Document:

2012 Incentive Compensation Plan of Forbes Energy Services Ltd.

 Exhibit 10.2 
 FORBES ENERGY SERVICES, LTD. 
 2012 INCENTIVE COMPENSATION PLAN

 1. Purpose of the Plan. The purpose of the Plan is to: (i) attract and retain the best available personnel
for positions of substantial responsibility, (ii) provide additional incentive to Employees, Directors and Consultants, and (iii) promote the success of the Company’s business. The Plan permits the grant of Incentive Stock Options,
Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, and Other Stock Based Awards. 
 2. Definition. As used in this Plan, the following definitions shall apply: 

(a) “Administrator” means the Board or any of its Committees that shall be administering the Plan, in accordance with
Section 4 of the Plan. 
 (b) “Applicable Laws” means the requirements relating to the administration of
equity-based awards or equity compensation plans under U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or shall be, granted under the Plan. 
 (c)
“Award” means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares or Other Stock Based Awards. 

(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
 (e) “Awarded
Stock” means the Common Stock subject to an Award. 
 (f) “Board” means the Board of Directors of the
Company. 
 (g) “Change in Control” means, except as otherwise provided in an Award Agreement, the occurrence of
any of the following events: 
 (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than a Founder, becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting
power represented by the Company’s then outstanding voting securities; 
 (ii) the sale or disposition by the Company of
all or substantially all of the Company’s assets (evaluated on a consolidated basis) other than (A) the sale or disposition of 

 
all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, at least fifty percent (50%) or more of the combined voting power
of the outstanding voting securities of the Company at the time of the sale or (B) pursuant to a spin-off type transaction, directly or indirectly, of such assets to the Company’s shareholders; 

(iii) A change in the composition of the Board occurring within a twelve (12) month period as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent Directors” are directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to
the election of directors to the Company); or 
 (iv) a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 (h) “Code” means the Internal Revenue Code of 1986, as amended, and the U.S. Treasury regulations
promulgated thereunder. Any reference to a section of the Code shall be a reference to any successor or amended section of the Code. 
 (i) “Committee” means a committee of Directors or other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 of the Plan. 

(j) “Common Stock” means the Common Stock of the Company, or in the case of Performance Units, Restricted Stock Units,
and certain Other Stock Based Awards, the cash equivalent thereof, as applicable. 
 (k) “Company” means Forbes
Energy Services, Ltd., a Texas corporation, and any successor thereto. 
 (l) “Consultant” means any person,
including an advisor or advisory director, engaged by the Company or a Parent or Subsidiary to render services to such entity. 

(m) “Director” means a member of the Board. 
 (n) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its sole discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. 

  
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 (o) “Dividend Equivalent” means a credit, made at the sole discretion of
the Administrator, to the account of a Participant in an amount equal to the value of dividends paid on one (1) Share for each Share represented by an Award held by such Participant. Under no circumstances shall the payment of a Dividend
Equivalent be made contingent on the exercise of an Option or Stock Appreciation Right. 
 (p) “Employee” means
any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company. 
 (q) “Exchange Act” means the Securities Exchange Act of 1934, as
amended. 
 (r) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation
the NASDAQ Global Select Market, the NASDAQ Global Market (formerly the NASDAQ National Market) or the NASDAQ Capital Market (formerly the NASDAQ SmallCap Market) of the NASDAQ Stock Market, the Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock for the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable. 

(iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator. 
 (s) “Founder” means any of John E. Crisp, Charles C. Forbes and Janet L. Forbes. 

(t) “Incentive Stock Option” means an Option intended to qualify and receive favorable tax treatment as an incentive
stock option within the meaning of Section 422 of the Code, as designated in the applicable Award Agreement. 
 (u)
“Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. 
 (v) “Option” means an option to purchase Common Stock granted pursuant to the Plan. 

  
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 (w) “Other Stock Based Awards” means any other awards not specifically
described in the Plan that are valued in whole or in part by reference to, or are otherwise based on, Shares and are created by the Administrator pursuant to Section 12. 
 (x) “Outside Director” means an “outside director” within the meaning of Section 162(m) of the Code. 

(y) “Parent” means a “parent corporation” with respect to the Company, whether now or hereafter existing, as
defined in Section 424(e) of the Code. 
 (z) “Participant” means a Service Provider who has been granted
an Award under the Plan. 
 (aa) “Performance Goals” means goals which have been established by the Committee in
connection with an Award and are based on one (1) or more of the following criteria, as determined by the Committee in its absolute and sole discretion: net income; cash flow; cash flow on investment; pre-tax or post-tax profit levels or
earnings; operating income or earnings; return on investment; earned value added; expense reduction levels; free cash flow; free cash flow per share; earnings per share; net earnings per share; net earnings from continuing operations; sales growth;
sales volume; economic profit; expense reduction; controlled expenses; return on assets; return on net assets; return on equity; return on capital; return on sales; return on invested capital; organic revenue; growth in managed assets; total
shareholder return; stock price; stock price appreciation; EBIT, adjusted EBIT, EBITA; adjusted EBITA; EBITDA; adjusted EBITDA; EBITDAR; adjusted EBITDAR; return in excess of cost of capital; operating profits; profit in excess of cost of capital;
net operating profit after tax; operating margin; profit margin; adjusted revenue; revenue; net revenue; operating revenue; net cash provided by operating activities; net cash provided by operating activities per share; cash conversion percentage;
new sales; net new sales; cancellations; gross margin; gross margin percentage; revenue before deferral; regulatory body approval for commercialization of a product; implementation or completion of critical projects; research; in-licensing;
out-licensing; product development; government relations; compliance; mergers and acquisitions; or sales of assets or subsidiaries. 
 (bb) “Performance Period” means the time period during which the Performance Goals or performance objectives must be met. 

(cc) “Performance Shares” means Shares issued pursuant to a Performance Share Award under Section 10 of the Plan.

 (dd) “Performance Unit” means, pursuant to Section 10 of the Plan, an unfunded and unsecured promise to
deliver Shares, cash or other securities equal to the value set forth in the Award Agreement. 
 (ee) “Period of
Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of
time, the achievement of Performance Goals or other target levels of performance, or the occurrence of other events as determined by the Administrator. 

  
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 (ff) “Plan” means this 2012 Incentive Compensation Plan. The Plan is the
successor to the Prior Plan. The Plan was approved by the Board on April 30, 2012 and by the Company’s shareholders on [            ], 2012. 

(gg) “Prior Plan” means the Forbes Energy Services, Ltd. Incentive Compensation Plan, sponsored by the Company.

 (hh) “Restricted Stock” means Shares issued pursuant to a Restricted Stock Award under Section 8 or
issued pursuant to the early exercise of an Option. 
 (ii) “Restricted Stock Unit” means, pursuant to
Sections 4 and 11 of the Plan, an unfunded and unsecured promise to deliver Shares, cash or other securities equal in value to the Fair Market Value of one (1) Share in the Company on the date of vesting or settlement, or as otherwise set
forth in the Award Agreement. 
 (jj) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 
 (kk)
“Section 16(b)” means Section 16(b) of the Exchange Act. 
 (ll) “Service Provider”
means an Employee, Director or Consultant. 
 (mm) “Share” means a share of Common Stock, as adjusted in
accordance with Section 15 of the Plan. 
 (nn) “Stock Appreciation Right” or “SAR” means,
pursuant to Section 9 of the Plan, an unfunded and unsecured promise to deliver Shares, cash or other securities equal in value to the difference between the Fair Market Value of a Share as of the date such SAR is exercised/settled and the Fair
Market Value of a Share as of the date such SAR was granted, or as otherwise set forth in the Award Agreement. 
 (oo)
“Subsidiary” means a “subsidiary corporation” with respect to the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code. 

3. Stock Subject to the Plan. 
 (a) Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued pursuant to all Awards under the Plan 1,022,500
plus any shares available to be granted under the 2008 Plan, but which are not subject to outstanding awards under the 2008 Plan, plus the amount of outstanding Common Stock subject to Lapsed Awards (defined below) under the Prior Plan, all of which
may be subject to Incentive Stock Option treatment. Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. Upon payment in Shares pursuant to the exercise of an Award, the
number of Shares available for issuance under the Plan shall be reduced only by the number of Shares actually issued in such payment. If a Participant pays the exercise price (or purchase price, if applicable) of an Award through the tender of
Shares, or if Shares are tendered or withheld to satisfy any Company 

  
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withholding obligations, the number of Shares so tendered or withheld shall again be available for issuance pursuant to future Awards under the Plan. 

(b) Lapsed Awards. If any outstanding Award expires or is terminated or canceled without having been exercised or settled in full,
or if Shares acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company, the Shares allocable to the terminated portion of the Award or the forfeited or repurchased Shares shall again be available
for grant under the Plan (the “Lapsed Awards”). Similarly, the shares subject to Lapsed Awards under the Prior Plan shall add to the maximum number of Shares that are available for grant under Section 3(a) of the Plan.

 (c) Share Reserve. The Company, during the term of the Plan, shall at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the Plan. 
 4. Administration of the Plan. 

(a) Procedure. 
 (i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. Other than as provided above, the Plan shall be administered
by (A) the Board or (B) a Committee constituted to satisfy Applicable Laws. 
 (ii) Section 162(m). To the
extent that the Administrator determines it to be desirable and necessary to qualify Awards granted under this Plan as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered
by a Committee of two or more Outside Directors. 
 (iii) Rule 16b-3. If a transaction is intended to be exempt under
Rule 16b-3 of the Exchange Act, it shall be structured to satisfy the requirements for exemption under Rule 16b-3. 
 (iv)
Delegation of Authority for Day-to-Day Administration. Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to
it in this Plan. Such delegation may be revoked at any time. 
 (b) Powers of the Administrator. Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to the Committee, the Administrator shall have the authority, in its discretion to: 

(i) determine the Fair Market Value of Awards; 
 (ii) select the Service Providers to whom Awards may be granted under this Plan; 

  
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 (iii) determine the number of Shares to be covered by each Award granted under this Plan;

 (iv) approve forms of Award Agreements for use under the Plan; 

(v) determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted under this Plan, including but
not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on Performance Goals or other performance criteria), any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any
restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 
 (vi) construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; 
 (vii) prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans; 

(viii) amend the terms of any outstanding Award, including the discretionary authority to extend the post-termination exercise period of
Awards and accelerate the satisfaction of any vesting criteria or waiver of forfeiture or repurchase restrictions, provided that any amendment that would adversely affect the Participant’s rights under an outstanding Award shall not be made
without the Participant’s written consent; however, except as otherwise provided in Section 15, the Administrator shall not, without prior approval of the Company’s shareholders (i) amend the exercise price of outstanding Options
or SARs, (ii) cancel and regrant Options or SARs at a lower exercise price, or (iii) substitute underwater Options for other securities (including buyouts through issuance of such cash or other means). Notwithstanding the foregoing, an
amendment shall not be treated as adversely affecting the rights of the Participant if the amendment causes an Incentive Stock Option to become a Nonstatutory Stock Option or if the amendment is made to the minimum extent necessary to avoid the
adverse tax consequences of Section 409A of the Code. 
 (ix) allow Participants to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of
any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined, and all elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; 
 (x) authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Award previously granted by the Administrator; 
 (xi) allow a Participant to
defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to the Participant under an Award; 

  
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 (xii) determine whether Awards shall be settled in Shares, cash or in a combination of
Shares and cash; 
 (xiii) determine whether Awards shall be adjusted for Dividend Equivalents; 

(xiv) create Other Stock Based Awards for issuance under the Plan; 

(xv) establish a program whereby Service Providers designated by the Administrator can reduce compensation otherwise payable in cash in
exchange for Awards under the Plan; 
 (xvi) impose such restrictions, conditions or limitations as it determines appropriate as
to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy, and
(B) restrictions as to the use of a specified brokerage firm for such resales or other transfers; 
 (xvii) establish one
or more programs under the Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of Performance Goals or other performance criteria, or other event that absent the
election, would entitle the Participant to payment or receipt of Shares or other consideration under an Award; and 
 (xviii)
make all other determinations that the Administrator deems necessary or advisable for administering the Plan. 
 The express grant in the Plan of
any specific power to the Administrator shall not be construed as limiting any power or authority of the Administrator. However, the Administrator may not exercise any right or power reserved to the Board. 

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations, actions and interpretations shall
be final, conclusive and binding on all persons having an interest in the Plan. 
 (d) Indemnification. The Company shall
defend and indemnify members of the Board, officers and Employees of the Company or of a Parent or Subsidiary to whom authority to act for the Board, the Administrator or the Company is delegated (“Indemnitees”) to the maximum
extent permitted by law against (i) all reasonable expenses, including reasonable attorneys’ fees incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein
(collectively, a “Claim”), to which any of them is a party by reason of any action taken or failure to act in connection with the Plan, or in connection with any Award granted under the Plan; and (ii) all amounts required to be
paid by them in settlement the Claim (provided the settlement is approved by the Company) or required to be paid by them in satisfaction of a judgment in any Claim. However, no person shall be entitled to indemnification to the extent he is
determined in such Claim to be liable for gross negligence, bad faith or intentional misconduct. In addition, to be entitled to indemnification, the Indemnitee must, within thirty (30) days after written notice of the Claim, offer the Company,
in writing, the opportunity, at the Company’s expense, to defend the Claim. The right to indemnification shall be in addition to all other rights of indemnification available to the Indemnitee. 

  
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 5. Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Units, Performance Shares, and Other Stock Based Awards may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

6. Limitations. 
 (a) $100,000 Limitation for Incentive Stock Options. Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted.
The Fair Market Value of the Shares shall be determined as of the time the Options with respect to such Shares are granted. 

(b) Special Annual Limits. 
 (i) Subject to Section 15 of the Plan, the maximum number of Shares that may be subject to Options or Stock Appreciation Rights granted to any Service Provider in any calendar year shall equal
750,000 Shares and contain an exercise price equal to the Fair Market Value of the Common Stock as of the date of grant. If a Participant’s Award is cancelled, such Award continues to be counted against the maximum number of Shares for which
Awards may be granted in such fiscal year with respect to such Participant. If, following the grant of an Award, the price of the Award is reduced, the transaction is treated as a cancellation of one Award and the issuance of another Award, both of
which count against the maximum number of Shares for which such Awards may be granted in such fiscal year with respect to such Participant. 
 (ii) Subject to Section 15 of the Plan, the maximum number of Shares that may be subject to Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock Based
Awards, Other Stock Based Awards granted to any Service Provider in any calendar year shall equal 750,000 Shares. 
 (iii)
Subject to Section 15 of the Plan, the maximum dollar amount that may be subject to cash awards granted to any Service Provider in any calendar year shall equal $5,000,000. 

7. Options. 
 (a) Term of Option. The term of each Option shall be stated in the Award Agreement. In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such
shorter term as may be provided in the Award Agreement. Moreover, in the 

  
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case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. 

(b) Option Exercise Price and Consideration. 
 (i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: 

(1) In the case of an Incentive Stock Option 
 (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred and ten percent (110%) of the Fair Market Value per Share on the date of grant. 

(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall
be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. 
 (2) In the case of a
Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator, but shall not be less than Fair Market Value per Share on the date of grant for those subject to U.S. taxation. In the case of a Nonstatutory
Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant. 
 (3) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share
exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. 

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the
Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised. The Administrator, in its sole discretion, may accelerate the satisfaction of such conditions at any time. 

(c) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration, to the extent permitted by Applicable Laws, may consist
entirely of: 

  
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 (i) cash; 
 (ii) check; 
 (iii) other Shares which meet the conditions established by the
Administrator to avoid adverse accounting consequences (as determined by the Administrator); 
 (iv) consideration received by
the Company under a cashless exercise program implemented by the Company in connection with the Plan; 
 (v) a reduction in the
amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement; 

(vi) any combination of the foregoing methods of payment; or 
 (vii) any other consideration and method of payment for the issuance of Shares permitted by Applicable Laws. 
 (d) Exercise of Option. 
 (i) Procedure for Exercise; Rights as a
Shareholder. Any Option granted under this Plan shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option shall be
deemed exercised when the Company receives: (x) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (y) full payment for the Shares with respect to
which the Option is exercised (including provision for any applicable tax withholding). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Awarded Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in
Section 15 of the Plan or the applicable Award Agreement. Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.

 (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than
upon the Participant’s death or Disability, the Participant may exercise his Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for six (3) months following the Participant’s termination after
which the Option shall terminate. Unless 

  
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otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his entire Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If the Participant does not exercise his Option as to all of the vested Shares within the time specified by the Award Agreement, the Option shall terminate, and the remaining Shares covered by the Option shall revert to the Plan.

 (iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of his Disability, the
Participant may exercise his Option, to the extent vested, within the time specified in the Award Agreement (but in no event later than the expiration of the term of the Option as set forth in the Award Agreement). If no time for exercise of the
Option on Disability is specified in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination for Disability. Unless otherwise provided by the Administrator, on the date of
termination for Disability, the unvested portion of the Option shall revert to the Plan. If after termination for Disability, the Participant does not exercise his Option as to all of the vested Shares within the time specified by the Award
Agreement, the Option shall terminate and the remaining Shares covered by such Option shall revert to the Plan. 
 (iv) Death
of Participant. If a Participant dies while a Service Provider, the Option, to the extent vested, may be exercised within the time specified in the Award Agreement (but in no event may the Option be exercised later than the expiration of the
term of the Option as set forth in the Award Agreement), by the beneficiary designated by the Participant prior to his death; provided that such designation must be acceptable to the Administrator. If no beneficiary has been designated by the
Participant, then the Option may be exercised by the personal representative of the Participant’s estate, or by the persons to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. If the Award Agreement does not specify a time within which the Option must be exercised following a Participant’s death, it shall be exercisable for twelve (12) months following his death. Unless otherwise provided by the
Administrator, if at the time of death, the Participant is not vested as to his entire Option, the Shares covered by the unvested portion of the Option shall immediately vest. If the Option is not exercised as to all of the vested Shares within the
time specified by the Administrator, the Option shall terminate, and the remaining Shares covered by such Option shall revert to the Plan. 
 8. Restricted Stock. 
 (a) Grant of Restricted Stock. Subject to the
terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, shall determine. 

(b) Restricted Stock Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the
Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, shall determine. Unless the Administrator determines otherwise, Shares of Restricted Stock shall be held by the
Company as escrow agent until the restrictions on the Shares have lapsed. 

  
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 (c) Removal of Restrictions. Except as otherwise provided in this Section 8,
Shares of Restricted Stock covered by each Award made under the Plan shall be released from escrow as soon as practical after the last day of the Period of Restriction. The Administrator, in its sole discretion, may accelerate the time at which any
restrictions shall lapse or be removed. 
 (d) Voting Rights. During the Period of Restriction, Service Providers holding
Shares of Restricted Stock may exercise full voting rights with respect to those Shares, unless the Award Agreement provides otherwise. 
 (e) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid
with respect to such Shares unless otherwise provided in the Award Agreement. If any dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid. 
 (f) Return of Restricted Stock to Company. On the date set forth
in the Award Agreement, the Restricted Stock for which restrictions have not lapsed shall revert to the Company and again shall become available for grant under the Plan. 
 9. Stock Appreciation Rights 
 (a) Grant of SARs. Subject to the terms and
conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine the number of SARs
granted to any Service Provider. The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan, including the sole discretion to accelerate
exercisability at any time. 
 (b) SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall
specify the exercise price, the term, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, shall determine. 
 (c) Expiration of SARs. A SAR granted under the Plan shall expire upon the date determined by the Administrator, in its sole discretion, as set forth in the Award Agreement. Notwithstanding the
foregoing, the rules of Sections 7(d)(ii), 7(d)(iii) and 7(d)(iv) shall also apply to SARs. 
 (d) Payment of SAR
Amount. Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying: 
 (i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 
 (ii) The number of Shares with respect to which the SAR is exercised. 

  
 13 

 At the sole discretion of the Administrator, the payment upon the exercise of a SAR may be in cash, in
Shares of equivalent value, or in some combination thereof, unless the Award Agreement provides otherwise. 
 10. Performance
Units and Performance Shares. 
 (a) Grant of Performance Units and Performance Shares. Subject to the terms and
conditions of the Plan, Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as shall be determined by the Administrator in its sole discretion. The Administrator shall have complete
discretion in determining the number of Performance Units and Performance Shares granted to each Service Provider. 
 (b)
Value of Performance Units and Performance Shares. Each Performance Unit shall have an initial value established by the Administrator on or before the date of grant. Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the date of grant. 
 (c) Performance Objectives and Other Terms. The Administrator shall set
Performance Goals or other performance objectives in its sole discretion which, depending on the extent to which they are met, shall determine the number or value of Performance Units and Performance Shares that shall be paid out to the Participant.
Each award of Performance Units or Performance Shares shall be evidenced by an Award Agreement that shall specify the Performance Period and such other terms and conditions as the Administrator in its sole discretion shall determine. The
Administrator may set Performance Goals or performance objectives based upon the achievement of Company-wide, divisional, or individual goals (including solely continued service), applicable federal or state securities laws, or any other basis
determined by the Administrator in its sole discretion. 
 (d) Earning of Performance Units and Performance Shares. After
the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to receive a payout of the number of Performance Units or Performance Shares earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding Performance Goals or performance objectives have been achieved. After the grant of Performance Units or Performance Shares, the Administrator, in its sole discretion, may reduce
or waive any performance objectives for the Performance Unit or Performance Share. 
 (e) Form and Timing of Payment of
Performance Units and Performance Shares. Payment of earned Performance Units and Performance Shares shall be made after the expiration of the applicable Performance Period at the time determined by the Administrator. The Administrator, in its
sole discretion, may pay earned Performance Units and Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units or Performance Shares, as applicable, at the close
of the applicable Performance Period) or in a combination of cash and Shares. 

  
 14 

 (f) Cancellation of Performance Units or Performance Shares. On the date set forth
in the Award Agreement, all unearned or unvested Performance Units and Performance Shares shall be forfeited to the Company, and again shall be available for grant under the Plan. 

11. Restricted Stock Units. Restricted Stock Units shall consist of a Restricted Stock, Performance Share or Performance Unit Award
that the Administrator, in its sole discretion permits to be paid out in a lump sum, installments or on a deferred basis, in accordance with rules and procedures established by the Administrator 

12. Other Stock Based Awards. Other Stock Based Awards may be granted either alone, in addition to, or in tandem with, other Awards
granted under the Plan and/or cash awards made outside of the Plan. The Administrator shall have authority to determine the Service Providers to whom and the time or times at which Other Stock Based Awards shall be made, the amount of such Other
Stock Based Awards, and all other conditions of the Other Stock Based Awards, including any dividend or voting rights and whether the Award should be paid in cash. 
 13. Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards granted under this Plan shall be suspended during any unpaid leave of absence and shall resume on the date the
Participant returns to work on a regular schedule as determined by the Company; provided, however, that no vesting credit shall be awarded for the time vesting has been suspended during such leave of absence. A Service Provider shall not cease to be
an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no leave of
absence may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not guaranteed by statute or contract,
then at the end of three (3) months following the expiration of the leave of absence, any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. 
 14. Non-Transferability of Awards. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by the laws of descent, distribution or pursuant to a qualifed domestic relations order, and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate. 

15. Adjustments; Dissolution or Liquidation; Change in Control. 

(a) Adjustments. In the event of any change in the outstanding Shares of Common Stock by reason of any stock split, stock dividend
or other non-recurring dividends or distributions, recapitalization, merger, consolidation, spin-off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction that affects the
Common Stock, an adjustment shall be made, as the Administrator deems necessary or appropriate, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Such adjustment may
include an adjustment to the number and class of Shares which may be delivered under the Plan, the 

  
 15 

 
number, class and price of Shares subject to outstanding Awards, the number and class of Shares issuable pursuant to Options, and the numerical limits in Sections 3 and 6(b). Notwithstanding
the preceding, the number of Shares subject to any Award always shall be a whole number. 
 (b) Dissolution or
Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practical prior to the effective date of the proposed transaction. The Administrator, in its sole
discretion, may provide for a Participant to have the right to exercise his Award, to the extent applicable, until ten (10) days prior to the transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award
would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse one hundred percent (100%), and that any Award vesting shall accelerate one
hundred percent (100%), provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised or vested, an Award shall terminate immediately prior to the
consummation of such proposed action. 
 (c) Change in Control. This Section 15(c) shall apply except to the extent
otherwise provided in the Award Agreement. 
 (i) Stock Options and SARs. In the event of a Change in Control that
results in ownership by a successor corporation, each outstanding Option and SAR shall be assumed or an equivalent option or SAR substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. Unless determined
otherwise by the Administrator, if the successor corporation refuses to assume or substitute for the Option or SAR, the Participant shall fully vest in and have the right to exercise the Option or SAR as to all of the Awarded Stock, including Shares
as to which it would not otherwise be vested or exercisable. If an Option or SAR is not assumed or substituted on the Change in Control, the Administrator shall notify the Participant in writing or electronically that the Option or SAR shall be
exercisable, to the extent vested, for a period of up to ninety (90) days from the date of such notice, and the Option or SAR shall terminate upon the expiration of such period. For the purposes of this Section 15(c)(i), the Option or SAR
shall be considered assumed if, following the Change in Control, the option or SAR confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option or SAR immediately prior to the Change in Control, the consideration
(whether securities, cash, or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares). However, if the consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the exercise of the Option or SAR, for each share of Awarded Stock subject to the Option or SAR, to be solely common stock of the successor corporation or its Parent equal in
Fair Market Value to the per share consideration received by holders of Common Stock in the Change in Control. Notwithstanding anything in this Plan to the contrary, an Award that vests, is earned, or is paid-out upon the satisfaction of one or more
performance objectives shall not be considered assumed if the Company or its successor modifies any of the performance objectives without the Participant’s consent; provided, however, a modification to performance objectives

  
 16 

 
only to reflect the successor corporation’s post-Change in Control corporate structure shall not be deemed to invalidate an otherwise valid Award assumption. 

(ii) Restricted Stock, Performance Shares, Performance Units, Restricted Stock Units and Other Stock Based Awards. In the event of
a Change in Control, each outstanding Award of Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit, and Other Stock Based Award shall be assumed or an equivalent Restricted Stock, Restricted Stock Unit, Performance Share,
Performance Unit, and Other Stock Based Award shall be substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. Unless determined otherwise by the Administrator, if the successor corporation refuses to assume
or substitute for the Award, the Participant shall fully vest in the Award, including as to Shares or Units that would not otherwise be vested, all applicable restrictions shall lapse, and all performance objectives and other vesting criteria shall
be deemed achieved at targeted levels. For the purposes of this Section 15(c)(ii), an Award of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Other Stock Based Awards shall be considered assumed if,
following the Change in Control, the award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control (and if a Restricted Stock Unit or Performance Unit, for each Share as determined
based on the then current value of the unit), the consideration (whether stock, cash, or other securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). However, if the consideration received in the Change in Control is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide that the consideration to be received for each Share (and if a Restricted Stock Unit or Performance Unit, for each Share as determined based on
the then current value of the unit) be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. Notwithstanding anything in
this Plan to the contrary, an Award that vests, is earned, or is paid-out upon the satisfaction of one or more performance objectives shall not be considered assumed if the Company or its successor modifies any of the performance objectives without
the Participant’s consent; provided, however, a modification to the performance objectives only to reflect the successor corporation’s post-Change in Control corporate structure shall not be deemed to invalidate an otherwise valid Award
assumption. 
 (iii) Outside Director Awards. Notwithstanding any provision of Sections 15(c)(i) or 15(c)(ii) to the
contrary, with respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following the assumption or substitution, the Participant’s status as a Director or a director of the successor
corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant, then the Participant shall fully vest in and have the right to exercise his Options and Stock Appreciation Rights as to all of the Award, including
Shares as to which such Awards would not otherwise be vested or exercisable, and all restrictions on Restricted Stock and Restricted Stock Units, as applicable, shall lapse, and, with respect to Performance Shares, Performance Units, and Other Stock
Based Awards, all performance goals and other vesting criteria shall be deemed achieved at target levels and all other terms and conditions met. 

  
 17 

 16. Date of Grant. The date of grant of an Award shall be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or a later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant within a reasonable time after the date of such
grant. 
 17. Shareholder Approval and Term of Plan. The Plan became effective on
[            ] and thereafter shall continue in effect for a term of ten (10) years unless terminated earlier under Section 18 of the Plan. 

18. Amendment and Termination of the Plan. 
 (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. 
 (b) Shareholder Approval. The Company shall obtain shareholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws. 

(c) Effect of Amendment or Termination. No amendment, alteration, suspension, or termination of the Plan shall materially or
adversely impair the rights of any Participant, unless otherwise mutually agreed upon by the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not
affect the Administrator’s ability to exercise the powers granted to it under this Plan with respect to Awards granted under the Plan prior to the date of termination. 
 19. Conditions upon issuance of shares. 
 (a) Legal Compliance.
Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company
with respect to such compliance. 
 (b) Investment Representations. As a condition to the exercise or receipt of an Award,
the Company may require the person exercising or receiving the Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present intention to sell or distribute
the Shares if, in the opinion of counsel for the Company, such a representation is required. 
 (c) Taxes. No Shares shall
be delivered under the Plan to any Participant or other person until the Participant or other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., U.S.-federal, U.S.-state, or local income and employment
tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares. Upon exercise or vesting of an Award, the Company shall withhold or collect from the Participant an amount sufficient to satisfy such tax
obligations, including, but not limited to, by surrender of the whole number of Shares covered by the Award sufficient to satisfy the minimum applicable tax withholding obligations incident to the exercise or vesting of an Award. 

  
 18 

 20. Severability. Notwithstanding any provision of the Plan or an Award to the
contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards shall be held invalid, illegal, or unenforceable in any respect, such provision shall be modified so as to make it valid, legal, and enforceable, and the
validity, legality, and enforceability of the remaining provisions (or any part thereof) of the Plan or Award, as applicable, shall not in any way be affected or impaired thereby. 

21. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained. 
 22. No Rights to Awards. No eligible Service Provider or other person
shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator shall be obligated to treat Participants or any other person uniformly. 

23. No Shareholder Rights. Except as otherwise provided in an Award Agreement, a Participant shall have none of the rights of a
shareholder with respect to Shares covered by an Award until the Participant becomes the owner of the Shares. 
 24.
Fractional Shares. No fractional Shares shall be issued and the Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding
up or down as appropriate. 
 25. Governing Law. The Plan, all Award Agreements, and all related matters, shall be
governed by the laws of the State of Texas, without regard to choice of law principles that direct the application of the laws of another state. 
 26. No Effect on Terms of Employment or Consulting Relationship. The Plan shall not confer upon any Participant any right as a Service Provider, nor shall it interfere in any way with his right or
the right of the Company or a Parent or Subsidiary to terminate the Participant’s service at any time, with or without cause, and with or without notice. There is no obligation for uniformity of treatment of any Service Provider of the Company
or any Participant. 
 27. Unfunded Obligation. Participants shall have the status of general unsecured creditors of the
Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither
the Company nor any Parent or Subsidiary shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial
ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations under this Plan. Any investments or the creation or maintenance of any trust for any Participant account shall not create or
constitute a trust or fiduciary relationship between the Administrator, the Company or any Parent or Subsidiary and Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any
assets of the Company or Parent or 

  
 19 

 
Subsidiary. The Participants shall have no claim against the Company or any Parent or Subsidiary for any changes in the value of any assets that may be invested or reinvested by the Company with
respect to the Plan. 
 28. Section 409A. It is the intention of the Company that no Award shall be “deferred
compensation” subject to Section 409A of the Code, unless and to the extent that the Administrator specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly. The following
rules shall apply to Awards intended to be subject to Section 409A of the Code (“409A Awards”): 
 (a)
Any distribution of a 409A Award following a separation from service that would be subject to Section 409A(a)(2)(A)(i) of the Code as a distribution following a separation from service of a “specified employee” (as defined under
Section 409A(a)(2)(B)(i) of the Code) shall occur no earlier than the expiration of the six (6) month period following such separation from service. 
 (b) In the case of a 409A Award providing for distribution or settlement upon vesting or lapse of a risk of forfeiture, if the time of such distribution or settlement is not otherwise specified in
the Plan or Award Agreement or other governing document, the distribution or settlement shall be made no later than March 15 of the calendar year following the calendar year in which such 409A Award vested or the risk of forfeiture lapsed.

 (c) In the case of any distribution of any other 409A Award, if the timing of such distribution is not otherwise
specified in the Plan or Award Agreement or other governing document, the distribution shall be made not later than the end of the calendar year during which the settlement of the 409A Award is specified to occur. 

29. Construction. Headings in this Plan are included for convenience and shall not be considered in the interpretation of the
Plan. References to sections are to Sections of this Plan unless otherwise indicated. Pronouns shall be construed to include the masculine, feminine, neutral, singular or plural as the identity of the antecedent may require. This Plan shall be
construed according to its fair meaning and shall not be strictly construed against the Company. 
 * * * * * 

  
 20Letter agreement

 Exhibit 10.3 

 
 

 
 March 28, 2012 
 Phil Rehkemper 
 [address redacted] 
 Dear Phil, 
 On behalf of API Technologies Corp, I am pleased to offer you employment with the
company in the position of Executive Vice President & Chief Financial Officer of API Technologies Corp. In this position, you will be based in Los Angeles, California, reporting to directly to Bel Lazar, Chief Operating Officer &
President of API Technologies Corp. It is currently contemplated that if accepted, your employment start date would be on or about April 10, 2012, with your actual employment date reasonably earlier or later as agreed between you and Bel Lazar.
This letter will set forth the terms and conditions of your employment with API Technologies Corp (the “Company”). 
  

	1.	Base Salary—Your annual base salary will be $285,000, which will be paid on a bi-weekly basis in accordance with the company’s payroll policies
and procedures. 

  

	2.	Stock Incentive Signing Bonus—We will recommend to the compensation committee of the board of directors (“Committee”) that you be granted
as a signing bonus 200,000 stock options with a term of 10 years, to vest in three equal annual installments over three (3) years, with the fist installment to vest one year from the date of grant (the “Stock Grant”). However, in the
event of the consummation of a plan of reorganization, merger, or consolidation, in which the stockholders of the Company own less than 50% of the outstanding voting securities of the surviving entity or in the event of a sale of substantially all
of the Company’s assets, or a liquidation or dissolution of the Company, then immediately prior to the closing of such event the stock options held by you under the Stock Grant, to the extent such stock options have not already vested, will
immediately vest and become exercisable. The Stock Grant will be made to you on the business day immediately following the date that the Committee approves the Stock Grant. The Stock Grant shall be subject to the terms and conditions of the
Company’s 2006 Equity Incentive Plan. 

  

	3.	Annual Bonus. You will be eligible to receive an annual incentive bonus (“Incentive Bonus”) based on the achievement of performance goals
established by the Committee. Your annual incentive bonus target will be 50% of your base salary, based on specified levels of performance goals being achieved. The actual earned Incentive Bonus, if any, will depend upon the extent to which the
applicable performance goals specified by the Committee are achieved. Receipt of the Incentive Bonus is contingent on your continued employment with the Company through the date of payment. 

 

 
  
  

	4.	Auto Allowance. You are eligible to receive an auto allowance of $900 per month. In addition to the auto allowance, you may submit gasoline and oil
receipts for reimbursement through the Company’s expense reporting and reimbursement policies. All other auto-related expenses are covered in your monthly auto allowance. 

 

	5.	Benefits. As a full-time employee of the company, you will be eligible to participate in the employee benefit plans as in effect from time to time and
generally made available to other employees of the Company, including medical, dental, life, long and short term disability insurance, and 401(k) plan. You also will be eligible to participate in the supplemental executive health insurance plan for
which executive employees are eligible. Notwithstanding the foregoing, the Company is not obligated to maintain any plans or benefits. You will be entitled to three (3) weeks of vacation annually. These benefits are subject to the terms,
conditions and eligibility requirements of the plans and the Company’s policies and procedures. 

  

	6.	At-Will Employment. The Company is excited about your joining and looks forward to a beneficial and productive relationship. Nevertheless, you should be
aware that your employment with the Company is for no specified period and constitutes at-will employment As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment
relationship with you at any time, with or without cause, and with or without notice. We request that, in the event of resignation, you give the Company at least two weeks’ notice. 

 

	7.	Background Checks. The Company reserves the right to conduct background investigations and/or reference checks on all of its potential employees. Your job
offer, therefore, is contingent upon a completion of such a background investigation and/or reference check, if any. 

  

	8.	Immigration Compliance. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and
eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated. 

 

	9.	Disclosure Requirement. We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior
employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. The Company understands that any such agreements will not prevent you from performing the duties of your position and you
represent that such is the case. 

  

	10.	 Rules of Workplace Conduct. As a Company employee, you will be expected to abide by the Company’s rules and standards. Specifically,
you will be required to sign an acknowledgment that you have read and that you understand the Company’s rules of conduct. Moreover, you agree that, during the term of your employment with the

  
 4705 S.
Apoka Vineland Road Suite 210 Orlando, Florida 32819, USA 

 

 
  

	 	
Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved
during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company. Similarly, you agree not to bring any third party confidential information to the Company, including that of your
former employer, and that in performing your duties for the Company you will not in any way utilize any such information. 

  

	11.	Execution of Confidentiality Agreement. As a condition of your employment, you are also required to sign and comply with an At-Will Employment,
Confidential Information, Invention Assignment and Arbitration Agreement (the “Confidentiality Agreement”), which is incorporated by reference herein and which requires, among other provisions, the assignment of patent rights to any
invention made during your employment at the Company, and non-disclosure of Company proprietary information. Please note that we must receive your signed Confidentiality Agreement before your first day of employment. 

To accept the Company’s offer, please sign and date this letter in the space provided below. A duplicate original is enclosed for
your records. If you accept our offer, we expect that your first day of employment will be on or about April 10, 2012. 

This letter, along with any agreements relating to proprietary rights between you and the Company and agreements relating to the Stock
Grant, set forth the terms of your employment with the Company and supersede any prior or contemporaneous representations or agreements including but not limited to, any representations made during your recruitment, interviews or pre-employment
negotiations, whether written or oral. This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the President or CEO and you. This offer of employment will
terminate if it is not accepted, signed and returned by March 30, 2012. 

  
 4705 S.
Apoka Vineland Road Suite 210 Orlando, Florida 32819, USA 

 

 
  
 We look forward to your
favorable reply and to working with you at API Technologies Corp. 
  

	
	Sincerely,
	
	/s/ Bel Lazar
	Bel Lazar
	President & Chief Operating Officer

			
	Agreed to and accepted:
		
	Signature:	 	  /s/    Phil Rehkemper

			
	Printed Name:	 	  Phil Rehkemper

			
		
	Date:	 	3/29/12

 Enclosures 

Duplicate Original Letter 
 Confidentiality and
Intellectual Property Rights Agreement 

  
 4705 S.
Apoka Vineland Road Suite 210 Orlando, Florida 32819, USA

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