Document:

ex4-41

 

Exhibit 4.41

DESCRIPTION OF SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

 

Youngevity International, Inc. (the “we,”
“us,” and “our”) has three (3) classes of
securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”):
(i) Common Stock, par value $0.001 per share (the “Common
Stock”), (ii) Series B Convertible
Preferred Stock, par value $0.001 per share (the “Series B
Convertible Preferred Stock”), and (iii) Series D Cumulative
Redeemable Perpetual Preferred Stock (the “Series D Preferred
Stock”).

 

Overview

 

The following is a description of the material terms of our Common
Stock, Series B Convertible Preferred Stock and Series D Preferred
Stock and does not purport to be complete. It is subject to and qualified in its entirety by
reference to our Certificate of Incorporation, as amended (the
“Certificate of Incorporation”), the Certificate of
Designations for the Series B Convertible Preferred Stock, the
Certificate of Designations for the Series D Preferred Stock, as
amended, Bylaws (the “Bylaws”). We encourage you
to read these documents and the applicable provisions
of Delaware General
Corporation Law (the “DGCL”), for additional information.

 

Authorized Capital

 

Our
authorized capital consists of 50,000,000 shares of Common Stock,
par value $0.001 per share, and 5,000,000 shares of preferred
stock, par value $0.001 per share.

 

Description of Common Stock

 

Voting.  The holders of our Common Stock are
entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders, including the election of
directors, and do not have cumulative voting rights.

 

Dividends.  Subject to preferences that may be
applicable to any then outstanding preferred stock, the holders of
Common Stock are entitled to receive dividends, if any, as may be
declared from time to time by our Board of Directors out of legally
available funds.

 

Liquidation.  In the event of our liquidation,
dissolution or winding up, holders of our Common Stock will be
entitled to share ratably in the net assets legally available for
distribution to stockholders after the payment of all of our debts
and other liabilities, subject to the satisfaction of any
liquidation preference granted to the holders of any then
outstanding shares of preferred stock.

 

Rights and Preferences.  The holders of our Common
Stock have no preemptive, conversion or subscription rights, and
there are no redemption or sinking fund provisions applicable to
our Common Stock. The rights, preferences and privileges of the
holders of our Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of
our preferred stock that we may designate and issue in the
future.

 

Fully Paid and Nonassessable. All of our issued and
outstanding shares of Common Stock are fully paid and
nonassessable.

 

  

Potential Anti-Takeover Effects

 

Certain
provisions set forth in our Certificate of Incorporation, in our
Bylaws and in Delaware law, which are summarized below, may be
deemed to have an anti-takeover effect and may delay, deter or
prevent a tender offer or takeover attempt that a stockholder might
consider to be in its best interests, including attempts that might
result in a premium being paid over the market price for the shares
held by stockholders.

 

 

 

-1-

 

 

Our
Certificate of Incorporation contains a provision that permits us
to issue, without any further vote or action by the stockholders,
up to five million shares of preferred stock in one or more series
and, with respect to each such series, to fix the number of shares
constituting the series and the designation of the series, the
voting powers, if any, of the shares of the series, and the
preferences and relative, participating, optional and other special
rights, if any, and any qualifications, limitations or
restrictions, of the shares of such series.

 

 In
particular our Bylaws and the DGCL, as applicable, among other
things:

 

●

Provide the Board
of Directors with the ability to alter the Bylaws without
stockholder approval; and

 

●

Provide that
vacancies on the Board of Directors may be filled by a majority of
directors in the office, although less than a quorum.

 

While
the foregoing provisions and provisions of Delaware law may have an
anti-takeover effect, these provisions are intended to enhance the
likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of
Directors and to discourage certain types of transactions that may
involve an actual or threatened change of control. In that regard,
these provisions are designed to reduce our vulnerability to an
unsolicited acquisition proposal. The provisions also are intended
to discourage certain tactics that may be used in proxy fights.
However, such provisions could have the effect of discouraging
others from making tender offers for our shares and, as a
consequence, they also may inhibit fluctuations in the market price
of our Common Stock that could result from actual or rumored
takeover attempts. Such provisions also may have the effect of
preventing changes in our management.

 

Delaware Takeover Statute

 

In
general, Section 203 of the DGCL prohibits a Delaware corporation
that is a public company from engaging in any “business
combination” (as defined below) with any “interested
stockholder” (defined generally as an entity or person
beneficially owning 15% or more of the outstanding voting stock of
the corporation and any entity or person affiliated with such
entity or person) for a period of three years following the date
that such stockholder became an interested stockholder, unless: (1)
prior to such date, the Board of Directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder; (2)
on consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those
shares owned (x) by persons who are directors and also officers and
(y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer;
or (3) on or subsequent to such date, the business combination is
approved by the Board of Directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least two-thirds of the outstanding voting
stock that is not owned by the interested stockholder.

 

Section
203 of the DGCL defines “business combination” to
include: (1) any merger or consolidation involving the corporation
and the interested stockholder; (2) any sale, transfer, pledge or
other disposition of ten percent or more of the assets of the
corporation involving the interested stockholder; (3) subject to
certain exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder; (4) any transaction involving the
corporation that has the effect of increasing the proportionate
share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (5) the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or through the corporation.

 

Transfer Agent and Registrar for Common Stock

 

The
registrar and transfer agent for our Common Stock is Pacific Stock Transfer Company. The
principal business address for Pacific
Stock Transfer Company is 6725 Via Austi Parkway, Suite 300, Las
Vegas Nevada 89119. Their
telephone number is (800) 785-7782.

 

 

-2-

 

 

 

Description of the Series B Convertible Preferred
Stock

 

General

 

Our Board of Directors has designated 1,052,631 shares of our
authorized but unissued Preferred Stock as Series B Convertible
Preferred Stock. When issued in accordance with this prospectus,
the Series B Convertible Preferred Stock will be validly issued,
fully paid and non-assessable. Our Board of Directors may authorize
the issuance and sale of additional shares of Series B Convertible
Preferred Stock from time to time.

 

Ranking

 

The Series B Convertible Preferred Stock rank, with respect to
dividend rights and rights upon voluntary or involuntary
liquidation, dissolution or winding up of our affairs:

 

●

senior
to the Series A Preferred, all classes or series of our Common
Stock and to any other class or series of our capital stock
expressly designated as ranking junior to the Series B Convertible
Preferred Stock;

 

●

on
parity any class or series of our capital stock expressly
designated as ranking on parity with the Series B Convertible
Preferred Stock, none of which exists on the date hereof;
and

 

●

junior
to any other class or series of our capital stock expressly
designated as ranking senior to the Series B Convertible Preferred
Stock, none of which exists on the date hereof.

 

The term “capital stock” does not include convertible
or exchangeable debt securities, which, prior to conversion or
exchange, rank senior in right of payment to the Series B
Convertible Preferred Stock. The Series B Convertible Preferred
Stock will also rank junior in right of payment to our other
existing and future debt obligations.

 

Dividends

 

Subject to the preferential rights of the holders of any class or
series of our capital stock ranking senior to the Series B
Convertible Preferred Stock with respect to dividend rights,
holders of shares of the Series B Convertible Preferred Stock are
entitled to receive, when, as and if authorized by our Board of
Directors and declared by us out of funds legally available for the
payment of dividends, cumulative cash dividends at the rate
of 5.0% per annum.

 

Dividends on the Series B Convertible Preferred Stock will accrue
and be cumulative from and including the date of original issue and
will be payable to holders quarterly in arrears on or about the
last day of March, June, September and December of each year
commencing June 30, 2018 or, if such day is not a business day, on
either the immediately preceding business day or next succeeding
business day at our option, except that, if such business day is in
the next succeeding year, such payment shall be made on the
immediately preceding business day, in each case with the same
force and effect as if made on such date. The term “business
day” means each day, other than a Saturday or a Sunday, which
is not a day on which banks in New York are required to close. If
the aggregate amount of dividends accrued and payable to a holder
is less than $10.00, we may, at our option, retain and not make
payment in the respect of such dividends until the aggregate number
of dividends then accrued and payable to the holder is not less
than $10.00.

 

Dividends on the Series B Convertible Preferred Stock will accrue
whether or not:

 

●

we
have earnings;

 

●

there
are funds legally available for the payment of those dividends;
or

 

●

those
dividends are authorized or declared.

 

 

 

-3-

 

 

Holders of shares of Series B Convertible Preferred Stock are not
entitled to any dividend, whether payable in cash, property or
shares of capital stock, in excess of full cumulative dividends on
the Series B Convertible Preferred Stock as described above. Any
dividend payment made on the Series B Convertible Preferred Stock
will first be credited against the earliest accrued but unpaid
dividends due with respect to those shares which remain payable.
Accrued but unpaid dividends on the Series B Convertible Preferred
Stock will accumulate as of the dividend payment date on which they
first become payable.

 

No dividends will be authorized by our Board of Directors and
declared by us or paid or set apart for payment if such
authorization, declaration or payment is restricted or prohibited
by law.

 

Liquidation Preference

 

Upon any voluntary or involuntary liquidation, dissolution or
winding up of our affairs, before any distribution or payment shall
be made to holders of shares of our Common Stock or any other class
or series of capital stock ranking, as to rights upon any voluntary
or involuntary liquidation, dissolution or winding up of our
affairs, junior to the Series B Convertible Preferred Stock,
holders of shares of Series B Convertible Preferred Stock will be
entitled to be paid out of our assets legally available for
distribution to our stockholders, after payment of or provision for
our debts and other liabilities, an amount equal to the original
purchase price plus any accrued and unpaid dividends (whether or
not authorized or declared) up to but excluding the date of
payment. If, upon our voluntary or involuntary liquidation,
dissolution or winding up, our available assets are insufficient to
pay the full amount of the liquidating distributions on all
outstanding shares of Series B Convertible Preferred Stock and the
corresponding amounts payable on all shares of each other class or
series of capital stock ranking, as to rights upon liquidation,
dissolution or winding up, on parity with the Series B Convertible
Preferred Stock in the distribution of assets, then holders of
shares of Series B Convertible Preferred Stock and each such other
class or series of capital stock ranking, as to rights upon any
voluntary or involuntary liquidation, dissolution or winding up, on
parity with the Series B Convertible Preferred Stock will share
ratably in any distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be
respectively entitled.

 

Conversion Rights

 

Each share of Series B Convertible Preferred Stock is initially
convertible at any time, in whole or in part, at the option of the
holders at an initial conversion price of $4.75 per share initially
into two shares of Common Stock and automatically converts into two
shares of Common Stock on its two-year anniversary of issuance. The
conversion price set forth in the certificate of designations of
the preferred stock is also subject to pro-rated adjustment in the
case of stock splits and stock dividends and other similar
transactions.

 

No fractional shares shall be issued upon conversion of Series B
Convertible Preferred Stock into Common Stock and no payment. In
lieu of delivering fractional shares, we will pay to the holder, to
the extent permitted by law, an amount in cash equal to the current
fair market value of such fractional share as determined in good
faith by our Board.

 

No Maturity, Sinking Fund or Mandatory Redemption

 

The Series B Convertible Preferred Stock has no maturity date and
we are not required to redeem the Series B Convertible Preferred
Stock at any time. Accordingly, the Series B Convertible Preferred
Stock will remain outstanding until automatically converted to
Common Stock on the two-year anniversary of issuance, unless the
holders of the Series B Convertible Preferred Stock convert the
Series B Convertible Preferred Stock into our Common Stock. The
Series B Convertible Preferred Stock is also not subject to any
sinking fund. There are no restrictions on the repurchase or
redemption by the Company of any shares of Series B Convertible
Preferred Stock while there is an arrearage in the payment of
dividends.

 

Limited Voting Rights

 

Holders of shares of the Series B Convertible Preferred Stock
generally do not have any voting rights. However, as long as any
shares of Series B Convertible Preferred Stock are outstanding, we
may not, without the affirmative vote of the holders of a majority
of the then outstanding shares of the Series B Convertible
Preferred Stock alter or change adversely the powers, preferences
or rights given to the Series B Convertible Preferred Stock or
alter or amend its certificate of designation.

 

 

 

-4-

 

 

 

Transfer Agent for the Series B
Convertible Preferred Stock

 

The transfer agent and registrar for the Series B Convertible
Preferred Stock is Pacific Stock Transfer Company. The
principal business address for Pacific
Stock Transfer Company is 6725 Via Austi Parkway, Suite 300, Las
Vegas Nevada 89119. Their
telephone number is (800) 785-7782.

 

Description of the Series D Preferred Stock

 

General

 

On December 17, 2019, we filed a Certificate
of Increase to the Certificate of Designations of our Series D
Preferred Stock with the Secretary of State of the State of
Delaware to increase the number of shares of preferred stock
designated as Series D Preferred Stock to an aggregate
of 650,000 shares.
Our Board of Directors may, without the approval of holders of the
Series D Preferred Stock or our Common Stock, subject to certain
limitations, designate additional series of authorized preferred
stock ranking junior to or on parity with the Series D Preferred
Stock or designate additional shares of the Series D Preferred
Stock and authorize the issuance of such shares. Designation of
preferred stock ranking senior to the Series D Preferred Stock will
require approval of the holders of Series D Preferred Stock, as
described below in “Voting Rights.” All of our
issued and outstanding shares of Series D Preferred Stock are fully
paid and nonassessable.

 

No Maturity, Sinking Fund or Mandatory Redemption

 

The
Series D Preferred Stock has no stated maturity and is not subject
to any sinking fund or mandatory redemption. Shares of the Series D
Preferred Stock will remain outstanding indefinitely unless we
decide to redeem or otherwise repurchase them. We are not required
to set aside funds to redeem the Series D Preferred
Stock.

 

 

 

-5-

 

 

 

Ranking

 

The
Series D Preferred Stock ranks, with respect to rights to the
payment of dividends and the distribution of assets upon our
liquidation, dissolution or winding up:

 

	
 

	

(1)

	

senior to all classes or series of our Common Stock and to all
other equity securities issued by us including our outstanding
Series A Preferred Stock and Series B Convertible Preferred
(none of which Series B Convertible Preferred Stock are currently
outstanding) and any shares of Series
C Stock that may be issued (none of which Series C Preferred
Stock are currently outstanding) other
than equity securities referred to in clauses (2) and (3)
below;

	
 

	
 

	
 

	
 

	

(2)

	

on a parity with all equity securities issued by us with terms
specifically providing that those equity securities rank on a
parity with the Series D Preferred Stock with respect to rights to
the payment of dividends and the distribution of assets upon our
liquidation, dissolution or winding up;

	
 

	
 

	
 

	
 

	

(3)

	

junior to all equity securities issued by us with terms
specifically providing that those equity securities rank senior to
the Series D Preferred Stock with respect to rights to the payment
of dividends and the distribution of assets upon our liquidation,
dissolution or winding up (please see the section entitled
“Voting Rights” below); and

	
 

	
 

	
 

	
 

	

(4)

	

effectively junior to all of our existing and future indebtedness
(including indebtedness convertible to our Common Stock or
preferred stock) and to any indebtedness and other liabilities of
(as well as any preferred equity interests held by others in) our
subsidiaries.

 

Dividends

 

Holders
of shares of the Series D Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors, out of our
funds legally available for the payment of dividends, cumulative
cash dividends at the rate of 9.75% per annum on the $25.00 per
share liquidation preference of the Series D Preferred Stock
(equivalent to $2.4375 per annum per share). Dividends on the
Series D Preferred Stock accrue daily and shall be cumulative from,
and including, the applicable issue date and are payable monthly in
arrears on the 15th day of each month; provided that if any
dividend payment date is not a business day, as defined in the
certificate of designations, then the dividend that would otherwise
have been payable on that dividend payment date may be paid on the
next succeeding business day and no interest, additional dividends
or other sums will accrue on the amount so payable for the period
from and after that dividend payment date to that next succeeding
business day. Any dividend payable on the Series D Preferred Stock,
including dividends payable for any partial dividend period, are
computed on the basis of a 360-day year consisting of twelve 30-day
months; however, when initially issued, the shares of Series D
Preferred Stock were credited as having accrued dividends since the
first day of the calendar month in which they were issued.
Dividends will be payable to holders of record as they appear in
our stock records for the Series D Preferred Stock at the close of
business on the applicable record date, which is the last day of
the calendar month, whether or not a business day, immediately
preceding the month in which the applicable dividend payment date
falls. As a result, holders of shares of Series D Preferred Stock
will not be entitled to receive dividends on a dividend payment
date if such shares were not issued and outstanding on the
applicable dividend record date.

 

No
dividends on shares of Series D Preferred Stock shall be authorized
by our Board of Directors or paid or set apart for payment by us at
any time when the terms and provisions of any agreement of ours,
including any agreement relating to our indebtedness, prohibit the
authorization, payment or setting apart for payment thereof or
provide that the authorization, payment or setting apart for
payment thereof would constitute a breach of the agreement or a
default under the agreement, or if the authorization, payment or
setting apart for payment shall be restricted or prohibited by
law.

 

Notwithstanding
the foregoing, dividends on the Series D Preferred Stock will
accumulate whether or not we have earnings, whether or not there
are funds legally available for the payment of those dividends and
whether or not those dividends are declared by our Board of
Directors. No interest, or sum in lieu of interest, will be payable
in respect of any dividend payment or payments on the Series D
Preferred Stock that may be in arrears, and holders of the Series D
Preferred Stock will not be entitled to any dividends in excess of
full cumulative dividends described above. Any dividend payment
made on the Series D Preferred Stock shall first be credited
against the earliest accumulated but unpaid dividend due with
respect to those shares.

 

 

-6-

 

 

Future
distributions on our Common Stock and preferred stock, including
the Series D Preferred Stock will be at the discretion of our Board
of Directors and will depend on, among other things, our results of
operations, cash flow from operations, financial condition and
capital requirements, any debt service requirements and any other
factors our Board of Directors deems relevant. Accordingly, we
cannot guarantee that we will be able to make cash distributions on
our preferred stock or what the actual distributions will be for
any future period.

 

Except
as provided in the next paragraph, unless full cumulative dividends
on all shares of Series D Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof has been or contemporaneously is
set apart for payment for all past dividend periods, no dividends
(other than in shares of Common Stock or in shares of any series of
preferred stock that we may issue ranking junior to the Series D
Preferred Stock as to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up) shall be
declared or paid or set aside for payment upon shares of our Common
Stock or preferred stock that we may issue ranking junior to, or on
a parity with, the Series D Preferred Stock as to the payment of
dividends or the distribution of assets upon liquidation,
dissolution or winding up. Nor shall any other distribution be
declared or made upon shares of our Common Stock or preferred stock
that we may issue ranking junior to, or on a parity with, the
Series D Preferred Stock as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up.
Also, any shares of our Common Stock or preferred stock that we may
issue ranking junior to or on a parity with the Series D Preferred
Stock as to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up, shall not be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys paid to or made available for a sinking fund for the
redemption of any such shares) by us (except by conversion into or
exchange for our other capital stock that we may issue ranking
junior to the Series D Preferred Stock as to the payment of
dividends and the distribution of assets upon liquidation,
dissolution or winding up); provided, however, that the foregoing
shall not prevent the purchase or acquisition by us of shares of
Series D Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of
Series D Preferred Stock.

 

When
dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series D Preferred Stock and
the shares of any other series of preferred stock that we may issue
ranking on a parity as to the payment of dividends with the Series
D Preferred Stock, all dividends declared upon the Series D
Preferred Stock and any other series of preferred stock that we may
issue ranking on a parity as to the payment of dividends with the
Series D Preferred Stock shall be declared pro rata so that the
amount of dividends declared per share of Series D Preferred Stock
and such other series of preferred stock that we may issue shall in
all cases bear to each other the same ratio that accrued dividends
per share on the Series D Preferred Stock and such other series of
preferred stock that we may issue (which shall not include any
accrual in respect of unpaid dividends for prior dividend periods
if such preferred stock does not have a cumulative dividend) bear
to each other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on
the Series D Preferred Stock that may be in arrears.

 

Liquidation Preference

 

In the
event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of shares of Series D Preferred Stock will
be entitled to be paid out of the assets we have legally available
for distribution to our shareholders, subject to the preferential
rights of the holders of any class or series of our capital stock
we may issue ranking senior to the Series D Preferred Stock with
respect to the distribution of assets upon liquidation, dissolution
or winding up, a liquidation preference of $25.00 per share, plus
an amount equal to any accumulated and unpaid dividends to, but not
including, the date of payment, before any distribution of assets
is made to holders of our Common Stock or any other class or series
of our capital stock we may issue that ranks junior to the Series D
Preferred Stock as to liquidation rights.

 

In the
event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, our available assets are insufficient to
pay the amount of the liquidating distributions on all outstanding
shares of Series D Preferred Stock and the corresponding amounts
payable on all shares of other classes or series of our capital
stock that we may issue ranking on a parity with the Series D
Preferred Stock in the distribution of assets, then the holders of
the Series D Preferred Stock and all other such classes or series
of capital stock shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which
they would otherwise be respectively entitled.

 

 

-7-

 

 

 

We will
use commercially reasonable efforts to provide written notice
of any such liquidation, dissolution or winding up no fewer than 10
days prior to the payment date. After payment of the full amount of
the liquidating distributions to which they are entitled, the
holders of Series D Preferred Stock will have no right or claim to
any of our remaining assets. The consolidation or merger of us with
or into any other corporation, trust or entity or of any other
entity with or into us, or the sale, lease, transfer or conveyance
of all or substantially all of our property or business, shall not
be deemed a liquidation, dissolution or winding up of us (although
such events may give rise to the special optional redemption to the
extent described below).

 

Redemption

 

The
Series D Preferred Stock is not redeemable by us prior to September
23, 2022, except as described below under “Special Optional
Redemption.”

 

Optional Redemption. On and after September 23, 2022, we
may, at our option, upon not less than 30 nor more than 60
days’ written notice, redeem the Series D Preferred Stock, in
whole or in part, at any time or from time to time, for cash at a
redemption price of $25.00 per share, plus any accumulated and
unpaid dividends thereon to, but not including, the date fixed for
redemption. If we elect to redeem any shares of Series D Preferred
Stock as described in this “Optional Redemption”
section, we may use any available cash to pay the redemption price,
and we will not be required to pay the redemption price only out of
the proceeds from the issuance of other equity securities or any
other specific source.

 

Special Optional Redemption

 

Upon
the occurrence of a Change of Control (as defined below), we may,
at our option, upon not less than 30 nor more than 60 days’
written notice, redeem the Series D Preferred Stock, in whole or in
part, within 120 days after the first date on which such Change of
Control occurred, for cash at a redemption price of $25.00 per
share, plus any accumulated and unpaid dividends thereon to, but
not including, the redemption date. If we elect to redeem any
shares of Series D Preferred Stock as described in this
“Special Optional redemption” section, we may use any
available cash to pay the redemption price, and we will not be
required to pay the redemption price only out of the proceeds from
the issuance of other equity securities or any other specific
source.

 

A
“Change of Control” is deemed to occur when the
following have occurred and are continuing:

 

●

the acquisition by
any person, including any syndicate or group deemed to be a
“person” under Section 13(d)(3) of the Exchange Act
(other than Stephan Wallach and Michelle Wallach, our chief
executive officer and our chief operating officer, respectively,
and our principal shareholders, any member of their immediate
family, and any “person” or “group” under
Section 13(d)(3) of the Exchange Act, that is controlled by Mr.
Wallach or Mrs. Wallach or any member of their immediate family,
any beneficiary of the estate of Mr. Wallach or Mrs. Wallach, or
any trust, partnership, corporate or other entity controlled by any
of the foregoing), of beneficial ownership, directly or indirectly,
through a purchase, merger or other acquisition transaction or
series of purchases, mergers or other acquisition transactions of
our stock entitling that person to exercise more than 50% of the
total voting power of all our stock entitled to vote generally in
the election of our directors (except that such person will be
deemed to have beneficial ownership of all securities that such
person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a
subsequent condition); and

 

●

following the
closing of any transaction referred to above, neither we nor the
acquiring or surviving entity has a class of common securities (or
American Depositary Receipts representing such securities) listed
on the NYSE, the NYSE American or Nasdaq, or listed or quoted on an
exchange or quotation system that is a successor to the NYSE, the
NYSE American or Nasdaq.

 

 

 

-8-

 

 

 

Redemption Procedures. In the event we elect to redeem
Series D Preferred Stock, the notice of redemption will be mailed
by us postage prepaid to each holder of record of Series D
Preferred Stock called for redemption at such holder’s
address as it appear on our stock transfer records, not less than
30 nor more than 60 days prior to the redemption date, and will
state the following:

 

●

the redemption
date;

 

●

the number of
shares of Series D Preferred Stock to be redeemed;

 

●

the redemption
price;

 

●

the place or places
where certificates (if any) for the Series D Preferred Stock are to
be surrendered for payment of the redemption price;

 

●

that dividends on
the shares to be redeemed will cease to accumulate on the
redemption date;

 

●

whether such
redemption is being made pursuant to the provisions described above
under “Optional Redemption” or “Special Optional
Redemption”; and

 

●

if applicable, that
such redemption is being made in connection with a Change of
Control and, in that case, a brief description of the transaction
or transactions constituting such Change of Control.

 

If less
than all of the Series D Preferred Stock held by any holder are to
be redeemed, the notice mailed to such holder shall also specify
the number of shares of Series D Preferred Stock held by such
holder to be redeemed. No failure to give such notice or any defect
thereto or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any shares of Series D Preferred
Stock except as to the holder to whom notice was defective or not
given.

 

Holders
of Series D Preferred Stock to be redeemed shall surrender the
Series D Preferred Stock at the place designated in the notice of
redemption and shall be entitled to the redemption price and any
accumulated and unpaid dividends payable upon the redemption
following the surrender. If notice of redemption of any shares of
Series D Preferred Stock has been given and if we have irrevocably
set aside the funds necessary for redemption in trust for the
benefit of the holders of the shares of Series D Preferred Stock so
called for redemption, then from and after the redemption date
(unless default shall be made by us in providing for the payment of
the redemption price plus accumulated and unpaid dividends, if
any), dividends will cease to accumulate on those shares of Series
D Preferred Stock, those shares of Series D Preferred Stock shall
no longer be deemed outstanding and all rights of the holders of
those shares will terminate, except the right to receive the
redemption price plus accumulated and unpaid dividends, if any,
payable upon redemption. If any redemption date is not a business
day, then the redemption price and accumulated and unpaid
dividends, if any, payable upon redemption may be paid on the next
business day and no interest, additional dividends or other sums
will accumulate on the amount payable for the period from and after
that redemption date to that next business day. If less than all of
the outstanding Series D Preferred Stock is to be redeemed, the
Series D Preferred Stock to be redeemed shall be selected pro rata
(as nearly as may be practicable without creating fractional
shares) or by any other equitable method we determine.

 

In
connection with any redemption of Series D Preferred Stock, we
shall pay, in cash, any accumulated and unpaid dividends to, but
not including, the redemption date, unless a redemption date falls
after a dividend record date and prior to the corresponding
dividend payment date, in which case each holder of Series D
Preferred Stock at the close of business on such dividend record
date shall be entitled to the dividend payable on such shares on
the corresponding dividend payment date notwithstanding the
redemption of such shares before such dividend payment date. Except
as provided in this paragraph, we will make no payment or allowance
for unpaid dividends, whether or not in arrears, on shares of the
Series D Preferred Stock to be redeemed.

 

Unless
full cumulative dividends on all shares of Series D Preferred Stock
have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof has been or
contemporaneously is set apart for payment for all past dividend
periods, no shares of Series D Preferred Stock shall be redeemed
unless all outstanding shares of Series D Preferred Stock are
simultaneously redeemed and we shall not purchase or otherwise
acquire directly or indirectly any shares of Series D Preferred
Stock (except by exchanging it for our capital stock ranking junior
to the Series D Preferred Stock as to the payment of dividends and
distribution of assets upon liquidation, dissolution or winding
up); provided, however, that the foregoing shall not prevent the
purchase or acquisition by us of shares of Series D Preferred Stock
pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Series D Preferred
Stock.

 

 

 

-9-

 

 

 

Subject
to applicable law, we may purchase shares of Series D Preferred
Stock in the open market, by tender or by private agreement. Any
shares of Series D Preferred Stock that we acquire may be retired
and reclassified as authorized but unissued shares of preferred
stock, without designation as to class or series, and may
thereafter be reissued as any class or series of preferred
stock.

 

Voting Rights

 

Holders
of the Series D Preferred Stock do not have any voting rights,
except as set forth below or as otherwise required by
law.

 

On each
matter on which holders of Series D Preferred Stock are entitled to
vote, each share of Series D Preferred Stock will be entitled to
one vote. In instances described below where holders of Series D
Preferred Stock vote with holders of any other class or series of
our preferred stock as a single class on any matter, the Series D
Preferred Stock and the shares of each such other class or series
will have one vote for each $25.00 of liquidation preference
(excluding accumulated dividends) represented by their respective
shares.

 

So long
as any shares of Series D Preferred Stock remain outstanding, we
will not, without the affirmative vote or consent of the holders of
at least two-thirds of the shares of the Series D Preferred Stock
outstanding at the time, given in person or by proxy, either in
writing or at a meeting (voting together as a class with all other
series of parity preferred stock that we may issue upon which like
voting rights have been conferred and are exercisable), (a)
authorize or create, or increase the authorized or issued amount
of, any class or series of capital stock ranking senior to the
Series D Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding
up or reclassify any of our authorized capital stock into such
shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such
shares; or (b) unless redeeming all Series D Preferred Stock in
connection with such action, amend, alter, repeal or replace our
certificate of incorporation or the certificate of designations
designating the Series D Preferred Stock, including by way of a
merger, consolidation or otherwise in which we may or may not be
the surviving entity, so as to materially and adversely affect and
deprive holders of Series D Preferred Stock of any right,
preference, privilege or voting power of the Series D Preferred
Stock (each, an “Event”). An increase in the amount of
the authorized preferred stock, including the Series D Preferred
Stock, or the creation or issuance of any other series of preferred
stock that we may issue, or any increase in the amount of
authorized shares of such series, in each case ranking on a parity
with or junior to the Series D Preferred Stock with respect to
payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed an
Event and will not require us to obtain two-thirds of the votes
entitled to be cast by the holders of the Series D Preferred Stock
and all such other similarly affected series, outstanding at the
time (voting together as a class), so long as such increase in the
number of shares of Series D Preferred Stock or issuance of such
new series of preferred stock does not (i) provide for, in the
aggregate, taken together with any previously issued shares of
Series D Preferred Stock), the payment of annual dividends on (in
the case of additional shares of Series D Preferred Stock), or on
parity with (in the case of any other series of preferred stock),
the Series D Preferred Stock in excess of $2,437,500 and (ii) any
such new series of preferred stock that may be created is on parity
or junior with the Series D Preferred Stock with respect to the
distribution of assets upon our liquidation, dissolution or winding
up.

 

Notwithstanding
the foregoing, if an Event set forth in the preceding paragraph
materially and adversely affects the right, preference, privilege
or voting power of the Series D Preferred Stock but not all series
of parity preferred stock that we may issue upon which voting
rights have been conferred and are exercisable, the affirmative
vote or consent of the holders of at least two-thirds of the shares
of Series D Preferred Stock and all other similarly affected series
outstanding at the time (voting together as a class) given in
person or proxy, either in writing or at a meeting, shall be
required in lieu of the vote or consent that would otherwise be
required by the preceding paragraph.

 

The
foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding shares of Series D
Preferred Stock shall have been redeemed or called for redemption
upon proper notice and sufficient funds shall have been deposited
in trust to effect such redemption.

 

Except
as expressly stated in the certificate of designations or as may be
required by applicable law, the Series D Preferred Stock do not
have any relative, participating, optional or other special voting
rights or powers and the consent of the holders thereof shall not
be required for the taking of any corporate action.

 

 

 

-10-

 

 

Information Rights

 

During
any period in which we are not subject to Section 13 or 15(d) of
the Exchange Act and any shares of Series D Preferred Stock are
outstanding, we will use our best efforts to (i) make available on
our website copies of the Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q that we would have been required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we
were subject thereto (other than any exhibits that would have been
required) and (ii) promptly, upon request, supply copies of such
reports to any holders or prospective holder of Series D Preferred
Stock. We will use our best effort to mail (or otherwise provide)
the information to the holders of the Series D Preferred Stock
within 15 days after the respective dates by which a periodic
report on Form 10-K or Form 10-Q, as the case may be, in respect of
such information would have been required to be filed with the SEC,
if we were subject to Section 13 or 15(d) of the Exchange Act, in
each case, based on the dates on which we would be required to file
such periodic reports if we were a “non-accelerated
filer” within the meaning of the Exchange Act.

 

No Conversion Rights

 

The
Series D Preferred Stock is not convertible into our Common Stock
or any other security.

 

No Preemptive Rights

 

Holders
of Series D Preferred Stock do not have any preemptive rights to
purchase or subscribe for our Common Stock or any other security by
virtue of their ownership thereof.

 

Change of Control

 

Provisions
in our Certificate of Incorporation, including the Certificate of
Designations establishing the terms of the Series D Preferred
Stock, as amended, and Bylaws may make it difficult and expensive
for a third party to pursue a tender offer, change in control or
takeover attempt, which is opposed by management and the Board of
Directors.

 

Book-Entry Procedures

 

DTC
acts as securities depository for our outstanding Series D
Preferred Stock. With respect to the outstanding Series D Preferred
Stock, we issued fully registered global securities certificates in
the name of DTC’s nominee, Cede & Co. These
certificates represent the total aggregate number of issued and
outstanding shares of Series D Preferred Stock. We deposited these
certificates with DTC or a custodian appointed by DTC. We will not
issue certificates to holders of the shares of Series D Preferred
Stock, unless DTC’s services are discontinued as described
below.

 

In
those instances where a vote is required, neither DTC nor Cede
& Co. itself will consent or vote with respect to the shares of
Series D Preferred Stock. Under its usual procedures, DTC would
mail an omnibus proxy to us as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.’s consenting
or voting rights to those direct participants whose accounts the
shares of Series D Preferred Stock are credited to on the record
date, which are identified in a listing attached to the omnibus
proxy.

 

Dividends
on the Series D Preferred Stock are made directly to DTC’s
nominee (or its successor, if applicable). DTC’s practice is
to credit participants’ accounts on the relevant payment date
in accordance with their respective holdings shown on DTC’s
records unless DTC has reason to believe that it will not receive
payment on that payment date.

 

If DTC
notifies us that it is unwilling to continue as securities
depositary, or it is unable to continue or ceases to be a clearing
agency registered under the Exchange Act and a successor depositary
is not appointed by us within 90 days after receiving such notice
or becoming aware that DTC is no longer so registered, we will
issue the Series D Preferred Stock in definitive form, at our
expense, upon registration of transfer of, or in exchange for, such
global security.

 

 

-11-

 

 

 

Global Clearance and Settlement Procedures

 

When
initially issued, settlement for the Series D Preferred Stock was
made in immediately available funds. Secondary market trading among
DTC’s participants occurs in the ordinary way in accordance
with DTC’s rules and is settled in immediately available
funds using DTC’s Same-Day Funds Settlement
System.

 

Transfer Agent and Disbursing Agent
for the Series D Preferred Stock

 

The
registrar, transfer agent and dividend and redemption price
disbursing agent in respect of the Series D Preferred Stock is
Pacific Stock Transfer Company.
The principal business address for Pacific Stock Transfer Company is 6725 Via Austi
Parkway, Suite 300, Las Vegas Nevada 89119. Their telephone number is (800)
785-7782.

 

 

 

-12-ex_259668.htm

Exhibit 10.1

 

 

 

 

 

 

 

CYCLO THERAPEUTICS, INC.

2021 EQUITY INCENTIVE PLAN

 

(Effective June 24, 2021)

 

 

 

 

 

 

Table of Contents

 

 

	1.	Purpose of Plan	1
	2.	Definitions	1
	3.	Plan Administration	6
	4.	Shares Available for Issuance	8
	5.	Participation	10
	6.	Options	10
	7.	Stock Appreciation Rights	11
	8.	Restricted Stock Awards, Restricted Stock Units and Deferred Stock Units	12
	9.	Performance Awards	14
	10.	Non-Employee Director Awards	16
	11.	Other Stock-Based Awards	16
	12.	Dividend Equivalents	17
	13.	Effect of Termination of Employment or Other Service	17
	14.	Payment of Withholding Taxes	20
	15.	Change in Control	20
	16.	Rights of Eligible Recipients and Participants; Transferability	23
	17.	Securities Law and Other Restrictions	24
	18.	Deferred Compensation; Compliance with Section 409A	24
	19.	Amendment, Modification and Termination	25
	20.	Substituted Awards	26
	21.	Effective Date and Duration of this Plan	26
	22.	Miscellaneous	26

 

 

 

 

 

CYCLO THERAPEUTICS, INC.

2021 EQUITY INCENTIVE PLAN

 

(Effective June 24, 2021)

 

 

	
			1.

				
			Purpose of Plan.

			

 

The purpose of the Cyclo Therapeutics, Inc 2021 Equity Incentive Plan (this “Plan”) is to advance the interests of Cyclo Therapeutics, Inc., a Nevada corporation (the “Company”), and its stockholders by enabling the Company and its Subsidiaries to attract and retain qualified individuals to perform services for the Company and its Subsidiaries, providing incentive compensation for such individuals that is linked to the growth and profitability of the Company and increases in stockholder value and aligning the interests of such individuals with the interests of its stockholders through opportunities for equity participation in the Company. This Plan has been approved by the Board and shall become effective upon approval by the stockholders of the Company on June 24, 2021 (the “Effective Date”).

 

	
			2.

				
			Definitions.

			

 

The following terms will have the meanings set forth below, unless the context clearly otherwise requires. Terms defined elsewhere in this Plan will have the same meaning throughout this Plan.

 

2.1        “Adverse Action” means any action or conduct by a Participant that the Committee, in its sole discretion, determines to be injurious, detrimental, prejudicial or adverse to the interests of the Company or any Subsidiary, including: (a) disclosing confidential information of the Company or any Subsidiary to any person not authorized by the Company or Subsidiary to receive it, (b) engaging, directly or indirectly, in any commercial activity that in the judgment of the Committee competes with the business of the Company or any Subsidiary or (c) interfering with the relationships of the Company or any Subsidiary and their respective employees, independent contractors, customers, prospective customers and vendors.

 

2.2        “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person where “control” will have the meaning given such term under Rule 405 of the Securities Act.

 

2.3        “Applicable Law” means any applicable law, including without limitation, (a) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and (c) rules of any securities exchange, national market system or automated quotation system on which the shares of Common Stock are listed, quoted or traded.

 

2.4        “Award” means, individually or collectively, an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit, Deferred Stock Unit, Performance Award, Non-Employee Director Award, or Other Stock-Based Award, in each case granted to an Eligible Recipient pursuant to this Plan.

 

2.5        “Award Agreement” means either: (a) a written or electronic (as provided in Section 22.7) agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, including any amendment or modification thereof, or (b) a written or electronic (as provided in Section 22.7) statement issued by the Company to a Participant describing the terms and provisions of such an Award, including any amendment or modification thereof.

 

 

 

 

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

 

2.7        “Broker Exercise Notice” means a written notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs a broker or dealer to sell a sufficient number of shares of Common Stock to pay all or a portion of the exercise price of the Option or any related withholding tax obligations and remit such sums to the Company and directs the Company to deliver shares of Common Stock to be issued upon such exercise directly to such broker or dealer or its nominee.

 

2.8        “Cause” means, unless otherwise provided in an Award Agreement, (a) “Cause” as defined in any employment, consulting, severance or similar agreement between the Participant and the Company or one of its Subsidiaries or Affiliates (an “Individual Agreement”), or (b) if there is no such Individual Agreement or if it does not define Cause: (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary; (ii) any unlawful or criminal activity of a serious nature; (iii) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant’s overall duties; (iv) any material breach by a Participant of any employment, service, confidentiality, non-compete or non-solicitation agreement entered into with the Company or any Subsidiary; or (v) before a Change in Control, such other events as will be determined by the Committee. Before a Change in Control, the Committee will, unless otherwise provided in an Individual Agreement, have the sole discretion to determine whether “Cause” exists with respect to subclauses (i), (ii), (iii), (iv) or (v) above, and its determination will be final.

 

2.9        “Change in Control” means, unless otherwise provided in an Award Agreement or any Individual Agreement, and except as provided in Section 18, an event described in Section 15.1 of this Plan.

 

2.10        “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be deemed to include a reference to any applicable regulations thereunder and any successor or amended section of the Code.

 

2.11        “Committee” means the Compensation Committee of the Board or a subcommittee thereof, or any other committee comprised solely of directors designated by the Board to administer this Plan who are (a) “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, and (b) “independent directors” within the meaning of the rules of The Nasdaq Stock Market (or other applicable exchange or market on which the Common Stock may be traded or quoted). The members of the Committee will be appointed from time to time by and will serve at the discretion of the Board. If the Committee does not exist or cannot function for any reason, the Board may take any action under this Plan that would otherwise be the responsibility of the Committee, except as otherwise provided in this Plan. Any action duly taken by the Committee will be valid and effective, whether or not the members of the Committee at the time of such action are later determined not to have satisfied the requirements of membership provided herein.

 

2.12        “Common Stock” means the common stock of the Company, par value $0.0001 per share, or the number and kind of shares of stock or other securities into which such Common Stock may be changed in accordance with Section 4.4 of this Plan.

 

2.13        “Company” means Cyclo Therapeutics, Inc., a Nevada corporation, and any successor thereto as provided in Section 22.5 of this Plan.

 

2.14        “Consultant” means a person engaged to provide consulting or advisory services (other than as an Employee or a Director) to the Company or any Subsidiary that: (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction and (b) do not directly or indirectly promote or maintain a market for the Company’s securities.

 

 

2

 

 

2.15        “Deferred Stock Unit” means a right granted to an Eligible Recipient pursuant to Section 8 of this Plan to receive shares of Common Stock (or the equivalent value in cash or other property if the Committee so provides) at a future time as determined by the Committee, or as determined by the Participant within guidelines established by the Committee in the case of voluntary deferral elections.

 

2.16        “Director” means a member of the Board.

 

2.17        “Disability” means, unless otherwise provided in an Award Agreement, with respect to a Participant who is a party to an Individual Agreement, which agreement contains a definition of “disability” or “permanent disability” (or words of like import) for purposes of termination of employment thereunder by the Company, “disability” or “permanent disability” as defined in the most recent of such agreements; or in all other cases, means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company or Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.

 

2.18        “Dividend Equivalents” has the meaning set forth in Section 3.2(l) of this Plan.

 

2.19        “Effective Date” means June 24, 2021 or such later date as this Plan is initially approved by the Company’s stockholders.

 

2.20        “Eligible Recipients” means all Employees, all Non-Employee Directors and all Consultants.

 

2.21        “Employee” means any individual performing services for the Company or a Subsidiary and designated as an employee of the Company or a Subsidiary on the payroll records thereof. An Employee will not include any individual during any period he or she is classified or treated by the Company or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting or temporary agency or any other entity other than the Company or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company or Subsidiary during such period. An individual will not cease to be an Employee in the case of: (a) any leave of absence approved by the Company, or (b) transfers between locations of the Company or between the Company or any Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company or a Subsidiary, as applicable, is not so guaranteed, then three (3) months following the ninety-first (91st) day of such leave, any Incentive Stock Option held by a Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Non-Statutory Stock Option. Neither service as a Director nor payment of a Director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

2.22        “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a section of the Exchange Act herein will be deemed to include a reference to any applicable rules and regulations thereunder and any successor or amended section of the Exchange Act.

 

3

 

 

2.23        “Fair Market Value” means, with respect to the Common Stock, as of any date: (a) the closing sale price of the Common Stock as of such date at the end of the regular trading session, as reported by The Nasdaq Stock Market or any national securities exchange on which the Common Stock is then listed (or, if no shares were traded on such date, as of the next preceding date on which there was such a trade); (b) if the Common Stock is not so listed, admitted to unlisted trading privileges or reported on any national exchange, the closing sale price as of such date at the end of the regular trading session, as reported by the OTC Bulletin Board, OTC Markets or other comparable quotation service (or, if no shares were traded or quoted on such date, as of the next preceding date on which there was such a trade or quote); or (c) if the Common Stock is not so listed or reported, such price as the Committee determines in good faith in the exercise of its reasonable discretion, and consistent with the definition of “fair market value” under Section 409A of the Code. If determined by the Committee, such determination will be final, conclusive and binding for all purposes and on all persons, including the Company, the stockholders of the Company, the Participants and their respective successors-in-interest. No member of the Committee will be liable for any determination regarding the fair market value of the Common Stock that is made in good faith.

 

2.24        “Grant Date” means the date an Award is granted to a Participant pursuant to this Plan and as determined pursuant to Section 5 of this Plan.

 

2.25        “Incentive Stock Option” means a right to purchase Common Stock granted to an Employee pursuant to Section 6 of this Plan that is designated as and intended to meet the requirements of an “incentive stock option” within the meaning of Section 422 of the Code.

 

2.26        “Individual Agreement” has the meaning set forth in Section 2.8 of this Plan.

 

2.27        “Non-Employee Director” means a Director who is not an Employee.

 

2.28        “Non-Employee Director Award” means any Award granted, whether singly, in combination, or in tandem, to an Eligible Recipient who is a Non-Employee Director, pursuant to such applicable terms, conditions and limitations as the Board or Committee may establish in accordance with this Plan, including any Non-Employee Director Option.

 

2.29        “Non-Employee Director Option” means a Non-Statutory Stock Option granted to a Non-Employee Director pursuant to Section 10 of this Plan.

 

2.30        “Non-Statutory Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of this Plan that is not intended to meet the requirements of or does not qualify as an Incentive Stock Option.

 

2.31        “Option” means an Incentive Stock Option or a Non-Statutory Stock Option, including a Non-Employee Director Option.

 

2.32        “Other Stock-Based Award” means an Award, denominated in Shares, not otherwise described by the terms of this Plan, granted pursuant to Section 11 of this Plan.

 

2.33        “Participant” means an Eligible Recipient who receives one or more Awards under this Plan.

 

2.34        “Performance Award” means a right granted to an Eligible Recipient pursuant to Section 9 of this Plan to receive an amount of cash, number of shares of Common Stock, or a combination of both, contingent upon and the value of which at the time it is payable is determined as a function of the extent of the achievement of one or more Performance Goals during a specified Performance Period or the achievement of other objectives during a specified period.

 

4

 

 

2.35        “Performance Goals” mean with respect to any applicable Award, one or more targets, goals or levels of attainment required to be achieved during the specified Performance Period, as set forth in the related Award Agreement.

 

2.36        “Performance Period” means the period of time, as determined by the Committee, during which the Performance Goals must be met in order to determine the degree of payout or vesting with respect to an Award.

 

2.37        “Period of Restriction” means the period when a Restricted Stock Award or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Section 8 of this Plan.

 

2.38        “Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or any other entity of whatever nature.

 

2.39        “Plan” means the Cyclo Therapeutics, Inc. 2021 Equity Incentive Plan, as it may be amended from time to time.

 

2.40        “Plan Year” means the Company’s fiscal year.

 

2.41        “Previously Acquired Shares” means shares of Common Stock that are already owned by the Participant or, with respect to any Award, that are to be issued to the Participant upon the grant, exercise, vesting or settlement of such Award.

 

2.42        “Restricted Stock Award” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 8 of this Plan that is subject to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 8.

 

2.43        “Restricted Stock Unit” means an award denominated in shares of Common Stock granted to an Eligible Recipient pursuant to Section 8 of this Plan.

 

2.44        “Retirement,” means, unless otherwise defined in the Award Agreement or in an Individual Agreement between the Participant and the Company or one of its Subsidiaries or Affiliates, “Retirement” as defined from time to time for purposes of this Plan by the Committee or by the Company’s chief human resources officer or other person performing that function or, if not so defined, means voluntary termination of employment or service by the Participant on or after the date the Participant reaches age fifty-five (55) with the present intention to leave the Company’s industry or to leave the general workforce.

 

2.45        “Securities Act” means the Securities Act of 1933, as amended. Any reference to a section of the Securities Act herein will be deemed to include a reference to any applicable rules and regulations thereunder and any successor or amended section of the Securities Act.

 

2.46        “Stock Appreciation Right” means a right granted to an Eligible Recipient pursuant to Section 7 of this Plan to receive a payment from the Company upon exercise, in the form of shares of Common Stock, cash or a combination of both, equal to the difference between the Fair Market Value of one or more shares of Common Stock and the grant price of such shares under the terms of such Stock Appreciation Right.

 

5

 

 

2.47        “Stock-Based Award” means any Award, denominated in Shares, made pursuant to this Plan, including Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Awards or Other Stock-Based Awards.

 

2.48        “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, an interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

 

2.49        “Tax Date” means the date any withholding or employment related tax obligation arises under the Code or any Applicable Law for a Participant with respect to an Award.

 

2.50        “Tax Laws” has the meaning set forth in Section 22.8 of this Plan.

 

	
			3.

				
			Plan Administration.

			

 

3.1        The Committee. The Plan will be administered by the Committee. The Committee will act by majority approval of the members at a meeting or by unanimous written consent, and a majority of the members of the Committee will constitute a quorum. The Committee may exercise its duties, power and authority under this Plan in its sole discretion without the consent of any Participant or other party, unless this Plan specifically provides otherwise. The Committee will not be obligated to treat Participants or Eligible Recipients uniformly, and determinations made under this Plan may be made by the Committee selectively among Participants or Eligible Recipients, whether or not such Participants and Eligible Recipients are similarly situated. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of this Plan will be final, conclusive and binding for all purposes and on all persons, and no member of the Committee will be liable for any action or determination made in good faith with respect to this Plan or any Award granted under this Plan.

 

3.2        Authority of the Committee. In accordance with and subject to the provisions of this Plan, the Committee will have full and exclusive discretionary power and authority to take such actions as it deems necessary and advisable with respect to the administration of this Plan, including the following:

 

(a)    To designate the Eligible Recipients to be selected as Participants;

 

(b)    To determine the nature, extent and terms of the Awards to be made to each Participant, including the amount of cash or number of shares of Common Stock to be subject to each Award, any exercise price or grant price, the manner in which Awards will vest, become exercisable, settled or paid out and whether Awards will be granted in tandem with other Awards, and the form of Award Agreement, if any, evidencing such Award;

 

(c)    To determine the time or times when Awards will be granted;

 

(d)    To determine the duration of each Award;

 

(e)    To determine the terms, restrictions and other conditions to which the grant of an Award or the payment or vesting of Awards may be subject;

 

(f)    To construe and interpret this Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration and in so doing, to correct any defect, omission, or inconsistency in this Plan or in an Award Agreement, in a manner and to the extent it will deem necessary or expedient to make this Plan fully effective;

 

6

 

 

(g)    To determine Fair Market Value in accordance with Section 2.23 of this Plan;

 

(h)    To amend this Plan or any Award Agreement, as provided in this Plan;

 

(i)    To adopt subplans or special provisions applicable to Awards regulated by the laws of a jurisdiction other than, and outside of, the United States, which except as otherwise provided in this Plan, such subplans or special provisions may take precedence over other provisions of this Plan;

 

(j)    To authorize any person to execute on behalf of the Company any Award Agreement or any other instrument required to effect the grant of an Award previously granted by the Committee;

 

(k)    To determine whether Awards will be settled in shares of Common Stock, cash or in any combination thereof;

 

(l)    To determine whether Awards will be adjusted for dividend equivalents, with “Dividend Equivalents” meaning a credit, made at the discretion of the Committee, to the account of a Participant in an amount equal to the cash dividends paid on one share of Common Stock for each share of Common Stock represented by an Award held by such Participant, subject to Section 12 of this Plan and any other provision of this Plan, and which Dividend Equivalents may be subject to the same conditions and restrictions as the Awards to which they attach and may be settled in the form of cash, shares of Common Stock, or in any combination of both; and

 

(m)    To impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any shares of Common Stock, including restrictions under an insider trading policy, stock ownership guidelines, restrictions as to the use of a specified brokerage firm for such resales or other transfers and other restrictions designed to increase equity ownership by Participants or otherwise align the interests of Participants with the Company’s stockholders.

 

3.3        Delegation. To the extent permitted by Applicable Law, the Committee may delegate to one or more of its members or to one or more officers of the Company or any Subsidiary or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. The Committee may, by resolution, authorize one or more directors of the Company or one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (a) designate Eligible Recipients to be recipients of Awards pursuant to this Plan; and (b) determine the size of any such Awards; provided, however, that (x) the Committee will not delegate such responsibilities to any such director(s) or officer(s) for any Awards granted to an Eligible Recipient: (i) who is a Non-Employee Director or who is subject to the reporting and liability provisions of Section 16 under the Exchange Act, or (ii) to whom authority to grant or amend Awards has been delegated hereunder; provided, further; that any delegation of administrative authority will only be permitted to the extent it is permissible under Applicable Law; (y) the resolution providing such authorization will set forth the type of Awards and total number of each type of Awards such director(s) or officer(s) may grant; and (z) such director(s) or officer(s) will report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated. At all times, the delagatee appointed under this Section 3.3 will serve in such capacity at the pleasure of the Committee.

 

7

 

 

3.4        No Re-pricing. Notwithstanding any other provision of this Plan other than Section 4.5 of this Plan, the Committee may not, without prior approval of the Company’s stockholders, seek to effect any re-pricing of any previously granted, “underwater” Option or Stock Appreciation Right by: (a) amending or modifying the terms of the Option or Stock Appreciation Right to lower the exercise price or grant price; (b) canceling the underwater Option or Stock Appreciation Right in exchange for (i) cash; (ii) replacement Options or Stock Appreciation Rights having a lower exercise price or grant price; or (iii) other Awards; or (c) repurchasing the underwater Options or Stock Appreciation Rights and granting new Awards under this Plan. For purposes of this Section 3.4, an Option or Stock Appreciation Right will be deemed to be “underwater” at any time when the Fair Market Value of the Common Stock is less than the exercise price of the Option or grant price of the Stock Appreciation Right.

 

3.5        Participants Based Outside of the United States. In addition to the authority of the Committee under Section 3.2(i) and notwithstanding any other provision of this Plan, the Committee may, in its sole discretion, amend the terms of this Plan or Awards with respect to Participants resident outside of the United States or employed by a non-U.S. Subsidiary in order to comply with local legal requirements, to otherwise protect the Company’s or Subsidiary’s interests or to meet objectives of this Plan, and may, where appropriate, establish one or more sub-plans (including the adoption of any required rules and regulations) for the purposes of qualifying for preferred tax treatment under foreign tax laws. The Committee will have no authority, however, to take action pursuant to this Section 3.5: (a) to reserve shares of Common Stock or grant Awards in excess of the limitations provided in Section 4.1 of this Plan; (b) to effect any re-pricing in violation of Section 3.4 of this Plan; (c) to grant Options or Stock Appreciation Rights having an exercise price or grant price less than one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the Grant Date in violation of Section 6.3 or Section 7.3 of this Plan; or (d) for which stockholder approval would then be required pursuant to Section 19.2 of this Plan.

 

	
			4.

				
			Shares Available for Issuance.

			

 

4.1        Maximum Number of Shares Available. Subject to adjustment as provided in Section 4.4 of this Plan, the maximum number of shares of Common Stock that will be available for issuance under this Plan will be 3,000,000 shares.

 

4.2        Limits on Incentive Stock Options and Non-Employee Director Compensation. Notwithstanding any other provisions of this Plan to the contrary and subject to adjustment as provided in Section 4.4 of this Plan,

 

(a)    the maximum aggregate number of shares of Common Stock that will be available for issuance pursuant to Incentive Stock Options under this Plan is exceed 3,000,000 shares; and

 

(b)    the sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of Awards granted to a Non-Employee Director as compensation for services as a Non-Employee Director during any fiscal year of the Company may not exceed $400,000 (increased to $600,000 with respect to any Non-Employee Director serving as Chairman of the Board or Lead Independent Director or in the fiscal year of a non-employee Director's initial service as a Non-Employee Director) (with any compensation that is deferred counting towards this limit for the year in which the compensation is first earned, and not a later year of settlement).

 

8

 

 

4.3        Accounting for Awards. Shares of Common Stock that are issued under this Plan or that are subject to outstanding Awards will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under this Plan only to the extent they are used; provided, however, that the full number of shares of Common Stock subject to a stock-settled Stock Appreciation Right or other Stock-Based Award will be counted against the shares authorized for issuance under this Plan, regardless of the number of shares actually issued upon settlement of such Stock Appreciation Right or other Stock-Based Award. Furthermore, any shares of Common Stock withheld to satisfy tax withholding obligations on Awards issued under this Plan, any shares of Common Stock withheld to pay the exercise price or grant price of Awards under this Plan and any shares of Common Stock not issued or delivered as a result of the “net exercise” of an outstanding Option pursuant to Section 6.5 or settlement of a Stock Appreciation Right in shares of Common Stock pursuant to Section 7.7 will be counted against the shares of Common Stock authorized for issuance under this Plan and will not be available again for grant under this Plan. Shares of Common Stock subject to Awards settled in cash will again be available for issuance pursuant to Awards granted under the Plan. Any shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award will not increase the number of shares of Common Stock available for future grant of Awards. Any shares of Common Stock related to Awards granted under this Plan that terminate by expiration, forfeiture, cancellation or otherwise without the issuance of the shares of Common Stock, will be available again for grant under this Plan. To the extent permitted by Applicable Law, shares of Common Stock issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Company or a Subsidiary pursuant to Section 20 of this Plan or otherwise will not be counted against shares of Common Stock available for issuance pursuant to this Plan. The shares of Common Stock available for issuance under this Plan may be authorized and unissued shares or treasury shares.

 

4.4        Adjustments to Shares and Awards.

 

(a)    In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin off) or any other similar change in the corporate structure or shares of Common Stock the Company, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustment or substitutions (which determination will be conclusive) as to: (i) the number and kind of securities or other property (including cash) available for issuance or payment under this Plan, including the sub-limits set forth in Section 4.2 of this Plan, and (ii) in order to prevent dilution or enlargement of the rights of Participants, the number and kind of securities or other property (including cash) subject to outstanding Awards and the exercise price of outstanding Awards; provided, however, that this Section 4.4 will not limit the authority of the Committee to take action pursuant to Section 15 of this Plan in the event of a Change in Control. The determination of the Committee as to the foregoing adjustments and/or substitutions, if any, will be final, conclusive and binding on Participants under this Plan.

 

(b)    Notwithstanding anything else herein to the contrary, without affecting the number of shares of Common Stock reserved or available hereunder, the limits in Section 4.2 of this Plan, the Committee may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with the rules under Sections 422, 424 and 409A of the Code, as and where applicable.

 

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			5.

				
			Participation.

			

 

Participants in this Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of the objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Awards, singly or in combination or in tandem with other Awards, as may be determined by the Committee in its sole discretion. Awards will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the Grant Date of any related Award Agreement with the Participant.

 

	
			6.

				
			Options.

			

 

6.1        Grant. An Eligible Recipient may be granted one or more Options under this Plan, and such Options will be subject to such terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion. Incentive Stock Options may be granted solely to eligible Employees of the Company or a Subsidiary. The Committee may designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that any Incentive Stock Option (or portion thereof) granted under this Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such Incentive Stock Option (or portion thereof) will continue to be outstanding for purposes of this Plan but will thereafter be deemed to be a Non-Statutory Stock Option. Options may be granted to an Eligible Recipient for services provided to a Subsidiary only if, with respect to such Eligible Recipient, the underlying shares of Common Stock constitute “service recipient stock” within the meaning of Treas. Reg. Sec. 1.409A-1(b)(5)(iii) promulgated under the Code.

 

6.2        Award Agreement. Each Option grant will be evidenced by an Award Agreement that will specify the exercise price of the Option, the maximum duration of the Option, the number of shares of Common Stock to which the Option pertains, the conditions upon which an Option will become vested and exercisable, and such other provisions as the Committee will determine which are not inconsistent with the terms of this Plan. The Award Agreement also will specify whether the Option is intended to be an Incentive Stock Option or a Non-Statutory Stock Option.

 

6.3        Exercise Price. The per share price to be paid by a Participant upon exercise of an Option granted pursuant to this Section 6 will be determined by the Committee in its sole discretion at the time of the Option grant; provided, however, that such price will not be less than one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the Grant Date (one hundred and ten percent (110%) of the Fair Market Value if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

 

6.4        Exercisability and Duration. An Option will become exercisable at such times and in such installments and upon such terms and conditions as may be determined by the Committee in its sole discretion at the time of grant, including (a) the achievement of one or more of the Performance Goals; or that (b) the Participant remain in the continuous employment or service with the Company or a Subsidiary for a certain period; provided, however, that no Option may be exercisable after ten (10) years from the Grant Date (five (5) years from the Grant Date in the case of an Incentive Stock Option that is granted to a Participant who owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company). Notwithstanding the foregoing, if the exercise of an Option that is exercisable in accordance with its terms is prevented by the provisions of Section 17 of this Plan, the Option will remain exercisable until thirty (30) days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the expiration date of such Option.

 

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6.5        Payment of Exercise Price.

 

(a)    The total purchase price of the shares of Common Stock to be purchased upon exercise of an Option will be paid entirely in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms and conditions established by the Committee, may allow such payments to be made, in whole or in part, by (i) tender of a Broker Exercise Notice; (ii) by tender, either by actual delivery or attestation as to ownership, of Previously Acquired Shares; (iii) a “net exercise” of the Option (as further described in paragraph (b), below); (iv) by a combination of such methods; or (v) any other method approved or accepted by the Committee in its sole discretion. Notwithstanding any other provision of this Plan to the contrary, no Participant who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act will be permitted to make payment with respect to any Awards granted under this Plan, or continue any extension of credit with respect to such payment with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

 

(b)    In the case of a “net exercise” of an Option, the Company will not require a payment of the exercise price of the Option from the Participant but will reduce the number of shares of Common Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value on the exercise date that does not exceed the aggregate exercise price for the shares exercised under this method. Shares of Common Stock will no longer be outstanding under an Option (and will therefore not thereafter be exercisable) following the exercise of such Option to the extent of (i) shares used to pay the exercise price of an Option under the “net exercise,” (ii) shares actually delivered to the Participant as a result of such exercise and (iii) any shares withheld for purposes of tax withholding pursuant to Section 14 of this Plan.

 

(c)    For purposes of such payment, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value on the exercise date of the Option.

 

6.6        Manner of Exercise. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in this Plan and in the Award Agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission or through the mail of written notice of exercise to the Company at its principal executive office (or to the Company’s designee as may be established from time to time by the Company and communicated to Participants) and by paying in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.5 of this Plan.

 

	
			7.

				
			Stock Appreciation Rights.

			

 

7.1        Grant. An Eligible Recipient may be granted one or more Stock Appreciation Rights under this Plan, and such Stock Appreciation Rights will be subject to such terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion. Stock Appreciation Rights may be granted to an Eligible Recipient for services provided to a Subsidiary only if, with respect to such Eligible Recipient, the underlying shares of Common Stock constitute “service recipient stock” within the meaning of Treas. Reg. Sec. 1.409A-1(b)(5)(iii) promulgated under the Code.

 

7.2        Award Agreement. Each Stock Appreciation Right will be evidenced by an Award Agreement that will specify the grant price of the Stock Appreciation Right, the term of the Stock Appreciation Right, and such other provisions as the Committee will determine which are not inconsistent with the terms of this Plan.

 

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7.3        Grant Price. The grant price of a Stock Appreciation Right will be determined by the Committee, in its discretion, at the Grant Date; provided, however, that such price may not be less than one hundred percent (100%) of the Fair Market Value of one share of Common Stock on the Grant Date.

 

7.4        Exercisability and Duration. A Stock Appreciation Right will become exercisable at such times and in such installments as may be determined by the Committee in its sole discretion at the time of grant; provided, however, that no Stock Appreciation Right may be exercisable after ten (10) years from its Grant Date. Notwithstanding the foregoing, if the exercise of a Stock Appreciation Right that is exercisable in accordance with its terms is prevented by the provisions of Section 17 of this Plan, the Stock Appreciation Right will remain exercisable until thirty (30) days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the expiration date of such Stock Appreciation Right.

 

7.5        Manner of Exercise. A Stock Appreciation Right will be exercised by giving notice in the same manner as for Options, as set forth in Section 6.6 of this Plan, subject to any other terms and conditions consistent with the other provisions of this Plan as may be determined by the Committee in its sole discretion.

 

7.6        Settlement. Upon the exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

 

(a)    The excess of the Fair Market Value of a share of Common Stock on the date of exercise over the per share grant price; by

 

(b)    The number of shares of Common Stock with respect to which the Stock Appreciation Right is exercised.

 

7.7        Form of Payment. Payment, if any, with respect to a Stock Appreciation Right settled in accordance with Section 7.6 of this Plan will be made in accordance with the terms of the applicable Award Agreement, in cash, shares of Common Stock or a combination thereof, as the Committee determines.

 

	
			8.

				
			Restricted Stock Awards, Restricted Stock Units and Deferred Stock Units.

			

 

8.1        Grant. An Eligible Recipient may be granted one or more Restricted Stock Awards, Restricted Stock Units or Deferred Stock Units under this Plan, and such Awards will be subject to such terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion. Restricted Stock Units will be similar to Restricted Stock Awards except that no shares of Common Stock are actually awarded to the Participant on the Grant Date of the Restricted Stock Units. Restricted Stock Units and Deferred Stock Units will be denominated in shares of Common Stock but paid in cash, shares of Common Stock or a combination of cash and shares of Common Stock as the Committee, in its sole discretion, will determine, and as provided in the Award Agreement.

 

8.2        Award Agreement. Each Restricted Stock Award, Restricted Stock Unit or Deferred Stock Unit grant will be evidenced by an Award Agreement that will specify the type of Award, the period(s) of restriction, the number of shares of restricted Common Stock, or the number of Restricted Stock Units or Deferred Stock Units granted, and such other provisions as the Committee will determine that are not inconsistent with the terms of this Plan.

 

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8.3        Conditions and Restrictions. Subject to the terms and conditions of this Plan, the Committee will impose such conditions or restrictions on a Restricted Stock Award, Restricted Stock Units or Deferred Stock Units granted pursuant to this Plan as it may deem advisable including a requirement that Participants pay a stipulated purchase price for each share of Common Stock underlying a Restricted Stock Award, Restricted Stock Unit or Deferred Stock Unit, restrictions based upon the achievement of specific Performance Goals, time-based restrictions on vesting following the attainment of the Performance Goals, time-based restrictions, restrictions under Applicable Laws or holding requirements or sale restrictions placed on the shares of Common Stock by the Company upon vesting of such Restricted Stock Award, Restricted Stock Units or Deferred Stock Units.

 

8.4        Voting Rights. Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by Applicable Law, as determined by the Committee, Participants holding a Restricted Stock Award granted hereunder will be granted the right to exercise full voting rights with respect to the shares of Common Stock underlying such Restricted Stock Award during the Period of Restriction. A Participant will have no voting rights with respect to any Restricted Stock Units or Deferred Stock Units granted hereunder.

 

8.5        Dividend Rights.

 

(a)    Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by Applicable Law, as determined by the Committee, Participants holding a Restricted Stock Award granted hereunder will have the same dividend rights as the Company’s other stockholders. Notwithstanding the foregoing any such dividends as to a Restricted Stock Award that is subject to vesting requirements will be subject to forfeiture and termination to the same extent as the Restricted Stock Award to which such dividends relate and the Award Agreement may require that any cash dividends be reinvested in additional shares of Common Stock subject to the Restricted Stock Award and subject to the same conditions and restrictions as the Restricted Stock Award with respect to which the dividends were paid. In no event will dividends with respect to Restricted Stock Awards that are subject to vesting be paid or distributed until the vesting provisions of such Restricted Stock Award lapse.

 

(b)    Unless otherwise determined by the Committee and set forth in a Participant’s Award Agreement, to the extent permitted or required by Applicable Law, as determined by the Committee, prior to settlement or forfeiture, any Restricted Stock Units or Deferred Stock Unit awarded under this Plan may, at the Committee’s discretion, carry with it a right to Dividend Equivalents. Such right entitles the Participant to be credited with an amount equal to all cash dividends paid on one share of Common Stock while the Restricted Stock Unit or Deferred Stock Unit is outstanding. Dividend Equivalents may be converted into additional Restricted Stock Units or Deferred Stock Units and may (and will, to the extent required below) be made subject to the same conditions and restrictions as the Restricted Stock Units or Deferred Stock Units to which they attach. Settlement of Dividend Equivalents may be made in the form of cash, in the form of shares of Common Stock, or in a combination of both. Dividend Equivalents as to Restricted Stock Units or Deferred Stock Units will be subject to forfeiture and termination to the same extent as the corresponding Restricted Stock Units or Deferred Stock Units as to which the Dividend Equivalents relate. In no event will Participants holding Restricted Stock Units or Deferred Stock Units be entitled to receive any Dividend Equivalents on such Restricted Stock Units or Deferred Stock Units until the vesting provisions of such Restricted Stock Units or Deferred Stock Units lapse.

 

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8.6        Enforcement of Restrictions. To enforce the restrictions referred to in this Section 8, the Committee may place a legend on the stock certificates representing Restricted Stock Awards referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates, together with duly endorsed stock powers, in the custody of the Company or its transfer agent, or to maintain evidence of stock ownership, together with duly endorsed stock powers, in an uncertificated book entry stock account with the Company’s transfer agent. Alternatively, Restricted Stock Awards may be held in non-certificated form pursuant to such terms and conditions as the Company may establish with its registrar and transfer agent or any third-party administrator designated by the Company to hold Restricted Stock Awards on behalf of Participants.

 

8.7        Lapse of Restrictions; Settlement. Except as otherwise provided in this Plan, including without limitation this Section 8 and 16.4 of this Plan, shares of Common Stock underlying a Restricted Stock Award will become freely transferable by the Participant after all conditions and restrictions applicable to such shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations). Upon the vesting of a Restricted Stock Unit, the Restricted Stock Unit will be settled, subject to the terms and conditions of the applicable Award Agreement, (a) in cash, based upon the Fair Market Value of the vested underlying shares of Common Stock, (b) in shares of Common Stock or (c) a combination thereof, as provided in the Award Agreement, except to the extent that a Participant has properly elected to defer income that may be attributable to a Restricted Stock Unit under a Company deferred compensation plan or arrangement.

 

8.8        Section 83(b) Election for Restricted Stock Award. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant must file, within thirty (30) days following the Grant Date of the Restricted Stock Award, a copy of such election with the Company and with the Internal Revenue Service, in accordance with the regulations under Section 83 of the Code. The Committee may provide in the Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the award under Section 83(b) of the Code.

 

	
			9.

				
			Performance Awards.

			

 

9.1        Grant. An Eligible Recipient may be granted one or more Performance Awards under this Plan, and such Awards will be subject to such terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion, including the achievement of one or more Performance Goals.

 

9.2        Award Agreement. Each Performance Award will be evidenced by an Award Agreement that will specify the amount of cash, shares of Common Stock, other Awards, or combination of both to be received by the Participant upon payout of the Performance Award, any Performance Goals upon which the Performance Award is subject, any Performance Period during which any Performance Goals must be achieved and such other provisions as the Committee will determine which are not inconsistent with the terms of this Plan.

 

9.3        Vesting. Subject to the terms of this Plan, the Committee may impose such restrictions or conditions, not inconsistent with the provisions of this Plan, to the vesting of such Performance Awards as it deems appropriate, including the achievement of one or more of the Performance Goals.

 

9.4        Earning of Performance Award Payment. Subject to the terms of this Plan and the Award Agreement, after the applicable Performance Period has ended, the holder of Performance Awards will be entitled to receive payout on the value and number of Performance Awards earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved and such other restrictions or conditions imposed on the vesting and payout of the Performance Awards has been satisfied.

 

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9.5        Form and Timing of Performance Award Payment. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Awards will be entitled to receive payment on the value and number of Performance Awards earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved. Payment of earned Performance Awards will be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Awards in the form of cash, in shares of Common Stock or other Awards (or in a combination thereof) equal to the value of the earned Performance Awards at the close of the applicable Performance Period. Payment of any Performance Award will be made as soon as practicable after the Committee has determined the extent to which the applicable Performance Goals have been achieved and not later than the fifteenth (15th) day of the third (3rd) month immediately following the later of the end of the Company’s fiscal year in which the Performance Period ends and any additional vesting restrictions are satisfied or the end of the calendar year in which the Performance Period ends and any additional vesting restrictions are satisfied, except to the extent that a Participant has properly elected to defer payment that may be attributable to a Performance Award under a Company deferred compensation plan or arrangement. The determination of the Committee with respect to the form and time of payment of Performance Awards will be set forth in the Award Agreement pertaining to the grant of the Performance Award. Any shares of Common Stock or other Awards issued in payment of earned Performance Awards may be granted subject to any restrictions deemed appropriate by the Committee, including that the Participant remain in the continuous employment or service with the Company or a Subsidiary for a certain period.

 

9.6        Evaluation of Performance. The Committee may provide in any such Award Agreement including Performance Goals that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) items related to a change in accounting principles; (b) items relating to financing activities; (c) expenses for restructuring or productivity initiatives; (d) other non-operating items; (e) items related to acquisitions; (f) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (g) items related to the disposal of a business or segment of a business; (h) items related to discontinued operations that do not qualify as a segment of a business under applicable accounting standards; (i) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; (j) any other items of significant income or expense which are determined to be appropriate adjustments; (k) items relating to unusual or extraordinary corporate transactions, events or developments; (l) items related to amortization of acquired intangible assets; (m) items that are outside the scope of the Company’s core, on-going business activities; (n) items related to acquired in-process research and development; (o) items relating to changes in tax laws; (p) items relating to major licensing or partnership arrangements; (q) items relating to asset impairment charges; (r) items relating to gains or losses for litigation, arbitration and contractual settlements; (s) foreign exchange gains and losses; or (t) items relating to any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions.

 

9.7        Adjustment of Performance Goals, Performance Periods or other Vesting Criteria. The Committee may amend or modify the vesting criteria (including any Performance Goals or Performance Periods) of any outstanding Awards based in whole or in part on the financial performance of the Company (or any Subsidiary or division, business unit or other sub-unit thereof) in recognition of unusual or nonrecurring events (including the events described in Sections 9.6 or 4.4(a) of this Plan) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee as to the foregoing adjustments, if any, will be final, conclusive and binding on Participants under this Plan.

 

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9.8        Dividend Rights. Participants holding Performance Awards granted under this Plan will not receive any cash dividends or Dividend Equivalents based on the dividends declared on shares of Common Stock that are subject to such Performance Awards during the period between the date that such Performance Awards are granted and the date such Performance Awards are settled.

 

	
			10.

				
			Non-Employee Director Awards.

			

 

10.1        Automatic and Non-Discretionary Awards to Non-Employee Directors. Subject to such terms and conditions, consistent with the other provisions of this Plan, the Committee at any time and from time to time may approve resolutions providing for the automatic grant to Non-Employee Directors of Non-Employee Director Awards granted under this Plan and may grant to Non-Employee Directors such discretionary Non-Employee Director Awards on such terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion, and set forth in an applicable Award Agreement.

 

10.2        Deferral of Award Payment; Election to Receive Award in Lieu of Retainers. The Committee may permit Non-Employee Directors the opportunity to defer the payment of an Award pursuant to such terms and conditions as the Committee may prescribe from time to time. In addition, the Committee may permit Non-Employee Directors to elect to receive, pursuant to the procedures established by the Board or a committee of the Board, all or any portion of their annual retainers, meeting fees, or other fees in Restricted Stock, Restricted Stock Units, Deferred Stock Units or other Stock-Based Awards as contemplated by this Plan in lieu of cash.

 

	
			11.

				
			Other Stock-Based Awards.

			

 

11.1        Other Stock-Based Awards. Subject to such terms and conditions, consistent with the other provisions of this Plan, as may be determined by the Committee in its sole discretion, the Committee may grant Other Stock-Based Awards to Eligible Recipients not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted shares of Common Stock) in such amounts and subject to such terms and conditions as the Committee will determine. Such Awards may involve the transfer of actual shares of Common Stock to Participants, including, without limitation, as a bonus or in lieu of obligations to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, or payment in cash or otherwise of amounts based on the value of shares of Common Stock, and may include Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

11.2        Value of Other Stock-Based Awards. Each Other Stock-Based Award will be expressed in terms of shares of Common Stock or units based on shares of Common Stock, as determined by the Committee. The Committee may establish Performance Goals in its discretion for any Other Stock-Based Award. If the Committee exercises its discretion to establish Performance Goals for any such Awards, the number or value of Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the Performance Goals are met.

 

11.3        Payment of Other Stock-Based Awards. Payment, if any, with respect to an Other Stock-Based Award will be made in accordance with the terms of the Award, in cash or shares of Common Stock for any Other Stock-Based Award, as the Committee determines, except to the extent that a Participant has properly elected to defer payment that may be attributable to an Other Stock-Based Award under a Company deferred compensation plan or arrangement.

 

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			12.

				
			Dividend Equivalents.

			

 

Subject to the provisions of this Plan and any Award Agreement, any Participant selected by the Committee may be granted Dividend Equivalents based on the dividends declared on shares of Common Stock that are subject to any Award (including any Award that has been deferred), to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests, settles, is paid or expires, as determined by the Committee. Such Dividend Equivalents will be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee and the Committee may provide that such amounts (if any) will be deemed to have been reinvested in additional shares of Common Stock or otherwise reinvested. Notwithstanding the foregoing, the Committee may not grant Dividend Equivalents based on the dividends declared on shares of Common Stock that are subject to an Option or Stock Appreciation Right or unvested Performance Awards; and further, no dividend or Dividend Equivalents will be paid out with respect to any unvested Awards.

 

	
			13.

				
			Effect of Termination of Employment or Other Service.

			

 

13.1        Termination Due to Cause. Unless otherwise expressly provided by the Committee in its sole discretion in an Award Agreement or the terms of an Individual Agreement between the Participant and the Company or one of its Subsidiaries or Affiliates or a plan or policy of the Company applicable to the Participant specifically provides otherwise, and subject to Sections 13.4 and 13.5 of this Plan, in the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated for Cause:

 

(a)    All outstanding Options and Stock Appreciation Rights held by the Participant as of the effective date of such termination will be immediately terminated and forfeited;

 

(b)    All outstanding but unvested Restricted Stock Awards, Restricted Stock Units, Performance Awards and Other Stock-Based Awards held by the Participant as of the effective date of such termination will be terminated and forfeited; and

 

(c)    All other outstanding Awards to the extent not vested will be immediately terminated and forfeited.

 

13.2        Termination Due to Death, Disability or Retirement. Unless otherwise expressly provided by the Committee in its sole discretion in an Award Agreement between the Participant and the Company or one of its Subsidiaries or Affiliates or the terms of an Individual Agreement or a plan or policy of the Company applicable to the Participant specifically provides otherwise, and subject to Sections 13.4, 13.5 and 15 of this Plan, in the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of death or Disability of a Participant, or in the case of a Participant that is an Employee, Retirement:

 

(a)    All outstanding Options (excluding Non-Employee Director Options in the case of Retirement) and Stock Appreciation Rights held by the Participant as of the effective date of such termination or Retirement will, to the extent exercisable as of the date of such termination or Retirement, remain exercisable for a period of one (1) year after the date of such termination or Retirement (but in no event after the expiration date of any such Option or Stock Appreciation Right) and Options and Stock Appreciation Rights not exercisable as of the date of such termination or Retirement will be terminated and forfeited;

 

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(b)    All outstanding unvested Restricted Stock Awards held by the Participant as of the effective date of such termination or Retirement will be terminated and forfeited; and

 

(c)    All outstanding unvested Restricted Stock Units, Performance Awards, and Other Stock-Based Awards held by the Participant as of the effective date of such termination or Retirement will be terminated and forfeited; provided, however, that with respect to any such Awards the vesting of which is based on the achievement of Performance Goals, if a Participant’s employment or other service with the Company or any Subsidiary, as the case may be, is terminated prior to the end of the Performance Period of such Award, but after the conclusion of a portion of the Performance Period (but in no event less than one year), the Committee may, in its sole discretion, cause shares of Common Stock to be delivered or payment made (except to the extent that a Participant has properly elected to defer income that may be attributable to such Award under a Company deferred compensation plan or arrangement) with respect to the Participant’s Award, but only if otherwise earned for the entire Performance Period and only with respect to the portion of the applicable Performance Period completed at the date of such event, with proration based on the number of months or years that the Participant was employed or performed services during the Performance Period. The Committee will consider the provisions of Section 13.5 of this Plan and will have the discretion to consider any other fact or circumstance in making its decision as to whether to deliver such shares of Common Stock or other payment, including whether the Participant again becomes employed.

 

13.3        Termination for Reasons Other than Death, Disability or Retirement. Unless otherwise expressly provided by the Committee in its sole discretion in an Award Agreement or the terms of an Individual Agreement between the Participant and the Company or one of its Subsidiaries or Affiliates or a plan or policy of the Company applicable to the Participant specifically provides otherwise, and subject to Sections 13.4, 13.5 and 15 of this Plan, in the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated for any reason other than for Cause or death or Disability of a Participant, or in the case of a Participant that is an Employee, Retirement:

 

(a)    All outstanding Options (including Non-Employee Director Options) and Stock Appreciation Rights held by the Participant as of the effective date of such termination will, to the extent exercisable as of such termination, remain exercisable for a period of three (3) months after such termination (but in no event after the expiration date of any such Option or Stock Appreciation Right) and Options and Stock Appreciation Rights not exercisable as of such termination will be terminated and forfeited. If the Participant dies within the three (3) month period referred to in the preceding sentence, the Option or Stock Appreciation Right may be exercised by those entitled to do so under the Participant’s will or by the laws of descent and distribution within a period of one (1) year following the Participant’s death (but in no event after the expiration date of any such Option or Stock Appreciation Right).

 

(b)    All outstanding unvested Restricted Stock Awards held by the Participant as of the effective date of such termination will be terminated and forfeited;

 

(c)    All outstanding unvested Restricted Stock Units, Performance Awards, and Other Stock-Based Awards held by the Participant as of the effective date of such termination will be terminated and forfeited; provided, however, that with respect to any such Awards the vesting of which is based on the achievement of Performance Goals, if a Participant’s employment or other service with the Company or any Subsidiary, as the case may be, is terminated by the Company without Cause prior to the end of the Performance Period of such Award, but after the conclusion of a portion of the Performance Period (but in no event less than one year), the Committee may, in its sole discretion, cause Shares to be delivered or payment made (except to the extent that a Participant has properly elected to defer income that may be attributable to such Award under a Company deferred compensation plan or arrangement) with respect to the Participant’s Award, but only if otherwise earned for the entire Performance Period and only with respect to the portion of the applicable Performance Period completed at the date of such event, with proration based on the number of months or years that the Participant was employed or performed services during the Performance Period.

 

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13.4        Modification of Rights upon Termination. Notwithstanding the other provisions of this Section 13, upon a Participant’s termination of employment or other service with the Company or any Subsidiary, as the case may be, the Committee may, in its sole discretion (which may be exercised at any time on or after the Grant Date, including following such termination) cause Options or Stock Appreciation Rights (or any part thereof) held by such Participant as of the effective date of such termination to terminate, become or continue to become exercisable or remain exercisable following such termination of employment or service, and Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Awards, Non-Employee Director Awards, and Other Stock-Based Awards held by such Participant as of the effective date of such termination to terminate, vest or become free of restrictions and conditions to payment, as the case may be, following such termination of employment or service, in each case in the manner determined by the Committee; provided, however, that (a) no Option or Stock Appreciation Right may remain exercisable beyond its expiration date; and (b) any such action by the Committee adversely affecting any outstanding Award will not be effective without the consent of the affected Participant (subject to the right of the Committee to take whatever action it deems appropriate under Section 4.4, 13.5, 15 or 19 of this Plan).

 

13.5        Additional Forfeiture Events.

 

(a)        Effect of Actions Constituting Cause or Adverse Action. Notwithstanding anything in this Plan to the contrary and in addition to the other rights of the Committee under this Plan, including this Section 13.5, if a Participant is determined by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause or an Adverse Action during or within one (1) year after the termination of employment or other service with the Company or a Subsidiary, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s employment or other service with the Company or any Subsidiary and irrespective of whether or not the Participant was terminated as a result of such Cause or Adverse Action, (i) all rights of the Participant under this Plan and any Award Agreements evidencing an Award then held by the Participant will terminate and be forfeited without notice of any kind, and (ii) the Committee in its sole discretion will have the authority to rescind the exercise, vesting or issuance of, or payment in respect of, any Awards of the Participant that were exercised, vested or issued, or as to which such payment was made, and to require the Participant to pay to the Company, within ten (10) days of receipt from the Company of notice of such rescission, any amount received or the amount of any gain realized as a result of such rescinded exercise, vesting, issuance or payment (including any dividends paid or other distributions made with respect to any shares of Common Stock subject to any Award). The Company may defer the exercise of any Option or Stock Appreciation Right for a period of up to six (6) months after receipt of the Participant’s written notice of exercise or the issuance of share certificates upon the vesting of any Award for a period of up to six (6) months after the date of such vesting in order for the Committee to make any determination as to the existence of Cause or an Adverse Action. The Company will be entitled to withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary) or make other arrangements for the collection of all amounts necessary to satisfy such payment obligations. Unless otherwise provided by the Committee in an applicable Award Agreement, this Section 13.5(a) will not apply to any Participant following a Change in Control.

 

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(b)        Forfeiture or Clawback of Awards Under Applicable Law and Company Policy. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, then any Participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 will reimburse the Company for the amount of any Award received by such individual under this Plan during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission, as the case may be, of the financial document embodying such financial reporting requirement. The Company also may seek to recover any Award made as required by the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other clawback, forfeiture or recoupment provision required by Applicable Law or under the requirements of any stock exchange or market upon which the shares of Common Stock are then listed or traded. In addition, all Awards under this Plan will be subject to forfeiture or other penalties pursuant to any clawback or forfeiture policy of the Company, as in effect from time to time, and such forfeiture and/or penalty conditions or provisions as determined by the Committee and set forth in the applicable Award Agreement.

 

	
			14.

				
			Payment of Withholding Taxes.

			

 

14.1        General Rules. The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, all amounts the Company reasonably determines are necessary to satisfy any and all federal, foreign, state and local withholding and employment related tax requirements attributable to an Award, including the grant, exercise, vesting or settlement of, or payment of dividends with respect to, an Award or a disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (b) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Award. When withholding shares of Common Stock for taxes is effected under this Plan, it will be withheld only up to an amount based on the maximum statutory tax rates in the Participant’s applicable tax jurisdiction or such other rate that will not trigger a negative accounting impact on the Company.

 

14.2        Special Rules. The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment related tax obligation described in Section 14.1 of this Plan by withholding shares of Common Stock underlying an Award, by electing to tender, or by attestation as to ownership of, Previously Acquired Shares, by delivery of a Broker Exercise Notice or a combination of such methods. For purposes of satisfying a Participant’s withholding or employment-related tax obligation, shares of Common Stock withheld by the Company or Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value on the Tax Date.

 

	
			15.

				
			Change in Control.

			

 

15.1        Definition of Change in Control. Unless otherwise provided in an Award Agreement or Individual Agreement between the Participant and the Company or one of its Subsidiaries or Affiliates, a “Change in Control” will mean the occurrence of any of the following:

 

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(a)    The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its Subsidiaries, or any employee benefit plan (or related trust) of the Company or its Subsidiaries, or any entity with respect to which, following such acquisition, more than fifty percent (50%) of, respectively, the then outstanding equity of such entity and the combined voting power of the then outstanding voting equity of such entity entitled to vote generally in the election of all or substantially all of the members of such entity's governing body is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or

 

(b)    The consummation of a reorganization, merger or consolidation of the Company, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the Common Stock and voting securities of the Company immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation; or

 

(c)    a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company.

 

15.2        Effect of Change in Control. Subject to the terms of the applicable Award Agreement or an Individual Agreement, in the event of a Change in Control, the Committee (as constituted prior to such Change in Control) may, in its discretion:

 

(a)         require that shares of stock of the corporation resulting from such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of Common Stock subject to an outstanding Award, with an appropriate and equitable adjustment to such Award as shall be determined by the Board in accordance with Section 4.4;

 

(b)         provide that (i) some or all outstanding Options shall become exercisable in full or in part, either immediately or upon a subsequent termination of employment, (ii) the restrictions or vesting applicable to some or all outstanding Restricted Stock Awards and Restricted Stock Units shall lapse in full or in part, either immediately or upon a subsequent termination of employment, (iii) the Performance Period applicable to some or all outstanding Awards shall lapse in full or in part, and/or (iv) the Performance Goals applicable to some or all outstanding Awards shall be deemed to be satisfied at the target or any other level; and/or

 

(c)         require outstanding Awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount determined pursuant to Section 15.3 below; (B) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above.

 

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15.3        Alternative Treatment of Incentive Awards. In connection with a Change in Control, the Committee in its sole discretion, either in an Award Agreement at the time of grant of an Award or at any time after the grant of such an Award, in lieu of providing a substitute award to a Participant pursuant to Section 15.2(a), may determine that any or all outstanding Awards granted under the Plan, whether or not exercisable or vested, as the case may be, will be canceled and terminated and that in connection with such cancellation and termination the holder of such Award will receive for each share of Common Stock subject to such Award a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities with a fair market value (as determined by the Committee in good faith) equivalent to such cash payment) equal to the difference, if any, between the consideration received by stockholders of the Company in respect of a share of Common Stock in connection with such Change in Control and the purchase price per share, if any, under the Award, multiplied by the number of shares of Common Stock subject to such Award (or in which such Award is denominated); provided, however, that if such product is zero ($0) or less or to the extent that the Award is not then exercisable, the Award may be canceled and terminated without payment therefor. If any portion of the consideration pursuant to a Change in Control may be received by holders of shares of Common Stock on a contingent or delayed basis, the Committee may, in its sole discretion, determine the fair market value per share of such consideration as of the time of the Change in Control on the basis of the Committee’s good faith estimate of the present value of the probable future payment of such consideration. Notwithstanding the foregoing, any shares of Common Stock issued pursuant to an Award that immediately prior to the effectiveness of the Change in Control are subject to no further restrictions pursuant to the Plan or an Award Agreement (other than pursuant to the securities laws) will be deemed to be outstanding shares of Common Stock and receive the same consideration as other outstanding shares of Common Stock in connection with the Change in Control.

 

15.4        Limitation on Change in Control Payments. Notwithstanding anything in this Section 15 to the contrary, if, with respect to a Participant, the acceleration of the vesting of an Award or the payment of cash in exchange for all or part of a Stock-Based Award (which acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of the Code), together with any other “payments” that such Participant has the right to receive from the Company or any corporation that is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the “payments” to such Participant pursuant to Section 15.2 or Section 15.3 of this Plan will be reduced (or acceleration of vesting eliminated) to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that such reduction will be made only if the aggregate amount of the payments after such reduction exceeds the difference between (a) the amount of such payments absent such reduction minus (b) the aggregate amount of the excise tax imposed under Section 4999 of the Code attributable to any such excess parachute payments; and provided, further that such payments will be reduced (or acceleration of vesting eliminated) by first eliminating vesting of Options with an exercise price above the then Fair Market Value of a share of Common Stock that have a positive value for purposes of Section 280G of the Code, followed by reducing or eliminating payments or benefits pro rata among Awards that are deferred compensation subject to Section 409A of the Code, and, if a further reduction is necessary, by reducing or eliminating payments or benefits pro rata among Awards that are not subject to Section 409A of the Code. Notwithstanding the foregoing sentence, if a Participant is subject to a separate agreement with the Company or a Subsidiary that expressly addresses the potential application of Section 280G or 4999 of the Code, then this Section 15.4 will not apply and any “payments” to a Participant pursuant to Section 15 of this Plan will be treated as “payments” arising under such separate agreement; provided, however, such separate agreement may not modify the time or form of payment under any Award that constitutes deferred compensation subject to Section 409A of the Code if the modification would cause such Award to become subject to the adverse tax consequences specified in Section 409A of the Code.

 

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15.5        Exceptions. Notwithstanding anything in this Section 15 to the contrary, individual Award Agreements or Individual Agreements between a Participant and the Company or one of its Subsidiaries or Affiliates may contain provisions with respect to vesting, payment or treatment of Awards upon the occurrence of a Change in Control, and the terms of any such Award Agreement or Individual Agreement will govern to the extent of any inconsistency with the terms of this Section 15. The Committee will not be obligated to treat all Awards subject to this Section 15 in the same manner. The timing of any payment under this Section 15 may be governed by any election to defer receipt of a payment made under a Company deferred compensation plan or arrangement.

 

	
			16.

				
			Rights of Eligible Recipients and Participants; Transferability.

			

 

16.1        Employment. Nothing in this Plan or an Award Agreement will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue employment or other service with the Company or any Subsidiary.

 

16.2        No Rights to Awards. No Participant or Eligible Recipient will have any claim to be granted any Award under this Plan.

 

16.3        Rights as a Stockholder. Except as otherwise provided in the Award Agreement, a Participant will have no rights as a stockholder with respect to shares of Common Stock covered by any Stock-Based Award unless and until the Participant becomes the holder of record of such shares of Common Stock and then subject to any restrictions or limitations as provided herein or in the Award Agreement.

 

16.4        Restrictions on Transfer.

 

(a)    Except pursuant to testamentary will or the laws of descent and distribution or as otherwise expressly permitted by subsections (b) and (c) below, no right or interest of any Participant in an Award prior to the exercise (in the case of Options or Stock Appreciation Rights) or vesting, issuance or settlement of such Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.

 

(b)    A Participant will be entitled to designate a beneficiary to receive an Award upon such Participant’s death, and in the event of such Participant’s death, payment of any amounts due under this Plan will be made to, and exercise of any Options or Stock Appreciation Rights (to the extent permitted pursuant to Section 13 of this Plan) may be made by, such beneficiary. If a deceased Participant has failed to designate a beneficiary, or if a beneficiary designated by the Participant fails to survive the Participant, payment of any amounts due under this Plan will be made to, and exercise of any Options or Stock Appreciation Rights (to the extent permitted pursuant to Section 13 of this Plan) may be made by, the Participant’s legal representatives, heirs and legatees. If a deceased Participant has designated a beneficiary and such beneficiary survives the Participant but dies before complete payment of all amounts due under this Plan or exercise of all exercisable Options or Stock Appreciation Rights, then such payments will be made to, and the exercise of such Options or Stock Appreciation Rights may be made by, the legal representatives, heirs and legatees of the beneficiary.

 

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(c)    Upon a Participant’s request, the Committee may, in its sole discretion, permit a transfer of all or a portion of a Non-Statutory Stock Option, other than for value, to such Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, 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, any person sharing such Participant’s household (other than a tenant or employee), a trust in which any of the foregoing have more than fifty percent (50%) of the beneficial interests, a foundation in which any of the foregoing (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent (50%) of the voting interests. Any permitted transferee will remain subject to all the terms and conditions applicable to the Participant prior to the transfer. A permitted transfer may be conditioned upon such requirements as the Committee may, in its sole discretion, determine, including execution or delivery of appropriate acknowledgements, opinion of counsel, or other documents by the transferee.

 

(d)    The Committee may impose such restrictions on any shares of Common Stock acquired by a Participant under this Plan as it may deem advisable, including minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which the Common Stock is then listed or traded, or under any blue sky or state securities laws applicable to such shares or the Company’s insider trading policy.

 

16.5        Non-Exclusivity of this Plan. Nothing contained in this Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.

 

	
			17.

				
			Securities Law and Other Restrictions.

			

 

Notwithstanding any other provision of this Plan or any Award Agreements entered into pursuant to this Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Awards granted under this Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable securities laws of a state or foreign jurisdiction or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other U.S. or foreign regulatory body which the Committee, in its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

 

	
			18.

				
			Deferred Compensation; Compliance with Section 409A.

			

 

It is intended that all Awards issued under this Plan be in a form and administered in a manner that will comply with the requirements of Section 409A of the Code, or the requirements of an exception to Section 409A of the Code, and the Award Agreements and this Plan will be construed and administered in a manner that is consistent with and gives effect to such intent. The Committee is authorized to adopt rules or regulations deemed necessary or appropriate to qualify for an exception from or to comply with the requirements of Section 409A of the Code. With respect to an Award that constitutes a deferral of compensation subject to Code Section 409A: (a) if any amount is payable under such Award upon a termination of service, a termination of service will be treated as having occurred only at such time the Participant has experienced a Separation from Service; (b) if any amount is payable under such Award upon a Disability, a Disability will be treated as having occurred only at such time the Participant has experienced a “disability” as such term is defined for purposes of Code Section 409A; (c) if any amount is payable under such Award on account of the occurrence of a Change in Control, a Change in Control will be treated as having occurred only at such time a “change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation” as such terms are defined for purposes of Code Section 409A, (d) if any amount becomes payable under such Award on account of a Participant’s Separation from Service at such time as the Participant is a “specified employee” within the meaning of Code Section 409A, then no payment will be made, except as permitted under Code Section 409A, prior to the first business day after the earlier of (i) the date that is six months after the date of the Participant’s Separation from Service or (ii) the Participant’s death, and (e) no amendment to or payment under such Award will be made except and only to the extent permitted under Code Section 409A.

 

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			19.

				
			Amendment, Modification and Termination.

			

 

19.1        Generally. Subject to other subsections of this Section 19 and Sections 3.4 of this Plan, the Board at any time may suspend or terminate this Plan (or any portion thereof) or terminate any outstanding Award Agreement and the Committee, at any time and from time to time, may amend this Plan or amend or modify the terms of an outstanding Award. The Committee’s power and authority to amend or modify the terms of an outstanding Award includes the authority to modify the number of shares of Common Stock or other terms and conditions of an Award, extend the term of an Award, accept the surrender of any outstanding Award or, to the extent not previously exercised or vested, authorize the grant of new Awards in substitution for surrendered Awards; provided, however that the amended or modified terms are permitted by this Plan as then in effect and that any Participant adversely affected by such amended or modified terms has consented to such amendment or modification.

 

19.2        Stockholder Approval. No amendments to this Plan will be effective without approval of the Company’s stockholders if: (a) stockholder approval of the amendment is then required pursuant to Section 422 of the Code, the rules of the primary stock exchange or stock market on which the Common Stock is then traded, applicable state corporate laws or regulations, applicable federal laws or regulations, and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under this Plan; or (b) such amendment would: (i) modify Section 3.4 of this Plan; (ii) materially increase benefits accruing to Participants; (iii) increase the aggregate number of shares of Common Stock issued or issuable under this Plan; (iv) increase any limitation set forth in this Plan on the number of shares of Common Stock which may be issued or the aggregate value of Awards which may be made, in respect of any type of Award to any single Participant during any specified period; (v) modify the eligibility requirements for Participants in this Plan; or (vi) reduce the minimum exercise price or grant price as set forth in Sections 6.3 and 7.3 of this Plan.

 

19.3        Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary, no termination, suspension or amendment of this Plan may adversely affect any outstanding Award without the consent of the affected Participant; provided, however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Sections 4.4, 9.7, 13, 15, 18 or 19.4 of this Plan.

 

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19.4        Amendments to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Committee may amend this Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming this Plan or an Award Agreement to any present or future law relating to plans of this or similar nature, and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 19.4 to any Award granted under this Plan without further consideration or action.

 

	
			20.

				
			Substituted Awards.

			

 

The Committee may grant Awards under this Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Company or a Subsidiary as a result of a merger or consolidation of the former employing entity with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the former employing corporation. The Committee may direct that the substitute Awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.

 

	
			21.

				
			Effective Date and Duration of this Plan.

			

 

This Plan is effective as of the Effective Date. This Plan will terminate at midnight on the day before the ten (10) year anniversary of the Effective Date, and may be terminated prior to such time by Board action. No Award will be granted after termination of this Plan, but Awards outstanding upon termination of this Plan will remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.

 

	
			22.

				
			Miscellaneous.

			

 

22.1        Usage. In this Plan, except where otherwise indicated by clear contrary intention, (a) any masculine term used herein also will include the feminine, (b) the plural will include the singular, and the singular will include the plural, (c) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term, and (d) “or” is used in the inclusive sense of “and/or”.

 

22.2        Relationship to Other Benefits. Neither Awards made under this Plan nor shares of Common Stock or cash paid pursuant to such Awards under this Plan will be included as “compensation” for purposes of computing the benefits payable to any Participant under any pension, retirement (qualified or non-qualified), savings, profit sharing, group insurance, welfare, or benefit plan of the Company or any Subsidiary unless provided otherwise in such plan.

 

22.3        Fractional Shares. No fractional shares of Common Stock will be issued or delivered under this Plan or any Award. The Committee will determine whether cash, other Awards or other property will be issued or paid in lieu of fractional shares of Common Stock or whether such fractional shares of Common Stock or any rights thereto will be forfeited or otherwise eliminated by rounding up or down.

 

22.4        Governing Law. Except to the extent expressly provided herein or in connection with other matters of corporate governance and authority (all of which will be governed by the laws of the Company’s jurisdiction of incorporation), the validity, construction, interpretation, administration and effect of this Plan and any rules, regulations and actions relating to this Plan will be governed by and construed exclusively in accordance with the laws of the State of Nevada, notwithstanding the conflicts of laws principles of any jurisdictions.

 

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22.5        Successors. All obligations of the Company under this Plan with respect to Awards granted hereunder will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Company.

 

22.6        Construction. Wherever possible, each provision of this Plan and any Award Agreement will be interpreted so that it is valid under the Applicable Law. If any provision of this Plan or any Award Agreement is to any extent invalid under the Applicable Law, that provision will still be effective to the extent it remains valid. The remainder of this Plan and the Award Agreement also will continue to be valid, and the entire Plan and Award Agreement will continue to be valid in other jurisdictions.

 

22.7        Delivery and Execution of Electronic Documents. To the extent permitted by Applicable Law, the Company may: (a) deliver by email or other electronic means (including posting on a Web site maintained by the Company or by a third party under contract with the Company) all documents relating to this Plan or any Award hereunder (including prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including annual reports and proxy statements), and (b) permit Participants to use electronic, internet or other non-paper means to execute applicable Plan documents (including Award Agreements) and take other actions under this Plan in a manner prescribed by the Committee.

 

22.8        No Representations or Warranties Regarding Tax Effect. Notwithstanding any provision of this Plan to the contrary, the Company and its Subsidiaries, the Board, and the Committee neither represent nor warrant the tax treatment under any federal, state, local, or foreign laws and regulations thereunder (individually and collectively referred to as the “Tax Laws”) of any Award granted or any amounts paid to any Participant under this Plan including, but not limited to, when and to what extent such Awards or amounts may be subject to tax, penalties, and interest under the Tax Laws.

 

22.9        Unfunded Plan. Participants will have no right, title or interest whatsoever in or to any investments that the Company or its Subsidiaries may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any individual acquires a right to receive payments from the Company or any Subsidiary under this Plan, such right will be no greater than the right of an unsecured general creditor of the Company or the Subsidiary, as the case may be. All payments to be made hereunder will be paid from the general funds of the Company or the Subsidiary, as the case may be, and no special or separate fund will be established and no segregation of assets will be made to assure payment of such amounts except as expressly set forth in this Plan.

 

22.10        Indemnification. Subject to any limitations and requirements of Nevada law, each individual who is or will have been a member of the Board, or a Committee appointed by the Board, or an officer or Employee of the Company to whom authority was delegated in accordance with Section 3.3 of this Plan, will be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding against him or her, provided he or she will give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or pursuant to any agreement with the Company, or any power that the Company may have to indemnify them or hold them harmless.

 

 

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