 

    A-14

     

    

 

5.11 Regulations and Other Approvals.

 

		(i)	The
obligation of the Company to sell or deliver Stock with respect to any Award granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

 

		(ii)	Each
Award is subject to the requirement that, if at any time the Committee determines, in its absolute discretion, that the listing, registration
or qualification of Stock issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant
of an Award or the issuance of Stock, no such Award shall be granted or payment made or Stock issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Committee.

 

		(iii)	In
the event that the disposition of Stock acquired pursuant to the Plan is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Stock shall be restricted against transfer to the extent required
by the Securities Act of 1933, as amended, or regulations thereunder, and applicable state securities laws, and the Committee may require
a Grantee receiving Stock pursuant to the Plan, as a condition precedent to receipt of such Stock, to represent to the Company in writing
that the Stock acquired by such Grantee is acquired for investment only and not with a view to distribution.

 

		(iv)	With
respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under
the Plan comply with all applicable provisions of Rule 16b-3.

 

		(v)	All
Awards under the Plan will be subject to any compensation, clawback and recoupment policies that may be applicable to the employees of
the Company, as in effect from time to time and as approved by the Board or Committee, whether or not approved before or after the Effective
Date. Subject to the requirements of applicable law, any such compensation, clawback and recoupment policies shall apply to Awards made
after the effective date of the policy.

 

5.12 Non-Employee Director
Award Deferrals. The Committee may permit a Non-Employee Director to defer receipt of the payment of cash or the delivery of shares
that would otherwise be due to such Non-Employee Director in connection with any Restricted Stock, Restricted Stock Units, Other Stock-Based
Awards or Cash-Based Awards. If any such deferral election is permitted, the Committee shall establish rules and procedures for such deferrals
and may provide for interest or other earnings to be paid on such deferrals, which rules and procedures shall be consistent with applicable
requirements of Section 409A of the Code. Unless otherwise specified in a Non-Employee Director’s valid election, any deferred amount
will be deferred until the earliest to occur of the Non-Employee Director’s death, separation from service, or Change of Control;
provided that any such deferral election is made by the Non-Employee Director on or prior to December 31 of the calendar year preceding
the calendar year in which any such amounts are earned, or, if such Non-Employee Director is newly eligible for purposes of Section 409A
of the Code, then within 30 days following the date he or she is first eligible, and then only with respect to amounts earned after the
date of the election.

 

    A-15

     

    

 

6 Amendment and Termination

 

The Plan may be terminated
or amended by the Board at any time, except that the following actions may not be taken without stockholder approval:

 

		(i)	any
increase in the number of shares that may be issued under the Plan (except by certain adjustments provided for under the Plan);

 

		(ii)	any
change in the class of persons eligible to receive ISOs under the Plan;

 

		(iii)	any
change in the requirements of Sections 4.2(i)(b) and 4.2(ii)(c) hereof regarding the exercise price of Options and the grant price of
SARs;

 

		(iv)	any
repricing or cancellation and regrant of any Option or, if applicable, other Award at a lower exercise, base or purchase price, whether
in the form of an amendment, cancellation or replacement grant, or a cash-out of underwater options or any action that provides for Awards
that contain a so-called “reload” feature under which additional Options or other Awards are granted automatically to the
Grantee upon exercise of the original Option or Award; or

 

		(v)	any
other amendment to the Plan that would require approval of the Company’s stockholders under applicable law, regulation or rule
or stock exchange listing requirement.

 

Notwithstanding any of the foregoing, adjustments
pursuant to Section 3 shall not be subject to the foregoing limitations of this Section 6. 

 

7 Governing Law

 

The Plan and all Award Agreements
entered into under the Plan shall be construed in accordance with and governed by the laws of the State of New York, except that any principles
or provisions of New York law that would apply the law of another jurisdiction (other than applicable provisions of U.S. Federal law)
shall be disregarded. Notwithstanding the foregoing, matters with respect to indemnification, delegation of authority under the Plan,
and the legality of shares of Stock issued under the Plan, shall be governed by the Nevada Revised Statutes.

 

8 Severability

 

If any of the provision of
this Plan is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified
to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected
thereby; provided that, if any such provision is finally held to be invalid, illegal or unenforceable because it exceeds the maximum scope
determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed modified to the minimum extent
necessary in order to make such provision enforceable.

 

 

A-16kalu-ex101_26.htm

 

Exhibit 10.1

Kaiser Aluminum Corporation

2021 EQUITY and INCENTIVE Compensation PLAN

1.Purpose.  The purpose of this Plan is to permit award grants to non-employee Directors and officers, other employees and service providers of the Company and its Subsidiaries and to provide to such persons incentives and rewards for service and/or performance. 

2.Definitions.  As used in this Plan:

(a)“Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and will include Tandem Appreciation Rights and Free-Standing Appreciation Rights.

(b)“Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right or a Tandem Appreciation Right.

(c)“Board” means the Board of Directors of the Company.

(d)“Cash Incentive Award” means a cash award granted pursuant to Section 8 of this Plan.

(e)“Change in Control” has the meaning set forth in Section 12 of this Plan.

(f)“Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder, as such law and regulations may be amended from time to time.

(g)“Committee” means the Compensation Committee of the Board (or its successor(s)), or any other committee of the Board designated by the Board to administer the Plan pursuant to Section 10 of this Plan.

(h)“Common Shares” means the shares of common stock, par value $0.01 per share, of the Company or any security into which such common stock may be changed by reason of any transaction or event of the type referred to in Section 11 of this Plan.

(i)“Company” means Kaiser Aluminum Corporation, a Delaware corporation, and its successors.

(j) “Date of Grant” means the date provided for by the Committee on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, Cash Incentive Awards, or other awards contemplated by Section 9 of this Plan, or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards contemplated by Section 9 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).

(k)“Director” means a member of the Board.

(l)“Effective Date” means the date this Plan is approved by the Shareholders.

(m)“Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of the awards granted under the Plan.  An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant. 

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

 

 

(o)“Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in tandem with an Option Right.

(p)“Incentive Stock Option” means an Option Right that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.

(q)“Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares, Performance Units or Cash Incentive Awards or, when so determined by the Committee, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, dividend equivalents or other awards pursuant to this Plan.  Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of one or more of the Subsidiaries, divisions, departments, regions, functions or other organizational units within the Company or its Subsidiaries.  The Management Objectives may be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index or one or more of the performance objectives themselves.  The Management Objectives may (but are not required to) be based on one or more, or a combination, of the following metrics (including relative or growth achievement regarding such metrics): 

	
 
	
(i)
	
Profits (e.g., operating income, EBIT, EBT, net income (before or after taxes), earnings per share, residual or economic earnings, economic profit – these profitability metrics could be measured before certain specified special items and/or subject to GAAP definition);

	
 
	
(ii)
	
Cash Flow (e.g., EBITDA, free cash flow, free cash flow with or without specific capital expenditure target or range, including or excluding divestments and/or acquisitions, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); 

	
 
	
(iii)
	
Returns (e.g., profits or cash flow returns on: assets, invested capital, net capital employed, revenue, sales and equity);

	
 
	
(iv)
	
Working Capital (e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables);

	
 
	
(v)
	
Profit Margins (e.g., profits divided by revenues, gross margins and material margins divided by revenues, and material margin divided by sales pounds);

	
 
	
(vi)
	
Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); 

	
 
	
(vii)
	
Revenues, Sales, Operating, Cost, and Stock Price Metrics (e.g., revenues, sales, revenue or sales growth, revenue or sales growth outside the United States, gross margin, gross margin growth, material margin, material margin growth, operating margin, operating margin growth, sales and administrative costs divided by sales or profits, operating or manufacturing costs, operating or manufacturing costs relative to prior periods or business plan, stock price appreciation and total return to shareholders; 

	
 
	
(viii)
	
Safety Performance (e.g., total case incident rate);

	
 
	
(ix)
	
Quality Performance (e.g., no fault claim rate); 

	
 
	
(x)
	
Delivery Performance (e.g., on-time delivery rate); and

	
 
	
(xi)
	
Strategic Initiative Key Deliverable Metrics consisting of one or more of the following: product development, strategic partnering, research and development, 

2

 

 

	
 
		
vitality index, market penetration, geographic business expansion goals, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures.

If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Committee may in its discretion modify such Management Objectives or the goals or actual levels of achievement regarding the Management Objectives, in whole or in part, as the Committee deems appropriate and equitable.

(r)“Market Value per Share” means, as of any particular date, the closing price of a Common Share as reported for that date on the Nasdaq Stock Market or, if the Common Shares are not then listed on the Nasdaq Stock Market, on any other national securities exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during which a sale occurred.  If there is no regular public trading market for the Common Shares, then the Market Value per Share shall be the fair market value as determined in good faith by the Committee.  The Committee is authorized to adopt another fair market value pricing method provided such method is stated in the applicable Evidence of Award and is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.

(s)“Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.

(t)“Option Price” means the purchase price payable on exercise of an Option Right.

(u)“Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan.

(v)“Participant” means a person who is selected by the Committee to receive benefits under this Plan and who is at the time (i) an officer or other employee of the Company or any Subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the Date of Grant, (ii) a person who provides services to the Company or any Subsidiary that are equivalent to those typically provided by an employee (provided that such person satisfies the Form S-8 definition of an “employee”), or (iii) a non-employee Director.  The term “Participant” shall also include any director emeritus.

(w)“Performance Period” means, in respect of a Cash Incentive Award, Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Cash Incentive Award, Performance Share or Performance Unit are to be achieved.

(x)“Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan.

(y)“Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee.

(z)“Plan” means this Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan, as may be amended or amended and restated from time to time.

(aa)“Predecessor Plan” means the Company’s 2016 Equity and Incentive Compensation Plan.

(bb) “Restricted Stock” means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.

3

 

 

(cc)“Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the right to receive Common Shares, cash or a combination thereof at the end of the applicable Restriction Period.

(dd)“Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan.

(ee)“Shareholder” means an individual or entity that owns one or more Common Shares.

(ff)“Spread” means the excess of the Market Value per Share on the date when an Option Right or Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option Right or the Appreciation Right, respectively.

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

(hh)“Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an Option Right.

(ii)“Voting Power” means, at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the election of Directors in the case of the Company, or members of the board of directors or similar body in the case of another entity.

3.Shares Available Under the Plan.

(a)Maximum Shares Available Under Plan.  

	
 
	
(i)
	
Subject to adjustment as provided in Section 11 of this Plan and the share counting rules set forth in Section 3(b) of this Plan, the number of Common Shares available under the Plan for awards of (A)  Option Rights or Appreciation Rights, (B)  Restricted Stock, (C)  Restricted Stock Units, (D)  Performance Shares or Performance Units, (E) awards contemplated by Section 9 of this Plan, or (F) dividend equivalents paid with respect to awards made under the Plan will not exceed in the aggregate (x) 525,000 Common Shares, plus (y) the total number of Common Shares remaining available for awards under the Predecessor Plan as of the Effective Date, plus (z) Common Shares that are subject to awards granted under this Plan or the Predecessor Plan that are added (or added back, as applicable) to the aggregate number of Common Shares available under this Section 3(a)(i) pursuant to the share counting rules of this Plan.  Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.

	
 
	
(ii)
	
Subject to the share counting rules set forth in Section 3(b) of this Plan, the aggregate number of Common Shares available under Section 3(a)(i) of this Plan will be reduced by one Common Share for every one Common Share subject to an award granted under this Plan.

4

 

 

(b)Share Counting Rules.  

	
 
	
(i)
	
Except as provided in Section 22 of this Plan, if any award granted under this Plan is cancelled or forfeited, expires, is settled for cash or is unearned (in whole or in part), the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement or unearned amount, again be available under Section 3(a)(i) above.

	
 
	
(ii)
	
If, after the Effective Date, any Common Shares subject to an award granted under the Predecessor Plan are forfeited, or an award granted under the Predecessor Plan is cancelled or forfeited, expires, is settled for cash or is unearned (in whole or in part), the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, cash settlement or unearned amount, be available for awards under this Plan.

	
 
	
(iii)
	
Notwithstanding anything to the contrary contained herein:  (A) Common Shares withheld by the Company, tendered or otherwise used in payment of the Option Price of an Option Right (or the option price of an option granted under the Predecessor Plan) will not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; (B) Common Shares withheld by the Company, tendered or otherwise used to satisfy tax withholding with respect to Option Rights or Appreciation Rights (or option rights or appreciation rights granted under the Predecessor Plan) will not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; (C) Common Shares withheld by the Company, tendered or otherwise used to satisfy tax withholding with respect to awards other than Option Rights and Appreciation Rights (or option rights or appreciation rights granted under the Predecessor Plan) will be added back to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan, but only for a period not to exceed 10 years from the Effective Date; (D) Common Shares subject to a share-settled Appreciation Right that are not actually issued in connection with the settlement of such Appreciation Right on the exercise thereof will not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan; and (E) Common Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Option Rights will not be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan.

	
 
	
(iv)
	
If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on fair market value, such Common Shares will not count against the aggregate limit under Section 3(a)(i) of this Plan.

(c)Limit on Incentive Stock Options.  Notwithstanding anything in this Section 3 or elsewhere in this Plan to the contrary, and subject to adjustment as provided in Section 11 of this Plan, the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 525,000 Common Shares.

(d)Non-Employee Director Compensation Limit. Notwithstanding anything to the contrary contained in this Plan, in no event will any non-employee Director in any one calendar year be granted compensation for such service having an aggregate maximum value (measured at the Date of Grant as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $700,000 (or, for an independent chair of the Board, $1,400,000).

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(e)Minimum Vesting Requirements.  Notwithstanding any other provision of this Plan (outside of this Section 3(e)) to the contrary, awards granted under this Plan (other than cash-based awards) shall vest no earlier than the first anniversary of the applicable Date of Grant; provided, that the following awards shall not be subject to the foregoing minimum vesting requirement: any (i) awards granted in connection with awards that are assumed, converted or substituted pursuant to Section 22(a) of this Plan, (ii) Common Shares delivered in lieu of fully vested cash obligations; (iii) awards to non-employee Directors that vest on the earlier of the one-year anniversary of the applicable Date of Grant and the next annual meeting of Shareholders, which is at least 50 weeks after the immediately preceding year’s annual meeting of Shareholders; and (iv) any additional awards the Committee may grant, up to a maximum of 5% of the available share reserve authorized for issuance under this Plan pursuant to Section 3(a)(i) (subject to adjustment under Section 11). Nothing in this Section 3(e) or otherwise in this Plan, however, shall preclude the Committee, in its sole discretion, from (x) providing for continued vesting or accelerated vesting for any award under this Plan upon certain events, including in connection with or following a Participant’s death, disability, or termination of service (provided that treatment of awards in connection with a Change in Control shall be subject to Section 12 of this Plan) or (y) exercising its authority under Section 18(c) at any time following the grant of an award.

4.Option Rights.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of Option Rights.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a)Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan.

(b)Each grant will specify an Option Price per share, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant.

(c)Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee (or other consideration authorized pursuant to Section 4(d) of this Plan) having a value at the time of exercise equal to the total Option Price, (iii) subject to any conditions or limitations established by the Committee, by the withholding of Common Shares otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number of treasury shares held by the Company, the Common Shares so withheld will not be treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Committee.

(d)To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.

(e)Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.

(f)Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary, if any, that is necessary before the Option Rights or installments thereof will vest.  Subject to Section 12 of this Plan, Option Rights may provide for continued vesting or the earlier vesting of such Option Rights, including in the event of the retirement, death, disability or termination of employment or service of a Participant.

(g)Any grant of Option Rights may specify Management Objectives regarding the vesting of such rights.

(h)Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not 

6

 

 

intended to so qualify, or (iii) combinations of the foregoing.  Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

(i)The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Section 5 of this Plan.

(j)No Option Right will be exercisable more than 10 years from the Date of Grant.

(k)Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.

(l)Each grant of Option Rights will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

5.Appreciation Rights.

(a)The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting (i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights.  A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option Right, to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.  Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option.  A Free-Standing Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.

(b)Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

	
 
	
(i)
	
Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common Shares or any combination thereof.

	
 
	
(ii)
	
Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Committee at the Date of Grant.

	
 
	
(iii)
	
Any grant may specify waiting periods before exercise and permissible exercise dates or periods.

	
 
	
(iv)
	
Each grant may specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is necessary before the Appreciation Rights or installments thereof will vest.  Subject to Section 12 of this Plan, Appreciation Rights may provide for continued vesting or the earlier vesting of such Appreciation Rights, including in the event of the retirement, death, disability or termination of employment or service of a Participant.

	
 
	
(v)
	
Any grant of Appreciation Rights may specify Management Objectives regarding the vesting of such Appreciation Rights.

	
 
	
(vi)
	
Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the 

7

 

 

	
 
		
related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Committee may approve.

(c)Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation.  Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any Tandem Appreciation Rights previously granted to the Participant remain unexercised.

(d)Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.

(e)Regarding Free-Standing Appreciation Rights only:

	
 
	
(i)
	
Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant;

	
 
	
(ii)
	
Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and

	
 
	
(iii)
	
No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.

6.Restricted Stock.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Stock to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a)Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend (subject in particular to Section (g) of this Plan) and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter described.

(b)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.

(c)Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Committee at the Date of Grant or until achievement of Management Objectives referred to in Section 6(e) of this Plan below.  

(d)Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).

(e)Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Stock.

(f)Notwithstanding anything to the contrary contained in this Plan, but subject to Section 12 of this Plan, Restricted Stock may provide for continued vesting or the earlier vesting of such Restricted Stock, including in the event of the retirement, death, disability or termination of employment or service of a Participant.

8

 

 

(g)Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional Restricted Stock, which may be subject to the same restrictions as the underlying award; provided, however, that dividends or other distributions on Restricted Stock with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.

(h)Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.  Unless otherwise directed by the Committee, (i) all certificates representing Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Restricted Stock will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Stock.

7.Restricted Stock Units.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

(a)Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash, or a combination thereof, to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Committee may specify.  

(b)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.

(c)Notwithstanding anything to the contrary contained in this Plan, but subject to Section 12 of this Plan, Restricted Stock Units may provide for continued vesting or the earlier lapse or other modification of the Restriction Period, including in the event of the retirement, death, disability or termination of employment or service of a Participant.

(d)During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the Committee may, at or after the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other distributions on Common Shares underlying Restricted Stock Units with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.

(e)Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned.  Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common Shares or cash, or a combination thereof.

(f)Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

8.Cash Incentive Awards, Performance Shares and Performance Units.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Cash Incentive Awards, Performance Shares and Performance Units.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:

9

 

 

(a)Each grant will specify the number or amount of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, to which it pertains, which number or amount may be subject to adjustment to reflect changes in compensation or other factors.

(b)The Performance Period with respect to each Cash Incentive Award, Performance Share or Performance Unit will be such period of time as will be determined by the Committee, which, subject to Section 12 of this Plan, may be subject to continued vesting or earlier lapse or other modification, including in the event of the retirement, death, disability or termination of employment or service of a Participant.

(c)Each grant of Cash Incentive Awards, Performance Shares or Performance Units will specify Management Objectives regarding the earning of the award.

(d)Each grant will specify the time and manner of payment of Cash Incentive Awards, Performance Shares or Performance Units that have been earned.  Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares, in Restricted Stock or Restricted Stock Units or in any combination thereof.

(e)Any grant of Cash Incentive Awards, Performance Shares or Performance Units may specify that the amount payable or the number of Common Shares, shares of Restricted Stock or Restricted Stock Units with respect thereto may not exceed a maximum specified by the Committee at the Date of Grant.  

(f)The Committee may, on the Date of Grant of Performance Shares or Performance Units, provide for the payment of dividend equivalents to the holder thereof either in cash or in additional Common Shares, which dividend equivalents will be subject to deferral and payment on a contingent basis based on the Participant’s earning and vesting of the Performance Shares or Performance Units, as applicable, with respect to which such dividend equivalents are paid.

(g)Each grant of Cash Incentive Awards, Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Committee may approve.

9.Other Awards.

(a)Subject to applicable law and the applicable limits set forth in Section 3 of this Plan, the Committee may authorize the grant to any Participant of Common Shares or such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Committee, and awards valued by reference to the book value of the Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company.  The Committee will determine the terms and conditions of such awards.  Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Common Shares, other awards, notes or other property, as the Committee determines.

(b)Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 9.

(c)The Committee may authorize the grant of Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements (including Common Shares granted to a Director upon such Director’s election to receive Common Shares in lieu of cash or other consideration), subject to such terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.

10

 

 

(d)The Committee may, at or after the Date of Grant, authorize the payment of dividends or dividend equivalents on awards granted under this Section 9 on either a current or deferred or contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other distributions on Common Shares underlying awards under this Section 9 with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.

(e)Each grant of an award under this Section 9 will be evidenced by an Evidence of Award.  Each such Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve, and will specify the time and terms of delivery of the applicable award.

(f)Notwithstanding anything to the contrary contained in this Plan, awards under this Section 9 may provide for the earning or vesting of, or earlier elimination of restrictions applicable to, such award, including, subject to Section 12 of this Plan, in the event of the retirement, death, disability or termination of employment or service of a Participant.

10.Administration of this Plan.

(a)This Plan will be administered by the Committee; provided, however, that notwithstanding anything in this Plan to the contrary, the Board may grant awards under this Plan to non-employee Directors and administer this Plan with respect to such awards.  The Committee may from time to time delegate all or any part of its authority under this Plan to a subcommittee thereof.  To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.

(b)The interpretation and construction by the Committee of any provision of this Plan or of any Evidence of Award (or related documents) and any determination by the Committee pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive.  No member of the Committee shall be liable for any such action or determination made in good faith.  In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.

(c)To the extent permitted by law, the Committee may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee, the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee, the subcommittee or such person may have under the Plan.  The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Committee:  (i) designate employees to be recipients of awards under this Plan; and (ii) determine the size of any such awards; provided, however, that (A) the Committee will not delegate such responsibilities to any such officer for awards granted to an employee who is an officer, Director, or more than 10% Beneficial Owner (as defined in Section 12 below) of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with Section 16 of the Exchange Act; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (C) the officer(s) will report periodically to the Committee regarding the nature and scope of the awards granted pursuant to the authority delegated.

11.Adjustments.  The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of Common Shares covered by other awards granted pursuant to Section 9 hereof, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, respectively, in the kind of shares covered thereby, in Cash Incentive Awards, and in other award terms, as the Committee, in its sole discretion, exercised in good faith, shall determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any extraordinary cash dividend, stock dividend, stock split, combination of shares, 

11

 

 

recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.  Moreover, in the event of any such transaction or event or, subject to Section 12 of this Plan, in the event of a Change in Control, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code.  In addition, for each Option Right or Appreciation Right with an Option Price or Base Price, respectively, greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any payment to the person holding such Option Right or Appreciation Right.  The Committee shall also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Committee in its sole discretion, exercised in good faith, shall determine is appropriate to reflect any transaction or event described in this Section 11; provided, however, that any such adjustment to the number specified in Section 3(c) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail to so qualify.

12.Change in Control.  

(a) Except as otherwise provided for in an Evidence of Award, upon a Change in Control, all then outstanding awards granted under this Plan shall vest or be earned upon the Change in Control if either (i) within a specified period, the Participant’s service is involuntarily terminated for reasons other than for cause or the Participant terminates his or her employment or service for good reason or (ii) such awards are not assumed or converted into replacement awards in a manner described in the Evidence of Award.  Unless otherwise provided in an Evidence of Award, awards granted under this Plan that vest or are earned subject to the achievement of Management Objectives that become vested in accordance with this Section 12 will vest or be earned based on the actual achievement of the applicable Management Objectives as if the applicable performance period ended on the trading day immediately preceding the date of the Change in Control, pro-rated for the number of days that have lapsed during the period of time beginning on the first day of the performance period  and continuing through the date of the Change in Control.

(b)For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan, a “Change in Control” will be deemed to have occurred upon the occurrence (after the Effective Date) of any of the following events:

(i)The acquisition by any Person (as defined in this Section 12(b) below) of Beneficial Ownership (as defined in this Section 12(b) below) of 35% or more of the combined voting power of the then-outstanding Voting Stock (as defined in this Section 12(b) below) of the Company; provided, however, that:

A.for purposes of this Section 12(b), the following acquisitions shall not constitute a Change in Control: (1) any acquisition of Voting Stock of the Company directly from the Company that is approved by a majority of the Incumbent Directors (as defined in this Section 12(b) below); (2) any acquisition of Voting Stock of the Company by the Company or any Subsidiary; (3) any acquisition of Voting Stock of the Company by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; and (4) any acquisition of Voting Stock of the Company by any Person pursuant to a Business Combination (as defined this Section 12(b) below) that complies with clauses (A), (B) and (C) of Section 12(b)(iii) below;

B.if any Person acquires Beneficial Ownership of 35% or more of combined voting power of the then-outstanding Voting Stock of the Company as a result of a transaction described in clause (1) of Section 12(b)(i)(A) and such Person thereafter becomes the Beneficial Owner of any additional shares of Voting Stock of the Company representing 1% or more of the then-outstanding Voting Stock of the Company, other than in an acquisition directly from the Company in a transaction that is approved by a majority of the Incumbent Directors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Stock are treated equally, such subsequent acquisition shall be deemed to constitute a Change in Control;

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C.a Change in Control will not be deemed to have occurred if a Person acquires Beneficial Ownership of 35% or more of the Voting Stock of the Company as a result of a reduction in the number of shares of Voting Stock of the Company outstanding unless and until such Person thereafter becomes the Beneficial Owner of any additional shares of Voting Stock of the Company representing 1% or more of the then-outstanding Voting Stock of the Company, other than in an acquisition directly from the Company in a transaction that is approved by a majority of the Incumbent Directors or other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Stock are treated equally; and

D.if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired Beneficial Ownership of 35% or more of the Voting Stock of the Company inadvertently, and such Person divests as promptly as practicable a sufficient number of shares so that such Person Beneficially Owns less than 35% of the Voting Stock of the Company, then no Change in Control shall have occurred as a result of such Person’s acquisition;

	
 
	
(ii)
	
a majority of the Directors are not Incumbent Directors;

(iii)the consummation of a Business Combination (as defined in this Section 12(b) below), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the Beneficial Owners of Voting Stock of the Company immediately prior to such Business Combination Beneficially Own, directly or indirectly, more than 60% of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination (including without limitation an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting from such Business Combination, any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from such Business Combination or any Person that immediately prior to such Business Combination owns, directly or indirectly, 35% or more of the Voting Stock of the Company so long as such Person does not at such time own, directly or indirectly, more than 1% of the securities of the other corporation or other entity involved in such Business Combination to be converted into or exchanged for shares of Voting Stock of the entity resulting from such Business Combination pursuant to such Business Combination) Beneficially Owns, directly or indirectly, 35% or more of the combined Voting Power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination, and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv)approval by the Shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 12(b)(iii).

For purposes of this Section 12(b), (1) “Beneficial Owner,” “Beneficial Ownership,” “Beneficially Own” and “Beneficially Owns” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act; (2) “Business Combination” means a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation or entity, or other transaction; (3) “Incumbent Directors” means the individuals who, as of the Effective Date, are Directors and any individual becoming a Director subsequent to the Effective Date whose election, nomination for election by the Shareholders, or appointment was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (4) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act; and (5) “Voting Stock” means securities entitled to vote generally in the election of Directors (or similar governing bodies).

 

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13.Detrimental Activity and Recapture Provisions.  Any Evidence of Award may reference a clawback policy of the Company or provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with the Company or a Subsidiary, or (b) within a specified period after termination of such employment or service, engages in any detrimental activity, as described in the applicable Evidence of Award or such clawback policy.  In addition, notwithstanding anything in this Plan to the contrary, any Evidence of Award or such clawback policy may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any Common Shares issued under and/or any other benefit related to an award, or other provisions intended to have a similar effect, including upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Common Shares may be traded.

14.Non U.S. Participants.  In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company or any Subsidiary under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.  Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including sub-plans, which are to be considered part of this Plan) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan.  No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the Shareholders.  Any such special terms, supplements, sub plans, or alternative versions of this Plan approved by the Committee may be attached as exhibits to this Plan.

15.Transferability.

(a)Except as otherwise determined by the Committee, no Option Right, Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, Cash Incentive Award, award contemplated by Section 9 of this Plan or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except (i) if it is made by the Participant for no consideration to Immediate Family Members or to a bona fide trust, partnership or other entity controlled by and for the benefit of one or more Immediate Family Members (“Immediate Family Members” mean the Participant’s spouse, children, stepchildren, parents, stepparents, siblings (including half brothers and sisters), in-laws, and other individuals who have a relationship to the Participant arising because of legal adoption; however, no transfer may be made to the extent that transferability would cause Form S-8 or any successor form thereto not to be able to register Common Shares related to an award) or (ii) by will or the laws of descent and distribution.  In no event will any such award granted under the Plan be transferred for value.  Except as otherwise determined by the Committee, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.

(b)The Committee may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer.

16.Withholding Taxes.  To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person 

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make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit.  If a Participant’s benefit is to be received in the form of Common Shares, and such Participant fails to make arrangements for the payment of taxes or other amounts, then, unless otherwise determined by the Committee, the Company will withhold Common Shares having a value equal to the amount required to be withheld.  Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income, employment, tax or other laws, the Committee may require the Participant to satisfy the obligation, in whole or in part, by having withheld, from the shares delivered or required to be delivered to the Participant, Common Shares having a value equal to the amount required to be withheld or by delivering to the Company other Common Shares held by such Participant.  The shares used for tax or other withholding will be valued at an amount equal to the fair market value of such Common Shares on the date the benefit is to be included in Participant’s income.  In no event will the fair market value of the Common Shares to be withheld and delivered pursuant to this Section to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld unless (a) an additional amount can be withheld and not result in adverse accounting consequences and (b) such additional withholding amount is authorized by the Committee.  Participants will also make such arrangements as the Company may require for the payment of any withholding tax or other obligation that may arise in connection with the disposition of Common Shares acquired upon the exercise of Option Rights.

17.Compliance with Section 409A of the Code.  

(a)To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants.  This Plan and any grants made hereunder will be administered in a manner consistent with this intent.  Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. 

(b)Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owed by a Participant to the Company or any of its Subsidiaries. 

(c)If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the fifth business day of the seventh month after such separation from service. 

(d)Solely with respect to any award that constitutes nonqualified deferred compensation subject to Section 409A of the Code and that is payable on account of a Change in Control (including any installments or stream of payments that are accelerated on account of a Change in Control), a Change in Control shall occur only if such event also constitutes a “change in the ownership,” “change in effective control,” and/or a “change in the ownership of a substantial portion of assets” of the Company as those terms are defined under Treasury  Regulation §1.409A-3(i)(5), but only to the extent necessary to establish a time and form of payment that complies with Section 409A of the Code, without altering the definition of Change in Control for any purpose in respect of such award.

 

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(e)Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

18.Amendments.

(a)The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan, for purposes of applicable stock exchange rules and except as permitted under Section 11 of this Plan, (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan, or (iv) must otherwise be approved by the Shareholders in order to comply with applicable law or the rules of the Nasdaq Stock Market or, if the Common Shares are not traded on the Nasdaq Stock Market, the principal national securities exchange upon which the Common Shares are traded or quoted, all as determined by the Board, then, such amendment will be subject to Shareholder approval and will not be effective unless and until such approval has been obtained.

(b)Except in connection with a corporate transaction or event described in Section 11 of this Plan or in connection with a Change in Control, the terms of outstanding awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, or cancel outstanding “underwater” Option Rights or Appreciation Rights (including following a Participant’s voluntary surrender of “underwater” Option Rights or Appreciation Rights) in exchange for cash, other awards or Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, without Shareholder approval.  This Section 18(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of this Plan.  Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without approval by the Shareholders.

(c)If permitted by Section 409A of the Code, but subject to the paragraph that follows, including in the case of termination of employment or service, or in the case of unforeseeable emergency or other circumstances, to the extent a Participant holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Cash Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any dividend equivalents or other awards made pursuant to Section 9 of this Plan subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 15(b) of this Plan, the Committee may, in its sole discretion, provide for continued vesting or accelerate the time at which such Option Right, Appreciation Right or other award may vest or be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Cash Incentive Awards, Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award.

(d)Subject to Section 18(b) hereof, the Committee may amend the terms of any award theretofore granted under this Plan prospectively or retroactively. Subject to Section 11 above, no such amendment will materially impair the rights of any Participant without his or her consent.  The Board may, in its discretion, terminate this Plan at any time.  Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.

19.Governing Law.  This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with the internal substantive laws of the State of Delaware.

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20.Effective Date/Termination.  This Plan will be effective as of the Effective Date. No grants will be made on or after the Effective Date under the Predecessor Plan, except that outstanding awards granted under the Predecessor Plan will continue unaffected following the Effective Date.  No grant will be made under this Plan on or after the tenth anniversary of the Effective Date, but all grants made prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.  For clarification purposes, the terms and conditions of this Plan shall not apply to or otherwise impact previously granted and outstanding awards under the Predecessor Plan, as applicable (except for purposes of providing for Common Shares under such awards to be added to the aggregate number of Common Shares available under Section 3(a)(i) of this Plan pursuant to the share counting rules of this Plan).

21.Miscellaneous Provisions.

(a)The Company will not be required to issue any fractional Common Shares pursuant to this Plan.  The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.

(b)This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.

(c)Except with respect to Section 21(e), to the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right.  Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.

(d)No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.

(e)Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder.

(f)No Participant will have any rights as a shareholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.

(g)The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.

(h)Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of Common Shares under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and which are intended to comply with the requirements of Section 409A of the Code.  The Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.

(i)If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any award under any law deemed applicable by the Committee, such provision will be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will remain in full force and effect.  Notwithstanding anything in this Plan or an Evidence of Award to the contrary, nothing in this Plan or in an Evidence of Award prevents a Participant from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of 

17

 

 

clarity a Participant is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act.

22.Stock-Based Awards in Substitution for Option Rights or Awards Granted by Other Company.  Notwithstanding anything in this Plan to the contrary:

(a)Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary.  Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.

(b)In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.  

(c)Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will not reduce the Common Shares available for issuance or transfer under the Plan or otherwise count against the limits contained in Section 3 of the Plan.  In addition, no Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will be added to the aggregate limit contained in Section 3(a)(i) of the Plan.

 

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