Document:

Exhibit 10.2

 

Orbsat
Corp 2020 Equity Incentive Plan

 

 

 

Section
1. Establishment and Purpose.

 

1.1
The purpose of the Plan is to attract and retain outstanding individuals as Employees, Directors and Consultants of the Company
and its Subsidiaries, to recognize the contributions made to the Company and its Subsidiaries by Employees, Directors and Consultants,
and to provide such Employees, Directors and Consultants with additional incentive to expand and improve the profits and achieve
the objectives of the Company and its Subsidiaries, by providing such Employees, Directors and Consultants with the opportunity
to acquire or increase their proprietary interest in the Company through receipt of Awards.

 

Section
2. Definitions.

 

As
used in the Plan, the following terms shall have the meanings set forth below:

 

2.1
“Award” means any award or benefit granted under the Plan, which shall be a Stock Option, a Stock Award, a
Stock Unit Award or an SAR.

 

2.2
“Award Agreement” means, as applicable, a Stock Option Agreement, Stock Award Agreement, Stock Unit Award Agreement
or SAR Agreement evidencing an Award granted under the Plan.

 

2.3
“Board” means the Board of Directors of the Company.

 

2.4
“Change in Control” has the meaning set forth in Section 8.2 of the Plan.

 

2.5
“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

2.6
“Committee” means the Compensation Committee of the Board or such other committee as may be designated by the
Board from time to time to administer the Plan, or, if no such committee has been designated at the time of any grants, it shall
mean the Board.

 

2.7
“Company” means Orbsat Corp, a Nevada corporation.

 

2.8
“Consultant” means any person, including an advisor, who is engaged by the Company or a Subsidiary to render
consulting or advisory services and is compensated for such services. However, service solely as a Director, or payment of a fee
for such service, will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding
the foregoing, a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities
Act is available to register either the offer or the sale of the Company’s securities to such person.

 

2.9
“Director” means a director of the Company who is not an employee of the Company or a Subsidiary.

 

2.10
“Effective Date” means August 21, 2020.

 

2.11
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

2.12
“Fair Market Value” means as of any date, the closing price of a Share on the national securities exchange
on which the Shares are listed, or, if the Shares are not listed on a national securities exchange, the over-the-counter market
on which the Shares trades, or, if the Shares is not listed on a national securities exchange or an over-the-counter market, as
determined by the Board as of such date in accordance with the requirements of Code Section 422 or 409A, as applicable, or, if
no trading occurred on such date, as of the trading day immediately preceding such date.

 

2.13
“Incentive Stock Option” or “ISO” means a Stock Option granted under Section 5 of the Plan
that meets the requirements of Section 422(b) of the Code or any successor provision.

 

     

     

    

 

2.14
“Employee” means an employee of the Company or any Subsidiary selected to participate in the Plan in accordance
with Section 3. A Employee may also include a person who is granted an Award (other than an Incentive Stock Option) in connection
with the hiring of the person prior to the date the person becomes an employee of the Company or any Subsidiary, provided that
such Award shall not vest prior to the commencement of employment.

 

2.15
“Family Member” unless otherwise defined by applicable tax laws, shall mean any child, stepchild, grandchild,
parent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive relationships, any person sharing the Participant’s household (other
than a tenant or employee of the Participant), a trust in which such persons have more than fifty percent (50%) of the beneficial
interest, a foundation in which such persons (or the Participant) control the management of assets, and any other entity in which
such persons (or the Participant) own more than fifty percent (50%) of the voting interests.

 

2.16
“Founder” means the Company’s founder David Phipps.

 

2.17
“Non-Qualified Stock Option” or “NSO” means a Stock Option granted under Section 5 of the
Plan that is not an Incentive Stock Option.

 

2.18
“Participant” means an Employee, Director or Consultant selected to receive an Award or Option under
the Plan.

 

2.19
“Plan” means this 2020 Equity Incentive Plan.

 

2.20
“Shares” means shares of common stock of the Company.

 

2.21
“Stock Appreciation Right” or “SAR” means a grant of a right to receive Shares or cash under
Section 8 of the Plan.

 

2.22
“Stock Award” means a grant of Shares under Section 6 of the Plan.

 

2.23
“Stock Option” means an Incentive Stock Option or a Non-Qualified Stock Option granted under Section 5 of the
Plan.

 

2.24
“Stock Unit Award” means a grant of a right to receive Shares or cash under Section 7 of the Plan.

 

2.25
“Subsidiary” means an entity of which the Company is the direct or indirect beneficial owner of not less than
50% of all issued and outstanding equity interest of such entity.

 

2.26
“Termination of Service” means a termination of a Participant’s service with the Company or a Subsidiary,
as applicable, for any reason, including, without limitation, disability or death. In the event Termination of Service shall constitute
a payment event with respect to any Award subject to Code Section 409A, Termination of Service shall only be deemed to occur upon
a “separation from service” as such term is defined under Code Section 409A.

 

Section
3. Administration.

 

3.1
The Committee.

 

The
Plan shall be administered by the Company’s Board of Directors, “Board”.

 

3.2
Authority of the Committee.

 

(a)
The Board, in its sole discretion, shall determine the Employees, Directors and Consultants to whom, and the time or times at
which Awards will be granted, the form and amount of each Award, the expiration date of each Award, the time or times within which
the Awards may be exercised, the cancellation of the Awards and the other limitations, restrictions, terms and conditions applicable
to the grant of the Awards. The terms and conditions of the Awards need not be the same with respect to each Participant or with
respect to each Award.

 

     

     

    

 

(b)
To the extent permitted by applicable law, regulation, and rules of a stock exchange on which the Shares are listed or traded,
the Committee may delegate its authority to grant Awards to Employees and to determine the terms and conditions thereof to such
officer of the Company as it may determine in its discretion, on such terms and conditions as it may impose, except with respect
to Awards to officers subject to Section 16 of the Exchange Act.

 

(c)
The Board may, subject to the provisions of the Plan, establish such rules and regulations as it deems necessary or advisable
for the proper administration of the Plan, and may make determinations and may take such other action in connection with or in
relation to the Plan as it deems necessary or advisable. Each determination or other action made or taken pursuant to the Plan,
including interpretation of the Plan and the specific terms and conditions of the Awards granted hereunder, shall be final and
conclusive for all purposes and upon all persons.

 

(d)
No member of the Board shall be liable for any action taken or determination made hereunder in good faith. The Board shall be
entitled to indemnification and reimbursement as Directors of the Company pursuant to the Company’s Certificate of Incorporation
and By-Laws.

 

3.3
Award Agreements.

 

(a)
Each Award shall be evidenced by a written Award Agreement specifying the terms and conditions of the Award. In the sole discretion
of the Committee, the Award Agreement may condition the grant of an Award upon the Participant’s entering into one or more
of the following agreements with the Company: (i) an agreement not to compete with the Company and its Subsidiaries which shall
become effective as of the date of the grant of the Award and remain in effect for a specified period of time following termination
of the Participant’s employment with the Company; (ii) an agreement to cancel any employment agreement, fringe benefit or
compensation arrangement in effect between the Company and the Participant; and (iii) an agreement to retain the confidentiality
of certain information. Such agreements may contain such other terms and conditions as the Committee shall determine. If the Participant
shall fail to enter into any such agreement at the request of the Committee, then the Award granted or to be granted to such Participant
shall be forfeited and cancelled.

 

Section
4. Shares Subject to Plan.

 

4.1
Total Number of Shares.

 

(a)
The total number of Shares that may be issued under the Plan shall be 2,250,000. Such Shares may be either authorized but unissued
shares or treasury shares, and shall be adjusted in accordance with the provisions of Section 4.3 of the Plan.

 

(b)
The number of Shares delivered by a Participant or withheld by the Company on behalf of any such Participant as full or partial
payment of an Award, including the exercise price of a Stock Option or of any required withholding taxes, shall not again be available
for issuance pursuant to subsequent Awards, and shall count towards the aggregate number of Shares that may be issued under the
Plan. Any Shares purchased by the Company with proceeds from a Stock Option exercise shall not again be available for issuance
pursuant to subsequent Awards, shall count against the aggregate number of Shares that may be issued under the Plan and shall
not increase the number of shares available under the Plan.

 

(c)
If there is a lapse, forfeiture, expiration, termination or cancellation of any Award for any reason (including for reasons described
in Section 3.3), or if Shares are issued under such Award and thereafter are reacquired by the Company pursuant to rights reserved
by the Company upon issuance thereof, the Shares subject to such Award or reacquired by the Company shall again be available for
issuance pursuant to subsequent Awards, and shall not count towards the aggregate number of Shares that may be issued under the
Plan.

 

     

     

    

 

4.2
Shares Under Awards.

 

Of
the Shares authorized for issuance under the Plan pursuant to Section 4.1:

 

(a)
The maximum number of Shares as to which an Employee (other than the CEO to whom no annual limit is applicable) may receive Stock
Options or SARs in any calendar year is 200,000, except that the maximum number of Shares as to which an Employee (other than
the CEO) may receive Stock Options or SARs in the calendar year in which such Employee begins employment with the Company or its
Subsidiaries is 50,000, or as specified in Employee’s employment agreement.

 

(b)
The maximum number of Shares that may be subject to Stock Options (ISOs and/or NSOs) is full amount of Shares authorized under
Section 4.1.

 

(c)
The maximum number of Shares that may be used for Stock Awards and/or Stock Unit Awards that may be granted to any Employee (other
than the Founder) in any calendar year is 200,000, or, in the event the Award is settled in cash, an amount equal to the Fair
Market Value or such value as determined by the Board at its discretion, of such number of Shares on the date on which
the Award is settled.

 

(d) The maximum
number of Shares subject to Awards granted under the Plan or otherwise during any one calendar year to any Director for service
on the Board, taken together with any cash fees paid by the Company to such Director during such calendar year for service on
the Board, will not exceed $100,000 in total value (calculating the value of any such Awards based on the grant date fair
value or such value as determined by the Board, at its discretion, of such Awards for financial reporting purposes).

 

(e) The maximum
number of Shares subject to Stock Options or SARs, granted under the Plan or otherwise during any one calendar year to any Consultant
for services, taken together with any cash fees paid by the Company to such Consultant during such calendar year for services,
will not exceed $100,000  in total value (calculating the value of any such Awards based on the grant date fair value, or
such value as the Board determines at its discretion, of such Awards for financial reporting purposes).

 

The
numbers of Shares described herein shall be as adjusted in accordance with Section 4.3 of the Plan.

 

4.3
Adjustment.

 

In
the event of any reorganization, recapitalization, stock split, stock distribution, merger, consolidation, split-up, spin-off,
combination, subdivision, consolidation or exchange of shares, any change in the capital structure of the Company or any similar
corporate transaction, the Committee shall make such adjustments as it deems appropriate, in its sole discretion, to preserve
the benefits or intended benefits of the Plan and Awards granted under the Plan. Such adjustments may include: (a) adjustment
in the number and kind of shares reserved for issuance under the Plan; (b) adjustment in the number and kind of shares covered
by outstanding Awards; (c) adjustment in the exercise price of outstanding Stock Options or SARs or the price of Stock Awards
or Stock Unit Awards under the Plan; (d) adjustments to any of the shares limitations set forth in Section 4.1 or 4.2 of the Plan;
and (e) any other changes that the Committee determines to be equitable under the circumstances.

 

Section
5. Grants of Stock Options.

 

5.1
Grant.

 

Subject
to the terms of the Plan, the Committee may from time to time grant Stock Options to Participants. Stock Options granted under
the Plan to Employees shall be NSOs unless the Award Agreement expressly provides that the Stock Option is an ISO. Stock Options
granted under the Plan to Consultants and Directors who are not Employees shall be NSOs.

 

5.2
Stock Option Agreement.

 

The
grant of each Stock Option shall be evidenced by a written Stock Option Agreement specifying the type of Stock Option granted,
the exercise period, the exercise price, the terms for payment of the exercise price, the expiration date of the Stock Option,
the number of Shares to be subject to each Stock Option and such other terms and conditions established by the Committee, in its
sole discretion, not inconsistent with the Plan.

 

     

     

    

 

5.3
Exercise Price and Exercise Period.

 

With
respect to each Stock Option granted to a Participant:

 

(a)
The per Share exercise price of each Stock Option shall be determined by the Board in the exercise of its discretion.

 

Fair
Market Value, as determined by the Company’s Board of Directors, at its discretion, of the Shares subject to the Stock Option
on the date on which the Stock Option is granted, but such exercise price shall not be less than its par value.

 

(b)
Each Stock Option shall become exercisable as provided in the Stock Option Agreement; provided that the Committee shall have the
discretion to accelerate the date as of which any Stock Option shall become exercisable.

 

(c)
No dividends or dividend equivalents shall be paid with respect to any Shares subject to a Stock Option prior to the exercise
of the Stock Option.

 

(d)
Each Stock Option shall expire, and all rights to purchase Shares thereunder shall expire, on the tenth anniversary of the date
the Stock Option was granted, unless an earlier expiration date is specified in the Award Agreement or dictated by Section 5.4.

 

5.4
Required Terms and Conditions of ISOs.

 

In
addition to the foregoing, each ISO granted to an Employee shall be subject to the following specific rules:

 

(a)
The aggregate Fair Market Value or Exercise Price (determined with respect to each ISO at the time such Option is granted) of
the Shares with respect to which ISOs are exercisable for the first time by an Employee during any calendar year (under all incentive
stock option plans of the Company and its Subsidiaries) shall not exceed the fair market value. If the aggregate Fair Market Value
(determined at the time of grant) of the Shares subject to an ISO which first becomes exercisable in any calendar year exceeds
the limitation of this Section 5.4(a), so much of the ISO that does not exceed the applicable dollar limit shall be an ISO and
the remainder shall be a NSO; but in all other respects, the original Stock Option Agreement shall remain in full force and effect.

 

(b)
Notwithstanding anything herein to the contrary, if an ISO is granted to an Employee who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company (or its parent or subsidiaries within the meaning of Section
422(b)(6) of the Code): (i) the purchase price of each Shares subject to the ISO shall be not less than 110% of the Fair Market
Value of the Shares on the date the ISO is granted; and (ii) the ISO shall expire, and all rights to purchase Shares thereunder
shall expire, no later than the fifth anniversary of the date the ISO was granted.

 

(c)
No ISOs shall be granted under the Plan after ten years from the earlier of the date the Plan is adopted or approved by shareholders
of the Company.

 

5.5
Exercise of Stock Options.

 

(a)
A Participant entitled to exercise a Stock Option may do so by delivering written notice to that effect specifying the number
of Shares with respect to which the Stock Option is being exercised and any other information the Committee may prescribe. All
notices or requests provided for herein shall be delivered to the Chief Financial Officer of the Company.

 

     

     

    

 

(b)
The Committee in its sole discretion may make available one or more of the following alternatives for the payment of the Stock
Option exercise price: (i) in cash; (ii) in cash received from a broker-dealer to whom the Participant has submitted an exercise
notice together with irrevocable instructions to deliver promptly to the Company the amount of sales proceeds from the sale of
the Shares subject to the Stock Option to pay the exercise price; (iii) by directing the Company to withhold such number of Shares
otherwise issuable in connection with the exercise of the Stock Option having an aggregate Fair Market Value, or such value
as determined by the Board, at its discretion, equal to the exercise price; or (iv) by delivering previously acquired Shares
that are acceptable to the Committee and that have an aggregate Fair Market Value on the date of exercise equal to the Stock Option
exercise price, except as otherwise may be determined by the Board in the exercise of its discretion.

 

The
Committee shall have the sole discretion to establish the terms and conditions applicable to any alternative made available for
payment of the Stock Option exercise price.

 

(c)
Except to the extent inconsistent with the terms of the applicable Award Agreement and/or the provisions of Section 9, the following
terms and conditions shall apply with respect to a Participant’s Termination of Service, as applicable:

 

(i)
The Participant’s rights, if any, to exercise any vested Stock Option and/or SAR shall terminate ninety (90) days after
the date of such Termination of Service, provided that if such termination is on account of the Participant’s death or disability
(as defined under Code Section 422(c)(6)), one (1) year after the date of such Termination of Service; and

 

(ii)
Upon such applicable date the Participant (or other legal representative) shall forfeit any rights or interests in or with respect
to any such Award. Notwithstanding the foregoing, the Committee, in its sole discretion, may provide for a different time period
in the Award Agreement, or may extend the time period, following a Termination of Service, during which the Participant has the
right to exercise any vested NSO or SAR, which time period may not extend beyond the expiration date of the Award term.

 

Section
6. Stock Awards.

 

6.1
Grant.

 

The
Committee may, in its discretion, (a) grant Shares under the Plan to any Participant without consideration from such Participant
or (b) sell Shares under the Plan to any Participant for such amount of cash, Shares or other consideration as the Committee deems
appropriate.

 

6.2
Stock Award Agreement.

 

Each
Shares granted or sold hereunder shall be subject to such restrictions, conditions and other terms as the Committee may determine
at the time of grant or sale, the general provisions of the Plan, the restrictions, terms and conditions of the related Stock
Award Agreement, and the following specific rules:

 

(a)
The Award Agreement shall specify whether the Shares are granted or sold to the Participant and such other provisions, not inconsistent
with the terms and conditions of the Plan, as the Committee shall determine.

 

(b)
The restrictions to which the Shares awarded hereunder are subject shall lapse as provided in Stock Award Agreement; provided
that the Committee shall have the discretion to accelerate the date as of which the restrictions lapse with respect to any Award
held by a Participant.

 

(c)
Except as provided in this subsection (c) and unless otherwise set forth in the related Stock Award Agreement, the Participant
receiving a grant of or purchasing Shares shall thereupon be a shareholder of the Company with respect to such Shares and shall
have the rights of a shareholder of the Company with respect to such Shares, including the right to vote such Shares and to receive
dividends and other distributions paid with respect to such Shares; provided that any dividends or other distributions payable
with respect to the Stock Award shall be accumulated and held by the Company and paid to the Participant only upon, and to the
extent, the restrictions lapse in accordance with the terms of the applicable Stock Award Agreement. Any such dividends or other
distributions held by the Company attributable to the portion of a Stock Award that is forfeited shall also be forfeited.

 

     

     

    

 

Section
7. Stock Unit Awards.

 

7.1
Grant.

 

The
Committee may, in its discretion, grant Stock Unit Awards to any Participant. Each Stock Unit subject to the Award shall entitle
the Participant to receive, on the date or the occurrence of an event (including the attainment of performance goals) as described
in the Stock Unit Award Agreement, a Share or cash equal to the Fair Market Value of a Share on the date of such event as provided
in the Stock Unit Award Agreement.

 

7.2
Stock Unit Agreement.

 

Each
Stock Unit Award shall be subject to such restrictions, conditions and other terms as the Committee may determine at the time
of grant, the general provisions of the Plan, the restrictions, terms and conditions of the related Stock Unit Award Agreement
and the following specific rules:

 

(a)
The Stock Unit Agreement shall specify such provisions, not inconsistent with the terms and conditions of the Plan, as the Committee
shall determine.

 

(b)
The restrictions to which the Shares of Stock Units awarded hereunder are subject shall lapse as provided in Stock Unit Agreement;
provided that the Committee shall have the discretion to accelerate the date as of which the restrictions lapse with respect to
any Award held by a Participant.

 

(c)
Except as provided in this subsection (c) and unless otherwise set forth in the Stock Unit Agreement, the Participant receiving
a Stock Unit Award shall have no rights of a shareholder of the Company, including voting or dividends or other distributions
rights, with respect to any Stock Units prior to the date they are settled in Shares; provided that a Stock Unit Award Agreement
may provide that until the Stock Units are settled in Shares or cash, the Participant shall be entitled to receive on each dividend
or distribution payment date applicable to the Shares an amount equal to the dividends or other distributions that the Participant
would have received had the Stock Units held by the Participant as of the related record date been actual Shares. Such amounts
shall be accumulated and held by the Company and paid to the Participant only upon, and to the extent, the restrictions lapse
in accordance with the terms of the applicable Stock Unit Award Agreement. Such amounts held by the Company attributable to the
portion of the Stock Unit Award that is forfeited shall also be forfeited.

 

Section
8. SARs.

 

8.1
Grant.

 

The
Committee may grant SARs to Participants. Upon exercise, an SAR entitles the Participant to receive from the Company the number
of Shares having an aggregate Fair Market Value equal to the excess of the Fair Market Value of one Share as of the date on which
the SAR is exercised over the exercise price, multiplied by the number of Shares with respect to which the SAR is being exercised.
The Committee, in its discretion, shall be entitled to cause the Company to elect to settle any part or all of its obligations
arising out of the exercise of an SAR by the payment of cash in lieu of all or part of the Shares it would otherwise be obligated
to deliver in an amount equal to the Fair Market Value of such Shares on the date of exercise. Cash shall be delivered in lieu
of any fractional Shares. The terms and conditions of any such Award shall be determined at the time of grant.

 

8.2
SAR Agreement.

 

(a)
Each SAR shall be evidenced by a written SAR Agreement specifying the terms and conditions of the SAR as the Committee may determine,
including the SAR exercise price, expiration date of the SAR, the number of Shares to which the SAR pertains, the form of settlement
and such other terms and conditions established by the Committee, in its sole discretion, not inconsistent with the Plan.

 

     

     

    

 

(b)
The per Share exercise price of each SAR shall not be less than 100% of the Fair Market Value of a Share on the date the SAR is
granted.

 

(c)
Each SAR shall expire and all rights thereunder shall cease on the date fixed by the Committee in the related SAR Agreement, which
shall not be later than the ten years after the date of grant; provided however, if a Participant is unable to exercise an SAR
because trading in the Shares is prohibited by law or the Company’s insider-trading policy, the SAR exercise date shall
be extended to the date that is 30 days after the expiration of the trading prohibition.

 

(d)
Each SAR shall become exercisable as provided in the related SAR Agreement; provided that notwithstanding any other Plan provision,
the Committee shall have the discretion to accelerate the date as of which any SAR shall become exercisable.

 

(e)
No dividends or dividend equivalents shall be paid with respect to any SAR prior to the exercise of the SAR.

 

(f)
A person entitled to exercise an SAR may do so by delivery of a written notice in accordance with procedures established by the
Committee specifying the number of Shares with respect to which the SAR is being exercised and any other information the Committee
may prescribe. As soon as reasonably practicable after the exercise of an SAR, the Company shall (i) issue the total number of
full Shares to which the Participant is entitled and cash in an amount equal to the Fair Market Value, as of the date of exercise,
of any resulting fractional Share, and (ii) if the Committee causes the Company to elect to settle all or part of its obligations
arising out of the exercise of the SAR in cash, deliver to the Participant an amount in cash equal to the Fair Market Value, as
of the date of exercise, of the Shares it would otherwise be obligated to deliver.

 

Section
9. Change in Control.

 

9.1
Effect of a Change in Control.

 

(a)
Notwithstanding any of the provisions of the Plan or any outstanding Award Agreement, upon a Change in Control of the Company
(as defined in Section 9.2), the Board is authorized and has sole discretion to provide that (i) all outstanding Awards shall
become fully exercisable, (ii) all restrictions applicable to all Awards shall terminate or lapse and (iii) performance goals
applicable to any Awards shall be deemed satisfied at the highest level, as applicable, in order that Participants may realize
the benefits thereunder.

 

(b)
In addition to the Board’s authority set forth in Section 3, upon such Change in Control of the Company, the Board is authorized
and has sole discretion as to any Award, either at the time such Award is granted hereunder or any time thereafter, to take any
one or more of the following actions without Participant consent: (i) provide for the purchase of any vested or unvested outstanding
Stock Option, for an amount of cash equal to the difference between the exercise price and the then Fair Market Value of the Shares
covered thereby; (ii) make such adjustment to any such Award then outstanding as the Board deems appropriate to reflect such Change
in Control; and (iii) cause any such Award then outstanding to be assumed by or substituted for another form of Award issued by
the surviving corporation after such Change in Control.

 

9.2
Definition of Change in Control.

 

“Change
in Control” of the Company shall be deemed to have occurred if at any time during the term of an Award granted under the
Plan any of the following events occurs:

 

(a)
any Person (other than the Company, a trustee or other fiduciary holding securities under an employee benefit plan of the Company,
or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their
ownership of Shares) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election
of directors (“Person” and “Beneficial Owner” being defined in Rule 13d-3 of the General Rules and Regulations
of the Exchange Act);

 

     

     

    

 

(b)
the Company is party to a merger, consolidation, reorganization or other similar transaction with another corporation or other
Person unless, following such transaction, more than 50% of the combined voting power of the outstanding securities of the surviving,
resulting or acquiring corporation or Person or its parent entity entitled to vote generally in the election of directors (or
Persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners of the Company’s outstanding securities entitled to vote generally in the election
of directors immediately prior to such transaction, in substantially the same proportions as their ownership, immediately prior
to such transaction, of the Company’s outstanding securities entitled to vote generally in the election of directors;

 

(c)
the election to the Board, without the recommendation or approval of two-thirds of the incumbent Board, of the lesser of: (i)
three Directors; or (ii) Directors constituting a majority of the number of Directors of the Company then in office; provided,
however, that Directors 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 will not be considered as incumbent
members of the Board for purposes of this Section; or

 

(d)
there is a complete liquidation or dissolution of the Company, or the Company sells all or substantially all of its business and/or
assets to another corporation or other Person unless, following such sale, more than 50% of the combined voting power of the outstanding
securities of the acquiring corporation or Person or its parent entity entitled to vote generally in the election of directors
(or Persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the Company’s outstanding securities entitled to vote generally
in the election of directors immediately prior to such sale, in substantially the same proportions as their ownership, immediately
prior to such sale, of the Company’s outstanding securities entitled to vote generally in the election of directors.

 

In
no event, however, shall a Change in Control be deemed to have occurred, with respect to a Participant, if that Participant is
part of a purchasing group which consummates the Change in Control transaction. A Participant shall be deemed “part of a
purchasing group” for purposes of the preceding sentence if the Participant is an equity participant or has agreed to become
an equity participant in the purchasing company or group (except for (a) passive ownership of less than 3% of the shares of the
purchasing company; or (b) ownership of equity participation in the purchasing company or group which is otherwise not deemed
to be significant, as determined prior to the Change in Control by a majority of the disinterested Directors).

 

Section
10. Payment of Taxes.

 

(a)
In connection with any Award, and as a condition to the issuance or delivery of any Shares to the Participant in connection therewith,
the Company shall require the Participant to pay the Company the minimum amount of federal, state, local or foreign taxes required
to be withheld, and in the Company’s sole discretion, the Company may permit the Participant to pay the Company up to the
maximum individual statutory rate of applicable withholding.

 

(b)
The Company in its sole discretion may make available one or more of the following alternatives for the payment of such taxes:
(i) in cash; (ii) in cash received from a broker-dealer to whom the Participant has submitted notice together with irrevocable
instructions to deliver promptly to the Company the amount of sales proceeds from the sale of the Shares subject to the Award
to pay the withholding taxes; (iii) by directing the Company to withhold such number of Shares otherwise issuable in connection
with the Award having an aggregate Fair Market Value equal to the minimum amount of tax required to be withheld; (iv) by delivering
previously acquired Shares of the Company that are acceptable to the Board that have an aggregate Fair Market Value equal to the
amount required to be withheld; or (v) by certifying to ownership by attestation of such previously acquired Shares.

 

     

     

    

 

The
Committee shall have the sole discretion to establish the terms and conditions applicable to any alternative made available for
payment of the required withholding taxes.

 

Section
11. Section 409A.

 

Notwithstanding
any other provision of the Plan, the Committee shall have no authority to issue an Award under the Plan with terms and/or conditions
which would cause such Award to constitute non-qualified “deferred compensation” under Section 409A of the Code unless
such Award shall be structured to be exempt from or comply with all requirements of Code Section 409A. The Plan and all Award
Agreements are intended to comply with the requirements of Section 409A of the Code (or to be exempt therefrom) and shall be so
interpreted and construed and no amount shall be paid or distributed from the Plan unless and until such payment complies with
all requirements of Code Section 409A. It is the intent of the Company that the provisions of this Agreement and all other plans
and programs sponsored by the Company be interpreted to comply in all respects with Code Section 409A, however, the Company shall
have no liability to the Participant, or any successor or beneficiary thereof, in the event taxes, penalties or excise taxes may
ultimately be determined to be applicable to any payment or award under the Plan.

 

Section
12. Postponement.

 

The
Committee may postpone any grant or settlement of an Award or exercise of a Stock Option or SAR for such time as the Board in
its sole discretion may deem necessary in order to permit the Company:

 

(a)
to effect, amend or maintain any necessary registration of the Plan or the Shares issuable pursuant to an Award, including upon
the exercise of a Stock Option or SAR, under the Securities Act of 1933, as amended, or the securities laws of any applicable
jurisdiction;

 

(b)
to permit any action to be taken in order to (i) list such Shares on a stock exchange if Shares are then listed on such exchange
or (ii) comply with restrictions or regulations incident to the maintenance of a public market for its Shares, including any rules
or regulations of any stock exchange on which the Shares are listed; or

 

(c)
to determine that such Shares and the Plan are exempt from such registration or that no action of the kind referred to in (b)(ii)
above needs to be taken; and the Company shall not be obligated by virtue of any terms and conditions of any Award or any provision
of the Plan to sell or issue Shares in violation of the Securities Act of 1933 or the law of any government having jurisdiction
thereof.

 

Any
such postponement shall not extend the term of an Award and shall comply with all requirements of Code Section 409A, and neither
the Company nor its Directors or officers shall have any obligation or liability to a Participant, the Participant’s successor
or any other person with respect to any Shares as to which the Award shall lapse because of such postponement.

 

Section
13. Nontransferability.

 

Awards
granted under the Plan, and any rights and privileges pertaining thereto, may not be transferred, assigned, pledged or hypothecated
in any manner, or be subject to execution, attachment or similar process, by operation of law or otherwise, except (i) by will
or by the laws of descent and distribution, or (ii) where permitted under applicable tax rules, by gift to any Family Member of
the Participant, subject to compliance with applicable laws. An Award may be exercisable during the lifetime of the Participant
only by such Participant or by the Participant’s guardian or legal representative unless it has been transferred by gift
to a Family Member of the Participant, in which case it shall be exercisable solely by such transferee. Notwithstanding any such
transfer, the Participant shall continue to be subject to the withholding requirements provided for under Section 10.

 

Section
14. Delivery of Shares.

 

Shares
issued pursuant to a Stock Award, the exercise of a Stock or SAR or the settlement of a Stock Unit Award shall be represented
by share certificates or on a non-certificated basis, with the ownership of such Shares by the Participant evidenced solely by
book entry in the records of the Company’s transfer agent; provided, however, that upon the written request of the Participant,
the Company shall issue, in the name of the Participant, share certificates representing such Shares. Notwithstanding the foregoing,
Shares granted pursuant to a Stock Award shall be held by the Secretary of the Company until such time as the Shares are forfeited
or settled.

 

     

     

    

 

Section
15. Termination or Amendment of Plan and Award Agreements.

 

15.1
Termination or Amendment of Plan.

 

(a)
Except as described in Section 15.3 below, the Board may terminate, suspend, or amend the Plan, in whole or in part, from time
to time, without the approval of the shareholders of the Company, unless such approval is required by applicable law, regulation
or rule of any stock exchange on which the Shares are listed. No amendment or termination of the Plan shall adversely affect the
right of any Participant under any outstanding Award in any material way without the written consent of the Participant, unless
such amendment or termination is required by applicable law, regulation or rule of any stock exchange on which the Shares are
listed. Subject to the foregoing, the Committee may correct any defect or supply an omission or reconcile any inconsistency in
the Plan or in any Award granted hereunder in the manner and to the extent it shall deem desirable, in its sole discretion, to
effectuate the Plan.

 

(b)
The Board shall have the authority to amend the Plan to the extent necessary or appropriate to comply with applicable law, regulation
or accounting rules in order to permit Participants who are located outside of the United States to participate in the Plan.

 

15.2
Amendment of Award Agreements.

 

The
Committee shall have the authority to amend any Award Agreement at any time; provided however, that no such amendment shall adversely
affect the right of any Participant under any outstanding Award Agreement in any material way without the written consent of the
Participant, unless such amendment is required by applicable law, regulation or rule of any stock exchange on which the Shares
are listed.

 

15.3
No Repricing of Stock Options.

 

Notwithstanding
the foregoing, and except as described in Section 4.3, there shall be no amendment to the Plan or any outstanding Stock Option
Agreement or SAR Agreement that results in the repricing of Stock Options or SARs without shareholders’ approval. For this
purpose, repricing includes (i) a reduction in the exercise price of the Stock Option or SARs or (ii) the cancellation of a Stock
Option in exchange for cash, Stock Options or SARs with an exercise price less than the exercise price of the cancelled Options
or SARs, other Awards or any other consideration provided by the Company, but does not include any adjustment described in Section
4.3.

 

Section
16. No Contract of Employment.

 

Neither
the adoption of the Plan nor the grant of any Award under the Plan shall be deemed to obligate the Company or any Subsidiary to
continue the employment of any Participant for any particular period, nor shall the granting of an Award constitute a request
or consent to postpone the retirement date of any Participant.

 

Section
17. Applicable Law.

 

All
questions pertaining to the validity, construction and administration of the Plan and all Awards granted under the Plan shall
be determined in conformity with the laws of the state of Nevada, without regard to the conflict of law provisions of any
state, and, in the case of Incentive Stock Options, Section 422 of the Code and regulations issued thereunder.

 

     

     

    

 

Section
18. Effective Date and Term of Plan.

 

18.1
Effective Date.

 

The
Plan shall be effective as of the Effective Date, provided that the Plan is approved by the shareholders of the Company within
twelve (12) months of such date. Awards may be granted or awarded prior to such shareholder approval, provided that such Awards
shall not be exercisable, shall not vest and the restrictions thereon shall not lapse prior to the time when the Plan is approved
by the shareholders, and provided further that if such approval has not been obtained at the end of said twelve month period,
all Awards previously granted or awarded under the Plan shall thereupon be canceled and become null and void. The Plan is intended
to supersede and replace any and all prior equity plans sponsored by the Company with respect to any authorized shares not made
subject to any award under such plans prior to the effective date of this Plan. Any outstanding awards under prior plans shall
continue to be subject to and governed by the terms of such plans.

 

18.2
Term of Plan.

 

Notwithstanding
anything to the contrary contained herein, no Awards shall be granted on or after the tenth anniversary of the adoption of this
Plan.

 

PLAN
ADOPTION AND AMENDMENTS/ADJUSTMENTS

SUMMARY
PAGE

 

	Date
                                         of Board

        Action
	 	Action	 	Section/Effect

        of
        Amendment
	 	Date
                                         of Shareholder

        Approval

	August
    21, 2020	 	Initial
    Plan Adoption	 	 	 	________,
    202__ex_201025.htm

Exhibit 4.1

 

DESCRIPTION OF THE COMPANY’S SECURITIES REGISTERED PURSUANT TO 

SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

 

The following is a brief description of the common stock, $0.01 par value per share (the “Common Stock”), of Ethan Allen Interiors Inc. (the “Company”), which is the only security of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”).

 

General

 

The total number of shares of capital stock which the Company shall have authority to issue is 151,055,000 shares, consisting of 150,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”), and 1,055,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”).

 

The following descriptions of our Common Stock and Preferred Stock and of certain provisions of Delaware law do not purport to be complete and are subject to and qualified in their entirety by reference to our (i) amended and restated certificate of incorporation and (ii) our amended and restated by-laws.

 

Our Common Stock is listed on the New York Stock Exchange under the symbol “ETH.” The transfer agent for the Common Stock is Computershare.

 

Preferred Stock

 

The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the General Corporation Law of the State of Delaware, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices and upon such terms and conditions; (ii) entitle to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Company; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, or debt or obligations, of the Company at such price or prices or at such rates of exchange and with such adjustments and upon such terms and conditions; all as may be stated in such resolution or resolutions.

 

Common Stock

 

Dividends. Subject to the preferences and other rights of any class or series of Preferred Stock then outstanding, the Board of Directors of the Company may cause dividends to be paid to the holders of shares of Common Stock out of funds legally available for the payment of dividends by declaring an amount per share as a dividend. When and as dividends are declared, whether payable in cash, in property or in shares of stock of the Company, the holders of Common Stock shall be entitled to share equally, share for share, in such dividends.

 

Liquidation Rights. Subject to the preferences and other rights of any class or series of Preferred Stock then outstanding, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of Common Stock shall be entitled, to share, ratably according to the number of shares of Common Stock held by them, in all remaining assets of the Company available for distribution to its shareholders, subject to any rights of the holders of Preferred Stock that the Company may issue in the future.

 

Voting Rights. Except as otherwise provided in the amended and restated certificate of incorporation (including, without limitation, any amendments to, restatements of or designations regarding any series or class of Preferred Stock) or by applicable law, only the holders of Common Stock shall be entitled to vote on each matter on which the shareholders of the Company shall be entitled to vote, and each holder of Common Stock shall be entitled to one vote for each share of Common Stock held by him.

 

Conversion and Preemptive Rights. Holders of shares of our Common Stock have no conversion, preemptive or similar rights.

 

 

 

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

Other Provisions 

 

Other provisions in our amended and restated certificate of incorporation and by-laws, incorporated herein by reference, may have the effect of delaying, deferring or preventing a change of control of the Company or may operate only with respect to extraordinary corporate transactions involving the Company.

 

Restated Article and Amended and Restated Bylaw Provisions

 

Our amended and restated certificate of incorporation and by-laws include a number of provisions that may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our Board of Directors rather than pursue non-negotiated takeover attempts. These provisions include an advance notice requirement for director nominations and actions to be taken at annual meetings of shareholders, the requirements for shareholders to call a special meeting of the shareholders, the availability of authorized but unissued blank check preferred stock and no shareholder action by written consent.

 

Advance Notice Requirement

 

Our amended and restated certificate of incorporation and by-laws set forth advance notice procedures with regard to shareholder nomination of persons for election to the Board of Directors or other business to be considered at meetings of shareholders. These procedures provide that notice of such shareholder proposals must be timely given in writing to the Secretary of the Company prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be delivered to the Secretary at the principal executive offices of the Company not less than 90 days nor more than 120 days prior to the meeting. The advance notice requirement does not give the Board of Directors any power to approve or disapprove shareholder director nominations or proposals but may have the effect of precluding the consideration of certain business at a meeting if the proper notice procedures are not followed.

 

Special Meetings of Shareholders

 

Special meetings of shareholders shall be called by the Secretary of the Company upon written request signed by shareholders holding at least 20% of the shares of stock generally entitled to vote, or by a majority of the Board of Directors, the President, the Chairman or otherwise in accordance with the Certificate of Incorporation. Notwithstanding the foregoing, whenever holders of one or more classes or series of Preferred Stock shall have the right, voting separately as a class or series, to elect directors, such holders may call, pursuant to the terms of the resolution or resolutions adopted by the Board of Directors in connection with issuing such Preferred Stock pursuant to the Certificate of Incorporation, special meetings of holders of such Preferred Stock.

 

Authorized Blank Check Preferred

 

The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by Delaware Law, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices and upon such terms and conditions; (ii) entitle to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Company; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, or debt or obligations, of the Company at such price or prices or at such rates of exchange and with such adjustments and upon such terms and conditions; all as may be stated in such resolution or resolutions.

 

No Shareholder Action by Written Consent

 

Any action required or permitted to be taken at any annual or special meeting of shareholders may be taken only upon the vote of shareholders at an annual or special meeting duly noticed and called in accordance with the Delaware Law, as amended from time to time, and may not be taken by written consent of shareholders without a meeting, except with regard to election, removal and filling of vacancies of directors by holders of Preferred Stock, voting separately, as and if so provided by the terms of the resolution or resolutions adopted by the Board of Directors.

 

 

 

ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES

 

Delaware Takeover Statute

 

The Company is subject to the General Corporation Law of the State of Delaware (the “DGCL”), including Section 203. In general, Section 203 restricts the ability of a public Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder. An “interested stockholder” includes any person or entity who in the last three years obtained 15% or more of any class or series of stock entitled to vote generally in the election of directors. Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. However, the restriction does not apply if:

 

	 	
			●

				
			the Board of Directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder, with approval taking place prior to such business combination or transaction;

			

 

	 	
			●

				
			upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the Company’s voting stock outstanding at the time the transaction commenced, excluding certain shares; or

			

 

	 	
			●

				
			the business combination is approved by the Board of Directors and by the affirmative vote of holders of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder, with approval taking place concurrently with or after the business combination.

			

 

Under certain circumstances, this provision may make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with the Company for a three-year period. This provision may encourage companies interested in acquiring the Company to negotiate in advance with the Board of Directors, because the stockholder approval requirement would be avoided if the Board of Directors were to approve either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in the Board of Directors and may make it more difficult to accomplish transactions that shareholders may otherwise deem to be in their best interest.

 

Limitations on Director Liability 

 

The certificate of incorporation provides that no director shall be personally liable to the Company or the shareholders for monetary damages for any breach of fiduciary duty by such director as a director, notwithstanding any other provision of law to the contrary.

 

Indemnification of Directors and Officers

 

The certificate of incorporation and by-laws provide that the Company shall indemnify its directors and officers, whether former or present, and provide for the advancement to them of expenses in connection with actual or threatened proceedings and claims arising out of their status as such to the fullest extent permitted by the DGCL. These provisions may be held not to be enforceable for violations of the federal securities laws of the United States.

 

Transfer Agent and Registrar

 

The transfer agent for the common stock is Computershare.

 

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Annual Report. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00313-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00313-of-00352.parquet"}]]