Exhibit 10.1
FOSSIL GROUP, INC.
2023 LONG-TERM INCENTIVE
PLAN
The Fossil Group, Inc.
Long-Term Incentive Plan (the “Plan”) was adopted by the Board of Directors of Fossil Group, Inc., a Delaware
corporation (the “Company”) on March 1, 2023 (the “Board Approval Date”) to be
effective as of the date the Plan is approved by the Company’s stockholders at the Company’s next Annual Shareholder Meeting
(the “Effective Date”). The Plan replaces and supersedes the Fossil Group, Inc. 2016 Long-Term Incentive
Plan, as amended (the “Prior Plan”) in its entirety. The Prior Plan shall terminate on the Effective Date, and
no future awards may be granted thereunder after the Effective Date, provided that the Prior Plan shall continue to apply to awards granted
under the Prior Plan prior to the Effective Date.
ARTICLE 1
PURPOSE
The purpose of the Plan is
to attract and retain the services of key employees, key contractors and Outside Directors of the Company and its Subsidiaries and to
provide such persons with a proprietary interest in the Company through the granting of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards,
whether granted singly, or in combination, or in tandem, that will
(a) increase
the interest of such persons in the Company’s welfare;
(b) furnish
an incentive to such persons to continue their services for the Company or its Subsidiaries; and
(c) provide
a means through which the Company may attract able persons as Employees, Contractors, and Outside Directors.
With respect to Reporting
Participants, the Plan and all transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 promulgated
under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, such provision or action
shall be deemed null and void ab initio, to the extent permitted by law and deemed advisable by the Committee.
ARTICLE 2
DEFINITIONS
For the purpose of the Plan,
unless the context requires otherwise, the following terms shall have the meanings indicated:
2.1 “Annual
Stockholders Meeting” means the annual general meeting of the Company’s stockholders, as established by the Board,
at which the members of the Company’s Board or any class thereof are elected.
2.2 “Applicable
Law” means all legal requirements relating to the administration of equity incentive plans and the issuance and distribution
of shares of Common Stock, if any, under applicable corporate laws, applicable securities laws, the rules of any exchange or inter-dealer
quotation system upon which the Company’s securities are listed or quoted, the rules of any foreign jurisdiction applicable
to Incentives granted to residents therein, and any other applicable law, rule or restriction.
2.3 “Authorized
Officer” is defined in Section 3.2(b) hereof.
2.4 “Award”
means the grant of any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, SAR, Restricted Stock Unit, Performance Award,
Dividend Equivalent Right or Other Award, whether granted singly or in combination or in tandem (each individually referred to herein
as an “Incentive”).
2.5 “Award
Agreement” means a written agreement between a Participant and the Company which sets out the terms of the grant of an Award.
2.6 “Award
Period” means the period set forth in the Award Agreement during which one or more Incentives granted under an Award may
be exercised.
2.7 “Board”
means the board of directors of the Company.
2.8 “Board
Approval Date” is defined in the preamble to the Plan.
2.9 “Change
in Control” means the occurrence of the event set forth in any one of the following paragraphs, except as otherwise provided
herein:
(i) any
Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company or its Affiliates) representing 30% or more of the combined voting
power of the Company’s then outstanding securities, or if such Person is the Beneficial Owner, directly or indirectly, of securities
of the Company representing 30% or more of the combined voting power of the Company’s outstanding securities as of the date the
particular Award is granted, such person becomes the Beneficial Owner, directly or indirectly, of the combined voting power of additional
securities representing 10% or more of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in clause (i) of paragraph (iii) below; or
(ii) the
following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective
Date of this Plan, constitute the Board and any new director (other than a director whose initial assumption of office is in connection
with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors
of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved
or recommended by a vote of at least a majority of the directors then still in office who either were directors on the Effective Date
of this Plan or whose appointment, election or nomination for election was previously so approved or recommended; or
(iii) there
is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 60% of the combined voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger or consolidation or (ii) a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including the securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing
30% or more of the combined voting power of the Company’s then outstanding securities; or
(iv) the
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company
immediately prior to such sale.
For purposes hereof:
“Affiliate”
shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.
“Beneficially
Owned” with respect to any securities shall mean having "beneficial ownership" of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act, including pursuant to any agreement, arrangement or understanding, whether or not
in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as hereinafter
defined) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a “group”
within the meaning of Section 13(d)(3) of the Exchange Act.
“Beneficial
Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.
“Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company.
Notwithstanding the foregoing
provisions of this Section 2.9, if an Award issued under the Plan is subject to Section 409A of the Code, then an event shall
not constitute a Change in Control for purposes of such Award under the Plan unless such event also constitutes a change in the Company’s
ownership, its effective control or the ownership of a substantial portion of its assets within the meaning of Section 409A of the
Code.
2.10 “Claims”
means any claim, liability or obligation of any nature, arising out of or relating to this Plan or an alleged breach of this Plan, or
an Award Agreement.
2.11 “Code”
means the Internal Revenue Code of 1986, as amended.
2.12 “Committee”
means the Compensation and Talent Management Committee of the Board.
2.13 “Common
Stock” means the common stock, par value $0.01 per share, which the Company is currently authorized to issue or may in the
future be authorized to issue, or any securities into which or for which the common stock of the Company may be converted or exchanged,
as the case may be, pursuant to the terms of this Plan.
2.14 “Company”
means Fossil Group, Inc. a Delaware corporation, and any successor entity.
2.15 “Contractor”
means any natural person, who is not an Employee, rendering bona fide services to the Company or a Subsidiary, with compensation,
pursuant to a written independent contractor agreement between such person and the Company or a Subsidiary, provided that such services
are not rendered in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.
2.16 “Corporation”
means any entity that (i) is defined as a corporation under Section 7701 of the Code and (ii) is the Company or is in an
unbroken chain of corporations (other than the Company) beginning with the Company, if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other
corporations in the chain. For purposes of clause (ii) hereof, an entity shall be treated as a “corporation” if it satisfies
the definition of a corporation under Section 7701 of the Code.
2.17 “Date
of Grant” means the effective date on which an Award is made to a Participant as set forth in the applicable Award Agreement;
provided, however, that solely for purposes of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder,
the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such date is later than the effective date of
such Award as set forth in the Award Agreement.
2.18 “Dividend
Equivalent Right” means the right of the holder thereof to receive credits based on the cash dividends that would have
been paid on the shares of Common Stock specified in the Award if such shares were held by the Participant to whom the Award is made.
2.19 “Employee”
means a common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of
the Code) of the Company or any Subsidiary of the Company provided, however, in the case of individuals whose employment status, by virtue
of their employer or residence, is not determined under Section 3401(c) of the Code, “Employee” shall mean an individual
treated as an employee for local payroll tax or employment purposes by the applicable employer under Applicable Law for the relevant
period.
2.20 “Exchange
Act” means the United States Securities Exchange Act of 1934, as amended.
2.21 “Exercise
Date” is the date (i) with respect to any Stock Option, that the Participant has delivered both the Exercise Notice
and consideration to the Company with a value equal to the total Option Price of the shares to be purchased (plus any income and/or employment
tax withholding or other tax payment due with respect to such Award); and (ii) with respect to any SAR, that the Participant has
delivered both the Exercise Notice and consideration to the Company with a value equal to any income and/or employment tax withholding
or other tax payment due with respect to such SAR..
2.22 “Exercise
Notice” is defined in Section 9.3(b) below.
2.23 “Exempt
Shares” means shares of Common Stock subject to an Award that has been granted with (or that has been amended by the Committee
to include) more favorable vesting provisions than those set forth in Section 8.2. No more than five percent (5%) of the shares
of Common Stock that may be delivered pursuant to Awards may be shares designated as “Exempt Shares.”
2.24 “Fair
Market Value” means, as of a particular date, (a) if the shares of Common Stock are listed or quoted on any established
national securities exchange, the arithmetic mean of the high and low prices per share of the Common Stock on the particular date (or,
if the particular date is not a trading day, the arithmetic mean of the high and low prices per share of the Common Stock immediately
preceding such particular date), determined in accordance with the requirements of Section 422 of the Code (to the extent Incentive
Stock Options are granted) and/or Section 409A of the Code and the regulations and other guidance issued thereunder; or (b) if
the shares of Common Stock are not so listed or quoted, such amount as may be determined by the Committee (acting on the advice of an
Independent Third Party, should the Committee elect in its sole discretion to utilize an Independent Third Party for this purpose), in
good faith, to be the fair market value per share of Common Stock. Notwithstanding the foregoing provisions of this Section 2.24,
to the extent an Award is intended to be in compliance with some or all of the requirements of Section 409A of the Code, “Fair
Market Value” for purposes of the Plan and any Award shall be the definition provided for under Section 409A of the Code and
Section 1.409A-1(b)(5)(iv) of the regulations issued thereunder or any successor provision thereto.
2.25 “Immediate
Family Members” is defined in Section 16.8 hereof.
2.26 “Incentive”
is defined in Section 2.4 hereof.
2.27 “Incentive
Stock Option” means an incentive stock option within the meaning of Section 422 of the Code, granted pursuant to this
Plan. For purposes of clarity, Employees of Fossil Partners, L.P., Outside Directors, and Contractors are not eligible to receive Incentive
Stock Options.
2.28 “Independent
Third Party” means an individual or entity independent of the Company having experience in providing investment banking
or similar appraisal or valuation services and with expertise generally in the valuation of securities or other property for purposes
of this Plan. The Committee may utilize one or more Independent Third Parties.
2.29 “Nonqualified
Stock Option” means a nonqualified stock option, granted pursuant to this Plan, which is not an Incentive Stock Option.
2.30 “Option
Price” means the price which must be paid by a Participant upon exercise of a Stock Option to purchase a share of Common
Stock.
2.31 “Other
Award” means an Award issued pursuant to Section 6.9 hereof.
2.32 “Outside
Director” means a director of the Company who is not an Employee or Contractor.
2.33 “Participant”
means an Employee, Contractor or Outside Director to whom an Award is granted under this Plan.
2.34 “Performance
Award” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable in, or otherwise related
to, Common Stock pursuant to Section 6.7 hereof.
2.35 “Performance
Goal” means any of the goals set forth in Section 6.10 hereof.
2.36 “Plan”
means this Fossil Group, Inc. 2023 Long-Term Incentive Plan, as amended from time to time.
2.37 “Prior
Plan Awards” means (i) any awards under the Prior Plan that are outstanding on the Effective Date, and that, on or
after the Effective Date, are forfeited, expire or are canceled; and (ii) any shares subject to awards relating to Common Stock under
the Prior Plans that are settled in cash on or after the Effective Date, but solely to the extent that such awards, by their terms, could
have been settled in Common Stock.
2.38 “Prior
Plan” means the Fossil, Inc. 2016 Long-Term Incentive Plan effective March 15, 2016.
2.39 “Reporting
Participant” means a Participant who is subject to the reporting requirements of Section 16 of the Exchange Act.
2.40 “Restricted
Stock” means shares of Common Stock issued or transferred to a Participant pursuant to Section 6.4 of this Plan
which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.
2.41 “Restricted
Stock Units” means units awarded to Participants pursuant to Section 6.6 hereof, which are convertible into
Common Stock at such time as such units are no longer subject to restrictions as established by the Committee.
2.42 “Restriction
Period” is defined in Section 6.4(b)(i) hereof.
2.43 “Retirement”
is as defined in the applicable Award Agreement.
2.44 “SAR”
or “Stock Appreciation Right” means the right to receive an amount, in cash and/or Common Stock, equal to the
excess of the Fair Market Value of a specified number of shares of Common Stock as of the date the SAR is exercised (or, as provided in
the Award Agreement, converted) over the SAR Price for such shares.
2.45 “SAR
Price” means the exercise price or conversion price of each share of Common Stock covered by a SAR, determined on the Date
of Grant of the SAR.
2.46 “Spread”
is defined in Section 13.4(b) hereof.
2.47 “Stock
Option” means a Nonqualified Stock Option or an Incentive Stock Option.
2.48 “Subsidiary”
means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock
in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any corporation described in item
(i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled to vote
on the removal and replacement of the general partner, and (iii) any partnership or limited liability company, if the partners or
members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed in
item (ii) above. “Subsidiaries” means more than one of any such corporations, limited partnerships, partnerships or
limited liability companies. Notwithstanding the foregoing, an entity shall not be a “Subsidiary” for purposes of this Plan,
unless at least twenty-five percent (25%) of such entity’s Voting Equity is owned either directly or indirectly by the Company.
2.49 “Tenure
Award” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable in, or otherwise related
to, Common Stock that vests over time based upon the Participant’s continued employment with or service to the Company or its Subsidiaries.
2.50 “Termination
of Service” occurs when a Participant who is (i) an Employee of the Company or any Subsidiary ceases to provide active
service as an Employee of the Company and its Subsidiaries, for any reason, (ii) a Contractor of the Company or any Subsidiary ceases
to serve as a Contractor of the Company and its Subsidiaries, for any reason; or (iii) an Outside Director of the Company or a Subsidiary
ceases to serve as a director of the Company and its Subsidiaries for any reason. Except as may be necessary or desirable to comply with
applicable federal or state law, a “Termination of Service” shall not be deemed to have occurred when a Participant who is
an Employee becomes an Outside Director or vice versa, or when a Participant who is serving in two capacities (i.e., both an Employee
and a director) ceases to serve in one of those capacities (i.e., serves only as a director and not as an Employee); provided, however,
a “Termination of Service” shall be deemed to have occurred if a Participant who is serving as an Employee becomes a Contractor,
or vice versa, or when an Outside Director ceases to be an Outside Director and becomes a Contractor, unless otherwise specifically provided
in the applicable award agreement. If, however, a Participant who is an Employee and who has an Incentive Stock Option ceases to be an
Employee but does not suffer a Termination of Service, and if that Participant does not exercise the Incentive Stock Option within the
time required under Section 422 of the Code upon ceasing to be an Employee, the Incentive Stock Option shall thereafter become a
Nonqualified Stock Option. Notwithstanding the foregoing provisions of this Section 2.50, in the event an Award issued under
the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition and to the extent necessary to comply
with the requirements of Section 409A of the Code, the definition of “Termination of Service” for purposes of such Award
shall be the definition of “separation from service” provided for under Section 409A of the Code and the regulations
or other guidance issued thereunder.
2.51 “Total
and Permanent Disability” means a Participant is qualified for long-term disability benefits under the Company’s
or Subsidiary’s disability plan or insurance policy or under applicable non-U.S. law; or, if no such plan, policy or law is then
in existence or if the Participant is not eligible to participate in such plan or policy, that the Participant, because of a physical
or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment for
a period of six (6) continuous months, as determined in good faith by the Committee, based upon medical reports or other evidence
satisfactory to the Committee; provided that, with respect to any Incentive Stock Option, Total and Permanent Disability shall
have the meaning given it under the rules governing Incentive Stock Options under the Code. Notwithstanding the foregoing provisions
of this Section 2.51, in the event an Award issued under the Plan is subject to Section 409A of the Code, then, in lieu
of the foregoing definition and to the extent necessary to comply with the requirements of Section 409A of the Code, the definition
of “Total and Permanent Disability” for purposes of such Award shall be the definition of “disability” provided
for under Section 409A of the Code and the regulations or other guidance issued thereunder.
2.52 “Voting
Equity” means the shares or other equity interests of an entity that has the right to vote generally on matters submitted
to a vote of the owners of such entity.
ARTICLE 3
ADMINISTRATION
3.1 General
Administration; Establishment of Committee. Subject to the terms of this Article 3, the Plan shall be administered
by the Committee. The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with
or without cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by
the Board. At any time there is no Committee to administer the Plan, any references in this Plan to the Committee shall be deemed to refer
to the Board.
Membership on the Committee
shall be limited to those members of the Board who are “non-employee directors” as defined in Rule 16b-3 promulgated
under the Exchange Act. The Committee shall select one of its members to act as its Chairman. A majority of the Committee shall constitute
a quorum, and the act of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the act
of the Committee.
3.2 Designation
of Participants and Awards.
(a) The
Committee shall determine and designate from time to time the eligible persons to whom Awards will be granted and shall set forth in each
related Award Agreement, where applicable, the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance
requirements, as are approved by the Committee, but not inconsistent with the Plan. The Committee shall determine whether an Award shall
include one type of Incentive or two or more Incentives granted in combination or two or more Incentives granted in tandem (that is, a
joint grant where exercise of one Incentive results in cancellation of all or a portion of the other Incentive). Although the members
of the Committee shall be eligible to receive Awards, all decisions with respect to any Award, and the terms and conditions thereof, to
be granted under the Plan to any member of the Committee shall be made solely and exclusively by the other members of the Committee, or
if such member is the only member of the Committee, by the Board.
(b) Notwithstanding
Section 3.2(a), to the extent permitted by Applicable Law, the Committee may, in its discretion and by a resolution adopted
by the Committee, authorize one or more officers of the Company (an “Authorized Officer”) to (i) designate
one or more Employees or Contractors as eligible persons to whom Awards will be granted under the Plan and (ii) determine the number
of shares of Common Stock that will be subject to such Awards; provided, however, that the resolution of the Committee granting such
authority shall (x) specify the total number of shares of Common Stock that may be made subject to the Awards, (y) set forth
the price or prices (or a formula by which such price or prices may be determined) to be paid for the purchase of the Common Stock subject
to such Awards, and (z) not authorize an officer to designate himself as a recipient of any Award.
3.3 Authority
of the Committee. The Committee, in its discretion, shall (i) interpret the Plan and Award Agreements, (ii) prescribe,
amend, and rescind any rules, regulations and sub-plans (including sub-plans for Awards made to Participants who are not resident in
the United States), as necessary or appropriate for the administration of the Plan, to obtain favorable tax treatment for the Awards
or to ensure compliance with securities laws, (iii) establish performance goals for an Award and certify the extent of their achievement,
and (iv) make such other determinations or certifications and take such other action as it deems necessary or advisable in the administration
of the Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive
on all interested parties. The Committee’s discretion set forth herein shall not be limited by any provision of the Plan, including
any provision which by its terms is applicable notwithstanding any other provision of the Plan to the contrary.
The Committee may delegate
to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under the Plan. Any actions
taken by any officers of the Company pursuant to such written delegation of authority shall be deemed to have been taken by the Committee.
With respect to restrictions
in the Plan that are based on the requirements of Rule 16b-3 promulgated under the Exchange Act, Section 422 of the Code, the
rules of any exchange or inter-dealer quotation system upon which the Company’s securities are listed or quoted, or any other
Applicable Law, to the extent that any such restrictions are no longer required by Applicable Law, the Committee shall have the sole discretion
and authority to grant Awards that are not subject to such formerly-mandated restrictions and/or to waive any such formerly-mandated restrictions
with respect to outstanding Awards.
ARTICLE 4
ELIGIBILITY
Any Employee (including an
Employee who is also a director or an officer), Contractor or Outside Director of the Company whose judgment, initiative, and efforts
contributed or may be expected to contribute to the successful performance of the Company is eligible to participate in the Plan; provided
that only Employees of Fossil Group, Inc. and its Subsidiaries (excluding Subsidiaries that are not corporations or that are less
than fifty percent (50%) owned subsidiaries) shall be eligible to receive Incentive Stock Options For purposes of clarity, Employees
of Fossil Partners, L.P., Contractors and Outside Directors are not eligible to receive Incentive Stock Options. The Committee, upon
its own action, may grant, but shall not be required to grant, an Award to any Employee, Contractor or Outside Director of the Company
or any Subsidiary. Awards may be granted by the Committee at any time and from time to time to new Participants, or to then Participants,
or to a greater or lesser number of Participants, and may include or exclude previous Participants, as the Committee shall determine.
Except as required by this Plan, Awards granted at different times or at the same time need not contain similar provisions. The Committee’s
determinations under the Plan (including without limitation determinations of which Employees, Contractors or Outside Directors, if any,
are to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing
same) need not be uniform and may be made by it selectively among Participants who receive, or are eligible to receive, Awards under
the Plan.
ARTICLE 5
SHARES SUBJECT TO PLAN
5.1 Number
Available for Awards. Subject to adjustment as provided in Articles 11 and 12 and subject to increase by any Prior Plan
Awards eligible for reuse pursuant to Section 5.2, the maximum number of shares of Common Stock that may be delivered pursuant
to Awards granted under the Plan is an aggregate of 4,700,000 shares, 100% of which may be delivered pursuant to Incentive Stock Options.
Shares to be issued may be made available from authorized but unissued Common Stock, Common Stock held by the Company in its treasury,
or Common Stock purchased by the Company on the open market or otherwise. During the term of this Plan, the Company will at all times
reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan.
5.2 Reuse
of Shares. To the extent that any Award under this Plan or any Prior Plan Awards shall be forfeited, shall expire or be canceled,
in whole or in part, then the number of shares of Common Stock covered by the Award or Prior Plan Award so forfeited, expired or canceled
may again be awarded pursuant to the provisions of this Plan. Awards that may be satisfied either by the issuance of shares of Common
Stock or by cash or other consideration shall be counted against the maximum number of shares of Common Stock that may be issued under
this Plan only during the period that the Award is outstanding or to the extent the Award is ultimately satisfied by the issuance of shares
of Common Stock. Shares of Common Stock otherwise deliverable pursuant to an Award that are withheld upon exercise or vesting of an Award
for purposes of paying the exercise price or tax withholdings shall be treated as delivered to the Participant and shall be counted against
the maximum number of shares of Common Stock that may be issued under this Plan. Awards will not reduce the number of shares of Common
Stock that may be issued pursuant to this Plan if the settlement of the Award will not require the issuance of shares of Common Stock,
as, for example, a SAR that can be satisfied only by the payment of cash. Notwithstanding any provisions of the Plan to the contrary,
only shares forfeited back to the Company or shares canceled on account of termination, expiration or lapse of an Award, shall again be
available for grant of Incentive Stock Options under the Plan, but shall not increase the maximum number of shares described in Section 5.1
above as the maximum number of shares of Common Stock that may be delivered pursuant to Incentive Stock Options.
5.3 Limitation
on Outside Director Awards. In addition to any Awards granted in accordance with Article 7 below, no Outside Director
may be granted any Award or Awards denominated in shares that exceed in the aggregate $130,000 in Fair Market Value (such Fair Market
Value computed as of the Date of Grant) in any calendar year period. The foregoing limit shall not apply to any Award made pursuant to
deferred compensation arrangements in lieu of all or a portion of cash retainers.
ARTICLE 6
GRANT OF AWARDS
6.1 In
General.
(a) The
grant of an Award shall be authorized by the Committee and shall be evidenced by an Award Agreement setting forth the Incentive or Incentives
being granted, the total number of shares of Common Stock subject to the Incentive(s), the Option Price (if applicable), the Award Period,
the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved by the Committee, but (i) not
inconsistent with the Plan, and (ii) to the extent an Award issued under the Plan is subject to Section 409A of the Code, in
compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder.
The Company shall execute an Award Agreement with a Participant after the Committee approves the issuance of an Award. Any Award granted
pursuant to this Plan must be granted within ten years of the Board Approval Date. The Plan shall be submitted to the Company’s
stockholders for approval at the first stockholder meeting after the Board Approval Date; however, the Committee may grant Awards under
the Plan prior to the time of stockholder approval. Any such Award granted prior to such stockholder approval shall be made subject to
the attainment of such stockholder approval. The grant of an Award to a Participant shall not be deemed either to entitle the Participant
to, or to disqualify the Participant from, receipt of any other Award under the Plan.
(b) If
the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of 30 days (or such shorter
period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement and paying such purchase price.
(c) Any
Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide for interest equivalents to be credited
with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified
by the grant.
6.2 Option
Price. The Option Price for any share of Common Stock which may be purchased under a Nonqualified Stock Option for any share
of Common Stock must be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Option Price for any share
of Common Stock which may be purchased under an Incentive Stock Option must be at least equal to the Fair Market Value of the share on
the Date of Grant; if an Incentive Stock Option is granted to an Employee who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company
(or any parent or Subsidiary), the Option Price shall be at least 110% of the Fair Market Value of the Common Stock on the Date of Grant.
No dividends or Dividend Equivalent Rights may be paid or granted with respect to any Stock Option granted hereunder.
6.3 Maximum
ISO Grants. The Committee may not grant Incentive Stock Options under the Plan to any Employee which would permit the aggregate
Fair Market Value (determined on the Date of Grant) of the Common Stock with respect to which Incentive Stock Options (under this and
any other plan of the Company and its Subsidiaries) are exercisable for the first time by such Employee during any calendar year to exceed
$100,000. To the extent any Stock Option granted under this Plan which is designated as an Incentive Stock Option exceeds this limit or
otherwise fails to qualify as an Incentive Stock Option, such Stock Option (or any such portion thereof) shall be a Nonqualified Stock
Option. In such case, the Committee shall designate which stock will be treated as Incentive Stock Option stock by causing the issuance
of a separate stock certificate and identifying such stock as Incentive Stock Option stock on the Company’s stock transfer records.
6.4 Restricted
Stock. If Restricted Stock is granted to or received by a Participant under an Award (including a Stock Option), the Committee
shall set forth in the related Award Agreement: (i) the number of shares of Common Stock awarded, (ii) the price, if any, to
be paid by the Participant for such Restricted Stock and the method of payment of the price, (iii) the time or times within which
such Award may be subject to forfeiture, (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof or any
group of Employees of the Company, or other criteria, which the Committee determines must be met in order to remove any restrictions (including
vesting) on such Award, and (v) all other terms, limitations, restrictions, and conditions of the Restricted Stock, which shall be
consistent with this Plan, to the extent applicable and, to the extent Restricted Stock granted under the Plan is subject to Section 409A
of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued
thereunder. The provisions of Restricted Stock need not be the same with respect to each Participant.
(a) Legend
on Shares. The Company shall electronically register the Restricted Stock awarded to a Participant in the name of such Participant,
which shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, substantially
as provided in Section 16.10 of the Plan. No stock certificate or certificates shall be issued with respect to such shares
of Common Stock, unless, following the expiration of the Restriction Period (as defined in Section 6.4(b)(i)) without forfeiture
in respect of such shares of Common Stock, the Participant requests delivery of the certificate or certificates by submitting a written
request to the Committee (or such party designated by the Company) requesting delivery of the certificates. The Company shall deliver
the certificates requested by the Participant to the Participant as soon as administratively practicable following the Company’s
receipt of such request.
(b) Restrictions
and Conditions. Shares of Restricted Stock shall be subject to the following restrictions and conditions:
(i) Subject
to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined by the
Committee commencing on the Date of Grant or the date of exercise of an Award (the “Restriction Period”), the
Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock. Except for these limitations and the
limitations set forth in Section 8.2 below, the Committee may in its sole discretion, remove any or all of the restrictions
on such Restricted Stock whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising
after the date of the Award, such action is appropriate.
(ii) Except
as provided in sub-paragraph (i) above or in the applicable Award Agreement, the Participant shall have, with respect to his or her
Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive
any dividends thereon; provided that, if the right to receive dividends is awarded, then (A) any cash dividends and stock
dividends with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account, and interest may
be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee; and (B) such
cash dividends or stock dividends so withheld by the Company and attributable to any particular share of Restricted Stock (and earnings
thereon, if applicable) shall be distributed to such Participant in cash or, at the discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such share and, if
such share is forfeited, the Participant shall have no right to such dividends. The Company shall electronically register the Restricted
Stock in the name of the Participant, but shall not issue certificates for the Restricted Stock unless the Participant requests delivery
of the certificates for the Restricted Stock, in writing in accordance with the procedures established by the Committee. A Participant
may only request delivery of certificates for shares of Common Stock free of restriction under this Plan after the Restriction Period
expires without forfeiture in respect of such shares of Common Stock or after any other restrictions imposed on such shares of Common
Stock by the applicable Award Agreement or other agreement have expired. Each Award Agreement shall require that (x) each Participant,
by his or her acceptance of Restricted Stock, shall irrevocably grant to the Company a power of attorney to transfer any shares so forfeited
to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer, and (y) such
provisions regarding returns and transfers of stock certificates with respect to forfeited shares of Common Stock shall be specifically
performable by the Company in a court of equity or law.
(iii) The
Restriction Period of Restricted Stock shall commence on the Date of Grant or the date of exercise of an Award, as specified in the Award
Agreement, and, subject to Article 13 of the Plan, unless otherwise established by the Committee in the Award Agreement setting
forth the terms of the Restricted Stock, shall expire upon satisfaction of the conditions set forth in the Award Agreement; such conditions
may provide for vesting based on length of continuous service or on such Performance Goals, as may be determined by the Committee in its
sole discretion.
(iv) Except
as otherwise provided in the particular Award Agreement, upon Termination of Service for any reason during the Restriction Period, the
nonvested shares of Restricted Stock shall be forfeited by the Participant. In the event a Participant has paid any consideration to the
Company for such forfeited Restricted Stock, the Committee shall specify in the Award Agreement that either (i) the Company shall
be obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to the Participant, as soon as practicable after
the event causing forfeiture, in cash, an amount equal to the lesser of the total consideration paid by the Participant for such forfeited
shares or the Fair Market Value of such forfeited shares as of the date of Termination of Service, as the Committee, in its sole discretion
shall select. Upon any forfeiture, all rights of a Participant with respect to the forfeited shares of the Restricted Stock shall cease
and terminate, without any further obligation on the part of the Company.
6.5 SARs.
The Committee may grant SARs to any Participant, either as a separate Award or in connection with a Stock Option. SARs shall be subject
to such terms and conditions as the Committee shall impose, provided that such terms and conditions are (i) not inconsistent with
the Plan, and (ii) to the extent a SAR issued under the Plan is subject to Section 409A of the Code, in compliance with the
applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. The grant of the SAR
may provide that the holder may be paid for the value of the SAR either in cash or in shares of Common Stock, or a combination thereof.
In the event of the exercise of a SAR payable in shares of Common Stock, the holder of the SAR shall receive that number of whole shares
of Common Stock having an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (a) the
difference between the Fair Market Value of a share of Common Stock on the date of exercise over the SAR Price as set forth in such SAR
(or other value specified in the Award Agreement granting the SAR), by (b) the number of shares of Common Stock as to which the SAR
is exercised, with a cash settlement to be made for any fractional shares of Common Stock. The SAR Price for any share of Common Stock
subject to a SAR may be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Committee, in its sole discretion,
may place a ceiling on the amount payable upon exercise of a SAR, but any such limitation shall be specified at the time that the SAR
is granted.
6.6 Restricted
Stock Units. Restricted Stock Units may be awarded or sold to any Participant under such terms and conditions as shall be established
by the Committee, provided, however, that such terms and conditions are (i) not inconsistent with the Plan, and (ii) to the
extent a Restricted Stock Unit issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements
of Section 409A of the Code and the regulations or other guidance issued thereunder. Restricted Stock Units shall be subject to such
restrictions as the Committee determines, including, without limitation, (a) a prohibition against sale, assignment, transfer, pledge,
hypothecation or other encumbrance for a specified period; or (b) a requirement that the holder forfeit (or in the case of shares
of Common Stock or units sold to the Participant, resell to the Company at cost) such shares or units in the event of Termination of Service
during the period of restriction. The value of Restricted Stock Units may be paid in shares of common stock, cash, or a combination of
both, as determined by the Committee.
6.7 Performance
Awards.
(a) The
Committee may grant Performance Awards to one or more Participants. The terms and conditions of Performance Awards shall be specified
at the time of the grant and may include provisions establishing the performance period, the Performance Goals to be achieved during a
performance period, and the maximum or minimum settlement values, provided that such terms and conditions are (i) not inconsistent
with the Plan and (ii) to the extent a Performance Award issued under the Plan is subject to Section 409A of the Code, in compliance
with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. If the Performance
Award is to be in shares of Common Stock, the Performance Awards may provide for the issuance of the shares of Common Stock at the time
of the grant of the Performance Award or at the time of the certification by the Committee that the Performance Goals for the performance
period have been met; provided, however, if shares of Common Stock are issued at the time of the grant of the Performance Award and if,
at the end of the performance period, the Performance Goals are not certified by the Committee to have been fully satisfied, then, notwithstanding
any other provisions of this Plan to the contrary, the Common Stock shall be forfeited in accordance with the terms of the grant to the
extent the Committee determines that the Performance Goals were not met. The forfeiture of shares of Common Stock issued at the time of
the grant of the Performance Award due to failure to achieve the established Performance Goals shall be separate from and in addition
to any other restrictions provided for in this Plan that may be applicable to such shares of Common Stock. Each Performance Award granted
to one or more Participants shall have its own terms and conditions.
If the Committee
determines, in its sole discretion, that the established performance measures or objectives are no longer suitable because of a change
in the Company’s business, operations, corporate structure, or for other reasons that the Committee deemed satisfactory, the Committee
may modify the performance measures or objectives and/or the performance period.
(b) Performance
Awards may be valued by reference to the Fair Market Value of a share of Common Stock or according to any formula or method deemed appropriate
by the Committee, in its sole discretion, including, but not limited to, achievement of Performance Goals or other specific financial,
production, sales or cost performance objectives that the Committee believes to be relevant to the Company’s business and/or remaining
in the employ of the Company or a Subsidiary for a specified period of time. Performance Awards may be paid in cash, shares of Common
Stock, or other consideration, or any combination thereof. If payable in shares of Common Stock, the consideration for the issuance of
such shares may be the achievement of the performance objective established at the time of the grant of the Performance Award. Performance
Awards may be payable in a single payment or in installments and may be payable at a specified date or dates or upon attaining the performance
objective. The extent to which any applicable performance objective has been achieved shall be conclusively determined by the Committee.
6.8 Dividend
Equivalent Rights. The Committee may grant a Dividend Equivalent Right to any Participant, either as a component of another
Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant. Dividend equivalents
credited to the holder of a Dividend Equivalent Right shall be paid only as the applicable Award vests or may be deemed to be reinvested
in additional shares of Common Stock (which may thereafter accrue additional dividend equivalents), which shares of Common Stock shall
be subject to the same vesting conditions as the Award to which they relate. Any such reinvestment shall be at the Fair Market Value at
the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination thereof, in a single payment
or in installments. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right
shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent
Right granted as a component of another Award may also contain terms and conditions different from such other Award; provided that (i) any
Dividend Equivalent Rights with respect to such Award shall be withheld by the Company for the Participant’s account until such
Award is vested, subject to such terms as determined by the Committee; and (ii) such Dividend Equivalent Rights so withheld by the
Company and attributable to any particular Award shall be distributed to such Participant in cash or, at the discretion of the Committee,
in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalent Rights, if applicable, upon vesting
of the Award and if such Award is forfeited, the Participant shall have no right to such Dividend Equivalent Rights. No Dividend Equivalent
Rights may be paid or granted with respect to any Stock Option or SAR.
6.9 Other
Awards. The Committee may grant to any Participant other forms of Awards, based upon, payable in, or otherwise related to,
in whole or in part, shares of Common Stock, if the Committee determines that such other form of Award is consistent with the purpose
and restrictions of this Plan. The terms and conditions of such other form of Award shall be specified by the grant. Such Other Awards
may be granted for no cash consideration, for such minimum consideration as may be required by Applicable Law, or for such other consideration
as may be specified by the grant.
6.10 Performance
Goals. Awards (whether relating to cash or shares of Common Stock) under the Plan may be made subject to the attainment of
Performance Goals relating to one or more business criteria which may consist of one or more or any combination of the following criteria:
operating income; net income; cash flow; cost; revenues, revenue growth, revenue ratios; sales; ratio of debt to debt plus equity; net
borrowing, credit quality or debt ratings; profit before tax; economic profit; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization or other measures of cash flow; gross margin; operating margins; earnings per share (whether on a
pre-tax, after-tax, operational or other basis); operating earnings; capital expenditures; aggregate product price and other product measures;
expenses or cost levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free cash
flow; operating profit; net profit; net sales or changes in net sales; net earnings; growth in operating earnings or growth in earnings
per share; value of assets; net asset value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings or
similar extraordinary business transactions; sales growth; price of the Company’s Common Stock, stockholder value, or total market
value; return on net assets, return on invested capital or other return measures, including return or net return on working assets, equity,
capital, or net sales; market share or market penetration with respect to specific designated products or product groups and/or specific
geographic areas; inventory and/or receivables control, inventory levels, inventory turn or shrinkage; total return to stockholders, stockholders
return based on growth measures or the attainment by the shares of a specified value for a specified period of time, share price or share
price appreciation; reduction of losses, loss ratios or expense ratios; reduction in fixed assets; operating cost management; management
of capital structure; debt reduction; productivity improvements; satisfaction of specified business expansion goals or goals relating
to acquisitions or divestitures; customer satisfaction based on specified objective goals or a Company-sponsored customer survey; customer
growth; employee diversity goals; employee turnover; specified objective social goals; safety record; or store sales or productivity or
any other criteria determined by the Committee (“Performance Criteria”). Any Performance Criteria may be used
to measure the performance of the Company as a whole or any business unit of the Company and may be measured relative to a peer group
or index. Any Performance Criteria may include or exclude (i) events that are of an unusual nature or indicate infrequency of occurrence,
(ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws, (iv) the
effect of a merger or acquisition, as identified in the Company’s quarterly and annual earnings releases, or (v) other similar
occurrences. In all other respects, Performance Criteria shall be calculated in accordance with the Company’s financial statements,
under generally accepted accounting principles, or under a methodology established by the Committee prior to the issuance of an Award
which is consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion
and Analysis section of the Company’s annual report.
6.11 Tandem
Awards. The Committee may grant two or more Incentives in one Award in the form of a “Tandem Award,” so that the
right of the Participant to exercise one Incentive shall be canceled if, and to the extent, the other Incentive is exercised. For example,
if a Stock Option and a SAR are issued in a Tandem Award, and the Participant exercises the SAR with respect to 100 shares of Common Stock,
the right of the Participant to exercise the related Stock Option shall be canceled to the extent of 100 shares of Common Stock.
6.12 No
Repricing of Stock Options or SARs. The Committee may not, without the approval of the Company’s stockholders, “reprice”
any Stock Option or SAR. For purposes of this Section 6.12, “reprice” means any of the following or any other
action that has the same effect: (i) amending a Stock Option or SAR to reduce its exercise price or base price, (ii) canceling
a Stock Option or SAR at a time when its exercise price or base price exceeds the Fair Market Value of a share of Common Stock in exchange
for cash or a Stock Option, SAR, award of Restricted Stock or other equity award with an exercise price or base price less than the exercise
price or base price of the original Stock Option or SAR, or (iii) taking any other action that is treated as a repricing under generally
accepted accounting principles, provided that nothing in this Section 6.12 shall prevent the Committee from making adjustments
pursuant to Article 11, from exchanging or cancelling Incentives pursuant to Article 12, or substituting Incentives
in accordance with Article 14.
6.13 Recoupment
for Restatements. Notwithstanding any other language in this Plan to the contrary, the Company may recoup all or any portion of any
shares or cash paid to a Participant in connection with an Award, in the event of a restatement of the Company’s financial statements
as set forth in the Company’s clawback policy, if any, approved by the Company’s Board from time to time.
ARTICLE 7
OUTSIDE DIRECTOR AUTOMATIC GRANTS
7.1 Automatic
Grants. Subject to the terms and conditions of this Plan, each Outside Director of the Company who does not elect to decline
to participate in the Plan, shall automatically be granted Restricted Stock Units as follows: (a) on the date of each Annual Stockholders
Meeting, each Outside Director (including an individual who first becomes an Outside Director at such Annual Stockholders Meeting) shall
automatically be granted a number of Restricted Stock Units equal to the number of shares of Common Stock having an aggregate Fair Market
Value of $130,000 (rounded down to the closest whole number) on the Date of Grant, so long as such Outside Director has not suffered a
Termination of Service as an Outside Director prior to such date; and (b) each individual who first becomes an Outside Director (other
than at any Annual Stockholders Meeting), shall automatically be granted as of the effective date of appointment as an Outside Director
a pro-rated number of Restricted Stock Units that would have been granted to such individual if he or she had been elected as an Outside
Director during the immediately preceding Annual Stockholders Meeting; the number of Restricted Stock Units shall be pro-rated based on
the number of days between the date such individual first became an Outside Director and the date that is one year from the immediately
preceding Annual Stockholders Meeting, over 365. Notwithstanding the foregoing, in the case of any grant of Restricted Stock Units made
pursuant to this Section 7.1, such grant shall only be made if the number of shares subject to grant under this Section 7.1
is sufficient to make all automatic grants required to be made pursuant to this Section 7.1 on such Date of Grant.
7.2 Vesting
and Forfeiture. Subject to certain restrictions and conditions set forth in this Plan, any Restricted Stock Units granted pursuant
to this Article 7 shall become one hundred percent (100%) vested and convertible into shares of Common Stock (i) for
grants made on the date of an Annual Stockholders Meeting, on the earlier of the first anniversary of the Date of Grant or the first Annual
Stockholders Meeting following the Date of Grant that is held at least 50 weeks following the Date of Grant, provided the Outside Director
is providing services to the Company or a Subsidiary on such date; and (ii) for grants made to an individual first being appointed
an Outside Director other than on the date of an Annual Stockholders Meeting, one year from the Date of Grant. Notwithstanding the foregoing,
in the event of an Outside Director’s Termination of Service due to his or her death, all unvested Restricted Stock Units shall
immediately become one hundred percent (100%) vested and convertible into shares of Common Stock. On the date such Restricted Stock Units
become vested or as soon as practicable thereafter, the Company shall deliver to the Outside Director the number of shares of Common Stock
equal to the number of vested Restricted Stock Units. Except as otherwise provided herein, each Outside Director’s Restricted Stock
Units granted pursuant to this Article 7 shall terminate and be forfeited on the date of his or her Termination of Service
for any reason other than death, to the extent such Restricted Stock Units are unvested on the date of his or her Termination of Service.
ARTICLE 8
AWARD PERIOD; VESTING
8.1 Award
Period. Subject to the other provisions of this Plan, the Committee may, in its discretion, provide that an Incentive may not
be exercised in whole or in part for any period or periods of time or beyond any date specified in the Award Agreement. Except as provided
in the Award Agreement, an Incentive may be exercised in whole or in part at any time during its term. The Award Period for an Incentive
shall be reduced or terminated upon Termination of Service. No Incentive granted under the Plan may be exercised at any time after the
end of its Award Period. No portion of any Incentive may be exercised after the expiration of ten years from its Date of Grant. However,
if an Employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten
percent of the combined voting power of all classes of stock of the Company (or any parent or Subsidiary) and an Incentive Stock Option
is granted to such Employee, the term of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be
no more than five (5) years from the Date of Grant.
8.2 Vesting.
The Committee, in its sole discretion, shall establish the vesting terms applicable to an Incentive, provided that any such
vesting terms shall not be inconsistent with the terms of the Plan, including, without limitation, this Section 8.2. Except
as otherwise provided by Section 7.2 or as otherwise provided herein, no Incentive (nor any portion of an Incentive, even
on a pro rata basis) that would result in the issuance of Common Stock may vest earlier than one (1) year after the Date of Grant
(other than substitute Incentives) other than in the event of the Participant’s death, Total and Permanent Disability or the occurrence
of a Change in Control. Notwithstanding the foregoing, the Committee may, in its sole discretion, grant Awards with more favorable vesting
provisions than set forth in this Section 8.2, or accelerate the vesting or waive the Restriction Period for Awards at any
time, provided that the shares of Common Stock subject to such Awards shall be Exempt Shares.
ARTICLE 9
EXERCISE OR CONVERSION OF INCENTIVE
9.1 In
General. A vested Incentive may be exercised or converted, during its Award Period, subject to limitations and restrictions set forth
in the Award Agreement
9.2 Securities
Law and Exchange Restrictions. In no event may an Incentive be exercised or shares of Common Stock be issued pursuant to an
Award if a necessary listing or quotation of the shares of Common Stock on a stock exchange or inter-dealer quotation system or any registration
under state or federal securities laws required under the circumstances has not been accomplished.
9.3 Exercise
of Stock Option.
(a) In
General. If a Stock Option is exercisable prior to the time it is vested, the Common Stock obtained on the exercise of the
Stock Option shall be Restricted Stock which is subject to the applicable provisions of the Plan and the Award Agreement. If the Committee
imposes conditions upon exercise, then subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate the date
on which all or any portion of the Stock Option may be exercised. No Stock Option may be exercised for a fractional share of Common Stock.
The granting of a Stock Option shall impose no obligation upon the Participant to exercise that Stock Option.
(b) Notice
and Payment. Subject to such administrative regulations as the Committee may from time to time adopt, a Stock Option may be
exercised by the delivery of notice (in writing, electronically, or telephonically) to the Committee (or such person or persons designated
by the Committee) setting forth the number of shares of Common Stock with respect to which the Stock Option is to be exercised (the “Exercise
Notice”). The consideration due with respect to the exercise of a Stock Option shall be payable as provided in the applicable
Award Agreement, which may provide for payment in any one or more of the following ways: (a) cash or check, bank draft, or money
order payable to the order of the Company and in U.S. dollars, (b) Common Stock (including Restricted Stock) owned by the Participant
on the Exercise Date, valued at its Fair Market Value on the Exercise Date, (c) by delivery (including by FAX or electronic transmission)
to the Company or its designated agent of an executed irrevocable option exercise form (or, to the extent permitted by the Company, exercise
instructions, which may be communicated in writing, telephonically, or electronically) together with irrevocable instructions from the
Participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the shares of Common Stock purchased upon
exercise of the Stock Option or to pledge such shares as collateral for a loan and promptly deliver to the Company the amount of sale
or loan proceeds necessary to pay such purchase price, and/or (d) in any other form of valid consideration that is acceptable to
the Committee in its sole discretion. In the event that shares of Restricted Stock are tendered as consideration for the exercise of
a Stock Option, a number of shares of Common Stock issued upon the exercise of the Stock Option equal to the number of shares of Restricted
Stock used as consideration therefor shall be subject to the same restrictions and provisions as the Restricted Stock so tendered. If
the Participant fails to deliver the consideration described in this Section 9.3(b) within three (3) business days
of the date of the Exercise Notice, then the Exercise Notice shall be null and void and the Company will have no obligation to deliver
any shares of Common Stock to the Participant in connection with such Exercise Notice.
(c) Issuance
of Certificate. Except as otherwise provided in Section 6.4 hereof (with respect to shares of Restricted Stock)
or in the applicable Award Agreement, upon payment of all amounts due from the Participant, the Company shall cause the Common Stock then
being purchased to be registered in the Participant’s name (or the person exercising the Participant’s Stock Option in the
event of his or her death), but shall not issue certificates for the Common Stock unless the Participant (or such other person) requests
delivery of the certificates for the Common Stock, in writing in accordance with the procedures established by the Committee. The Company
shall deliver certificates to the Participant (or the person exercising the Participant’s Stock Option in the event of his or her
death) as soon as administratively practicable following the Company’s receipt of a written request from the Participant (or such
other person) for delivery of the certificates. Notwithstanding the forgoing, if the Participant has exercised an Incentive Stock Option,
the Company may at its option place a transfer restriction on any electronically registered shares (or if a physical certificate is issued
to the Participant, retain physical possession of the certificate evidencing the shares acquired upon exercise) until the expiration of
the holding periods described in Section 422(a)(1) of the Code. Any obligation of the Company to deliver shares of Common Stock
shall, however, be subject to the condition that, if at any time the Committee shall determine in its discretion that the listing, registration,
or qualification of the Stock Option or the Common Stock upon any securities exchange or inter-dealer quotation system or under any state
or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with,
the Stock Option or the issuance or purchase of shares of Common Stock thereunder, the Stock Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions
not reasonably acceptable to the Committee.
(d) Failure
to Pay. Except as may otherwise be provided in an Award Agreement, if the Participant fails to pay for any of the Common Stock
specified in such notice or fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to purchase
such Common Stock may be forfeited by the Participant, in the Committee’s sole discretion.
9.4 SARs.
Subject to the conditions of this Section 9.4 and such administrative regulations as the Committee may from time to time adopt,
a SAR may be exercised by the delivery (including by FAX) of an Exercise Notice to the Committee setting forth the number of shares of
Common Stock with respect to which the SAR is to be exercised and the Exercise Date thereof. Subject to the terms of the Award Agreement
and only if permissible under Section 409A of the Code and the regulations or other guidance issued thereunder (or, if not so permissible,
at such time as permitted by Section 409A of the Code and the regulations or other guidance issued thereunder), the Participant shall
receive from the Company in exchange therefor in the discretion of the Committee, and subject to the terms of the Award Agreement:
(i) cash
in an amount equal to the excess (if any) of the Fair Market Value (as of the Exercise Date, or if provided in the Award Agreement, conversion,
of the SAR) per share of Common Stock over the SAR Price per share specified in such SAR, multiplied by the total number of shares of
Common Stock of the SAR being surrendered;
(ii) that
number of shares of Common Stock having an aggregate Fair Market Value (as of the Exercise Date, or if provided in the Award Agreement,
conversion, of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for
any fractional share interests; or
(iii) the
Company may settle such obligation in part with shares of Common Stock and in part with cash.
The
distribution of any cash or Common Stock pursuant to the foregoing sentence shall be made at such time as set forth in the Award Agreement.
9.5 Disqualifying
Disposition of Incentive Stock Option. If shares of Common Stock acquired upon exercise of an Incentive Stock Option are disposed
of by a Participant prior to the expiration of either two (2) years from the Date of Grant of such Stock Option or one (1) year
from the transfer of shares of Common Stock to the Participant pursuant to the exercise of such Stock Option, or in any other disqualifying
disposition within the meaning of Section 422 of the Code, such Participant shall notify the Company in writing of the date and terms
of such disposition. A disqualifying disposition by a Participant shall not affect the status of any other Stock Option granted under
the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code.
ARTICLE 10
AMENDMENT OR DISCONTINUANCE
Subject to the limitations
set forth in this Article 10, the Board may at any time and from time to time, without the consent of the Participants, alter,
amend, revise, suspend, or discontinue the Plan in whole or in part; provided, however, that no amendment for which stockholder approval
is required either (i) by any securities exchange or inter-dealer quotation system on which the Common Stock is listed or traded
or (ii) in order for the Plan and Incentives awarded under the Plan to continue to comply with Sections 421 and 422 of the Code,
including any successors to such Sections, or other Applicable Law, shall be effective unless such amendment shall be approved by the
requisite vote of the stockholders of the Company entitled to vote thereon. Notwithstanding the foregoing, no amendment to the Plan that
increases the benefits accrued to Participants, increases the maximum number of shares of Common Stock which may be issued under the
Plan, reprices any Stock Options or modifies the requirements for participation in the Plan shall be effective unless such amendment
shall be approved by the stockholders of the Company entitled to vote thereon in the manner set forth in the Company’s articles
of incorporation and bylaws. Any amendments made pursuant to this Article 10 shall, to the extent deemed necessary or advisable
by the Committee, be applicable to any outstanding Incentives theretofore granted under the Plan, notwithstanding any contrary provisions
contained in any Award Agreement. In the event of any such amendment to the Plan, the holder of any Incentive outstanding under the Plan
shall, upon request of the Committee and as a condition to the exercisability thereof, execute a conforming amendment in the form prescribed
by the Committee to any Award Agreement relating thereto. Notwithstanding anything contained in this Plan to the contrary, unless required
by law, no action contemplated or permitted by this Article 10 shall adversely affect any rights of Participants or obligations
of the Company to Participants with respect to any Incentive theretofore granted under the Plan without the consent of the affected Participant.
For purposes of clarity, any amendment to an existing Award resulting in a less favorable tax consequence to a Participant under the
Award shall not be considered to adversely affect the rights of the Participant.
ARTICLE 11
TERM
The Plan shall be effective
as of the Effective Date and, unless sooner terminated by action of the Board, the Plan will terminate on the tenth anniversary of the
Effective Date, but Incentives granted before that date will continue to be effective in accordance with their terms and conditions.
ARTICLE 12
CAPITAL ADJUSTMENTS
In the event that any dividend
or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split,
reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision,
repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock
or other securities of the Company, or other similar corporate transaction or event affects the fair value of an Award, then the Committee
shall adjust any or all of the following so that the fair value of the Award immediately after the transaction or event is equal to the
fair value of the Award immediately prior to the transaction or event (i) the number of shares and type of Common Stock (or the securities
or property) which thereafter may be made the subject of Awards, (ii) the number of shares and type of Common Stock (or other securities
or property) subject to outstanding Awards, (iii) the Option Price of each outstanding Award, (iv) the amount, if any, the Company
pays for forfeited shares of Common Stock in accordance with Section 6.4, and (v) the number of or SAR Price of shares
of Common Stock then subject to outstanding SARs previously granted and unexercised under the Plan to the end that the same proportion
of the Company’s issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate
SAR Price; provided however, that the number of shares of Common Stock (or other securities or property) subject to any Award shall always
be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment would
cause the Plan or any Stock Option to violate Section 422 of the Code or Section 409A of the Code. Such adjustments shall be
made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject.
The computation of any adjustment
under this Article 12 shall be conclusive and shall be binding upon each affected Participant to the extent required by Applicable
Law, upon the occurrence of any such adjustment, the Company shall provide notice to each affected Participant of its computation of such
adjustment.
ARTICLE 13
RECAPITALIZATION, MERGER AND CONSOLIDATION
13.1 No
Effect on Company’s Authority. The existence of this Plan and Incentives granted hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations,
or other changes in the Company’s capital structure and its business, or any Change in Control, or any merger or consolidation of
the Company, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common Stock
or the rights thereof (or any rights, options, or warrants to purchase same), or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character
or otherwise.
13.2 Conversion
of Incentives Where Company Survives. Subject to any required action by the stockholders and except as otherwise provided by
Section 13.4 hereof or as may be required to comply with Section 409A of the Code and the regulations or other guidance
issued thereunder, if the Company shall be the surviving or resulting corporation in any merger, consolidation or share exchange, any
Incentive granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or assets) to which a holder
of the number of shares of Common Stock subject to the Incentive would have been entitled; and in such event, such Incentive shall remain
subject to the same restrictions and/or other vesting requirements as existed prior to such merger, consolidation or share exchange.
13.3 Exchange
or Cancellation of Incentives Where Company Does Not Survive. Except as otherwise provided by Section 13.4 hereof
or as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, in the event
the acquiror or the surviving or resulting corporation does not agree to assume the Incentives or in the event of any merger, consolidation
or share exchange pursuant to which the Company is not the surviving or resulting corporation, there shall be substituted for each share
of Common Stock subject to the unexercised portions of outstanding Incentives, that number of shares of each class of stock or other securities
or that amount of cash, property, or assets of the surviving, resulting or consolidated company which were distributed or distributable
to the stockholders of the Company in respect to each share of Common Stock held by them, such outstanding Incentives to be thereafter
exercisable for such stock, securities, cash, or property in accordance with their terms.
13.4 Cancellation
of Incentives. Notwithstanding the provisions of Sections 13.2 and 13.3 hereof, and except as may be required to comply
with Section 409A of the Code and the regulations or other guidance issued thereunder, in the event the acquirer or the surviving
or resulting corporation does not agree to assume the Incentives, all Incentives granted hereunder may be canceled by the Company, in
its sole discretion, as of the effective date of any Change in Control, merger, consolidation or share exchange, or any issuance of bonds,
debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common Stock or the rights thereof (or any rights,
options, or warrants to purchase same), or of any proposed sale of all or substantially all of the assets of the Company, or of any dissolution
or liquidation of the Company, by either:
(a) giving
notice to each holder thereof or his personal representative of its intention to cancel those Incentives for which the issuance of shares
of Common Stock involved payment by the Participant for such shares, and permitting the purchase during the thirty (30) day period next
preceding such effective date of any or all of the shares of Common Stock subject to such outstanding Incentives, including in the Committee’s
discretion some or all of the shares as to which such Incentives would not otherwise be vested and exercisable; or
(b) in
the case of Incentives that are either (i) settled only in shares of Common Stock, or (ii) at the election of the Participant,
settled in shares of Common Stock, paying the holder thereof an amount equal to a reasonable estimate of the difference between the net
amount per share payable in such transaction or as a result of such transaction, and the price per share of such Incentive to be paid
by the Participant (hereinafter the “Spread”), multiplied by the number of shares subject to the Incentive.
In cases where the shares constitute, or would after exercise, constitute Restricted Stock, the Company, in its discretion, may include
some or all of those shares in the calculation of the amount payable hereunder. In estimating the Spread, appropriate adjustments to give
effect to the existence of the Incentives shall be made, such as deeming the Incentives to have been exercised, with the Company receiving
the exercise price payable thereunder, and treating the shares receivable upon exercise of the Incentives as being outstanding in determining
the net amount per share. In cases where the proposed transaction consists of the acquisition of assets of the Company, the net amount
per share shall be calculated on the basis of the net amount receivable with respect to shares of Common Stock upon a distribution and
liquidation by the Company after giving effect to expenses and charges, including but not limited to taxes, payable by the Company before
such liquidation could be completed.
An Award that by its terms would be fully vested
or exercisable upon a Change in Control will be considered vested or exercisable for purposes of Section 13.4(a) hereof.
Notwithstanding the foregoing, with respect to Performance Awards, the Committee only may approve the acceleration of vesting and/or cash-out
if (i) the amount payable or vested is linked to the achievement of the Performance Goals for such Performance Award as of the date
of the Change in Control and/or (ii) the amount to be paid or vested under the Performance Award on the Change in Control is prorated
based on the time elapsed in the applicable performance period between the Performance Award’s Date of Grant and the Change in Control.
ARTICLE 14
LIQUIDATION OR DISSOLUTION
Subject to Section 13.4
hereof, in case the Company shall, at any time while any Incentive under this Plan shall be in force and remain unexpired, (i) sell
all or substantially all of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each Participant shall be entitled
to receive, in lieu of each share of Common Stock of the Company which such Participant would have been entitled to receive under the
Incentive, the same kind and amount of any securities or assets as may be issuable, distributable, or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each share of Common Stock of the Company. If the Company shall, at any time prior to the expiration
of any Incentive, make any partial distribution of its assets, in the nature of a partial liquidation, whether payable in cash or in kind
(but excluding the distribution of a cash dividend payable out of earned surplus and designated as such) and an adjustment is determined
by the Committee to be appropriate to prevent the dilution of the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem equitable, make such adjustment in accordance with the provisions of Article 12
hereof.
ARTICLE 15
INCENTIVES IN SUBSTITUTION FOR
INCENTIVES GRANTED BY OTHER ENTITIES
Incentives may be granted
under the Plan from time to time in substitution for similar instruments held by employees, independent contractors or directors of a
corporation, partnership, or limited liability company who become or are about to become Employees, Contractors or Outside Directors of
the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company, the acquisition
by the Company of equity of the employing entity, or any other similar transaction pursuant to which the Company becomes the successor
employer. The terms and conditions of the substitute Incentives so granted may vary from the terms and conditions set forth in this Plan
to such extent as the Committee at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the incentives
in substitution for which they are granted.
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1 Investment
Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan, such evidence as it
may deem necessary to establish that the Incentives granted or the shares of Common Stock to be purchased or transferred are being acquired
for investment and not with a view to their distribution.
16.2 No
Right to Continued Employment. Neither the Plan nor any Incentive granted under the Plan shall confer upon any Participant any right
with respect to continuance of employment by the Company or any Subsidiary.
16.3 Indemnification
of Board and Committee. No member of the Board or the Committee, nor any officer or Employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect
to the Plan, and all members of the Board and the Committee, each officer of the Company, and each Employee of the Company acting on behalf
of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any
such action, determination, or interpretation to the fullest extent provided by law. Except to the extent required by any unwaiveable
requirement under Applicable Law, no member of the Board or the Committee (and no Subsidiary of the Company) shall have any duties or
liabilities, including without limitation any fiduciary duties, to any Participant (or any Person claiming by and through any Participant)
as a result of this Plan, any Award Agreement or any Claim arising hereunder and, to the fullest extent permitted under Applicable Law,
each Participant (as consideration for receiving and accepting an Award Agreement) irrevocably waives and releases any right or opportunity
such Participant might have to assert (or participate or cooperate in) any Claim against any member of the Board or the Committee and
any Subsidiary of the Company arising out of this Plan.
16.4 Effect
of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any person
any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment thereto, duly
authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms and conditions expressly
set forth therein.
16.5 Compliance
with Other Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell
or issue shares of Common Stock under any Incentive if the issuance thereof would constitute a violation by the Participant or the Company
of any provisions of any law or regulation of any governmental authority or any national securities exchange or inter-dealer quotation
system or other forum in which shares of Common Stock are quoted or traded (including without limitation Section 16 of the Exchange
Act); and, as a condition of any sale or issuance of shares of Common Stock under an Incentive, the Committee may require such agreements
or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. The Plan,
the grant and exercise of Incentives hereunder, and the obligation of the Company to sell and deliver shares of Common Stock, shall be
subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency
as may be required.
16.6 Foreign
Participation. To assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover,
the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it determines is necessary
or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Committee approves for purposes of
using this Plan in a foreign country will not affect the terms of this Plan for any other country.
16.7 Tax
Requirements. The Company or, if applicable, any Subsidiary (for purposes of this Section 16.7, the term “Company”
shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form in
connection with the Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with an Award granted
under this Plan. The Company may, in its sole discretion, also require the Participant receiving shares of Common Stock issued under
the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s
income arising with respect to the Award. Such payments shall be required to be made when requested by the Company and may be required
to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment may be made (i) by the delivery
of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required
tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents in writing, the actual delivery
by the exercising Participant to the Company of shares of Common Stock, which shares so delivered have an aggregate Fair Market Value
that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if
the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon
the exercise of the Stock Option, which shares so withheld have an aggregate Fair Market Value that equals or exceeds the required tax
withholding payment; or (iv) any combination of (i), (ii), or (iii). To the extent the number of shares delivered in accordance
with Section 16.7(i) or (ii) or withheld in accordance with Section 16.7(iii) exceeds the required
tax withholding due, the Company shall make a cash payment to the Participant equal to the excess amount as soon as administratively
practicable thereafter. The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise paid
by the Company to the Participant. The Committee may in the Award Agreement impose any additional tax, social insurance, fringe benefit,
payment on account requirements or provisions that the Committee deems necessary or desirable.
16.8 Assignability.
Incentive Stock Options may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will
or the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant or the Participant’s
legally authorized representative, and each Award Agreement in respect of an Incentive Stock Option shall so provide. The designation
by a Participant of a beneficiary will not constitute a transfer of the Stock Option. The Committee may waive or modify any limitation
contained in the preceding sentences of this Section 16.8 that is not required for compliance with Section 422 of the
Code.
Except as otherwise provided
herein, Awards may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will or the laws
of descent and distribution or in accordance with the terms of a qualified domestic relations order. Notwithstanding the foregoing, the
Committee may, in its discretion, authorize all or a portion of a Nonqualified Stock Option or SAR to be granted to a Participant on terms
which permit transfer by such Participant to (i) the spouse (or former spouse), children or grandchildren of the Participant (“Immediate
Family Members”), (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iii) a partnership
in which the only partners are (1) such Immediate Family Members and/or (2) entities which are controlled by the Participant
and/or Immediate Family Members, (iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code
or any successor provision, or (v) a split interest trust or pooled income fund described in Section 2522(c)(2) of the
Code or any successor provision, provided that (x) there shall be no consideration for any such transfer, (y) the Award
Agreement pursuant to which such Nonqualified Stock Option or SAR is granted must be approved by the Committee and must expressly provide
for transferability in a manner consistent with this Section, and (z) subsequent transfers of transferred Nonqualified Stock Options
or SARs shall be prohibited except those by will or the laws of descent and distribution.
Following any transfer, any
such Nonqualified Stock Option and SAR shall continue to be subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that for purposes of Articles 9, 10, 12, 14 and 16 hereof the term “Participant” shall be deemed
to include the transferee. The events of Termination of Service shall continue to be applied with respect to the original Participant,
following which the Nonqualified Stock Options and SARs shall be exercisable or convertible by the transferee only to the extent and for
the periods specified in the Award Agreement. The Committee and the Company shall have no obligation to inform any transferee of a Nonqualified
Stock Option or SAR of any expiration, termination, lapse or acceleration of such Stock Option or SAR. The Company shall have no obligation
to register with any federal or state securities commission or agency any Common Stock issuable or issued under a Nonqualified Stock Option
or SAR that has been transferred by a Participant under this Section 16.8.
16.9 Use
of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Incentives granted under this Plan shall constitute
general funds of the Company.
16.10 Legend.
Each certificate representing shares of Restricted Stock issued to a Participant shall bear the following legend, or a similar legend
deemed by the Company to constitute an appropriate notice of the provisions hereof (any such certificate not having such legend shall
be surrendered upon demand by the Company and so endorsed):
On the face of the certificate:
“Transfer of this stock is restricted
in accordance with conditions printed on the reverse of this certificate.”
On the reverse:
“The shares of stock evidenced
by this certificate are subject to and transferable only in accordance with that certain Fossil Group, Inc. 2023 Long-Term Incentive
Plan, a copy of which is on file at the principal office of the Company in Dallas, Texas. No transfer or pledge of the shares evidenced
hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of this certificate, any holder,
transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan.”
The following legend shall
be inserted on a certificate evidencing Common Stock issued under the Plan if the shares were not issued in a transaction registered under
the applicable federal and state securities laws:
“Shares of stock represented by
this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant
to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold
or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance with such laws,
and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel
satisfactory to the Company.”
16.11 Governing
Law. The Plan shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding
any conflict of laws, rule or principle of Delaware law that might refer the governance, construction, or interpretation of this
Plan to the laws of another state). A Participant’s sole remedy for any Claim shall be against the Company, and no Participant shall
have any claim or right of any nature against any Subsidiary of the Company or any stockholder or existing or former director, officer
or Employee of the Company or any Subsidiary of the Company. Each Award Agreement shall require the Participant to release and covenant
not to sue any Person other than the Company over any Claims. The individuals and entities described above in this Section 16.11
(other than the Company) shall be third-party beneficiaries of this Plan for purposes of enforcing the terms of this Section 16.11.
A copy of this Plan shall
be kept on file in the principal office of the Company in Richardson, Texas.
***************
IN WITNESS WHEREOF, the Company
has caused this instrument to be executed as of March 1, 2023, by its Chief Executive Officer pursuant to prior action taken by the
Board.
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FOSSIL GROUP, INC. |
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By: |
/s/ Kosta N. Kartsotis |
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Name: |
Kosta N. Kartsotis |
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Title: |
Chairman and Chief Executive Officer |
