Document:

Exhibit 10.1

 

 

 

 

New Age Beverages Corporation

2016-2017 LONG-TERM INCENTIVE PLAN

I.            PURPOSE

The purpose of the NEW AGE BEVERAGES CORPORATION 2016 LONG-TERM INCENTIVE PLAN (the "Plan") is to provide a means through which New Age Beverages Corporation, a Washington corporation (the "Company"), and its Affiliates may attract able persons to enter the employ or to serve as Directors or Consultants of the Company and its Affiliates and to provide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company and its Affiliates rest, and whose present and potential contributions to the Company and its Affiliates are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company and its Affiliates. A further purpose of the Plan is to provide such individuals with additional incentive and reward opportunities designed to enhance the profitable growth of the Company and its Affiliates. Accordingly, the Plan provides for granting Incentive Stock Options, Options that do not constitute Incentive Stock Options, Restricted Stock Awards, Performance Awards, Stock Appreciation Rights, Phantom Stock Awards, Stock Awards, Restricted Stock Unit Awards, or any combination of the foregoing, as is best suited to the circumstances of the particular employee, Consultant, or Director as provided herein.

II.            DEFINITIONS

The following definitions shall be applicable throughout the Plan unless specifically modified by any provision of the Plan:

(a) "Affiliate" means any entity which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any entity, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity, or (ii) to direct or cause the direction of the management and policies of the controlled entity, whether through the ownership of voting securities or by contract or otherwise.

(b) "Award" means any Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, Phantom Stock Award, Stock Award or Restricted Stock Unit Award granted under the Plan.

(c) "Award Agreement" means an agreement evidencing an Award.

(d) "Board" means the Board of Directors of the Company.

(e) "Change of Control Value" shall have the meaning assigned to such term in Section XIII(d).

(f) "Code" means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations issued by the Department of Treasury under such section.

(g) "Committee" means a committee of the Board that is selected by the Board as provided in Section IV(a).

 

 

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(h) "Common Stock" means the common stock, par value $.001 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 described in Section XIII.

(i) "Company" means New Age Beverages Corporation, a Washington corporation.

(j) "Consultant" means any person who is not an employee or a Director and who is providing advisory or consulting services to the Company or any Affiliate.

(k) "Corporate Change" shall have the meaning assigned to such term in Section XIII(c).

(l) "Covered Employee" means an employee who is a "covered employee," as defined in Section 162(m).

(m) "Director" means an individual elected to the Board by the stockholders of the Company or by the Board under applicable corporate law who is serving on the Board on the date the Plan is adopted by the Board or is elected to the Board after such date.

(n) "Disability" means as determined by the Committee in its discretion exercised in good faith, (i) in the case of an Award (other than an Incentive Stock Option) that is exempt from the application of the requirements of Section 409A, a physical or mental condition of the Holder that would entitle the Holder to payment of disability income payments under the Company's long-term disability insurance policy or plan for employees as then in effect, or in the event that the Holder is a Director or is not covered (for whatever reason) under the Company's long-term disability insurance policy or plan for employees or in the event the Company does not maintain such a long-term disability insurance policy, and in the case of an Incentive Stock Option, "Disability" means a permanent and total disability as defined in section 22(e)(3) of the Code; and (ii) in the case of an Award that is not exempt from the application of the requirements of Section 409A, (1) the Holder is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (2) the Holder is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Holder shall submit to an examination by such physician upon request by the Committee.

(o) "Dividend Equivalent" means a payment equivalent in amount to dividends paid to the Company's stockholders.

(p) An "employee" means any individual in an employment relationship with the Company or any Affiliate.

 

 

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(q) An "entity" means a corporation, limited liability company, partnership, limited partnership or any other type of legal entity or organization.

(r) "Forfeiture Restrictions" shall have the meaning assigned to such term in Section VIII(a).

(s) "Holder" means the holder of an Award.

(t) "Immediate Family" means, with respect to a Participant, the Participant's spouse, children or grandchildren (including adopted children, stepchildren and grandchildren).

(u) "Incentive Stock Option" means an incentive stock option within the meaning of section 422 of the Code.

(v) "1934 Act" means the Securities Exchange Act of 1934, as amended.

(w) "Mature Shares" means Shares which have been held by the Holder and with respect to which any applicable forfeiture restrictions have lapsed, in each case, for at least six months.

(x) "Option" means an Award (other than a SAR) granted under Section VII and includes both Incentive Stock Options to purchase Common Stock and Options that do not constitute Incentive Stock Options to purchase Common Stock.

(y) "Option Agreement" means a written agreement between the Company and a Participant with respect to an Option.

(z) "Participant" means an employee, Consultant, or Director who has been granted an Award.

(aa) "Performance Award" means an Award granted under Section IX.

(bb) "Performance Award Agreement" means a written agreement between the Company and a Participant with respect to a Performance Award.

(cc) "Performance Goals" means one or more of the performance goals established with respect to a Performance Award that is based upon one or more of the criteria described in Section IX.

(dd) A "person" means an individual or entity.

(ee) "Phantom Stock Award" means an Award granted under Section X.

(ff) "Phantom Stock Award Agreement" means a written agreement between the Company and a Participant with respect to a Phantom Stock Award.

(gg) "Plan" means the Búcha, Inc. 2016 Long-Term Incentive Plan, as amended from time to time.

(hh) "Plan Share Limit" shall have the meaning assigned to such term in Section V(a).

 

 

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(ii) "Restricted Stock Agreement" means a written agreement between the Company and a Participant with respect to a Restricted Stock Award.

(jj) "Restricted Stock Award" means an Award granted under Section VIII.

(kk) "Restricted Stock Unit Award" or "RSU Award" means an Award granted under Section XII.

(ll) "RSU Award Agreement" means a written agreement between the Company and a Participant with respect to an RSU Award.

(mm) "Rule 16b-3"means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be amended from time to time, and any successor rule, regulation or statute fulfilling the same or a similar function.

(nn) "Section 162(m)" means section 162(m) of the Code and other guidance promulgated by the Internal Revenue Service under Section 162(m).

(oo) "Section 409A" means section 409A of the Code and other guidance promulgated by the Internal Revenue Service under Section 409A.

(pp) "Share" means a share of Common Stock.

(qq) "Stock Appreciation Right" or "SAR" means a stock appreciation right granted pursuant to Section VII.

(rr) "SAR Agreement" means a written agreement between the Company and a Participant with respect to a SAR.

(ss) "Stock Award" means an award granted pursuant to Section XI.

(tt) "Substantial Risk of Forfeiture" shall have the meaning ascribed to that term in Section 409A.

III.            EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall become effective upon the date of its adoption by the Board, provided the Plan is approved by the stockholders of the Company within 12 months thereafter. Notwithstanding any provision in the Plan, no Award shall be granted under the Plan prior to such stockholder approval. No Awards may be granted under the Plan after ten years from the date the Plan is adopted by the Board. The Plan shall remain in effect until all Options granted under the Plan have been exercised or expired, all Restricted Stock Awards granted under the Plan have vested or been forfeited, and all Performance Awards, Phantom Stock Awards and RSU Awards have been satisfied or expired.

 

 

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IV.            ADMINISTRATION

(a) Composition of Committee. The Plan shall be administered by a committee of, and appointed by, the Board that shall be comprised solely of two or more outside Directors (within the meaning of the term "outside directors" as used in Section 162(m) and within the meaning of the term "Non-Employee Director" as defined in Rule 16b-3). The initial Committee shall be the Compensation Committee of the Board.

(b) Powers. Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. Subject to the express provisions of the Plan, the Committee shall have authority, in its discretion, to determine which employees, Consultants or Directors shall receive an Award, the time or times when such Award shall be made, the type of Award that shall be made, the number of Shares to be subject to each Option, SAR, Stock Award or Restricted Stock Award, and the number of Shares subject to or the value of each Performance Award, RSU Award or Phantom Stock Award. In making such determinations, the Committee shall take into account the nature of the services rendered by the respective employees, Consultants, or Directors, their present and potential contribution to the Company's success and such other factors as the Committee in its sole discretion shall deem relevant.

(c) Additional Powers. The Committee shall have such additional powers as are delegated to it by the other provisions of the Plan. Subject to the express provisions of the Plan, this shall include the power to construe the Plan and the respective agreements executed hereunder, to prescribe rules and regulations relating to the Plan, and to determine the terms, restrictions and provisions of each Award Agreement, including such terms, restrictions and provisions as shall be requisite in the judgment of the Committee to cause designated Options to qualify as Incentive Stock Options, and to make all other determinations necessary or advisable for administering the Plan. The Committee may specify in any Award Agreement the effect under the applicable Award of the occurrence of the death, Disability or retirement of the Participant, or the change of control of the Company. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent it shall deem expedient to carry it into effect. The determinations of the Committee on the matters referred to in this Section IV shall be conclusive.

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V.            SHARES SUBJECT TO THE PLAN; AWARD LIMITS; GRANT OF AWARDS

(a) Number of Shares Available for Awards. Subject to adjustment as provided in Section XIII, the aggregate number of Shares that may be issued under the Plan shall be limited 10% of the shares of Common Stock outstanding, which calculation shall be made on the first trading day of a new fiscal year ("Plan Share Limit"); provided that for purposes of 2016, the maximum aggregate number of shares of common stock that may be issued under the 2016 Plan, including pursuant to stock options, stock awards and stock appreciation rights, is limited to 1,600,000 shares of common stock, or approximately 10% of the common stock outstanding on the date the 2016 Plan was approved by the Board of Directors. The Shares that are available for issuance under the Plan may be issued in any form of Award authorized under the Plan. Any Shares that are the subject of Awards under the Plan which are forfeited or terminated, expire unexercised, are settled in cash in lieu of Shares or in a manner such that all or some of the Shares covered by an Award are not issued to a Participant or are exchanged for Awards that do not involve Shares shall again immediately become available to be issued pursuant to Awards granted under the Plan. If Shares are withheld from payment of an Award to satisfy tax obligations with respect to the Award, such Shares shall be treated as Shares that have been issued under the Plan, and the number of such Shares shall not again be available for issuance under the Plan. If Shares are tendered in payment of an option price of an Option or the exercise price of a SAR, such Shares shall not be available for issuance under the Plan.

The following rules shall apply to grants of Awards under the Plan:

(i) In any year no more than 10% of the Common Stock of the Company can be issued pursuant to the Plan.

(ii) No single Participant may receive more than 25% of the total shares awarded in any single year.

(iii) The maximum aggregate amount awarded or credited with respect to Performance Awards to any one employee in any one calendar year that are payable in cash shall not exceed $15,000,000 in value, determined as of the date of grant. The limitations set forth in this clause (iii) shall be applied in a manner that is consistent with the provisions of Section 162(m).

(iv) Incentive Stock Options.  The aggregate number of Shares with respect to which Incentive Stock Options may be granted under the Plan is 1,000,000 Shares.

(v) Options.  The maximum aggregate number of Shares that may be subject to Options granted in any one calendar year to any one employee shall be 1,000,000 Shares determined as of the dates of grant.

(vi) SARs.  The maximum aggregate number of Shares that may be granted pursuant to SARs granted in any one calendar year to any one employee shall be 1,000,000 Shares, determined as of the dates of grant.

 

 

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(vii) Adjustments. Each of the foregoing numerical limits stated in this Section V(a) shall be subject to adjustment in accordance with the provisions of Section XIII.

(b) Grant of Awards.  The Committee may from time to time grant Awards to one or more employees, Consultants, or Directors determined by it to be eligible for participation in the Plan in accordance with the terms of the Plan.

(c) Stock Offered.  Subject to the limitations set forth in Section V(a), the stock to be offered pursuant to the grant of an Award may be authorized but unissued Common Stock or Common Stock previously issued and outstanding and reacquired by the Company. Any of such Shares which remain unissued and which are not subject to outstanding Awards at the termination of the Plan shall cease to be subject to the Plan but, until the termination of the Plan, the Company shall at all times make available a sufficient number of Shares to meet the requirements of the Plan.

VI.            ELIGIBILITY

Awards may be granted only to persons who, at the time of grant, are employees, Consultants, or Directors. An Award may be granted on more than one occasion to the same person, and, subject to the limitations set forth in the Plan, such Award may include an Incentive Stock Option, an Option that is not an Incentive Stock Option, a Stock Award, a Restricted Stock Award, a Performance Award, a Phantom Stock Award, a SAR or an RSU Award or any combination thereof.

VII.            STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

(a) Option Period or Stock Appreciation Right Period.  The term of each Option or SAR shall be as specified by the Committee at the date of grant, but shall not be exercisable more than ten years after the date of grant.

(b) Limitations on Exercise of Option or Stock Appreciation Right.  An Option or SAR shall be exercisable in whole or in such installments and at such times as determined by the Committee.

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(c) Special Limitations on Incentive Stock Options.  Unless otherwise specified in an Option Agreement, Options granted pursuant to the Plan shall be Options that do not constitute Incentive Stock Options. An Incentive Stock Option may be granted only to an individual who is employed by the Company or any parent or subsidiary corporation (as defined in section 424 of the Code) at the time the Option is granted. To the extent that the aggregate fair market value (determined at the time the respective Incentive Stock Option is granted) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of the Company and its parent and subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be treated as Options which do not constitute Incentive Stock Options. No Incentive Stock Option shall be granted to an individual if, at the time the Option is granted, such individual owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation, within the meaning of section 422(b)(6) of the Code, unless (i) at the time such Option is granted the option price is at least 110% of the fair market value of the Common Stock subject to the Option and (ii) such Option by its terms is not exercisable after the expiration of five years from the date of grant. An Incentive Stock Option shall not be transferable otherwise than by will or the laws of descent and distribution, and shall be exercisable during the Participant's lifetime only by such Participant or the Participant's guardian or legal representative.

(d) Option Agreement.  Each Option shall be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve, including provisions to qualify an Incentive Stock Option under section 422 of the Code. Each Option Agreement shall specify the effect of termination of (i) employment, (ii) the consulting or advisory relationship, or (iii) membership on the Board, as applicable, on the exercisability of the Option. An Option Agreement may provide for the payment of the option price as the Committee may specify, including by the delivery of Shares. The terms and conditions of the respective Option Agreements need not be identical. Subject to the consent of the Participant, the Committee may, in its sole discretion, amend an outstanding Option Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan (including an amendment that accelerates the time at which the Option, or a portion thereof, may be exercisable).

(e) SAR Agreement.  Each SAR shall be evidenced by a SAR Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve. The terms and conditions of the respective SAR Agreements need not be identical. Subject to the consent of the Participant, the Committee may, in its sole discretion, amend an outstanding SAR Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan (including an amendment that accelerates the time at which the SAR, or a portion thereof, may be exercisable). Unless otherwise set forth in a SAR Agreement, upon the exercise of a SAR, a Holder shall be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the value of a Share on the date of exercise over the grant price by (ii) the number of Shares with respect to which the SAR is exercised. The per Share grant price for a SAR shall be established on the date of grant of the SAR. At the discretion of the Committee, the payment made to a Holder upon the exercise of a SAR may be in cash, in Shares or in any combination thereof. The Committee's determination regarding the form of payment may be set out in the applicable SAR Agreement pertaining to the grant of the SAR.

 

 

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(f) Restrictions on Repricing of Options or Stock Appreciation Rights.  Except as provided in Section XIII, the Committee may not, without approval of the stockholders of the Company, amend any outstanding Option Agreement or SAR Agreement to lower the option price (or cancel and replace any outstanding Option Agreement with Option Agreements having a lower option price) or to lower the SAR grant price (or cancel and replace any outstanding SAR with SAR Agreements having a lower SAR grant price). Further, the Committee may not lower an option price of an Option (or cancel and replace any outstanding Option Agreement with Option Agreements having a lower option price) or lower the SAR grant price (or cancel and replace any outstanding SAR with SAR Agreements having a lower SAR grant price) to the extent that doing so would subject the Holder to additional taxes under Section 409A.

(g) Option Price and Payment.  The price at which a Share may be purchased upon exercise of an Option shall be determined by the Committee but, subject to adjustment as provided in Section XIII, (i) in the case of an Incentive Stock Option, such purchase price shall not be less than the fair market value of a Share on the date such Option is granted, and (ii) in the case of an Option that does not constitute an Incentive Stock Option, such purchase price may be less than the fair market value of a Share on the date such Option is granted. The Option or portion thereof may be exercised by delivery of an irrevocable notice of exercise to the Company, as specified by the Committee. The purchase price of the Option or portion thereof shall be paid in full in the manner prescribed by the Committee. Separate stock certificates shall be issued by the Company for those Shares acquired pursuant to the exercise of an Incentive Stock Option and for those Shares acquired pursuant to the exercise of any Option that does not constitute an Incentive Stock Option, or should the Shares be represented by book or electronic entry rather than certificates, such Shares shall be accounted for separately in such book or electronic entry.

(h) Method of Exercise of Option.

(i) General Method of Exercise. Subject to the terms and provisions of the Plan and the applicable Award Agreement, Options may be exercised in whole or in part from time to time by the delivery of written notice in the manner designated by the Committee stating (1) that the Holder wishes to exercise such Option on the date such notice is so delivered, (2) the number of Shares with respect to which the Option is to be exercised and (3) the address to which any certificate representing such Shares should be mailed or delivered. Except in the case of exercise by a third party broker as provided below, in order for the notice to be effective the notice must be accompanied by payment of the option price by any combination of the following: (1) cash, certified check, bank draft or postal or express money order for an amount equal to the option price under the Option, (2) an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee or an executive officer of the Company) or (3) any other form of payment which is acceptable to the Committee.

 

 

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(ii) Exercise Through Third-Party Broker. The Committee may permit a Holder to elect to pay the option price and any applicable tax withholding resulting from such exercise by authorizing a third-party broker to sell all or a portion of the Shares acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the option price and any applicable tax withholding resulting from such exercise.

(i) Options and Stock Appreciation Rights in Substitution for Options Granted by Other Employers.  Options and SARs may be granted under the Plan from time to time in substitution for options held by persons who become employees, Consultants, or Directors as a result of a merger or consolidation or other business transaction with the Company or any Affiliate. The repricing prohibitions of Sections VII(f) and XIV shall apply to substitution awards granted pursuant to this Section VII(i).

VIII.            RESTRICTED STOCK AWARDS

(a) Forfeiture Restrictions To Be Established by the Committee.  Shares that are the subject of a Restricted Stock Award shall be subject to restrictions on disposition by the Participant and an obligation of the Participant to forfeit and surrender the Shares to the Company under certain circumstances ("Forfeiture Restrictions"). The Forfeiture Restrictions shall be determined by the Committee in its sole discretion, and the Committee may provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of one or more performance measures established by the Committee, (ii) the continued employment or service with the Company or an Affiliate for a specified period of time, or (iii) the occurrence of any event or the satisfaction of any other condition specified by the Committee in its sole discretion. Each Restricted Stock Award may have different Forfeiture Restrictions, in the discretion of the Committee.

(b) Other Terms and Conditions.  Common Stock awarded pursuant to a Restricted Stock Award shall be represented by (i) a stock certificate registered in the name of the Participant, (ii) book or electronic entry or (iii) any other reasonable alternative form for evidencing or representing the issuance of Common Stock. Unless provided otherwise in a Restricted Stock Agreement, the Participant shall have the right to receive dividends with respect to Common Stock subject to a Restricted Stock Award, which dividends shall be accrued and paid when the Forfeiture Restrictions applicable to the Restricted Stock Award have lapsed, to vote Common Stock subject thereto and to enjoy all other stockholder rights, except that (i) the Participant shall not be entitled to delivery of a stock certificate until the Forfeiture Restrictions have lapsed, (ii) the Company shall retain custody of the Common Stock until the Forfeiture Restrictions have lapsed, (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Common Stock until the Forfeiture Restrictions have lapsed, and (iv) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Agreement shall cause a forfeiture of the Restricted Stock Award. At the time of such Award, the Committee may, in its sole discretion, prescribe additional terms, conditions or restrictions relating to Restricted Stock Awards, including rules pertaining to the termination of employment or service as a Consultant or Director (by retirement, disability, death or otherwise) of a Participant prior to expiration of the Forfeitures Restrictions. Such additional terms, conditions or restrictions shall be set forth in a Restricted Stock Agreement made in conjunction with the Award.

 

 

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(c) Payment for Restricted Stock.  The Committee shall determine the amount and form of any payment for Common Stock received pursuant to a Restricted Stock Award, provided that in the absence of such a determination, a Participant shall not be required to make any payment for Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law.

(d) Committee's Discretion to Accelerate Vesting of Restricted Stock Awards.  The Committee may, in its discretion and as of a date determined by the Committee, fully vest any or all Common Stock awarded to a Participant pursuant to a Restricted Stock Award and, upon such vesting, all Forfeiture Restrictions applicable to such Restricted Stock Award shall lapse as of such date. Any action by the Committee pursuant to this paragraph (d) may vary among individual Participants and may vary among the Restricted Stock Awards held by any individual Participant.

(e) Restricted Stock Agreements.  At the time any Award is made under this Section VIII, the Company and the Participant shall enter into a Restricted Stock Agreement setting forth each of the matters contemplated hereby and such other matters as the Committee may determine to be appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be identical. Subject to the consent of the Participant the Committee may, in its sole discretion, amend an outstanding Restricted Stock Agreement from time to time in any manner that is not inconsistent with the provisions of the Plan.

IX.            PERFORMANCE AWARDS

		(a)	Performance Awards Based Upon Satisfaction of Performance Goals.  Subject to the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant Performance Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the transferability restrictions applicable to any Performance Award shall be based upon the attainment of such Performance Goals as the Committee may determine; provided, however, that the performance period for any Performance Award shall not be less than one year.

 

 

  

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(b) Performance Goals.  A Performance Goal must be objective such that a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Holder, one or more business units of the Company, or the Company as a whole, with reference to one or more of the following: stock price (including adjustments for dividends), funds from operations, adjusted funds from operations, earnings or adjusted earnings before or after interest, taxes, depletion, depreciation or amortization, earnings per share, earnings per share growth, total shareholder return, economic value added, cash return on capitalization, increased revenue, revenue ratios (per employee or per customer), net income (before or after taxes), market share, return on equity, return on assets, return on capital, return on capital compared to cost of capital, return on capital employed, return on invested capital, return on investment, return on sales, operating or profit margins, shareholder value, net cash flow, operating income, cash flow, cash flow from operations, cost reductions or cost savings, cost ratios (per employee or per customer), expense control, sales, proceeds from dispositions, project completion time, budget goals, net cash flow before financing activities, customer growth, total capitalization, debt to total capitalization ratio, credit quality or debt ratings, dividend payout, dividend growth, production volumes or safety results. Goals may also be based on performance relative to a peer group of companies. Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). Performance Goals may be determined by including or excluding, in the Committee's discretion, items that are determined to be extraordinary, unusual in nature, infrequent in occurrence, related to the disposal or acquisition of a segment of a business, or related to a change in accounting principal, in each case, based on Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 225-20, Income Statement, Extraordinary and Unusual Items, and FASB ASC 830-10, Foreign Currency Matters, Overall, or other applicable accounting rules, or consistent with Company accounting policies and practices in effect on the date the Performance Goal is established. In interpreting Plan provisions applicable to Performance Goals and Performance Awards, it is intended that the Plan will conform with the standards of Section 162(m) and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Subject to the foregoing provisions, and the following provisions of this Section IX, the terms, conditions and limitations applicable to any Performance Awards made pursuant to the Plan shall be determined by the Committee.

(c) Time of Establishment of Performance Goals.  With respect to a Covered Employee, a Performance Goal for a particular Performance Award must be established by the Committee prior to the earlier to occur of (i) 90 days after the commencement of the period of service to which the Performance Goal relates or (ii) the lapse of 25 percent of the period of service, and in any event while the outcome is substantially uncertain.

(d) Written Agreement.  Each Performance Award shall be evidenced by a Performance Award Agreement that contains any vesting or transferability restrictions, Performance Goals, payment provisions and other provisions not inconsistent with the Plan as the Committee may specify. The terms and provisions of the respective Performance Award Agreements need not be identical.

 

 

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(e) Form of Payment Under Performance Award.  Payment under a Performance Award shall be made in cash or Shares as specified in the Holder's Award Agreement.

(f) Certification by Committee Prior to Payment.  Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied.

(g) Time of Payment Under Performance Award.  Unless a Performance Award is structured as a current transfer of Shares subject to a risk of forfeiture in the event Performance Goals are not achieved, a Holder's payment under a Performance Award shall be made at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that such payment will be made (i) by a date that is no later than the date that is two and one-half (2 1/2) months after the end of the calendar year in which the Performance Award payment is no longer subject to a Substantial Risk of Forfeiture or (ii) at a time that is permissible under Section 409A.

(h) Increases Prohibited.  None of the Committee, the Board or the Company may increase the amount of compensation payable under a Performance Award. If the time at which a Performance Award will vest or be paid is accelerated for any reason, the number of Shares subject to, or the amount payable under, the Performance Award shall be reduced pursuant to Department of Treasury Regulation § 1.162-27(e)(2)(iii) to reasonably reflect the time value of money.

(i) Stockholder Approval.  No payments of Stock or cash will be made to a Covered Employee pursuant to this Section IX unless the stockholder approval requirements of Department of Treasury Regulation § 1.162-27(e)(4) are satisfied.

(j) No Dividend Equivalents.  An Award Agreement for a Performance Award shall not specify that the Holder shall be entitled to the payment of Dividend Equivalents under the Award, unless the payment of any such Dividend Equivalents will be subject to the satisfaction of the same performance conditions as apply to the Performance Award.

(k) Dividends.  In the case of a Performance Award that is payable in Shares, if the Holder shall be become entitled to the payment of dividends paid in Shares with respect to the Performance Award, such dividends shall be added to and become a part of the Performance Award. Accordingly, such dividends will be subject to the satisfaction of the same performance conditions as apply to the Performance Shares.

X.            PHANTOM STOCK AWARDS

(a) Phantom Stock Awards.  Phantom Stock Awards are rights to receive the value of Shares which vest over a period of time as established by the Committee, without satisfaction of any performance criteria or objectives. The Committee may, in its discretion, require payment or other conditions of the Participant respecting any Phantom Stock Award.

 

 

 

Exhibit 10.1 -- Page 13

(b) Award Period.  The Committee shall establish, with respect to and at the time of grant of each Phantom Stock Award, a period over which the Award shall vest with respect to the Participant.

(c) Awards Criteria.  In determining the value of Phantom Stock Awards, the Committee shall take into account a Participant's responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate.

(d) Payment.  Following the end of the vesting period for a Phantom Stock Award (or at such other time as the applicable Phantom Stock Award Agreement may provide), the holder of a Phantom Stock Award shall be entitled to receive payment of an amount, not exceeding the maximum value of the Phantom Stock Award, based on the then vested value of the Award. Payment of a Phantom Stock Award may be made in cash, Common Stock, or a combination thereof as determined by the Committee.

(e) Termination of Award.  A Phantom Stock Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable vesting period, except as may be otherwise determined by the Committee.

(f) Phantom Stock Award Agreements.  At the time any Award is made under this Section X, the Company and the Participant shall enter into a Phantom Stock Award Agreement setting forth each of the matters contemplated hereby, and such additional matters as the Committee may determine to be appropriate. The terms and provisions of the respective Phantom Stock Award Agreements need not be identical. A Phantom Stock Award Agreement may provide for the payment of Dividend Equivalents.

XI.            STOCK AWARDS

(a) Stock Awards.  Stock Awards are rights to receive Shares, which vest immediately, without satisfaction of any performance criteria or objectives. The Committee may, in its discretion, require payment, partial payment or other conditions of the Participant respecting any Stock Award.

(b) Awards Criteria.  In determining the value of Stock Awards, the Committee may take into account a Participant's responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate.

(c) Payment.  A Participant who receives a Stock Award shall be entitled to receive immediate payment of such Award in Common Stock.

 

 

  

Exhibit 10.1 -- Page 14

 

  

XII.            RESTRICTED STOCK UNIT AWARDS

(a) RSU Awards.  An RSU Award shall be similar in nature to a Restricted Stock Award except that no Shares or cash shall be transferred to the Holder until the applicable vesting restrictions lapse or performance conditions have been satisfied. The amount of, and the vesting and the transferability restrictions applicable to, any RSU Award shall be determined by the Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account which reflects the number of RSUs credited under the Plan for the benefit of a Holder.

(b) RSU Award Agreement.  Each RSU Award shall be evidenced by an Award Agreement that contains any Substantial Risk of Forfeiture, vesting and transferability restrictions, form and time of payment provisions and other provisions not inconsistent with the Plan as the Committee may specify. An RSU Award Agreement may provide for the payment of Dividend Equivalents.

(c) Form of Payment Under RSU Award.  Payment under an RSU Award shall be made in cash or Shares as specified in the applicable Award Agreement.

(d) Time of Payment Under RSU Award.  Payment to a Holder under an RSU Award shall be made at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (i) by a date that is no later than the date that is two and one-half (2 1/2) months after the end of the Fiscal Year in which the RSU Award payment is no longer subject to a Substantial Risk of Forfeiture or (ii) at a time that is permissible under Section 409A.

XIII.            RECAPITALIZATION OR REORGANIZATION

(a) No Effect on Right or Power.  The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's or any Affiliate's capital structure or its business, any merger or consolidation of the Company or any Affiliate, any issue of debt or equity securities ahead of or affecting Common Stock or the rights thereof, the dissolution or liquidation of the Company or any Affiliate or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.

(b) Capital Readjustments; Stock Dividends.  The Shares with respect to which Awards may be granted are Shares as presently constituted, but if, and whenever, prior to the expiration of an Award theretofore granted, the Company shall effect a subdivision or consolidation of Shares or other capital readjustment, the payment of a stock dividend on Common Stock, or other increase or reduction in the number of Shares outstanding, without receipt of consideration by the Company, then (i) the number of Shares, class or series and per Share price with respect to which such Award may thereafter be exercised or satisfied, as applicable, shall be appropriately adjusted in such a manner as to entitled a Holder to receive upon exercise or satisfaction of an Award, for the same aggregate cash consideration, the equivalent total number and class of series of Common Stock the Holder would have received had the Holder exercised the Holder's Option or satisfied the requirements under another Award prior to the event requiring the adjustment, and (ii) the number and class or series of Common Stock then available for issuance under the Plan and the numerical limitations in Section V(a) shall be adjusted by substituting for the total number and class or series of Common Stock then available for issuance that number and class or series of Common Stock that would have been received by the owner of an equal number of outstanding Shares of each class or series of Common Stock as a result of the event requiring the adjustment.

 

 

 

Exhibit 10.1 -- Page 15

(c) Corporate Changes.  If (i) the Company shall not be the surviving entity in any merger or consolidation or other reorganization (or survives only as a subsidiary of an entity other than an entity that was directly or indirectly wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization), (ii) the Company sells, leases or exchanges all or substantially all of its assets to any other person (other than an entity that is directly or indirectly wholly owned by the Company), (iii) the Company is to be dissolved, (iv) any person, including a "group" as contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or control (including, power to vote) of more than 50 percent of the outstanding shares of the Company's voting stock (based on voting power), (v) as a result of or in connection with a contested election of Directors, the persons who were Directors of the Company before such election shall cease to constitute a majority of the Board, or (vi) the Company is party to any other corporate transaction (as defined under section 424(a) of the Code and applicable Department of Treasury regulations) that is not described in clauses (i), (ii), (iii), (iv) or (v) of this sentence (each such event is referred to herein as a "Corporate Change"), then, the Committee, acting in its sole discretion without the consent or approval of any Holder (subject to any restrictions or limitations in an agreement with a Holder), shall effect one or more of the following alternatives, which alternatives may vary among individual Holders and which may vary among Options or SARs held by any individual Holder: (1) accelerate the time at which Options and SARs then outstanding may be exercised so that such Options or SARs may be exercised in full for a limited period of time on or before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all unexercised Options and SARs and all rights of Participants thereunder shall terminate, (2) require the mandatory surrender to the Company by all or selected Holders of some or all of the outstanding Options and SARs held by such Holders (irrespective of whether such Awards are then exercisable under the provisions of the Plan or the applicable Award Agreements) as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall thereupon cancel such Award and the Company shall pay (or cause to be paid) to each Holder an amount of cash per Share equal to the excess, if any, of the amount calculated in paragraph (d) below ("Change of Control Value") of the Shares subject to such Option over the exercise price(s) under such Options for such Shares or the grant date values of the SARs with respect to such Shares, (3) with respect to all or selected Holders, have some or all of their then outstanding Options or SARs (whether vested or unvested) assumed or have a new award of a similar nature substituted for some or all of their then outstanding Options or SARs under the Plan (whether vested or unvested) by an entity which is a party to the transaction resulting in such Corporate Change and which is then employing such Holder or which is affiliated or associated with such Holder in the same or a substantially similar manner as the Company prior to the Corporate Change, or a parent or subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where the excess of the aggregate fair market value of the Common Stock subject to the Option or SAR immediately after the assumption or substitution over the aggregate exercise price of such Common Stock is equal to the excess of the aggregate fair market value of all Common Stock subject to the Award immediately before such assumption or substitution over the aggregate exercise price of such Common Stock, and (B) the assumed rights under such existing Option or SAR or the substituted rights under such new Option or SAR, as the case may be, will have the same terms and conditions as the rights under the existing Award assumed or substituted for, as the case may be, or (4) make such adjustments to Options or SARs then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to Options or SARs then outstanding), including adjusting an Option or SAR to provide that the number and class of Shares covered by such Option or SAR shall be adjusted so that such Option or SAR shall thereafter cover securities of the surviving or acquiring corporation or other property (including cash) as determined by the Committee in its sole discretion.

 

 

Exhibit 10.1 -- Page 16

 

  

(d) Change of Control Value.  For the purposes of clause (2) in paragraph (c) above, the "Change of Control Value" shall equal the amount determined in clause (i), (ii) or (iii), whichever is applicable, as follows: (i) the per Share price offered to stockholders of the Company in any such merger, consolidation, sale of assets or dissolution transaction, (ii) the price per Share offered to stockholders of the Company in any tender offer or exchange offer whereby a Corporate Change takes place, or (iii) if such Corporate Change occurs other than pursuant to a tender or exchange offer, the fair market value per Share of the shares into which such Options being surrendered are exercisable, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Options. In the event that the consideration offered to stockholders of the Company in any transaction described in this paragraph (d) or paragraph (c) above consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.

(e) Other Changes in the Common Stock.  In the event of changes in the outstanding Common Stock by reason of recapitalizations, reorganizations, mergers, consolidations, combinations, split-ups, split-offs, spin-offs, exchanges or other relevant changes in capitalization or distributions to the holders of Common Stock occurring after the date of the grant of any Award and not otherwise provided for by this Section XIII, such Award and any agreement evidencing such Award shall be subject to adjustment by the Committee at its sole discretion as to the number and price of Shares or other consideration subject to such Award. In the event of any such change in the outstanding Common Stock or distribution to the holders of Common Stock, the aggregate number of Shares then available for issuance under the Plan and the maximum number of Shares that may be subject to Awards granted to any one individual and the numerical limitations in Section V(a) may be appropriately adjusted by the Committee, whose determination shall be conclusive. Notwithstanding the foregoing, except as otherwise provided in Section XV(h) or an Award Agreement, upon the occurrence of a Corporate Change, the Committee, acting in its sole discretion without the consent or approval of any Participant, may require the mandatory surrender to the Company by selected Participants of some or all of the outstanding Performance Awards, RSU Awards and Phantom Stock Awards as of a date, before or after such Corporate Change, specified by the Committee, in which event the Committee shall thereupon cancel such Performance Awards, RSU Awards and Phantom Stock Awards and the Company shall pay (or cause to be paid) to each Participant an amount of cash equal to the maximum value of such Performance Award, RSU Award or Phantom Stock Award which, in the event the applicable performance or vesting period set forth in such Performance Award, RSU Award or Phantom Stock Award has not been completed, shall be multiplied by a fraction, the numerator of which is the number of days during the period beginning on the first day of the applicable performance or vesting period and ending on the date of the surrender, and the denominator of which is the aggregate number of days in the applicable performance or vesting period.

(f) No Adjustments Unless Otherwise Provided.  Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to Awards theretofore granted or the purchase price per share, if applicable.

 

 

Exhibit 10.1 -- Page 17

  

XIV.            AMENDMENT AND TERMINATION OF THE PLAN

The Board in its discretion may terminate the Plan at any time with respect to any Shares for which Awards have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided that no change in the Plan may be made that would impair the rights of a Participant with respect to an Award theretofore granted without the consent of the Participant, and provided, further, that the Board may not, without approval of the stockholders of the Company, (a) amend the Plan to increase the maximum aggregate number of Shares that may be issued under the Plan or change the class of individuals eligible to receive Awards under the Plan, or (b) amend or delete Section VII(f).

XV.            MISCELLANEOUS

(a) No Right To An Award.  Neither the adoption of the Plan nor any action of the Board or of the Committee shall be deemed to give any individual any right to be granted an Award or any other rights hereunder except as may be evidenced by an Award Agreement duly executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the performance of its obligations under any Award.

(b) No Employment/Membership Rights Conferred.  Nothing contained in the Plan shall (i) confer upon any employee or Consultant any right with respect to continuation of employment or of a consulting or advisory relationship with the Company or any Affiliate or (ii) interfere in any way with the right of the Company or any Affiliate to terminate his or her employment or consulting or advisory relationship at any time. Nothing contained in the Plan shall confer upon any Director any right with respect to continuation of membership on the Board.

(c) Other Laws.  The Company shall not be obligated to issue any Common Stock pursuant to any Award granted under the Plan at any time when the Shares covered by such Award have not been registered under the Securities Act of 1933, as amended, and such other state and federal laws, rules and regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the registration requirements of such laws, rules and regulations available for the issuance and sale of such Shares.

(d) No Fractional Shares.  No fractional Shares shall be delivered, nor shall any cash in lieu of fractional Shares be paid.

(e) Withholding.  The Company or any Affiliate shall be entitled to deduct from any other compensation payable to each Holder any sums required by federal, state, local or foreign tax law to be withheld with respect to an Award including the vesting or exercise of an Award. Alternatively, the Company or any Affiliate may require the Holder (or other person validly exercising the Award) to pay such sums for taxes directly to the Company or Affiliate in cash or by check upon the vesting or exercise. Alternatively, in the discretion of the Committee, the Company may reduce the number of Shares issued to the Holder upon the exercise or vesting of a Holder's Award to satisfy the tax withholding obligations of the Company or an Affiliate. The Committee may, in its discretion, allow a Holder to use Mature Shares to satisfy the Company's or Affiliate's tax withholding obligations with respect to an Award. The Company shall have no obligation upon vesting or exercise of any Award until the Company or an Affiliate has received payment sufficient to satisfy the Company's or Affiliate's tax withholding obligations with respect to that vesting or exercise. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount which it will be required to withhold.

 

 

Exhibit 10.1 -- Page 18

 

(f) No Restriction on Corporate Action.  Nothing contained in the Plan shall be construed to prevent the Company or any Affiliate from taking any action which is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Participant, beneficiary or other person shall have any claim against the Company or any Affiliate as a result of any such action.

(g) Restrictions on Transfer.  An Award (other than an Incentive Stock Option, which shall be subject to the transfer restrictions set forth in Section VII(c)) shall not be transferable otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order as defined by the Code, or the rules thereunder, (iii) with respect to Awards of Options which do not constitute Incentive Stock Options, if such transfer is permitted in the sole discretion of the Committee, by transfer by a Participant to a member of the Participant's Immediate Family, to a trust solely for the benefit of the Participant and the Participant's Immediate Family, or to a partnership or limited liability company whose only partners or shareholders are the Participant and members of the Participant's Immediately Family, or (iv) with the consent of the Committee.

(h) Compliance With Section 409A.  Awards shall be designed, granted and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A. Each Award Agreement for an Award that is intended to comply with the requirements of Section 409A shall be construed and interpreted in accordance with such intention. If the Committee determines that an Award, an Award Agreement, payment, distribution, deferral election, transaction, or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken or implemented, cause a Holder to become subject to additional taxes under Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Holder. The exercisability of an Option shall not be extended to the extent that such extension would subject the Holder to additional taxes under Section 409A.

(i) Restrictions.  If the Committee imposes vesting or transferability restrictions on a Holder's rights with respect to an Award, the Committee may issue such instructions to the Company's stock transfer agent in connection therewith as it deems appropriate. The Committee may also cause the certificate for Shares issued pursuant to an Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or, should the Shares be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the Shares as counsel for the Company considers necessary or advisable to comply with applicable law.

(j) Rights As a Stockholder.  Subject to the terms and conditions of the Plan and the applicable Award Agreements, each Holder of an Award shall have all the rights of a stockholder with respect to Shares issued to the Holder pursuant to the Award during any period in which such issued Shares are subject to forfeiture and restrictions on transfer, including the right to vote such Shares. In no event shall a Holder have any rights of a stockholder with respect to an Award before Shares are issued to the Holder pursuant to the Award.

 

 

Exhibit 10.1 -- Page 19

 

(k) Recoupment in Restatement Situations.  If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, the current or former Holder who was a current or former executive officer of the Company shall forfeit and must repay to the Company any compensation awarded under the Plan to the extent specified in any of the Company's recoupment policies established or amended (now or in the future) in compliance with the rules and standards of the Securities and Exchange Commission Committee under or in connection with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

(l) Persons Residing Outside of the United States.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company or any of its Affiliates operates or has employees, the Committee, in its sole discretion, shall have the power and authority to (i) determine which Affiliates shall be covered by the Plan; (ii) determine which persons employed or hired outside the United States are eligible to participate in the Plan; (iii) amend or vary the terms and provisions of the Plan and the terms and conditions of any Award granted to persons who reside outside the United States; (iv) establish subplans and modify exercise procedures and other terms and procedures to the extent such actions may be necessary or advisable (and any subplans and modifications to Plan terms and procedures established under this Section XV(l) by the Committee shall be attached to the Plan document as Appendices); and (v) take any action, before or after an Award is made, that it deems advisable to obtain or comply with any necessary local government regulatory exemptions or approvals. Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the 1934 Act, the Code, any securities law or governing statute or any other applicable law.

(m) Governing Law.  The Plan shall be governed by, and construed in accordance with, the laws of the State of Washington, without regard to conflicts of laws principles thereof.

(n) Interpretation.  The term "including" means "including without limitation."  The term "or" means "and/or" unless clearly indicated otherwise. The term "vest" includes the lapse of restrictions on Awards, including Forfeiture Restrictions. Reference herein to a "Section" shall be to a section of the Plan unless indicated otherwise.

 

 

 

 

 

 

Exhibit 10.1 -- Page 20Exhibit 10.1

 

AMENDED AND RESTATED STOCK OPTION PLAN

RITCHIE BROS. AUCTIONEERS INCORPORATED

 

ARTICLE 1

PURPOSE

 

		1.1	The purpose of this Stock Option Plan is to promote the interests of Ritchie Bros. Auctioneers Incorporated (the “Company”)
by:

 

		(a)	furnishing certain directors, officers, employees of the Company and its subsidiaries or other persons as the Compensation
Committee may approve with greater incentive to further develop and promote the business and financial success of the Company;

 

		(b)	furthering the identity of interests of persons to whom options may be granted with those of the shareholders of the Company
generally through share ownership in the Company; and

 

		(c)	assisting the Company in attracting, retaining and motivating its directors, officers and employees.

 

The Company believes that these purposes may best be effected
by granting options to acquire common shares without par value in the capital of the Company.

 

ARTICLE 2

INTERPRETATION

 

		2.1	In this Plan, unless there is something in the subject matter or context inconsistent therewith:

 

		(a)	“Associate” has the meaning ascribed thereto under NI 45-106 as from time to time amended, supplemented,
replaced or re-enacted or if no such meaning can be ascertained, “Associate” shall have the meaning ascribed
thereto under the Canada Business Corporations Act as from time to time amended, supplemented or re-enacted;

 

		(b)	“Black Out Period” means any period during which an Optionholder is prevented from trading the Common Shares
pursuant to a policy of the Company, including but not limited to the Company’s Policy Regarding Securities Trades by Company
Personnel, as amended and in force from time to time;

 

		(c)	“Board of Directors” means the board of directors of the Company;

 

		(d)	“Business Day” means a day, other than Saturday, Sunday and any other day which is a statutory holiday in
British Columbia;

 

     

     

    

  

		(e)	“Cause” for the purposes of this Plan, notwithstanding the terms of any agreement between the Company or
a subsidiary and any Optionholder, unless otherwise defined in the applicable Option Agreement in respect of any Option granted
or awarded to any Optionholder, means the wilful and continued failure by an Optionholder to substantially perform, or otherwise
properly carry out, the Optionholder’s duties on behalf of the Company or a subsidiary, or to follow, in any material respect,
the lawful policies, procedures, instructions or directions of the Company or any applicable subsidiary (other than any such failure
resulting from the Optionholder’s disability or incapacity due to physical or mental illness), or the Optionholder wilfully
or intentionally engaging in illegal or fraudulent conduct, financial impropriety, intentional dishonesty, breach of duty of loyalty
or any similar intentional act which is materially injurious to the Company or a subsidiary, or which may have the effect of materially
injuring the reputation, business or business relationships of the Company or a subsidiary, or any other act or omission constituting
cause for termination of employment without notice or pay in lieu of notice at common law. For the purposes of this definition,
no act, or failure to act, on the part of an Optionholder shall be considered “wilful” unless done, or omitted to be
done, by the Optionholder in bad faith and without reasonable belief that the Optionholder’s action or omissions were in,
or not opposed to, the best interests of the Company and its subsidiaries.

 

		(f)	“Change of Control” includes:

 

		(i)	the acquisition by any persons acting jointly or in concert (as determined by the Securities Act), whether directly or indirectly,
of voting securities of the Company that, together with all other voting securities of the Company held by such persons, constitute
in the aggregate more than 50% of all outstanding voting securities of the Company;

 

		(ii)	an amalgamation, arrangement or other form of business combination of the Company with another corporation that results in
the holders of voting securities of that other corporation holding, in the aggregate, more than 50% of all outstanding voting securities
of the corporation resulting from the business combination or, if such corporation is a subsidiary of another corporation, the
parent of such corporation; or

 

		(iii)	the sale, lease or exchange of all or substantially all of the property of the Company to another person, other than in the
ordinary course of business of the Company or to a Related Entity;

 

		(g)	“CEO” means the Chief Executive Officer of the Company;

 

		(h)	“Common Shares” means the common shares without par value in the capital of the Company;

 

		(i)	“Consultant” means a person other than an employee, officer or director of the Company or of any of its
subsidiaries that:

 

    	 	2	 

     

    

 

		(i)	is engaged to provide services to the Company or any of its subsidiaries;

 

		(ii)	provides the services under a written contract with the Company or of any of its subsidiaries; and

 

		(iii)	spends or will spend a significant amount of time and attention on the affairs and business of the Company or of any of its
subsidiaries,

 

and includes, for an individual Consultant, a corporation
of which such individual is an employee or shareholder;

 

		(j)	“Control” by a person over a second person means the power to direct, directly or indirectly, the management
and policies of the second person by virtue of:

 

		(i)	ownership of or direction over voting securities in the second person;

 

		(ii)	a written agreement or indenture;

 

		(iii)	being or Controlling the general partner of the second person; or

 

		(iv)	being a trustee of the second person;

 

		(k)	“Eligible Persons” means directors, officers, employees or Consultants of the Company or of any of its subsidiaries
or any other persons as approved by the Compensation Committee, and an “Eligible Person” shall have a corresponding
meaning;

 

		(l)	“Exercise Price” means the price per share at which Common Shares may be subscribed for by an Optionholder
pursuant to a particular Option Agreement;

 

		(m)	“Good Reason” means a material adverse change by the Company or a subsidiary to an Optionholder’s
position, authority, duties, responsibilities or compensation, excluding an isolated or inadvertent action not taken in bad faith
and which is remedied by the Company or subsidiary promptly after receipt of written notice given by the Optionholder.

 

		(n)	“Grant Date” has the meaning ascribed thereto in Section 8.1(a);

 

		(o)	“Incentive Stock Option” means an Option to purchase Common Shares with the intention that it qualify as
an “incentive stock option” as that term is defined in Section 422 of the U.S. Internal Revenue Code,
such intention being evidenced by the resolutions of the directors at the time of grant;

 

		(p)	“Insider” has the meaning given to that term in the Securities Act and also includes associates and affiliates
of the insider, but does not include directors or senior officers of a subsidiary or affiliate of the Company unless such director
or senior officer:

 

    	 	3	 

     

    

 

		(i)	in the ordinary course receives or has access to information as material facts or material changes concerning the Company before
the material facts or material changes are generally disclosed;

 

		(ii)	is a director or senior officer of a “major subsidiary” of the Company (where “major subsidiary” has
the meaning given to that term in National Instrument 55-101 – Insider Reporting Exemptions); or

 

		(iii)	is an insider of the Company in a capacity other than as a director or senior officer of the subsidiary or affiliate;

 

For the purpose of this definition, the terms “affiliate”,
“associate” and “subsidiary” have the meanings given to them, respectively, in the Securities Act;

 

		(q)	“NI 45-106” means National Instrument 45-106 – Prospectus and Registration Exemptions;

 

		(r)	“Option Agreement” has the meaning ascribed thereto under Section 8.1(d);

 

		(s)	“Optioned Shares” means the Common Shares that may be subscribed for by an Optionholder pursuant to an Option
Agreement;

 

		(t)	“Optionholder” means an Eligible Person to whom an Option has been granted;

 

		(u)	“Options” means stock options granted hereunder to purchase Common Shares from treasury;

 

		(v)	“Nonqualified Stock Option” means an Option to purchase Common Shares other than an Incentive Stock Option;

 

		(w)	“Plan” means this Stock Option Plan, as the same may from time to time be supplemented, amended and/or restated
and in effect;

 

		(x)	“Related Entity” means, for a company or corporation, a person that Controls or is Controlled by the Company
or that is Controlled by the same person that controls that company or corporation;

 

		(y)	“Securities Act” means the Securities Act (British Columbia);

 

		(z)	“shareholder approval” means the approval as evidenced by a resolution passed by a simply majority of votes
cast at a meeting of holders of Common Shares (unless required by the Stock Exchanges to exclude the votes cast by Insiders in
relation to amendments benefiting Insiders);

 

		(aa)	“Security Based Compensation Arrangement” means any stock option, stock option plan, employee stock purchase
plan or any other compensation or incentive mechanism involving the issuance or potential issuance of securities of the Company,
including a share purchase from treasury that is financially assisted by the Company by way of a loan, guarantee or otherwise;

 

    	 	4	 

     

    

 

		(bb)	“Stock Exchanges” means such stock exchanges or other organized market on which the Common Shares are listed
or posted for trading, including the Toronto Stock Exchange and the New York Stock Exchange;

 

		(cc)	“subsidiary” has the meaning assigned thereto under the Securities Act (British Columbia) as the same may
from time to time be amended or re-enacted; and

 

		(dd)	“Trading Day”, with respect to any Stock Exchange, means a day on which securities may be traded through
the facilities of such Stock Exchange.

 

		2.2	Any question arising as to the interpretation of this Plan will be determined by the Compensation Committee (as hereinafter
defined) and, absent manifest error, such determination will be conclusive and binding on the Company and all Optionees.

 

		2.3	In this Plan, words importing the singular number only include the plural and vice versa, words importing any gender
include all genders and words importing persons include individuals, corporations, limited and unlimited liability companies, general
and unlimited partnerships, associations, trusts, incorporated organizations, joint ventures and governmental authorities.

 

ARTICLE 3

EFFECTIVE DATE OF PLAN

 

The initial effective date of this Plan was July 30, 1997,
the date on which the Plan was deemed to be adopted by the Board of Directors, and the Plan was amended and restated on April 13,
2007. The Plan is amended and restated with effect from May 2, 2016.

 

ARTICLE 4

ADMINISTRATION OF PLAN

 

		4.1	This Plan will be administered by a committee (the “Compensation Committee”) of the Board of Directors,
consisting of not less than three directors, and each member of the Compensation Committee shall be a “non-employee director”
within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m) of the U.S. Internal
Revenue Code. The Compensation Committee shall not delegate its power to grant Options to executive officers in a manner that would
cause the Plan not to comply with the requirements of Section 162(m) of the Internal Revenue Code.

 

		4.2	The Board of Directors will take such steps which in its opinion are required to ensure that the Compensation Committee has
the necessary authority to fulfil its functions under this Plan.

 

		4.3	The Compensation Committee has the authority to interpret the Plan, to adapt, amend (subject to Article 9 below), rescind
and waive rules and regulations to govern the administration of the Plan and to determine all questions arising out of the Plan
and any Option granted pursuant to the Plan, which interpretations and determinations will be conclusive and binding on the Company
and all other affected persons.

 

    	 	5	 

     

    

 

ARTICLE 5

REGULATIONS

 

		5.1	The Compensation Committee may from time to time establish such regulations, make such determinations and interpretations and
take such steps in connection with this Plan which, in its opinion, are necessary or desirable for the administration of this Plan.

 

ARTICLE 6

COMPLIANCE WITH LAWS

 

		6.1	The Plan, the grant and exercise of Options under the Plan and the Company’s obligation to issue Common Shares on exercise
of Options will be subject to all applicable federal, provincial and foreign laws, rules and regulations and the rules of any regulatory
authority or stock exchange on which the securities of the Company are listed. The Company shall not be required or in any way
obliged to grant Options or issue Common Shares if such grant or issuance would require registration of the Plan or of any such
Options or Common Shares under the securities laws of any foreign jurisdiction. Common Shares issued to Optionholders pursuant
to the exercise of Options may be subject to limitations on sale or resale under applicable securities laws.

 

		6.2	The Compensation Committee may from time to time take such steps and require such documentation from Eligible Persons or Optionholders
which in its opinion are necessary or desirable to ensure compliance with all applicable laws, the bylaws, rules and regulations
of any Stock Exchanges.

 

		6.3	The Compensation Committee may also from time to time take such steps which in its opinion are necessary or desirable to restrict
the transferability of any Common Shares acquired on the exercise of any Option in order to ensure such compliance, including,
where applicable, the endorsement of a legend on any certificate representing Common Shares acquired on the exercise of any Option
to the effect that such Common Shares may not be offered, sold or delivered except in compliance with the applicable securities
laws and regulations of Canada or the United States.

 

ARTICLE 7

COMMON SHARES SUBJECT TO PLAN

 

		7.1	The maximum number of Common Shares that may be issued from and after April 13, 2007 pursuant to exercise of Options granted
under the Plan is 13,700,000 Common Shares, subject to adjustment as provided hereunder.

 

		7.2	The Board of Directors will reserve for allotment from time to time out of the authorized but unissued Common Shares sufficient
Common Shares to provide for issuance of all Common Shares which are issuable under all outstanding Options.

 

    	 	6	 

     

    

 

		7.3	Upon the expiry or termination of an Option which has not been exercised in full, the number of Common Shares reserved for
issuance under that Option but which have not been issued shall become available for issue for the purpose of additional Options
which may be granted under this Plan.

 

		7.4	Participation in this Plan will be entirely voluntary and any decision not to participate will not affect an Eligible Person’s
employment or other relationship with the Company or any Related Entity.

 

		7.5	Nothing in this Plan or in any Option Agreement will confer on any Optionholder any right to remain as an employee, officer,
director or Consultant of the Company or any Related Entity.

 

		7.6	Nothing herein or otherwise shall be construed so as to confer on any Optionee any rights as a shareholder of the Company with
respect to any Common Shares reserved for the purpose of any Option.

 

		7.7	An Optionholder will only have rights as a shareholder of the Company with respect to Shares that the Optionholder acquires
through the exercise of an Option in accordance with its terms.

 

		7.8	The number of Common Shares issuable to Insiders, at any time, pursuant to the Plan and any other Securities Based Compensation
Arrangement cannot exceed 10% of the issued and outstanding Common Shares.

 

		7.9	The number of Common Shares issued to Insiders, within any one year period, under the Plan and any other Securities Based Compensation
Arrangement cannot exceed 10% of the issued and outstanding Common Shares.

 

		7.10	The maximum number of Common Shares issued and reserved for issuance to non- employee directors of the Company upon exercise
of Options shall not exceed 0.3% of the issued and outstanding Common Shares.

 

		7.11	No Eligible Person may be granted an Option or Options for more than 500,000 Common Shares (subject to adjustment as provided
for in Section 8.1(h) of the Plan), in the aggregate in any calendar year.

 

ARTICLE 8

GRANT OF OPTIONS

 

		8.1	Subject to the rules set out below, the Compensation Committee (or in the case of any proposed grantee who is a member of the
Compensation Committee, the Board of Directors) may from time to time grant to any Eligible Person one or more Options as the Compensation
Committee deems appropriate, or authorize the CEO to grant up to a certain number of Options to such Eligible Persons (other than
directors and officers) in such amount and on such terms as the CEO deems appropriate:

 

    	 	7	 

     

    

 

		(a)	Date Option Granted. The date on which an Option will be deemed to have been granted under this Plan will be the date
on which the Compensation Committee or the CEO, as applicable, authorizes the grant of such Option or such later date as may be
specified by the Compensation Committee at the time of such authorization.

 

		(b)	Number of Common Shares. The number of Common Shares that may be purchased under any Option by an Optionee will be determined
by the Compensation Committee or the CEO, as applicable, provided that such number may not be greater than the maximum number permitted
under the applicable rules and regulations of all regulatory authorities to which the Company is subject, including the Stock Exchanges.
An Optionee, at the time of granting an Option, may hold more than one Option.

 

		(c)	Exercise Price. The exercise price (the “Exercise Price”) per Common Share under each Option will
be determined by the Compensation Committee or the CEO, as applicable, by reference to the fair market price(s) of the Common Shares
on the primary Stock Exchange for which most trading of the Common Shares occurs, generally by reference to the closing market
price of the Common Shares, provided that such price may not be less than the lowest price permitted under the applicable rules
and regulations of all regulatory authorities to which the Company is subject, including those of the Stock Exchanges (the “Permitted
Price”).

 

		(d)	Option Agreements. Each Option will be evidenced by an agreement (the “Option Agreement”) which incorporates
such terms and conditions as the Compensation Committee in its discretion deems appropriate and consistent with the provisions
of this Plan. Each Option Agreement will be executed by the Eligible Person to whom the Option is granted (the “Optionee”)
and on behalf of the Company by any member of the Compensation Committee, the CEO or the Corporate Secretary of the Company or
such other person as the Compensation Committee may designate for such purpose.

 

		(e)	Expiry of Options. Each Option will expire on the earlier of:

 

		(i)	the date determined by the Compensation Committee and specified in the Option Agreement pursuant to which such Option is granted,
provided that such date may not be later than the earlier of (A) the date which is the tenth anniversary of the date on which
such Option is granted (except in the circumstances where the tenth anniversary falls within, or within five Business Days after,
the end of a Black Out Period, then instead of the tenth anniversary, the relevant date shall be the fifth Business Day after the
end of such Black Out Period) and (B) the latest date permitted under the applicable rules and regulations of all regulatory
authorities to which the Company is subject, including the Stock Exchanges;

 

    	 	8	 

     

    

 

		(ii)	in the event the Optionee ceases to be an Eligible Person for any reason, other than death of the Optionee, such period of
time after the date on which the Optionee ceases to be an Eligible Person as may be specified by the Compensation Committee, and
which period will be specified in the specific Option Agreement with respect to such Option;

 

		(iii)	in the case of the death of an Optionee prior to: (A) the Optionee ceasing to be an Eligible Person; or (B) the date
which is the number of days specified by the Compensation Committee pursuant to subparagraph (ii) above from the date on which
the Optionee ceased to be an Eligible Person; the date which is the 180th day after the date of death of such Optionee or such
other date as may be specified by the Compensation Committee and which period will be specified in the Option Agreement with respect
to such Option;

 

		(iv)	notwithstanding the foregoing provisions of subparagraphs (ii) and (iii) of this paragraph 8(e), the Compensation
Committee may, subject to regulatory approval, at any time prior to expiry of an Option extend the period of time within which
an Option held by a deceased Optionee may be exercised or within which an Option may be exercised by an Optionee who has ceased
to be an Eligible Person, but such an extension shall not be granted beyond the original expiry date of the Option as provided
for in subparagraph (i) above; and

 

		(v)	notwithstanding the foregoing provisions, if the expiry of an Option pursuant to an Option Agreement or this Plan occurs during
the Black Out Period applicable to the Optionee or within five Business Days after the last day of a Black Out Period applicable
to the Optionee, the expiry date for the Option will be the last day of such five Business Day period, except in the event of expiry
of Options following termination of an Optionholder’s employment or contract as a Consultant for cause.

 

		(f)	Non-Transferability of Options. Each Option Agreement will provide that the Option granted thereunder is not transferable
or assignable and may be exercised only by the Optionee or, in the event of the death of the Optionee or the appointment of a committee
or duly appointed attorney of the Optionee or of the estate of the Optionee on the grounds that the Optionee is incapable, by reason
of physical or mental infirmity, of managing their affairs, the Optionee’s legal representative or such committee or attorney,
as the case may be (the “Legal Representative”).

 

    	 	9	 

     

    

 

		(g)	Exercise of Options. Subject to the provisions of paragraph 8.1(h) below, the Compensation Committee may impose
such limitations or conditions on the exercise or vesting of any Option as the Compensation Committee in its discretion deems appropriate.
Each Option Agreement will provide that the Option granted thereunder may be exercised by notice signed by the Optionee or the
Legal Representative of the Optionee and accompanied by full payment for the Common Shares being purchased or by other means, including
without limitation electronic means via on-line arrangements, as the Compensation Committee may from time to time approve and allow.
The exercise price for the option exercised must be paid in cash or by check unless the Compensation Committee in its sole discretion
permits, either at the time the Option is granted or at any time before it is exercised, a combination of cash and check or any
other form of consideration or manner of payment. In the event of the exercise of any Option by the Legal Representative of the
Optionee, the Legal Representative shall also deliver to the Company evidence satisfactory to the Company of the Legal Representative’s
authority to do so. The Compensation Committee may in its discretion incorporate into any Option Agreement terms which will, notwithstanding
the time or times specified in such Option Agreement for the exercise of the Option granted thereunder, allow the Optionee to elect
to purchase all or any of the Common Shares then subject to such Option if the Compensation Committee in its discretion determines
to permit the Optionee to exercise the Option in respect of such Common Shares; provided, that notwithstanding any such terms that
may be incorporated into any Option Agreement, in the event of a proposed Change of Control, the Compensation Committee may, in
connection with such proposed Change of Control, only accelerate the vesting of any unvested Options as contemplated by Section
8.1(h)(ii).

 

		(h)	Adjustments to Shares and Acceleration of Vesting.

 

		(i)	The number of Common Shares delivered to an Optionholder upon exercise of an Option must be adjusted in the following events
and manner, subject to the right of the Compensation Committee to make such additional or other adjustments or to determine any
adjustments being inapplicable as it considers appropriate in the circumstances:

 

		(A)	upon a subdivision of the Common Shares into a greater number of Common Shares, a consolidation of the Common Shares into a
lesser number of Shares or the issue of a stock dividend to holders of the Common Shares (other than dividends in the ordinary
course), the number of Common Shares authorized to be issued under the Plan, the number of Common Shares receivable on the exercise
of an Option and the Exercise Price thereof will be increased or reduced proportionately and the Company will deliver upon the
exercise of an Option, in addition to or in lieu of the number of Optioned Shares in respect of which the right to purchase is
being exercised and without the Optionholder making any additional payment other than the appropriately adjusted Exercise Price,
such greater or lesser number of Common Shares as results from the subdivision, consolidation or stock dividend;

 

    	 	10	 

     

    

 

		(B)	upon the distribution by the Company to holders of Common Shares of: shares of any class (whether of the Company or another
corporation, but other than Common Shares), rights (other than the distribution of rights under any shareholder rights plan from
time to time adopted by the Company), options, warrants, evidence of indebtedness, cash, or other securities or assets (other than
dividends in the ordinary course), the Company will deliver upon exercise of an Option, in addition to that number of Optioned
Shares in respect of which the right to purchase is being exercised, and without the Optionholder making any additional payment,
such other securities, evidence of indebtedness or assets for each Common Share as a result of such distribution; and

 

		(C)	upon a capital reorganization, reclassification or change of the Common Shares, a consolidation, merger, amalgamation, arrangement
or other form of corporate reorganization or combination of the Company with another corporation or a sale, lease or exchange of
all or substantially all of the assets of the Company, the Company (or, if the Company is not the successor in such transaction,
the successor or its parent company) will deliver upon exercise of an Option, in lieu of each Optioned Share in respect of which
the right to purchase is being exercised, the kind and amount of shares or other securities or assets that one Common Share is
exchanged for, reorganized or reclassified into or entitled to as a result from such event.

 

The purpose of such adjustments is to ensure that
any Optionholder exercising an Option after any such event will be in substantially the same position as such Optionholder would
have been in if he or she had exercised the Option prior to such event.

 

		(ii)	Notwithstanding any other provision herein, in the event of a proposed Change of Control, the Compensation Committee may, as
it deems necessary or equitable in its sole discretion, determine that the vesting of any Option granted under the Plan shall be
accelerated (A) in the event that the Optionholder’s employment with the Company or its subsidiaries is terminated (i) by
the Company or its subsidiaries, other than for Cause, upon the Change of Control or within two years following the Change of Control,
or (ii) by the Optionholder for Good Reason upon the Change of Control or within one year following the Change of Control, or (B)
as required by the terms of any agreement between the Company and any Optionholder dated on or prior to February 29, 2016, as such
agreement is in effect on February 29, 2016. All determinations of the Compensation Committee under this Section will be binding
for all purposes of the Plan.

 

		(iii)	If, at any time when an Option granted under the Plan remains unexercised, an offer to purchase all of the Common Shares of
the Company is made by a third party, the Company will use its best efforts to bring such offer to the attention of the Optionholder
as soon as practicable.

 

    	 	11	 

     

    

 

		(iv)	An adjustment will take effect at the time of the event giving rise to the adjustment, and the adjustments provided for in
this Section are cumulative unless the Compensation Committee specifically provides otherwise.

 

		(v)	the Company will not be required to issue fractional Common Shares or other securities under the Plan and any fractional interest
in a Common Share or other security that would otherwise be delivered upon the exercise of an Option will be cancelled.

 

		(vi)	Except as expressly provided in this Section 8.1(h) or as determined by the Board of Directors, neither the issue by the
Company of shares of any class or securities convertible into or exchangeable for shares of any class, nor the conversion or exchange
of such shares or securities, affects, and no adjustment by reason thereof is to be made with respect to, the number of Common
Shares that may be acquired on the exercise of any outstanding Option or the Exercise Price of any outstanding Option.

 

		(i)	Representations and Covenants of Optionees. Each Option Agreement will contain representations and covenants of the
Optionee that:

 

		(i)	the Optionee is or was a director, officer, employee or Consultant of the Company or of a subsidiary of the Company or a person
otherwise approved as an “Eligible Person” under this Plan by the Compensation Committee or the CEO, as applicable;

 

		(ii)	the Optionee has not been induced to enter into such Option Agreement by the expectation of employment or engagement as a Consultant
or continued employment or engagement as a Consultant with the Company;

 

		(iii)	the Optionee is aware that the grant of the Option and the issuance by the Company of Common Shares thereunder are exempt from
the obligation under applicable securities laws to file a prospectus or other registration document (other than a registration
statement on Form S-8 with the United States Securities and Exchange Commission) qualifying the distribution of the Options
or the Common Shares to be distributed thereunder under any applicable securities laws and if such exemption for any reason becomes
unavailable, the obligation of the Company to grant any Option or issue any Common Shares upon the exercise of granted Options
will cease;

 

		(iv)	upon each exercise of an Option, the Optionee, or the Legal Representative of the Optionee, as the case may be, will, if requested
by the Company, represent and agree in writing that the person is, or the Optionee was, a director, officer, employee or Consultant
of the Company or of a subsidiary of the Company or a person otherwise approved as an “Eligible Person” under
this Plan by the Compensation Committee, and has not been induced to purchase the Common Shares by expectation of employment or
continued employment with the Company, or in the case of a Consultant, by engagement or continued engagement by the Company, and
that such person is not aware of any commission or other remuneration having been paid or given to others in respect of the trade
in the Common Shares; and

 

    	 	12	 

     

    

 

		(v)	if the Optionee or the Legal Representative of the Optionee exercises the Option, the Optionee or the Legal Representative,
as the case may be, will prior to and upon any sale or disposition of any Common Shares purchased pursuant to the exercise of the
Option, comply with all applicable securities laws and all applicable rules and regulations of all regulatory authorities to which
the Company is subject, including the Stock Exchanges, and will not offer, sell or deliver any of such Common Shares, directly
or indirectly, in the United States or to any citizen or resident of, or any company, partnership or other entity created or organized
in or under the laws of, the United States, or any estate or trust the income of which is subject to United States federal income
taxation regardless of its source, except in compliance with the securities laws of the United States;

 

		(j)	Provisions Relating to Share Issuances. Each Option Agreement will contain such provisions as in the opinion of the
Compensation Committee are required to ensure that no Common Shares are issued on the exercise of an Option unless the Compensation
Committee is satisfied that the issuance of such Common Shares will be exempt from all registration or qualification requirements
of applicable securities laws and will be permitted under the applicable rules and regulations of all regulatory authorities to
which the Company is subject, including the Stock Exchanges. In particular, if required by any regulatory authority to which the
Company is subject, including the Stock Exchanges, an Option Agreement may provide that shareholder approval to the grant of an
Option must be obtained prior to the exercise of the Option or to the amendment of the Option Agreement.

 

		(k)	Restrictions on Transfer. At any time, if the Company is not a reporting issuer (as defined under the Securities Act
(British Columbia) or under the Securities Act of the jurisdiction in which the headquarters of the Company is located,
all Common Shares issued pursuant to any Options granted under this Plan shall not be transferred unless such transfer is approved,
in the absolute discretion, by the board of directors and such approval may be granted on such terms and conditions as the directors
may deem fit.

 

ARTICLE 9

SUSPENSION, AMENDMENT OR TERMINATION OF PLAN

 

		9.1	This Plan will terminate on a date as the Compensation Committee may determine (without prejudice to Options granted prior
to the termination of this Plan).

 

    	 	13	 

     

    

 

		9.2	Subject to Section 9.3 below, the Compensation Committee will have the right at any time and from time to time to suspend,
amend or terminate this Plan in any manner without consent or approval from Optionholders or shareholders (provided that no such
suspension, amendment or termination may be made that will materially prejudice the rights of any Optionholder under any Option
previously granted to the Optionholder without consent or deemed consent by such Optionholder) including, without limitation:

 

		(a)	to avoid any additional tax on Optionholders under Section 409A of the United States Internal Revenue Code or other applicable
tax legislation;

 

		(b)	changing the eligibility for and limitations on participation in the Plan (other than participation by non-employee directors
in the Plan);

 

		(c)	making any addition to, deletion from or alteration of the provisions of the Plan that are necessary to comply with applicable
law or the requirements of any regulatory authority or Stock Exchange;

 

		(d)	making any amendment of a typographical, grammatical, administrative or clerical nature, or clarification correcting or rectifying
any ambiguity, defective provision, error or omission in the Plan; and

 

		(e)	provisions relating to the administration of the Plan or the manner of exercise of the Options, including:

 

		·	changing or adding of any form of financial assistance provided by the Company to the Participants that would facilitate purchase
of Common Shares under the Plan; and

 

		·	adding provisions relating to a cashless exercise (which will provide for a full deduction of the underlying Common Shares
from the maximum number reserved under the Plan for issuance).

 

		9.3	Notwithstanding any provision to the contrary, none of the following amendments to the Plan or to the terms of Options granted
under the Plan may be made without shareholders’ approval:

 

		(a)	any increase in the maximum number of Common Shares that may be issued pursuant to the exercise of Options granted under the
Plan;

 

		(b)	any reduction in exercise price or cancellation and reissue of Options;

 

		(c)	any amendment that extends the term of an Option beyond the original expiry date;

 

		(d)	if at any time, the Plan is amended to exclude participation by non-employee directors, any amendment to “Eligible Participants”
that may permit the introduction or reintroduction of non-employee directors on a discretionary basis;

 

    	 	14	 

     

    

 

		(e)	any amendment that increases limits previously imposed on non-employee director participation;

 

		(f)	any amendment which would permit equity based awards granted under the Plan to be transferable or assignable other than for
normal estate settlement purposes;

 

		(g)	any amendment to increase the maximum limit of the number of securities that may be:

 

		(i)	issued to Insiders within any one year period; or

 

		(ii)	issuable to Insiders at any time;

 

under the Plan, or when combined with all of the Company’s
other Security Based Compensation Arrangements, which could exceed 10% of the total issued and outstanding Common Shares of the
Company, respectively;

 

		(h)	any amendment to change the maximum limit on the number of options that may be issued to any Eligible Person in the aggregate
in any calendar year as set forth in Section 7.11;

 

		(i)	adding provisions relating to a cashless exercise (other than a surrender of options for cash) which does not provide for a
full deduction of the underlying Common Shares from the maximum number reserved under the Plan for issuance; and

 

		(j)	any amendment to the amending provisions of the Plan.

 

The full powers of the Compensation Committee as provided
for in this Plan will survive the termination of this Plan until all Options have been exercised in full or have otherwise expired.

 

ARTICLE 10

INCENTIVE STOCK OPTION LIMITATIONS

 

		10.1	To the extent required by Section 422 of the U.S. Internal Revenue Code, Incentive Stock Options shall be subject to the
following additional terms and conditions and if there is any conflict between the terms of this Article and other provisions under
the Plan, the provisions under this Article shall prevail:

 

		(a)	Dollar Limitation. To the extent the aggregate fair market value (determined as of the grant date) of Common Shares
with respect to which Incentive Stock Options are exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds U.S. $100,000, such portion in excess of U.S. $100,000 shall be treated as a Nonqualified
Stock Option. In the event the Optionee holds two or more such Options that become exercisable for the first time in the same calendar
year, such limitation shall be applied on the basis of the order in which such Options are granted.

 

    	 	15	 

     

    

 

		(b)	10% Shareholders. If an Optionee owns 10% or more of the total voting power of all classes of the Company’s stock,
then the exercise price per share of an Incentive Stock Option shall not be less than 110% of the fair market value of the Common
Shares on the grant date and the Option term shall not exceed five years. The determination of 10% ownership shall be made in accordance
with Section 422 of the U.S. Internal Revenue Code.

 

		(c)	Eligible Employees. Individuals who are not employees of the Company or one of its parent corporations or subsidiary
corporations may not be granted Incentive Stock Options. For purposes of this paragraph (c), “parent corporation”
and “subsidiary corporation” shall have the meanings attributed to those terms for purposes of Section 422
of the U.S. Internal Revenue Code.

 

		(d)	Term. The term of an Incentive Stock Option shall not exceed 10 years.

 

		(e)	Exercisability. To qualify for Incentive Stock Option tax treatment, an Option designated as an Incentive Stock Option
must be exercised within three months after termination of employment for reasons other than death, except that, in the case of
termination of employment due to total disability, such Option must be exercised within one year after such termination. Employment
shall not be deemed to continue beyond the first 90 days of a leave of absence unless the Optionee’s reemployment rights
are guaranteed by statute or contract. For purposes of this paragraph (e), “total disability” shall mean
a mental or physical impairment of the Optionee which is expected to result in death or which has lasted or is expected to last
for a continuous period of 12 months or more and which causes the Optionee to be unable, in the opinion of the Company and
two independent physicians, to perform his or her duties for the Company and to be engaged in any substantial gainful activity.
Total disability shall be deemed to have occurred on the first day after the Company and the two independent physicians have furnished
their opinion of total disability to the Compensation Committee.

 

		(f)	Taxation of Incentive Stock Options. In order to obtain certain tax benefits afforded to Incentive Stock Options under
Section 422 of the U.S. Internal Revenue Code, the Optionee must hold the shares issued upon the exercise of an Incentive
Stock Option for two years after the date of grant of the Incentive Stock Option and one year from the date of exercise. An Optionee
may be subject to U.S. alternative minimum tax at the time of exercise of an Incentive Stock Option. The Compensation Committee
may require an Optionee to give the Company prompt notice of any disposition of shares acquired by the exercise of an Incentive
Stock Option prior to the expiration of such holding periods.

 

		(g)	Assignability. No Incentive Stock Option granted under the Plan may be assigned or transferred by the Optionee other
than by will or by the laws of descent and distribution, and during the Optionee’s lifetime, such Incentive Stock Option
may be exercised only by the Optionee.

 

    	 	16	 

     

    

 

		(h)	Grant. No Incentive Stock Options may be granted more than ten years after the later of (i) the adoption of the
Plan by the Board and (ii) the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan
for purposes of Section 422 of the United States Internal Revenue Code.

 

ARTICLE 11

APPLICABLE LAW

 

		11.1	The laws of the Province of British Columbia shall apply to the Plan and any Option Agreements granted hereunder and will be
interpreted and construed in accordance with the laws of the Province of British Columbia.

 

    	 	17

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