Exhibit 10.7
EXACTUS, INC
2019 EQUITY INCENTIVE PLAN
1.1
The purpose of this 2019 Equity
Incentive Plan (this “
Plan
”) of Exactus, Inc., a
Delaware corporation (the “
Corporation
”), is to promote the
success of the Corporation and to increase stockholder value by
providing an additional means through the grant of awards to
attract, motivate, retain and reward selected employees and other
eligible persons.
2.1
The Administrator (as such term is
defined in Section 3.1) may grant awards under this Plan only to
those persons that the Administrator determines to be Eligible
Persons. An “
Eligible
Person
” is any person who is either: (a) an officer
(whether or not a director) or employee of the Corporation or one
of its Subsidiaries; (b) a director of the Corporation or one of
its Subsidiaries; or (c) a consultant who renders bona fide
services (other than services in connection with the offering or
sale of securities of the Corporation or one of its Subsidiaries in
a capital-raising transaction or as a market maker or promoter of
securities of the Corporation or one of its Subsidiaries) to the
Corporation or one of its Subsidiaries and who is selected to
participate in this Plan by the Administrator;
provided, however,
that a person who is
otherwise an Eligible Person under clause (c) above may participate
in this Plan only if such participation would not adversely affect
either the Corporation’s eligibility to use Form S-8 to
register under the Securities Act of 1933, as amended (the
“
Securities
Act
”), the offering and sale of shares issuable under
this Plan by the Corporation, or the Corporation’s compliance
with any other applicable laws. An Eligible Person who has been
granted an award (a “
participant
”) may, if otherwise
eligible, be granted additional awards if the Administrator shall
so determine. As used herein, “
Subsidiary
” means any corporation
or other entity a majority of whose outstanding voting stock or
voting power is beneficially owned directly or indirectly by the
Corporation; and “
Board
” means the Board of
Directors of the Corporation.
3.1
The
Administrator
. This Plan shall be administered by and all
awards under this Plan shall be authorized by the Administrator.
The “
Administrator
” means the Board or
one or more committees appointed by the Board or another committee
(within its delegated authority) to administer all or certain
aspects of this Plan. Any such committee shall be comprised solely
of one or more directors or such number of directors as may be
required under applicable law. A committee may delegate some or all
of its authority to another committee so constituted. The Board or
a committee comprised solely of directors may also delegate, to the
extent permitted by Section 157(c) of the Delaware General
Corporation Law or any applicable law, to one or more officers of
the Corporation, its powers under this Plan (a) to designate
Eligible Persons who will receive grants of awards under this Plan,
and (b) to determine the number of shares subject to, and the other
terms and conditions of, such awards. The Board may delegate
different levels of authority to different committees with
administrative and grant authority under this Plan. Unless
otherwise provided in the bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of the
members of the acting Administrator shall constitute a quorum, and
(b) the affirmative vote of a majority of the members present
assuming the presence of a quorum or the unanimous written consent
of the members of the Administrator shall constitute due
authorization of an action by the acting
Administrator.
With
respect to awards intended to satisfy the requirements for
performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “
Code
”) , this Plan shall be
administered by a committee consisting solely of two or more
outside directors (as this requirement is applied under Section
162(m) of the Code);
provided,
however,
that the failure to satisfy such requirement shall
not affect the validity of the action of any committee otherwise
duly authorized and acting in the matter. Award grants, and
transactions in or involving awards, intended to be exempt under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the “
Exchange
Act
”) , must be duly and timely authorized by the
Board or a committee consisting solely of two or more non-employee
directors (as this requirement is applied under Rule 16b-3
promulgated under the Exchange Act). To the extent required by any
applicable stock exchange, this Plan shall be administered by a
committee composed entirely of independent directors (within the
meaning of the applicable stock exchange). Awards granted to
non-employee directors shall not be subject to the discretion of
any officer or employee of the Corporation and shall be
administered exclusively by a committee consisting solely of
independent directors.
3.2
Powers
of the Administrator
. Subject to the express provisions of
this Plan, the Administrator is authorized and empowered to do all
things necessary or desirable in connection with the authorization
of awards and the administration of this Plan (in the case of a
committee or delegation to one or more officers, within the
authority delegated to that committee or person(s)), including,
without limitation, the authority to:
(a)
determine eligibility and, from among those persons determined to
be eligible, the particular Eligible Persons who will receive
awards under this Plan;
(b)
grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the
other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if
any) in which such awards shall become exercisable or shall vest
(which may include, without limitation, performance and/or
time-based schedules), or determine that no delayed exercisability
or vesting is required, establish any applicable performance
targets, and establish the events of termination or reversion of
such awards;
(c)
approve the forms of award agreements (which need not be identical
either as to type of award or among participants);
(d)
construe and interpret this Plan and any agreements defining the
rights and obligations of the Corporation, its Subsidiaries, and
participants under this Plan, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted
under this Plan;
(e)
cancel, modify, or waive the Corporation’s rights with
respect to, or modify, discontinue, suspend, or terminate any or
all outstanding awards, subject to any required consent under
Section 8.6.5;
(f)
accelerate or extend the vesting or exercisability or extend the
term of any or all such outstanding awards (in the case of options
or stock appreciation rights, within the maximum ten-year term of
such awards) in such circumstances as the Administrator may deem
appropriate (including, without limitation, in connection with a
termination of employment or services or other events of a personal
nature) subject to any required consent under Section
8.6.5;
(g)
adjust the number of shares of Common Stock subject to any award,
adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate, in each
case subject to compliance with applicable stock exchange
requirements, Sections 4 and 8.6 and the applicable requirements of
Code Section 162(m) and treasury regulations thereunder with
respect to awards that are intended to satisfy the requirements for
performance-based compensation under Section 162(m), and provided
that in no case (except due to an adjustment contemplated by
Section 7 or any repricing that may be approved by stockholders)
shall such an adjustment constitute a repricing (by amendment,
cancellation and regrant, exchange or other means) of the per share
exercise or base price of any stock option or stock appreciation
right or other award granted under this Plan, and further provided
that any adjustment or change in terms made pursuant to this
Section 3.2(g) shall be made in a manner that, in the good faith
determination of the Administrator will not likely result in the
imposition of additional taxes or interest under Section 409A of
the Code;
(h)
determine the date of grant of an award, which may be a designated
date after but not before the date of the Administrator’s
action (unless otherwise designated by the Administrator, the date
of grant of an award shall be the date upon which the Administrator
took the action granting an award);
(i)
determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the
termination, conversion, substitution, acceleration or succession
of awards upon the occurrence of an event of the type described in
Section 7;
(j) acquire
or settle (subject to Sections 7 and 8.6) rights under awards in
cash, stock of equivalent value, or other consideration;
and
(k)
determine the Fair Market Value (as defined in Section 5.6) of the
Common Stock or awards under this Plan from time to time and/or the
manner in which such value will be determined.
3.3
Binding
Determinations.
Any action taken by, or inaction of, the
Corporation, any Subsidiary, or the Administrator relating or
pursuant to this Plan and within its authority hereunder or under
applicable law shall be within the absolute discretion of that
entity or body and shall be conclusive and binding upon all
persons. Neither the Board, the Administrator, nor any Board
committee, nor any member thereof or person acting at the direction
thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with
this Plan (or any award made under this Plan), and all such persons
shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense
(including, without limitation, legal fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under any
directors and officers liability insurance coverage that may be in
effect from time to time.
3.4
Reliance
on Experts.
In making any determination or in taking or not
taking any action under this Plan, the Administrator may obtain and
may rely upon the advice of experts, including professional
advisors to the Corporation. The Administrator shall not be liable
for any such action or determination taken or made or omitted in
good faith based upon such advice.
3.5
Delegation
of Non-Discretionary Functions.
In addition to the ability
to delegate certain grant authority to officers of the Corporation
as set forth in Section 3.1, the Administrator may also delegate
ministerial, non-discretionary functions to individuals who are
officers or employees of the Corporation or any of its Subsidiaries
or to third parties.
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4.
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SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE
LIMIT
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4.1
Shares
Available.
Subject to the provisions of Section 7.1, the
capital stock available for issuance under this Plan shall be
shares of the Corporation’s authorized but unissued Common
Stock. For purposes of this Plan, “
Common Stock
” shall mean the
common stock of the Corporation and such other securities or
property as may become the subject of awards under this Plan, or
may become subject to such awards, pursuant to an adjustment made
under Section 7.1.
4.2
Share
Limit.
The maximum number of shares of Common Stock that may
be delivered pursuant to awards granted to Eligible Persons under
this Plan may not exceed fifteen percent (15%) of the total of: (a)
the issued and outstanding shares of the Corporation’s Common
Stock, and (b) all shares common stock issuable upon conversion or
exercise of any outstanding securities of the Corporation which are
convertible or exercisable into shares of Common Stock under the
terms thereof, as determined on the date this Plan is adopted by
the Corporation’s Board of Directors (the “
Share Limit
”). The Share Limit
will be increased effective the first day of each of the
Corporation’s fiscal quarters, by an amount equal to the
lesser of:
(1) The
number of shares which is equal to 15% of the total of: (a) the
issued and outstanding shares of the Corporation’s Common
Stock, and (b) all shares common stock issuable upon conversion or
exercise of any outstanding securities of the Corporation which are
convertible or exercisable into shares of Common Stock under the
terms thereof; and
(2) any
lesser number of shares of Common Stock as may determined by the
board of directors of the Corporation.
The
foregoing Share Limit is subject to adjustment as contemplated by
Section 4.3, Section 7.1, and Section 8.10.
4.3
Awards
Settled in Cash, Reissue of Awards and Shares.
The
Administrator may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in
the case of tandem or substitute awards) and make adjustments in
accordance with this Section 4.3. Shares shall be counted against
those reserved to the extent such shares have been delivered and
are no longer subject to a substantial risk of forfeiture.
Accordingly, (i) to the extent that an award under the Plan, in
whole or in part, is canceled, expired, forfeited, settled in cash,
settled by delivery of fewer shares than the number of shares
underlying the award, or otherwise terminated without delivery of
shares to the participant, the shares retained by or returned to
the Corporation will not be deemed to have been delivered under the
Plan and will be deemed to remain or to become available under this
Plan; and (ii) shares that are withheld from such an award or
separately surrendered by the participant in payment of the
exercise price or taxes relating to such an award shall be deemed
to constitute shares not delivered and will be deemed to remain or
to become available under the Plan. The foregoing adjustments to
the Share Limit of this Plan are subject to any applicable
limitations under Section 162(m) of the Code with respect to awards
intended as performance-based compensation thereunder.
4.4
Reservation of Shares; No
Fractional Shares.
The Corporation shall at all times
reserve a number of shares of Common Stock sufficient to cover the
Corporation’s obligations and contingent obligations to
deliver shares with respect to awards then outstanding under this
Plan (exclusive of any dividend equivalent obligations to the
extent the Corporation has the right to settle such rights in
cash). No fractional shares shall be delivered under this Plan. The
Administrator may pay cash in lieu of any fractional shares in
settlements of awards under this Plan.
5.1
Type and Form of
Awards.
The Administrator shall determine the type or types
of award(s) to be made to each selected Eligible Person. Awards may
be granted singly, in combination or in tandem. Awards also may be
made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for grants or rights under
any other employee or compensation plan of the Corporation or one
of its Subsidiaries. The types of awards that may be granted under
this Plan are:
5.1.1
Stock Options.
A
stock option is the grant of a right to purchase a specified number
of shares of Common Stock during a specified period as determined
by the Administrator. An option may be intended as an incentive
stock option within the meaning of Section 422 of the Code (an
“
ISO
”) or a
nonqualified stock option (an option not intended to be an ISO).
The award agreement for an option will indicate if the option is
intended as an ISO; otherwise it will be deemed to be a
nonqualified stock option. The maximum term of each option (ISO or
nonqualified) shall be ten (10) years. The per share exercise price
for each ISO shall be not less than 100% of the Fair Market Value
of a share of Common Stock on the date of grant of the option. When
an option is exercised, the exercise price for the shares to be
purchased shall be paid in full in cash or such other method
permitted by the Administrator consistent with Section
5.5.
5.1.2
Additional Rules Applicable
to ISOs.
To the extent that the aggregate Fair Market Value
(determined at the time of grant of the applicable option) of stock
with respect to which ISOs first become exercisable by a
participant in any calendar year exceeds $100,000, taking into
account both Common Stock subject to ISOs under this Plan and stock
subject to ISOs under all other plans of the Corporation or one of
its Subsidiaries (or any parent or predecessor corporation to the
extent required by and within the meaning of Section 422 of the
Code and the regulations promulgated thereunder), such options
shall be treated as nonqualified stock options. In reducing the
number of options treated as ISOs to meet the $100,000 limit, the
most recently granted options shall be reduced first. To the extent
a reduction of simultaneously granted options is necessary to meet
the $100,000 limit, the Administrator may, in the manner and to the
extent permitted by law, designate which shares of Common Stock are
to be treated as shares acquired pursuant to the exercise of an
ISO. ISOs may only be granted to employees of the Corporation or
one of its subsidiaries (for this purpose, the term
“subsidiary” is used as defined in Section 424(f) of
the Code, which generally requires an unbroken chain of ownership
of at least 50% of the total combined voting power of all classes
of stock of each subsidiary in the chain beginning with the
Corporation and ending with the subsidiary in question). There
shall be imposed in any award agreement relating to ISOs such other
terms and conditions as from time to time are required in order
that the option be an “incentive stock option” as that
term is defined in Section 422 of the Code. No ISO may be granted
to any person who, at the time the option is granted, owns (or is
deemed to own under Section 424(d) of the Code) shares of
outstanding Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation,
unless the exercise price of such option is at least 110% of the
Fair Market Value of the stock subject to the option and such
option by its terms is not exercisable after the expiration of five
years from the date such option is granted.
5.1.3
Stock Appreciation
Rights.
A stock appreciation right or “
SAR
” is a right to receive a
payment, in cash and/or Common Stock, equal to the number of shares
of Common Stock being exercised multiplied by the excess of (i) the
Fair Market Value of a share of Common Stock on the date the SAR is
exercised, over (ii) the Fair Market Value of a share of Common
Stock on the date the SAR was granted as specified in the
applicable award agreement (the “
base price
”). The maximum term of
a SAR shall be ten (10) years.
5.1.4
Restricted
Shares
.
(a)
Restrictions
. Restricted
shares are shares of Common Stock subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any,
as the Administrator may impose, which restrictions may lapse
separately or in combination at such times, under such
circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or
otherwise, as the Administrator may determine at the date of grant
or thereafter. Except to the extent restricted under the terms of
this Plan and the applicable award agreement relating to the
restricted stock, a participant granted restricted stock shall have
all of the rights of a shareholder, including the right to vote the
restricted stock and the right to receive dividends thereon
(subject to any mandatory reinvestment or other requirement imposed
by the Administrator).
(b)
Certificates for Shares
.
Restricted shares granted under this Plan may be evidenced in such
manner as the Administrator shall determine. If certificates
representing restricted stock are registered in the name of the
participant, the Administrator may require that such certificates
bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such restricted stock, that the
Corporation retain physical possession of the certificates, and
that the participant deliver a stock power to the Corporation,
endorsed in blank, relating to the restricted stock. The
Administrator may require that restricted shares are held in escrow
until all restrictions lapse
(c)
Dividends and Splits
. As a
condition to the grant of an award of restricted stock, subject to
applicable law, the Administrator may require or permit a
participant to elect that any cash dividends paid on a share of
restricted stock be automatically reinvested in additional shares
of restricted stock or applied to the purchase of additional awards
under this Plan. Unless otherwise determined by the Administrator,
stock distributed in connection with a stock split or stock
dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent
as the restricted stock with respect to which such stock or other
property has been distributed.
5.1.5
Restricted Share Units
.
(a)
Grant of Restricted Share
Units
. A restricted share unit,
or “
RSU
”,
represents the right to receive from the Corporation on the
respective scheduled vesting or payment date for such RSU, one
Common Share. An award of RSUs may be subject to the attainment of
specified performance goals or targets, forfeitability provisions
and such other terms and conditions as the Administrator may
determine, subject to the provisions of this Plan. At the time an
award of RSUs is made, the Administrator shall establish a period
of time during which the restricted share units shall vest and the
timing for settlement of the RSU.
(b)
Dividend Equivalent
Accounts
. Subject to the terms and conditions of the Plan
and the applicable award agreement, as well as any procedures
established by the Administrator, prior to the expiration of the
applicable vesting period of an RSU, the Administrator may
determine to pay dividend equivalent rights with respect to RSUs,
in which case, the Corporation shall establish an account for the
participant and reflect in that account any securities, cash or
other property comprising any dividend or property distribution
with respect to the shares of Common Stock underlying each RSU.
Each amount or other property credited to any such account shall be
subject to the same vesting conditions as the RSU to which it
relates. The participant shall have the right to be paid the
amounts or other property credited to such account upon vesting of
the subject RSU.
(c)
Rights as a
Shareholder
. Subject to the
restrictions imposed under the terms and conditions of this Plan
and the applicable award agreement, each participant receiving RSUs
shall have no rights as a shareholder with respect to such RSUs
until such time as shares of Common Stock are issued to the
participant. No shares of Common Stock shall be issued at the time
a RSU is granted, and the Company will not be required to set aside
a fund for the payment of any such award. Except as otherwise
provided in the applicable award agreement, shares of Common Stock
issuable under an RSU shall be treated as issued on the first date
that the holder of the RSU is no longer subject to a substantial
risk of forfeiture as determined for purposes of Section 409A of
the Code, and the holder shall be the owner of such shares of
Common Stock on such date. An award agreement may provide that
issuance of shares of Common Stock under an RSU may be deferred
beyond the first date that the RSU is no longer subject to a
substantial risk of forfeiture, provided that such deferral is
structured in a manner that is intended to comply with the
requirements of Section 409A of the Code.
5.1.6
Cash
Awards
.
The
Administrator may, from time to time, subject to the provisions of
the Plan and such other terms and conditions as it may determine,
grant cash bonuses (including without limitation, discretionary
awards, awards based on objective or subjective performance
criteria, awards subject to other vesting criteria or awards
granted consistent with Section 5.2 below). Cash awards shall be
awarded in such amount and at such times during the term of the
Plan as the Administrator shall determine.
5.1.7
Other
Awards.
The other types of awards that may be granted under
this Plan include: (a) stock bonuses, performance stock,
performance units, dividend equivalents, or similar rights to
purchase or acquire shares, whether at a fixed or variable price or
ratio related to the Common Stock (subject to the requirements of
Section 5.1.1 and in compliance with applicable laws), upon the
passage of time, the occurrence of one or more events, or the
satisfaction of performance criteria or other conditions, or any
combination thereof; or (b) any similar securities with a value
derived from the value of or related to the Common Stock and/or
returns thereon.
5.2
Section
162(m) Performance-Based Awards
.
Without limiting the generality of the
foregoing, any of the types of awards listed in Sections 5.1.4
through 5.1.7 above may be, and options and SARs granted with an
exercise or base price not less than the Fair Market Value of a
share of Common Stock at the date of grant (“
Qualifying Options
” and
“
Qualifying SARs
,” respectively) typically will be, granted as awards
intended to satisfy the requirements for “performance-based
compensation” within the meaning of Section 162(m) of the
Code (“
Performance-Based
Awards
”) . The grant, vesting, exercisability or
payment of Performance-Based Awards may depend (or, in the case of
Qualifying Options or Qualifying SARs, may also depend) on the
degree of achievement of one or more performance goals relative to
a pre-established targeted level or levels using the Business
Criteria provided for below for the Corporation on a consolidated
basis or for one or more of the Corporation’s subsidiaries,
segments, divisions or business units, or any combination of the
foregoing. Such criteria may be evaluated on an absolute basis or
relative to prior periods, industry peers, or stock market indices.
Any Qualifying Option or Qualifying SAR shall be subject to the
requirements of Section 5.2.1 and 5.2.3 in order for such award to
satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Any other
Performance-Based Award shall be subject to all of the following
provisions of this Section 5.2.
5.2.1
Class;
Administrator.
The eligible class of persons for
Performance-Based Awards under this Section 5.2 shall be officers
and employees of the Corporation or one of its Subsidiaries. The
Administrator approving Performance-Based Awards or making any
certification required pursuant to Section 5.2.4 must be
constituted as provided in Section 3.1 for awards that are intended
as performance-based compensation under Section 162(m) of the
Code.
5.2.2
Performance
Goals.
The specific performance goals for Performance-Based
Awards (other than Qualifying Options and Qualifying SARs) shall
be, on an absolute or relative basis, established based on such
business criteria as selected by the Administrator in its sole
discretion (“
Business
Criteria
”) , including the following: (1) earnings per
share, (2) cash flow (which means cash and cash equivalents derived
from either (i) net cash flow from operations or (ii) net cash flow
from operations, financing and investing activities), (3) total
stockholder return, (4) price per share of Common Stock, (5) gross
revenue, (6) revenue growth, (7) operating income (before or after
taxes), (8) net earnings (before or after interest, taxes,
depreciation and/or amortization), (9) return on equity, (10)
capital employed, or on assets or on net investment, (11) cost
containment or reduction, (12) cash cost per ounce of production,
(13) operating margin, (14) debt reduction, (15) resource amounts,
(16) production or production growth, (17) resource replacement or
resource growth, (18) successful completion of financings, or (19)
any combination of the foregoing. To qualify awards as
performance-based under Section 162(m), the applicable Business
Criterion (or Business Criteria, as the case may be) and specific
performance goal or goals (“
targets
”) must be established and
approved by the Administrator during the first 90 days of the
performance period (and, in the case of performance periods of less
than one year, in no event after 25% or more of the performance
period has elapsed) and while performance relating to such
target(s) remains substantially uncertain within the meaning of
Section 162(m) of the Code. Performance targets shall be adjusted
to mitigate the unbudgeted impact of material, unusual or
nonrecurring gains and losses, accounting changes or other
extraordinary events not foreseen at the time the targets were set
unless the Administrator provides otherwise at the time of
establishing the targets; provided that the Administrator may not
make any adjustment to the extent it would adversely affect the
qualification of any compensation payable under such performance
targets as “performance-based compensation” under
Section 162(m) of Code. The applicable performance measurement
period may not be less than 3 months nor more than 10
years.
5.2.3
Form
of Payment.
Grants or awards intended to qualify under this
Section 5.2 may be paid in cash or shares of Common Stock or any
combination thereof.
5.2.4
Certification
of Payment.
Before any Performance-Based Award under this
Section 5.2 (other than Qualifying Options and Qualifying SARs) is
paid and to the extent required to qualify the award as
performance-based compensation within the meaning of Section 162(m)
of the Code, the Administrator must certify in writing that the
performance target(s) and any other material terms of the
Performance-Based Award were in fact timely satisfied.
5.2.5
Reservation
of Discretion
.
The
Administrator will have the discretion to determine the
restrictions or other limitations of the individual awards granted
under this Section 5.2 including the authority to reduce awards,
payouts or vesting or to pay no awards, in its sole discretion, if
the Administrator preserves such authority at the time of grant by
language to this effect in its authorizing resolutions or
otherwise.
5.2.6
Expiration
of Grant Authority
.
As required pursuant to Section 162(m) of the Code and the
regulations promulgated thereunder, the Administrator’s
authority to grant new awards that are intended to qualify as
performance-based compensation within the meaning of Section 162(m)
of the Code (other than Qualifying Options and Qualifying SARs)
shall terminate upon the first meeting of the Corporation’s
stockholders that occurs in the fifth year following the year in
which the Corporation’s stockholders first approve this Plan
(the “
162(m)
Term
”) .
5.2.7
Compensation
Limitations
.
The
maximum aggregate number of shares of Common Stock that may be
issued to any Eligible Person during the term of this Plan pursuant
to Qualifying Options and Qualifying SARs may not exceed the Share
Limit. The maximum aggregate number of shares of Common Stock that
may be issued to any Eligible Person pursuant to Performance-Based
Awards granted during the 162(m) Term (other than cash awards
granted pursuant to Section 5.1.6 and Qualifying Options or
Qualifying SARs) may not exceed the Share Limit. The maximum amount
that may be paid to any Eligible Person pursuant to
Performance-Based Awards granted pursuant to Sections 5.1.6 (cash
awards) during the 162(m) Term may not exceed
$1,000,000.
5.3
Award
Agreements.
Each award shall be evidenced by a written or
electronic award agreement in the form approved by the
Administrator and, if required by the Administrator, executed by
the recipient of the award. The Administrator may authorize any
officer of the Corporation (other than the particular award
recipient) to execute any or all award agreements on behalf of the
Corporation (electronically or otherwise). The award agreement
shall set forth the material terms and conditions of the award as
established by the Administrator consistent with the express
limitations of this Plan.
5.4
Deferrals
and Settlements.
Payment of awards may be in the form of
cash, Common Stock, other awards or combinations thereof as the
Administrator shall determine, and with such restrictions as it may
impose. The Administrator may also require or permit participants
to elect to defer the issuance of shares of Common Stock or the
settlement of awards in cash under such rules and procedures as it
may establish under this Plan. The Administrator may also provide
that deferred settlements include the payment or crediting of
interest or other earnings on the deferral amounts, or the payment
or crediting of dividend equivalents where the deferred amounts are
denominated in shares. All mandatory or elective deferrals of the
issuance of shares of Common Stock or the settlement of cash awards
shall be structured in a manner that is intended to comply with the
requirements of Section 409A of the Code.
5.5
Consideration
for Common Stock or Awards.
The purchase price for any award
granted under this Plan or the Common Stock to be delivered
pursuant to an award, as applicable, may be paid by means of any
lawful consideration as determined by the Administrator and subject
to compliance with applicable laws, including, without limitation,
one or a combination of the following methods:
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services
rendered by the recipient of such award;
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cash,
check payable to the order of the Corporation, or electronic funds
transfer;
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notice
and third party payment in such manner as may be authorized by the
Administrator;
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the
delivery of previously owned shares of Common Stock that are fully
vested and unencumbered;
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by a
reduction in the number of shares otherwise deliverable pursuant to
the award; or
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subject
to such procedures as the Administrator may adopt, pursuant to a
“cashless exercise” with a third party who provides
financing for the purposes of (or who otherwise facilitates) the
purchase or exercise of awards.
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In the
event that the Administrator allows a participant to exercise an
award by delivering shares of Common Stock previously owned by such
participant and unless otherwise expressly provided by the
Administrator, any shares delivered which were initially acquired
by the participant from the Corporation (upon exercise of a stock
option or otherwise) must have been owned by the participant at
least six months as of the date of delivery (or such other period
as may be required by the Administrator in order to avoid adverse
accounting treatment). Shares of Common Stock used to satisfy the
exercise price of an option shall be valued at their Fair Market
Value on the date of exercise. The Corporation will not be
obligated to deliver any shares unless and until it receives full
payment of the exercise or purchase price therefor and any related
withholding obligations under Section 8.5 and any other conditions
to exercise or purchase, as established from time to time by the
Administrator, have been satisfied. Unless otherwise expressly
provided in the applicable award agreement, the Administrator may
at any time eliminate or limit a participant’s ability to pay
the purchase or exercise price of any award by any method other
than cash payment to the Corporation.
5.6
Definition
of Fair Market Value.
For purposes of this Plan
“
Fair Market
Value
” shall mean, unless otherwise determined or
provided by the Administrator in the circumstances, the closing
price for a share of Common Stock on the trading day immediately
before the grant date, as furnished by the NASDAQ Stock Market or
other principal stock exchange on which the Common Stock is then
listed for the date in question, or if the Common Stock is no
longer listed on a principal stock exchange, then by the
Over-the-Counter Bulletin Board or OTC Markets. If the Common Stock
is no longer listed on the NASDAQ Capital Market or listed on a
principal stock exchange or is no longer actively traded on the
Over-the-Counter Bulletin Board or OTC Markets as of the applicable
date, the Fair Market Value of the Common Stock shall be the value
as reasonably determined by the Administrator for purposes of the
award in the circumstances.
5.7
Transfer
Restrictions.
5.7.1
Limitations
on Exercise and Transfer.
Unless otherwise expressly
provided in (or pursuant to) this Section 5.7, by applicable law
and by the award agreement, as the same may be amended, (a) all
awards are non-transferable and shall not be subject in any manner
to sale, transfer, anticipation, alienation, assignment, pledge,
encumbrance or charge; (b) awards shall be exercised only by the
participant; and (c) amounts payable or shares issuable pursuant to
any award shall be delivered only to (or for the account of) the
participant.
5.7.2
Exceptions.
The Administrator may permit awards to be exercised by and paid to,
or otherwise transferred to, other persons or entities pursuant to
such conditions and procedures, including limitations on subsequent
transfers, as the Administrator may, in its sole discretion,
establish in writing (provided that any such transfers of ISOs
shall be limited to the extent permitted under the federal tax laws
governing ISOs). Any permitted transfer shall be subject to
compliance with applicable federal and state securities
laws.
5.7.3
Further
Exceptions to Limits on Transfer.
The exercise and transfer
restrictions in Section 5.7.1 shall not apply to:
(a)
transfers to the Corporation,
(b) the
designation of a beneficiary to receive benefits in the event of
the participant’s death or, if the participant has died,
transfers to or exercise by the participant’s beneficiary,
or, in the absence of a validly designated beneficiary, transfers
by will or the laws of descent and distribution,
(c) subject to any applicable
limitations on ISOs, transfers to a family member (or former family
member) pursuant to a domestic relations order if approved or
ratified by the Administrator,
(d)
subject to any applicable limitations on ISOs, if the participant
has suffered a disability, permitted transfers or exercises on
behalf of the participant by his or her legal representative,
or
(e) the
authorization by the Administrator of “cashless
exercise” procedures with third parties who provide financing
for the purpose of (or who otherwise facilitate) the exercise of
awards consistent with applicable laws and the express
authorization of the Administrator.
5.8
International
Awards.
One or more awards may be granted to Eligible
Persons who provide services to the Corporation or one of its
Subsidiaries outside of the United States. Any awards granted to
such persons may, if deemed necessary or advisable by the
Administrator, be granted pursuant to the terms and conditions of
any applicable sub-plans, if any, appended to this Plan and
approved by the Administrator.
5.9
Vesting
.
Subject to Sections 5.1.2 and 5.10 hereof, awards shall vest at
such time or times and subject to such terms and conditions as
shall be determined by the Administrator at the time of grant;
provided, however
, that in
the absence of any award vesting periods designated by the
Administrator at the time of grant in the applicable award
agreement, awards shall vest as to one-third of the total number of
shares subject to the award on each of the first, second and third
anniversaries of the date of grant.
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6.
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EFFECT OF TERMINATION OF SERVICE ON AWARDS
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6.1
Termination
of Employment.
6.1.1
The
Administrator shall establish the effect of a termination of
employment or service on the rights and benefits under each award
under this Plan and in so doing may make distinctions based upon,
inter alia, the cause of termination and type of award. If the
participant is not an employee of the Corporation or one of its
Subsidiaries and provides other services to the Corporation or one
of its Subsidiaries, the Administrator shall be the sole judge for
purposes of this Plan (unless a contract or the award agreement
otherwise provides) of whether the participant continues to render
services to the Corporation or one of its Subsidiaries and the
date, if any, upon which such services shall be deemed to have
terminated.
6.1.2
For
awards of stock options or SARs, unless the award agreement
provides otherwise, the exercise period of such options or SARs
shall expire: (1) three months after the last day that the
participant is employed by or provides services to the Corporation
or a Subsidiary (provided; however, that in the event of the
participant’s death during this period, those persons
entitled to exercise the option or SAR pursuant to the laws of
descent and distribution shall have one year following the date of
death within which to exercise such option or SAR); (2) in the case
of a participant whose termination of employment is due to death or
disability (as defined in the applicable award agreement), 12
months after the last day that the participant is employed by or
provides services to the Corporation or a Subsidiary; and (3)
immediately upon a participant’s termination for
“cause”. The Administrator will, in its absolute
discretion, determine the effect of all matters and questions
relating to a termination of employment, including, but not by way
of limitation, the question of whether a leave of absence
constitutes a termination of employment and whether a
participant’s termination is for
“cause.”
If not
defined in the applicable award agreement, “
Cause
” shall mean:
(i)
conviction of a felony or a crime involving fraud or moral
turpitude; or
(ii)
theft, material act of dishonesty or fraud, intentional
falsification of any employment or Company records, or commission
of any criminal act which impairs participant’s ability to
perform appropriate employment duties for the Corporation;
or
(iii)
intentional or reckless conduct or gross negligence materially
harmful to the Company or the successor to the Corporation after a
Change in Control, including violation of a non-competition or
confidentiality agreement; or
(iv)
willful failure to follow lawful instructions of the person or body
to which participant reports; or
(v)
gross negligence or willful misconduct in the performance of
participant’s assigned duties. Cause shall
not
include mere unsatisfactory
performance in the achievement of participant’s job
objectives.
6.1.3
For
awards of restricted shares, unless the award agreement provides
otherwise, restricted shares that are subject to restrictions at
the time that a participant whose employment or service is
terminated shall be forfeited and reacquired by the Corporation;
provided that,
the
Administrator may provide, by rule or regulation or in any award
agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to restricted shares
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Administrator may in other
cases waive in whole or in part the forfeiture of restricted
shares. Similar rules shall apply in respect of RSUs.
6.2
Events
Not Deemed Terminations of Service.
Unless the express
policy of the Corporation or one of its Subsidiaries, or the
Administrator, otherwise provides, the employment relationship
shall not be considered terminated in the case of (a) sick leave,
(b) military leave, or (c) any other leave of absence authorized by
the Corporation or one of its Subsidiaries, or the Administrator;
provided that unless reemployment upon the expiration of such leave
is guaranteed by contract or law, such leave is for a period of not
more than 3 months. In the case of any employee of the Corporation
or one of its Subsidiaries on an approved leave of absence,
continued vesting of the award while on leave from the employ of
the Corporation or one of its Subsidiaries may be suspended until
the employee returns to service, unless the Administrator otherwise
provides or applicable law otherwise requires. In no event shall an
award be exercised after the expiration of the term set forth in
the award agreement.
6.3
Effect
of Change of Subsidiary Status.
For purposes of this Plan
and any award, if an entity ceases to be a Subsidiary of the
Corporation, a termination of employment or service shall be deemed
to have occurred with respect to each Eligible Person in respect of
such Subsidiary who does not continue as an Eligible Person in
respect of another entity within the Corporation or another
Subsidiary that continues as such after giving effect to the
transaction or other event giving rise to the change in
status.
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7.
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ADJUSTMENTS; ACCELERATION
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7.1
Adjustments
.
Upon or in contemplation of any of the following events described
in this Section 7.1,: any reclassification, recapitalization, stock
split (including a stock split in the form of a stock dividend) or
reverse stock split (“
stock
split
”) ; any merger, arrangement, combination,
consolidation, or other reorganization; any spin-off, split-up, or
similar extraordinary dividend distribution in respect of the
Common Stock (whether in the form of securities or property); any
exchange of Common Stock or other securities of the Corporation, or
any similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; then the Administrator shall in such
manner, to such extent and at such time as it deems appropriate and
equitable in the circumstances (but subject to compliance with
applicable laws and stock exchange requirements) proportionately
adjust any or all of (1) the number and type of shares of Common
Stock (or other securities) that thereafter may be made the subject
of awards (including the number of shares provided for in this
Plan), (2) the number, amount and type of shares of Common Stock
(or other securities or property) subject to any or all outstanding
awards, (3) the grant, purchase, or exercise price (which term
includes the base price of any SAR or similar right) of any or all
outstanding awards, (4) the securities, cash or other property
deliverable upon exercise or payment of any outstanding awards, and
(5) the 162(m) compensation limitations set forth in Section 5.2.7
and (subject to Section 8.8.3(a)) the performance standards
applicable to any outstanding awards (provided that no adjustment
shall be allowed to the extent inconsistent with the requirements
of Code section 162(m)). Any adjustment made pursuant to this
Section 7.1 shall be made in a manner that, in the good faith
determination of the Administrator, will not likely result in the
imposition of additional taxes or interest under Section 409A of
the Code. With respect to any award of an ISO, the Administrator
may make such an adjustment that causes the option to cease to
qualify as an ISO without the consent of the affected
participant.
7.2
Change
in Control
. Upon a Change in Control, each then-outstanding
option and SAR shall automatically become fully vested, all
restricted shares then outstanding shall automatically fully vest
free of restrictions, and each other award granted under this Plan
that is then outstanding shall automatically become vested and
payable to the holder of such award
unless
the
Administrator has made appropriate provision for the substitution,
assumption, exchange or other continuation of the award pursuant to
the Change in Control. Notwithstanding the foregoing, the
Administrator, in its sole and absolute discretion, may choose (in
an award agreement or otherwise) to provide for full or partial
accelerated vesting of any award upon a Change In Control (or upon
any other event or other circumstance related to the Change in
Control, such as an involuntary termination of employment occurring
after such Change in Control, as the Administrator may determine),
irrespective of whether such any such award has been substituted,
assumed, exchanged or otherwise continued pursuant to the Change in
Control.
For
purposes of this Plan, “
Change in Control
” shall be deemed
to have occurred if:
(i) a
tender offer (or series of related offers) shall be made and
consummated for the ownership of 50% or more of the outstanding
voting securities of the Corporation, unless as a result of such
tender offer more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Corporation (as of the time
immediately prior to the commencement of such offer), any employee
benefit plan of the Corporation or its Subsidiaries, and their
affiliates;
(ii)
the Corporation shall be merged or consolidated with another
entity, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or
resulting entity shall be owned in the aggregate by the
stockholders of the Corporation (as of the time immediately prior
to such transaction), any employee benefit plan of the Corporation
or its Subsidiaries, and their affiliates;
(iii)
the Corporation shall sell substantially all of its assets to
another entity that is not wholly owned by the Corporation, unless
as a result of such sale more than 50% of such assets shall be
owned in the aggregate by the stockholders of the Corporation (as
of the time immediately prior to such transaction), any employee
benefit plan of the Corporation or its Subsidiaries and their
affiliates; or
(iv) a
Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Corporation (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Corporation (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Corporation or its
Subsidiaries, and their affiliates.
For
purposes of this Section 5(c), ownership of voting securities shall
take into account and shall include ownership as determined by
applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the
date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof;
provided
,
however
, that a Person shall
not include (A) the Company or any of its Subsidiaries; (B) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries; (C) an
underwriter temporarily holding securities pursuant to an offering
of such securities; or (D) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportion as their ownership of stock of the
Company.
Notwithstanding the
foregoing, (1) the Administrator may waive the requirement
described in paragraph (iv) above that a Person must acquire more
than 50% of the outstanding voting securities of the Corporation
for a Change in Control to have occurred if the Administrator
determines that the percentage acquired by a person is significant
(as determined by the Administrator in its discretion) and that
waiving such condition is appropriate in light of all facts and
circumstances, and (2) no compensation that has been deferred for
purposes of Section 409A of the Code shall be payable as a result
of a Change in Control unless the Change in Control qualifies as a
change in ownership or effective control of the Corporation within
the meaning of Section 409A of the Code.
7.3
Early
Termination of Awards
. Any award that has been accelerated
as required or permitted by Section 7.2 upon a Change in Control
(or would have been so accelerated but for Section 7.4 or 7.5)
shall terminate upon such event, subject to any provision that has
been expressly made by the Administrator, through a plan of
reorganization or otherwise, for the survival, substitution,
assumption, exchange or other continuation of such award and
provided that, in the case of options and SARs that will not
survive, be substituted for, assumed, exchanged, or otherwise
continued in the transaction, the holder of such award shall be
given reasonable advance notice of the impending termination and a
reasonable opportunity to exercise his or her outstanding options
and SARs in accordance with their terms before the termination of
such awards (except that in no case shall more than ten days’
notice of accelerated vesting and the impending termination be
required and any acceleration may be made contingent upon the
actual occurrence of the event).
The
Administrator may make provision for payment in cash or property
(or both) in respect of awards terminated pursuant to this section
as a result of the Change in Control and may adopt such valuation
methodologies for outstanding awards as it deems reasonable and, in
the case of options, SARs or similar rights, and without limiting
other methodologies, may base such settlement solely upon the
excess if any of the per share amount payable upon or in respect of
such event over the exercise or base price of the
award.
7.4
Other
Acceleration Rules
. Any acceleration of awards pursuant to
this Section 7 shall comply with applicable legal and stock
exchange requirements and, if necessary to accomplish the purposes
of the acceleration or if the circumstances require, may be deemed
by the Administrator to occur a limited period of time not greater
than 30 days before the event. Without limiting the generality of
the foregoing, the Administrator may deem an acceleration to occur
immediately prior to the applicable event and/or reinstate the
original terms of an award if an event giving rise to the
acceleration does not occur. Notwithstanding any other provision of
the Plan to the contrary, the Administrator may override the
provisions of Section 7.2, 7.3, and/or 7.5 by express provision in
the award agreement or otherwise. The portion of any ISO
accelerated pursuant to Section 7.2 or any other action permitted
hereunder shall remain exercisable as an ISO only to the extent the
applicable $100,000 limitation on ISOs is not exceeded. To the
extent exceeded, the accelerated portion of the option shall be
exercisable as a nonqualified stock option under the
Code.
7.5
Possible
Rescission of Acceleration
. If the vesting of an award has
been accelerated expressly in anticipation of an event and the
Administrator later determines that the event will not occur, the
Administrator may rescind the effect of the acceleration as to any
then outstanding and unexercised or otherwise unvested awards;
provided, that
, in the
case of any compensation that has been deferred for purposes of
Section 409A of the Code, the Administrator determines that such
rescission will not likely result in the imposition of additional
tax or interest under Code Section 409A.
8.1
Compliance
with Laws.
This Plan, the granting and vesting of awards
under this Plan, the offer, issuance and delivery of shares of
Common Stock, the acceptance of promissory notes and/or the payment
of money under this Plan or under awards are subject to compliance
with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law,
federal margin requirements) and to such approvals by any
applicable stock exchange listing, regulatory or governmental
authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. The person
acquiring any securities under this Plan will, if requested by the
Corporation or one of its Subsidiaries, provide such assurances and
representations to the Corporation or one of its Subsidiaries as
the Administrator may deem necessary or desirable to assure
compliance with all applicable legal and accounting
requirements.
8.2
Future
Awards/Other Rights.
No person shall have any claim or
rights to be granted an award (or additional awards, as the case
may be) under this Plan, subject to any express contractual rights
(set forth in a document other than this Plan) to the
contrary.
8.3
No
Employment/Service Contract.
Nothing contained in this Plan
(or in any other documents under this Plan or in any award) shall
confer upon any Eligible Person or other participant any right to
continue in the employ or other service of the Corporation or one
of its Subsidiaries, constitute any contract or agreement of
employment or other service or affect an employee’s status as
an employee at will, nor shall interfere in any way with the right
of the Corporation or one of its Subsidiaries to change a
person’s compensation or other benefits, or to terminate his
or her employment or other service, with or without cause. Nothing
in this Section 8.3, however, is intended to adversely affect any
express independent right of such person under a separate
employment or service contract other than an award
agreement.
8.4
Plan
Not Funded.
Awards payable under this Plan shall be payable
in shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to
assure payment of such awards. No participant, beneficiary or other
person shall have any right, title or interest in any fund or in
any specific asset (including shares of Common Stock, except as
expressly otherwise provided) of the Corporation or one of its
Subsidiaries by reason of any award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the
creation or adoption of this Plan, nor any action taken pursuant to
the provisions of this Plan shall create, or be construed to
create, a trust of any kind or a fiduciary relationship between the
Corporation or one of its Subsidiaries and any participant,
beneficiary or other person. To the extent that a participant,
beneficiary or other person acquires a right to receive payment
pursuant to any award hereunder, such right shall be no greater
than the right of any unsecured general creditor of the
Corporation.
8.5
Tax
Withholding.
Upon any exercise, vesting, or payment of any
award, the Corporation or one of its Subsidiaries shall have the
right at its option to:
(a)
require the participant (or the participant’s personal
representative or beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount of any taxes
which the Corporation or one of its Subsidiaries may be required to
withhold with respect to such award event or payment;
or
(b)
deduct from any amount otherwise payable in cash to the participant
(or the participant’s personal representative or beneficiary,
as the case may be) the minimum amount of any taxes which the
Corporation or one of its Subsidiaries may be required to withhold
with respect to such cash payment.
In any
case where a tax is required to be withheld in connection with the
delivery of shares of Common Stock under this Plan, the
Administrator may in its sole discretion (subject to Section 8.1)
grant (either at the time of the award or thereafter) to the
participant the right to elect, pursuant to such rules and subject
to such conditions as the Administrator may establish, to have the
Corporation reduce the number of shares to be delivered by (or
otherwise reacquire) the appropriate number of shares, valued in a
consistent manner at their Fair Market Value or at the sales price
in accordance with authorized procedures for cashless exercises,
necessary to satisfy the minimum applicable withholding obligation
on exercise, vesting or payment. In no event shall the shares
withheld exceed the minimum whole number of shares required for tax
withholding under applicable law.
8.6
Effective
Date, Termination and Suspension, Amendments.
8.6.1
Effective
Date and Termination.
This Plan was approved by the Board
and became effective on August 3, 2016. Unless earlier terminated
by the Board, this Plan shall terminate at the close of business on
August 3, 2026. After the termination of this Plan either upon such
stated expiration date or its earlier termination by the Board, no
additional awards may be granted under this Plan, but previously
granted awards (and the authority of the Administrator with respect
thereto, including the authority to amend such awards) shall remain
outstanding in accordance with their applicable terms and
conditions and the terms and conditions of this Plan.
8.6.2
Board
Authorization.
The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole or
in part. No awards may be granted during any period that the Board
suspends this Plan.
8.6.3
Stockholder
Approval.
To the extent then required by applicable law or
any applicable stock exchange or required under Sections 162, 422
or 424 of the Code to preserve the intended tax consequences of
this Plan, or deemed necessary or advisable by the Board, this Plan
and any amendment to this Plan shall be subject to stockholder
approval.
8.6.4
Amendments
to Awards.
Without limiting any other express authority of
the Administrator under (but subject to) the express limits of this
Plan, the Administrator by agreement or resolution may waive
conditions of or limitations on awards to participants that the
Administrator in the prior exercise of its discretion has imposed,
without the consent of a participant, and (subject to the
requirements of Sections 3.2 and 8.6.5) may make other changes to
the terms and conditions of awards. Any amendment or other action
that would constitute a repricing of an award is subject to the
limitations set forth in Section 3.2(g).
8.6.5
Limitations
on Amendments to Plan and Awards.
No amendment, suspension
or termination of this Plan or change of or affecting any
outstanding award shall, without written consent of the
participant, affect in any manner materially adverse to the
participant any rights or benefits of the participant or
obligations of the Corporation under any award granted under this
Plan prior to the effective date of such change. Changes,
settlements and other actions contemplated by Section 7 shall not
be deemed to constitute changes or amendments for purposes of this
Section 8.6.
8.7
Privileges
of Stock Ownership.
Except as otherwise expressly authorized
by the Administrator or this Plan, a participant shall not be
entitled to any privilege of stock ownership as to any shares of
Common Stock not actually delivered to and held of record by the
participant. No adjustment will be made for dividends or other
rights as a stockholder for which a record date is prior to such
date of delivery.
8.8
Governing
Law; Construction; Severability.
8.8.1
Choice
of Law.
This Plan, the awards, all documents evidencing
awards and all other related documents shall be governed by, and
construed in accordance with the laws of the State of
Delaware.
8.8.2
Severability.
If a court of competent jurisdiction holds any provision invalid
and unenforceable, the remaining provisions of this Plan shall
continue in effect.
8.8.3
Plan
Construction.
(a)
Rule 16b-3.
It is the
intent of the Corporation that the awards and transactions
permitted by awards be interpreted in a manner that, in the case of
participants who are or may be subject to Section 16 of the
Exchange Act, qualify, to the maximum extent compatible with the
express terms of the award, for exemption from matching liability
under Rule 16b-3 promulgated under the Exchange Act.
Notwithstanding the foregoing, the Corporation shall have no
liability to any participant for Section 16 consequences of awards
or events under awards if an award or event does not so
qualify.
(b)
Section 162(m).
Awards
under Sections 5.1.4 through 5.1.7 to persons described in Section
5.2 that are either granted or become vested, exercisable or
payable based on attainment of one or more performance goals
related to the Business Criteria, as well as Qualifying Options and
Qualifying SARs granted to persons described in Section 5.2, that
are approved by a committee composed solely of two or more outside
directors (as this requirement is applied under Section 162(m) of
the Code) shall be deemed to be intended as performance-based
compensation within the meaning of Section 162(m) of the Code
unless such committee provides otherwise at the time of grant of
the award. It is the further intent of the Corporation that (to the
extent the Corporation or one of its Subsidiaries or awards under
this Plan may be or become subject to limitations on deductibility
under Section 162(m) of the Code) any such awards and any other
Performance-Based Awards under Section 5.2 that are granted to or
held by a person subject to Section 162(m) will qualify as
performance-based compensation or otherwise be exempt from
deductibility limitations under Section 162(m).
(c)
Code Section 409A
Compliance.
The Board intends that, except as may be
otherwise determined by the Administrator, any awards under the
Plan are either exempt from or satisfy the requirements of Section
409A of the Code and related regulations and Treasury
pronouncements (“
Section
409A
”) to avoid the imposition of any taxes, including
additional income or penalty taxes, thereunder. If the
Administrator determines that an award, award agreement,
acceleration, adjustment to the terms of an award, payment,
distribution, deferral election, transaction or any other action or
arrangement contemplated by the provisions of the Plan would, if
undertaken, cause a participant’s award to become subject to
Section 409A, unless the Administrator expressly determines
otherwise, such award, award agreement, payment, acceleration,
adjustment, distribution, deferral election, transaction or other
action or arrangement shall not be undertaken and the related
provisions of the Plan and/or award agreement will be deemed
modified or, if necessary, rescinded in order to comply with the
requirements of Section 409A to the extent determined by the
Administrator without the content or notice to the participant.
Notwithstanding the foregoing, neither the Company nor the
Administrator shall have any obligation to take any action to
prevent the assessment of any excise tax or penalty on any
participant under Section 409A and neither the Company nor the
Administrator will have any liability to any participant for such
tax or penalty.
(d)
No Guarantee of Favorable Tax
Treatment.
Although the Company intends that awards under
the Plan will be exempt from, or will comply with, the requirements
of Section 409A of the Code, the Company does not warrant that any
award under the Plan will qualify for favorable tax treatment under
Section 409A of the Code or any other provision of federal, state,
local or foreign law. The Company shall not be liable to any
participant for any tax, interest or penalties the participant
might owe as a result of the grant, holding, vesting, exercise or
payment of any award under the Plan
8.9
Captions.
Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the
construction or interpretation of this Plan or any provision
thereof.
8.10
Stock-Based
Awards in Substitution for Stock Options or Awards Granted by Other
Corporation.
Awards may be granted to Eligible Persons in
substitution for or in connection with an assumption of employee
stock options, SARs, restricted stock or other stock-based awards
granted by other entities to persons who are or who will become
Eligible Persons in respect of the Corporation or one of its
Subsidiaries, in connection with a distribution, arrangement,
business combination, merger or other reorganization by or with the
granting entity or an affiliated entity, or the acquisition by the
Corporation or one of its Subsidiaries, directly or indirectly, of
all or a substantial part of the stock or assets of the employing
entity. The awards so granted need not comply with other specific
terms of this Plan, provided the awards reflect only adjustments
giving effect to the assumption or substitution consistent with the
conversion applicable to the Common Stock in the transaction and
any change in the issuer of the security. Any shares that are
delivered and any awards that are granted by, or become obligations
of, the Corporation, as a result of the assumption by the
Corporation of, or in substitution for, outstanding awards
previously granted by an acquired company (or previously granted by
a predecessor employer (or direct or indirect parent thereof) in
the case of persons that become employed by the Corporation or one
of its Subsidiaries in connection with a business or asset
acquisition or similar transaction) shall not be counted against
the Share Limit or other limits on the number of shares available
for issuance under this Plan, except as may otherwise be provided
by the Administrator at the time of such assumption or substitution
or as may be required to comply with the requirements of any
applicable stock exchange.
8.11
Non-Exclusivity
of Plan.
Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Administrator to grant
awards or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or
authority.
8.12
No
Corporate Action Restriction.
The existence of this Plan,
the award agreements and the awards granted hereunder shall not
limit, affect or restrict in any way the right or power of the
Board or the stockholders of the Corporation to make or authorize:
(a) any adjustment, recapitalization, reorganization or other
change in the capital structure or business of the Corporation or
any Subsidiary, (b) any merger, arrangement, business combination,
amalgamation, consolidation or change in the ownership of the
Corporation or any Subsidiary, (c) any issue of bonds, debentures,
capital, preferred or prior preference stock ahead of or affecting
the capital stock (or the rights thereof) of the Corporation or any
Subsidiary, (d) any dissolution or liquidation of the Corporation
or any Subsidiary, (e) any sale or transfer of all or any part of
the assets or business of the Corporation or any Subsidiary, or (f)
any other corporate act or proceeding by the Corporation or any
Subsidiary. No participant, beneficiary or any other person shall
have any claim under any award or award agreement against any
member of the Board or the Administrator, or the Corporation or any
employees, officers or agents of the Corporation or any Subsidiary,
as a result of any such action.
8.13
Other
Corporation Benefit and Compensation Programs.
Payments and
other benefits received by a participant under an award made
pursuant to this Plan shall not be deemed a part of a
participant’s compensation for purposes of the determination
of benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Corporation or any
Subsidiary, except where the Administrator expressly otherwise
provides or authorizes in writing or except as otherwise
specifically set forth in the terms and conditions of such other
employee welfare or benefit plan or arrangement. Awards under this
Plan may be made in addition to, in combination with, as
alternatives to or in payment of grants, awards or commitments
under any other plans or arrangements of the Corporation or its
Subsidiaries.
8.14
Prohibition
on Repricing
.
Subject
to Section 4, the Administrator shall not, without the approval of
the stockholders of the Corporation (i) reduce the exercise price,
or cancel and reissue options so as to in effect reduce the
exercise price or (ii) change the manner of determining the
exercise price so that the exercise price is less than the fair
market value per share of Common Stock.
As
adopted by the Board of Directors of Exactus, Inc. on December __,
2018.