Beneficial Ownership of Series B Preferred
Name and
Address
(1)
|
Series
B Convertible Preferred Stock
|
|
Executive Officers and Directors
|
Brandon Stump
|
|
|
Chief Executive Officer and Director
|
928,543
|
66.5
%
|
Ryan Stump
|
|
|
Chief Operating Officer and Director
|
397,947
|
28.5
%
|
Executive Officers and
Directors, as a group
(6
persons)
|
1,326,490
|
95.0
%
|
(1)
Each of the Company’s officers and directors
who do not hold shares of Series B Preferred were excluded from
this table. Unless otherwise indicated, the address for each
stockholder is 1007 Brioso Drive, Costa Mesa, California
92627.
Beneficial Ownership of Common Stock
Name, Address and Title (if applicable)
(1)
|
|
Shares Issuable Upon Conversion of Preferred A
Stock
(2)
|
Shares
Issuable Upon Conversion of Preferred B Stock
|
Shares
Issuable upon Exercise of Warrants
(3)
|
Shares
Issuable upon Exercise of Vested Stock Options
|
Total
Number of Shares Beneficially Owned
|
|
|
Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Chief Executive Officer and Director
|
93,792,189
|
-
|
9,285,426,700
|
-
|
-
|
9,379,218,889
|
65.8
%
|
Ryan Stump
|
|
|
|
|
|
|
|
Chief Operating Officer and Director
|
40,196,653
|
|
3,979,468,700
|
|
|
4,019,665,353
|
44.9
%
|
David Allen
|
|
|
|
|
|
|
|
Chief Financial Officer
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
%
|
Mitch Brantley
|
|
|
|
|
|
|
|
Chief Marketing Officer
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
%
|
Scot Cohen
(4)
|
|
|
|
|
|
|
|
Director
|
200,950,015
|
84,625,280
|
-
|
56,416,355
|
7,244,826
|
349,236,476
|
6.8
%
|
Kevin Sherman
|
|
|
|
|
|
|
|
|
532,999
|
-
|
-
|
-
|
46,210,000
|
46,742,999
|
0.9
%
|
Executive Officers and
Directors, as a group
(6
persons)
|
335,471,856
|
84,625,280
|
13,264,895,400
|
56,416,355
|
53,454,826
|
13,794,863,717
|
74.8
%
|
|
Greater Than 5%
Stockholders
|
Vincent C. Smith
(5)
|
|
|
|
|
|
|
|
17595
Harvard Avenue, Suite C511
|
|
|
|
|
|
|
|
Irvine,
California 92614
|
2,214,058,642
|
761,627,520
|
-
|
513,130,526
|
-
|
3,488,816,688
|
55.8
%
|
Red Beard Holdings, LLC
(6)
|
|
|
|
|
|
|
|
17595
Harvard Avenue, Suite C511
|
|
|
|
|
|
|
|
Irvine,
California 92614
|
2,152,825,308
|
761,627,520
|
-
|
513,130,526
|
-
|
3,427,583,354
|
54.9
%
|
Iroquois Capital Management,
LLC
(7)
|
|
|
|
|
|
|
|
125
Park Avenue, 25th Floor
|
|
|
|
|
|
|
|
New
York, New York 10017
|
500,232,693
|
740,471,200
|
-
|
493,643,101
|
-
|
1,734,346,994
|
27.9
%
|
Katalyst Securities, LLC
(8)
|
|
|
|
|
|
|
|
630
Third Avenue
|
|
|
|
|
|
|
|
New
York, New York 10017
|
-
|
-
|
-
|
855,043,815
|
-
|
855,043,815
|
14.7
%
|
Empery Asset Management,
LP
(9)
|
|
|
|
|
|
|
|
One
Rockefeller Plaza, Suite 1205
|
|
|
|
|
|
|
|
New
York, New York 10020
|
126,936,799
|
380,813,760
|
-
|
253,873,596
|
-
|
761,624,155
|
13.6
%
|
Hudson Bay Capital Management,
LP
(10)
|
|
|
|
|
|
|
|
777
Third Avenue, 30th Floor
|
|
|
|
|
|
|
|
New
York, New York 10017
|
84,624,532
|
253,875,840
|
-
|
169,249,063
|
-
|
507,749,435
|
9.2
%
|
SDS Capital Partners II,
LLC
(11)
|
|
|
|
|
|
|
|
500
Summer Street, Suite 405
|
|
|
|
|
|
|
|
Stamford,
Connecticut 06901
|
84,624,532
|
253,875,840
|
-
|
169,249,063
|
-
|
507,749,435
|
9.4
%
|
Altium Growth Fund, LP
(12)
|
|
|
|
|
|
|
|
551
Fifth Avenue, 19th Floor
|
|
|
|
|
|
|
|
New
York, New York 10176
|
82,932,041
|
248,798,323
|
-
|
165,864,082
|
-
|
497,594,446
|
9.2
%
|
Conner Raisin
|
4,231,227
|
|
418,891,400
|
|
-
|
423,122,627
|
7.8
%
|
(1)
|
Unless otherwise indicated, the address for each stockholder is
1007 Brioso Drive, Costa Mesa, California 92627.
|
(2)
|
Pursuant to the Series A COD, shares of Series A
Preferred may not be converted or exercised, as applicable, to the
extent that the holder and its affiliates would own more than 4.99%
(or 9.99% upon the election of any holder of Series A
Preferred)
of the
Company’s outstanding Common Stock after such conversion (the
“
Series A Ownership
Limitation
”);
provided
,
however
,
that any holder of shares of Series A Preferred may waive the
Conversion Limitation upon 61 days written notice to the
Company
.
|
|
The Series A COD also entitles each share of
Series A Preferred to vote, on an as converted basis, along with
the Common Stock;
provided,
however,
that the Series A
Preferred may not be voted to the extent that the holder and its
affiliates would control more than 9.99% of the Company’s
voting power (the “
Series A Voting
Limitation
”).
|
|
Ownership
percentages in this table were calculated in accordance with
Section 13(d) of the Exchange Act, and do not reflect any
adjustments due to the Series A Ownership Limitation or the Series
A Voting Limitation.
|
(3)
|
Certain of the warrants included in this table are subject to
blockers that prevent a holder from exercising Investor Warrants or
Placement Agent Warrants in the event that such exercise would
result in the holder and its affiliates beneficially owning in
excess of 4.99% of the Company’s issued and outstanding
Common Stock immediately thereafter, which limit may be increased
to 9.99% at the election of the holder (the
“
Warrant Exercise
Limitation
”).
|
|
Ownership
percentages in this table were calculated in accordance with
Section 13(d) of the Exchange Act, and do not reflect any
adjustments due to the Warrant Exercise Limitation.
|
(4)
|
Includes securities held by V3 Capital Partners and the Scot Jason
Cohen Foundation. Mr. Cohen is the Managing Partner of V3 Capital
Partners and an officer of the Scot Jason Cohen Foundation, and has
dispositive and/or voting power over these shares.
|
(5)
|
Includes securities held by Vincent C. Smith Annuity Trust 2015-1
(the “
Smith Trust
”), and LB 2, LLC
(“
LB
2
”) and Red Beard
Holdings, LLC (“
Red Beard
”), based on Company records and ownership
information from Amendment No. 5 to Schedule 13D filed by Vincent
C. Smith on April 25, 2016. Mr. Smith is the trustee for the Smith
Trust, and manager of LB 2 and Red Beard. As such, Mr. Smith has
dispositive power and voting power over, and may be deemed to be
the beneficial owner of the securities held by each of these
entities.
|
(6)
|
Based on Company records and ownership information from Amendment
No. 5 to Schedule 13D filed by Vincent C. Smith on April 25,
2016. Mr. Smith is a manager of Red Beard, and has dispositive
power and voting power over the securities reported
herein.
|
(7)
|
Based on Company records and ownership information from Schedule
13G filed by Iroquois Capital Management, LLC
(“
Iroquois Capital
Management
”), Mr. Richard
Abbe and Ms. Kimberly Page on May 10, 2019. Mr. Abbe shares
authority and responsibility for the investments made on behalf of
Iroquois Master Fund with Ms. Kimberly Page, each of whom is a
director of the Iroquois Master Fund. As such, Mr. Abbe and Ms.
Page may each be deemed to be the beneficial owner of all shares of
Common Stock underlying the Common Stock held by Iroquois Master
Fund.
|
(8)
|
Based on Company records as of May 10, 2019. Michael Silverman,
Managing Member of Katalyst Securities, LLC may be deemed to be the
beneficial owner of all shares of Common Stock underlying the
Common Stock held by Katalyst Securities, LLC.
|
(9)
|
Based on Company records as of May 10, 2019. Ryan M. Lane, Managing
Member of Empery Asset Management, LP may be deemed to be the
beneficial owner of all shares of Common Stock underlying the
Common Stock held by Empery Asset Management, LP.
|
(10)
|
Based on Company records as of May 10, 2019. Sander Gerber,
Authorized Signor for Hudson Bay Capital Management, LP may be
deemed to be the beneficial owner of all shares of Common Stock
underlying the Common Stock held by Hudson Bay Capital Management,
LP.
|
(11)
|
Based on Company records as of May 10, 2019. Steve Derby, Managing
Member of SDS Capital Partners II, LLC may be deemed to be the
beneficial owner of all shares of Common Stock underlying the
Common Stock held by SDS Capital Partners II, LLC.
|
(12)
|
Based on Company records as of May 10, 2019. Jacob Gottlieb, Chief
Executive Officer of Altium Growth Fund, LP may be deemed to be the
beneficial owner of all shares of Common Stock underlying the
Common Stock held by Altium Growth Fund, LP.
|
DISTRIBUTION AND COSTS
We
will pay the cost of preparing, printing and distributing this
Information Statement. Only one Information Statement will be
delivered to multiple stockholders sharing an address, unless
contrary instructions are received from one or more of such
stockholders. Upon receipt of a written request at the address
noted above, we will deliver a single copy of this Information
Statement and future stockholder communication documents to any
stockholders sharing an address to which multiple copies are now
delivered.
WHERE YOU CAN FIND MORE INFORMATION
We
file annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and other information with the SEC.
You may obtain such SEC filings from the Securities and
Exchange Commission’s website at http://www.sec.gov.
You can also read and copy these materials at the Securities
and Exchange Commission’s public reference room at 100 F
Street, N.E., Washington, D.C. 20549. You can obtain
information about the operation of the Securities and Exchange
Commission’s public reference room by calling the SEC at
1-800-SEC-0330.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN
ADDRESS
If
hard copies of the materials are requested, we will send only one
Information Statement and other corporate mailings to stockholders
who share a single address unless we received contrary instructions
from any stockholder at that address. This practice, known as
“householding,” is designed to reduce our printing and
postage costs. However, we will deliver promptly upon written
or oral request a separate copy of the Information Statement to a
stockholder at a shared address to which a single copy of the
Information Statement was delivered. You may make such a
written or oral request by sending a written notification stating
(i) your name, (ii) your shared address and (iii) the address to
which we should direct the additional copy of the Information
Statement, to us at True Drinks Holdings, Inc., 1007 Brioso Drive,
Costa Mesa, California 92627.
If
multiple stockholders sharing an address have received one copy of
this Information Statement or any other corporate mailing and would
prefer us to mail each stockholder a separate copy of future
mailings, you may send notification to or call our principal
executive offices. Additionally, if current stockholders with
a shared address received multiple copies of this Information
Statement or other corporate mailings and would prefer us to mail
one copy of future mailings to stockholders at the shared address,
notification of such request may also be made by mail or telephone
to our principal executive offices.
APPENDIX
A
AMENDED
AND RESTATED
ARTICLES
OF INCORPORATION
OF
CHARLIE’S
HOLDINGS, INC.
Charlie’s
Holdings, Inc. (the “
Corporation
”) does hereby amend
and restate its Articles of Incorporation, as amended, in their
entirety in accordance with the Nevada Revised Statutes, and
certifies as follows:
ARTICLE
I
NAME
The
name of the corporation is Charlie’s Holdings,
Inc.
ARTICLE
II
PURPOSES
AND POWERS
The Corporation shall have and may exercise all of the rights,
powers and privileges now or hereafter conferred upon corporations
organized under the laws of Nevada. In addition, the Corporation
may do everything necessary, suitable or proper for the
accomplishment of any of its corporate purposes. The Corporation
may conduct part or all of its business in any part of Nevada, the
United States or the world and may hold, purchase, mortgage, lease
and convey real and personal property in any of such
places.
ARTICLE
III
CAPITAL
STOCK
1.
Authorized Shares of
Common Stock
. The aggregate number of shares of stock which
the Corporation shall have authority to issue is 50,000,000,000
shares of $.001 par value Common Stock. The shares of this class of
Common Stock shall have unlimited voting rights and shall
constitute the sole voting group of the Corporation, except to the
extent any additional voting group or groups may hereafter be
established in accordance with the Nevada Revised Statutes. The
shares of this class shall also be entitled to receive the net
assets of the Corporation upon dissolution.
2.
Voting Rights; Denial
of Preemptive Rights
. Each shareholder of record shall have
one vote for each share of stock standing in his name on the books
of the Corporation and entitled to vote, except that in the
election of directors each shareholder shall have as many votes for
each share held by him as there are directors to be elected and for
whose election the shareholder has a right to vote. Cumulative
voting shall not be permitted in the election of directors or
otherwise. Preemptive rights to purchase additional shares of stock
are denied.
3.
Authorized Shares of
Preferred Stock
. The Corporation shall have the authority to
issue 5,000,000 shares of $.001 par value Preferred Stock, which
may be issued in one or more series at the discretion of the board
of directors. In establishing a series, the board of directors
shall give to it a distinctive designation so as to distinguish it
from the shares of all other series and classes, shall fix the
number of shares in such series, and the preferences, rights and
restrictions thereof. All shares of any one series shall be alike
in every particular except as otherwise provided by these Articles
of Incorporation or the Nevada Revised Statutes.
ARTICLE
IV
BOARD
OF DIRECTORS
The number of
directors of the Corporation shall be fixed by the bylaws, or if
the bylaws fail to fix such a number, then by resolution adopted
from time to time by the board of directors, provided that the
number of directors shall not be less than one.
ARTICLE
V
REGISTERED
OFFICE AND RESIDENT AGENT
The street address
of the registered office of the Corporation is 1100 East William
Street, Suite 207, Carson City, Nevada 89701. The name of the
registered agent of the Corporation at such address is the National
Registered Agents, Inc. of Nevada.
ARTICLE
VI
PRINCIPAL
OFFICE
The address of the
principal office of the Corporation is 1007 Brioso Drive, Costa
Mesa, California 92627.
ARTICLE
VII
MANAGEMENT
OF THE BUSINESS
The following
provisions are inserted for the management of the business and for
the conduct of the affairs of the Corporation, and the same are in
furtherance of and not in limitation or exclusion of the powers
conferred by law.
1. Conflicting
Interest Transactions. As used in this paragraph, "conflicting
interest transaction" means any of the following: (i) a loan or
other assistance by the Corporation to a director of the
Corporation or to an entity in which a director of the Corporation
is a director or officer or has a financial interest; (ii) a
guaranty by the Corporation of an obligation of a director of the
Corporation or of an obligation of an entity in which a director of
the Corporation is a director or officer or has a financial
interest; or (iii) a contract or transaction between the
Corporation and a director of the Corporation or between the
Corporation and an entity in which a director of the Corporation is
a director or officer or has a financial interest. No conflicting
interest transaction shall be void or voidable, be enjoined, be set
aside, or give rise to an award of damages or other sanctions in a
proceeding by a shareholder or by or in the right of the
Corporation, solely because the conflicting interest transaction
involves a director of the Corporation or an entity in which a
director of the Corporation is a director or officer or has a
financial interest, or solely because the director is present at or
participates in the meeting of the Corporation's board of directors
or of the committee of the board of directors which authorizes,
approves or ratifies a conflicting interest transaction, or solely
because the director's vote is counted for such purpose if: (A) the
material facts as to the director's relationship or interest and as
to the conflicting interest transaction are disclosed or are known
to the board of directors or the committee, and the board of
directors or committee in good faith authorizes, approves or
ratifies the conflicting interest transaction by the affirmative
vote of a majority of the disinterested directors, even though the
disinterested directors are less than a quorum; or (B) the material
facts as to the director's relationship or interest and as to the
conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest
transaction is specifically authorized, approved or ratified in
good faith by a vote of the shareholders; or (C) a conflicting
interest transaction is fair as to the Corporation as of the time
it is authorized, approved or ratified by the board of directors, a
committee thereof, or the shareholders. Common or interested
directors may be counted in determining the presence of a quorum at
a meeting of the board of directors or of a committee which
authorizes, approves or ratifies the conflicting interest
transaction.
2. Indemnification.
The Corporation shall indemnify, to the maximum extent permitted by
law, any person who is or was a director, officer, agent, fiduciary
or employee of the Corporation against any claim, liability or
expense arising against or incurred by such person made party to a
proceeding because he is or was a director, officer, agent,
fiduciary or employee of the Corporation or because he is or was
serving another entity or employee benefit plan as a director,
officer, partner, trustee, employee, fiduciary or agent at the
Corporation's request. The Corporation shall further have the
authority to the maximum extent permitted by law to purchase and
maintain insurance providing such indemnification.
3. Limitation on
Director's or Officer's Liability. No director or officer of the
Corporation shall be personally liable to the Corporation or any of
its shareholders for damages for breach of fiduciary duty as a
director or officer involving any act or omission of any such
director or officer provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or officer
for acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the shareholders of the
Corporation shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such
repeal or modification.
ARTICLE
VI
ADOPTION
OF ARTICLES
The foregoing
Amended and Restated Articles of Incorporation were duly approved
by all of the board of directors of the Corporation at a meeting of
the Board of Directors on May 8, 2019, and by a majority vote at a
meeting the Shareholders of all issued and outstanding voting
securities the Corporation on May 8, 2019, in conformity with the
requirements of the Nevada Revised Statutes and the Bylaws of the
Corporation. At the time of the adoption of the foregoing Amended
and Restated Articles of Incorporation, the Corporation had three
class of stock outstanding, designated as Common Stock, Series A
Convertible Preferred Stock and Series B Convertible Preferred
Stock (collectively, the “
Voting Securities
”), all of which
were entitled to vote thereon. The number of Voting Securities that
voted to approve the foregoing Amended and Restated Articles of
Incorporation was 15,551,709,550, or 74% of the issued and
outstanding shares, which is sufficient for the approval of the
foregoing Amended and Restated Articles of
Incorporation.
IN WITNESS WHEREOF,
these Amended and Restated Articles of Incorporation are executed
as of the ___ day of ______________, 2019.
|
CHARLIE’S
HOLDINGS, INC.
|
|
|
|
By:
________________________________
|
|
Name:
______________________________
|
|
Title:
_______________________________
|
APPENDIX
B
CHARLIE’S HOLDINGS, INC.
2019 OMNIBUS INCENTIVE PLAN
Charlie’s
Holdings, Inc., a Nevada corporation, sets forth herein the terms
of its 2019 Omnibus Incentive Plan, as follows:
The
Plan is intended to enhance the Company’s and its
Affiliates’ (as defined herein) ability to attract and retain
highly qualified officers, Non-Employee Directors (as defined
herein), key employees, consultants and advisors, and to motivate
such officers, Non-Employee Directors, key employees, consultants
and advisors to serve the Company and its Affiliates and to expend
maximum effort to improve the business results and earnings of the
Company, by providing to such persons an opportunity to acquire or
increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for
the grant of stock options, stock appreciation rights, restricted
stock, restricted stock units, other stock-based awards and cash
awards. Any of these awards may, but need not, be made as
performance incentives to reward attainment of performance goals in
accordance with the terms hereof. Stock options granted under the
Plan may be non-qualified stock options or incentive stock options,
as provided herein. Upon becoming effective, the Plan
replaces, and no further awards shall be made under, the
Predecessor Plan (as defined herein).
For
purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall
apply:
2.1
“
Affiliate
”
means
any company or other trade or business that “controls,”
is “controlled by” or is “under common
control” with the Company within the meaning of Rule 405 of
Regulation C under the Securities Act, including, without
limitation, any Subsidiary.
2.2
“
Award
”
means a grant of an Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, or Other Stock-based Award under the
Plan.
2.3
“
Award
Agreement
” means a
written agreement between the Company and a Grantee, or notice from
the Company or an Affiliate to a Grantee that evidences and sets
forth the terms and conditions of an Award.
2.4
“
Beneficial
Owner
” means
“Beneficial Owner” as defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act; except that, in calculating the
beneficial ownership of any particular Person, such Person shall be
deemed to have beneficial ownership of all securities that such
Person has the right to acquire by conversion or exercise of other
securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The term
“Beneficial Ownership” has a corresponding
meaning.
2.5
“
Board
”
means the Board of Directors of the Company.
2.6
“
Change
in Control
” shall have
the meaning set forth in
Section
14.3.2
.
2.7
“
Code
”
means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. References to the Code shall include the valid
and binding governmental regulations, court decisions and other
regulatory and judicial authority issued or rendered
thereunder.
2.8
“
Committee
”
means the Compensation Committee of the Board or any committee or
other person or persons designated by the Board to administer the
Plan. The Board will cause the Committee to satisfy the
applicable requirements of any stock exchange on which the Common
Stock may then be listed. For purposes of Awards to Grantees
who are subject to Section 16 of the Exchange Act, Committee means
all of the members of the Committee who are “non-employee
directors” within the meaning of Rule 16b-3 adopted under the
Exchange Act. All references in the Plan to the Board shall
mean such Committee or the Board.
2.9
“
Company
”
means Charlie’s Holdings, Inc., a Nevada corporation, or any
successor corporation.
2.10
“
Common
Stock
” or
“
Stock
” means a share of common stock of the
Company, par value $0.001 per share.
2.11
“
Corporate
Transaction
” means a
reorganization, merger, statutory share exchange, consolidation,
sale of all or substantially all of the Company’s assets, or
the acquisition of assets or stock of another entity by the
Company, or other corporate transaction involving the Company or
any of its Subsidiaries.
2.12
“
Effective
Date
” means May 8, 2019,
the date the Plan was approved by the Company’s
stockholders.
2.13
“
Exchange
Act
” means the Securities
Exchange Act of 1934, as now in effect or as hereafter
amended.
2.14
“
Fair Market
Value
” of a share of
Common Stock as of a particular date means (i) if the Common Stock
is listed on a national securities exchange, the closing or last
price of the Common Stock on the composite tape or other comparable
reporting system for the applicable date, or if the applicable date
is not a trading day, the trading day immediately preceding the
applicable date, or (ii) if the shares of Common Stock are not then
listed on a national securities exchange, the closing or last price
of the Common Stock quoted by an established quotation service for
over-the-counter securities, or (iii) if the shares of Common Stock
are not then listed on a national securities exchange or quoted by
an established quotation service for over-the-counter securities,
or the value of such shares is not otherwise determinable, such
value as determined by the Board in good faith in its sole
discretion.
2.15
“
Family
Member
” means a person
who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother, sister,
brother-in-law, or sister-in-law, including adoptive relationships,
of the applicable individual, any person sharing the applicable
individual’s household (other than a tenant or employee), a
trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any
one or more of these persons (or the applicable individual) control
the management of assets, and any other entity in which one or more
of these persons (or the applicable individual) own more than fifty
percent of the voting interests.
2.16
“
Grant Date
” means, as determined by the Board, the
latest to occur of (i) the date as of which the Board approves an
Award, (ii) the date on which the recipient of an Award first
becomes eligible to receive an Award under
Section 6
hereof, or (iii) such other date as may be
specified by the Board in the Award Agreement.
2.17
“
Grantee
” means a person who receives or holds an
Award under the Plan.
2.18
“
Incentive Stock
Option
” means an
“incentive stock option” within the meaning of Section
422 of the Code, or the corresponding provision of any subsequently
enacted tax statute, as amended from time to
time.
2.19
“
Non-Employee
Director
” means a member
of the Board who is not an officer or employee of the Company or
any Subsidiary.
2.20
“
Non-qualified Stock
Option
” means an Option
that is not an Incentive Stock Option.
2.21
“
Option
” means an option to purchase one or more
shares of Stock pursuant to the Plan.
2.22
“
Option
Price
” means the exercise
price for each share of Stock subject to an
Option.
2.23
“
Other Stock-based
Awards
” means Awards
consisting of Stock units, or other Awards, valued in whole or in
part by reference to, or otherwise based on, Common Stock, other
than Options, Stock Appreciation Rights, Restricted Stock, and
Restricted Stock Units.
2.24
“
Person
” means an individual, entity or group
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act.
2.25
“
Plan
” means this Charlie’s Holdings, Inc.
2019 Omnibus Incentive Plan, as amended from time to
time.
2.26
“
Predecessor
Plan
” means the True
Drinks Holdings, Inc. 2013 Stock Incentive Plan, as
amended.
2.27
“
Purchase
Price
” means the purchase
price for each share of Stock pursuant to a grant of Restricted
Stock.
2.28
“
Restricted
Period
” shall have the
meaning set forth in
Section 10.1
hereof.
2.29
“
Restricted
Stock
” means shares of
Stock, awarded to a Grantee pursuant to
Section 10
hereof.
2.30
“
Restricted Stock
Unit
” means a bookkeeping
entry representing the equivalent of shares of Stock, awarded to a
Grantee pursuant to
Section 10
hereof.
2.31
“
SAR Exercise
Price
” means the per
share exercise price of a SAR granted to a Grantee under
Section 9
hereof.
2.32
“
SEC
” means the United States Securities and
Exchange Commission.
2.33
“
Section
409A
” means Section 409A
of the Code.
2.34
“
Securities
Act
” means the Securities
Act of 1933, as now in effect or as hereafter
amended.
2.35
“
Separation from
Service
” means a
termination of Service by a Service Provider, as determined by the
Board, which determination shall be final, binding and conclusive;
provided if any Award governed by Section 409A is to be distributed
on a Separation from Service, then the definition of Separation
from Service for such purposes shall comply with the definition
provided in Section 409A.
2.36
“
Service
” means service as a Service Provider to the
Company or an Affiliate. Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change in position or duties
shall not result in interrupted or terminated Service, so long as
such Grantee continues to be a Service Provider to the Company or
an Affiliate.
2.37
“
Service
Provider
” means an
employee, officer, Non-Employee Director, consultant or advisor of
the Company or an Affiliate.
2.38
“
Stock Appreciation
Right
” or
“
SAR
” means a right granted to a Grantee
under
Section 9
hereof.
2.39
“
Subsidiary
” means any “subsidiary
corporation” of the Company within the meaning of Section
424(f) of the Code.
2.40
“
Substitute
Award
” means any Award
granted in assumption of or in substitution for an award of a
company or business acquired by the Company or a Subsidiary or with
which the Company or an Affiliate combines.
2.41
“
Ten Percent
Stockholder
” means an
individual who owns more than ten percent (10%) of the total
combined voting power of all classes of outstanding stock of the
Company, its parent or any of its Subsidiaries. In determining
stock ownership, the attribution rules of Section 424(d) of the
Code shall be applied.
2.42
“
Termination
Date
” means the date that
is ten (10) years after the Effective Date, unless the Plan is
earlier terminated by the Board under
Section 5.2
hereof.
3.
|
ADMINISTRATION OF THE PLAN
|
3.1
General
.
The
Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the
Company’s articles of incorporation and bylaws and applicable
law. The Board shall have the power and authority to delegate its
responsibilities hereunder to the Committee, which shall have full
authority to act in accordance with its charter, and with respect
to the authority of the Board to act hereunder, all references to
the Board shall be deemed to include a reference to the Committee,
to the extent such power or responsibilities have been
delegated. Except as otherwise may be required by applicable
law, regulatory requirement or the articles of incorporation or the
bylaws of the Company, the Board shall have full power and
authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award
Agreement, and shall have full power and authority to take all such
other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan
that the Board deems to be necessary or appropriate to the
administration of the Plan. The Committee shall administer
the Plan; provided that, the Board shall retain the right to
exercise the authority of the Committee to the extent consistent
with applicable law and the applicable requirements of any
securities exchange on which the Common Stock may then be
listed. The interpretation and construction by the Board of
any provision of the Plan, any Award or any Award Agreement shall
be final, binding and conclusive. Without limitation, the Board
shall have full and final authority, subject to the other terms and
conditions of the Plan, to:
(i)
designate Grantees;
(ii)
determine the type or types of Awards to be made to a
Grantee;
(iii)
determine the number of shares of Stock to be subject to an
Award;
(iv)
establish the terms and conditions of each Award (including, but
not limited to, the Option Price of any Option, the nature and
duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting, exercise, transfer, or forfeiture
of an Award or the shares of Stock subject thereto, and any terms
or conditions that may be necessary to qualify Options as Incentive
Stock Options);
(v)
prescribe the form of each Award Agreement; and
(vi)
amend, modify, or supplement the terms of any outstanding Award
including the authority, in order to effectuate the purposes of the
Plan, to modify Awards to foreign nationals or individuals who are
employed outside the United States to recognize differences in
local law, tax policy, or custom.
3.2
No
Repricing.
Notwithstanding any provision herein to the
contrary, the repricing of Options or SARs is prohibited without
prior approval of the Company’s stockholders. For this
purpose, a “repricing” means any of the following (or
any other action that has the same effect as any of the following):
(i) changing the terms of an Option or SAR to lower its Option
Price or SAR Exercise Price; (ii) any other action that is treated
as a “repricing” under generally accepted accounting
principles; and (iii) repurchasing for cash or canceling an Option
or SAR at a time when its Option Price or SAR Exercise Price is
greater than the Fair Market Value of the underlying shares in
exchange for another Award, unless the cancellation and exchange
occurs in connection with a change in capitalization or similar
change under
Section 14
. A cancellation and exchange under clause
(iii) would be considered a “repricing” regardless of
whether it is treated as a “repricing” under generally
accepted accounting principles and regardless of whether it is
voluntary on the part of the Grantee.
3.3
Clawbacks.
Awards
shall be subject to the requirements of (i) Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act
(regarding recovery of erroneously awarded compensation) and any
implementing rules and regulations thereunder, (ii) similar rules
under the laws of any other jurisdiction, (iii) any compensation
recovery policies adopted by the Company to implement any such
requirements or (iv) any other compensation recovery policies as
may be adopted from time to time by the Company, all to the extent
determined by the Committee in its discretion to be applicable to a
Grantee.
3.4
Minimum Vesting
Conditions.
Notwithstanding any other provision of the Plan to
the contrary, no more than one-third of any equity-based Awards
granted under the Plan shall vest prior to the first anniversary of
the date the Award is granted, excluding, for this purpose, any (i)
Substitute Awards, (ii) shares delivered in lieu of fully vested
cash incentive compensation under any applicable plan or program of
the Company, and (iii) Awards to Non-Employee Directors that vest
on the earlier of the one-year anniversary of the date of grant or
the next annual meeting of stockholders (provided that such vesting
period under this clause (iii) may not be less than 50 weeks after
grant); provided, that, the Board may grant equity-based Awards
without regard to the foregoing minimum vesting requirement with
respect to a maximum of five percent (5%) of the available share
reserve authorized for issuance under the Plan pursuant to
Section 4.1
(subject to adjustment under
Section
14
); and, provided further, for
the avoidance of doubt, that the foregoing restriction does not
apply to the Board’s discretion to provide for accelerated
exercisability or vesting of any Award, including in cases of
retirement, death, disability or a Change in Control, in the terms
of the Award or otherwise.
3.5
Deferral
Arrangement.
The
Board may permit or require the deferral of any Award payment into
a deferred compensation arrangement, subject to such rules and
procedures as it may establish and in accordance with Section 409A,
which may include provisions for the payment or crediting of
interest or dividend equivalents, including converting such credits
into deferred Stock units.
3.6
No
Liability.
No
member of the Board or of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan, any Award or Award Agreement.
3.7
Book Entry.
Notwithstanding
any other provision of this Plan to the contrary, the Company may
elect to satisfy any requirement under this Plan for the delivery
of stock certificates through the use of book-entry.
4.
|
STOCK SUBJECT TO THE PLAN
|
4.1
Authorized Number of
Shares
Subject to adjustment under
Section 14
, the total number of shares of Common Stock
authorized to be awarded under the Plan shall not exceed
1,107,254,205. In addition, shares of Common Stock underlying
any outstanding award granted under the Predecessor Plan that,
following the Effective Date, expires, or is terminated,
surrendered or forfeited for any reason without issuance of such
shares shall be available for the grant of new Awards under this
Plan. As provided in
Section 1
, no new awards shall be granted under the
Predecessor Plan following the Effective Date. Shares issued
under the Plan may consist in whole or in part of authorized but
unissued shares, treasury shares, or shares purchased on the open
market or otherwise, all as determined by the Company from time to
time.
4.2
Share
Counting
4.2.1
General
Each share of Common Stock granted in connection
with an Award shall be counted as one share against the limit
in
Section
4.1
, subject to the provisions
of this
Section 4.2
.
4.2.2
Cash-Settled
Awards
Any
Award settled in cash shall not be counted as shares of Common
Stock for any purpose under this Plan.
4.2.3
Expired
or Terminated Awards
If
any Award under the Plan expires, or is terminated, surrendered or
forfeited, in whole or in part, without issuance or delivery of
vested shares, the unissued or surrendered Common Stock covered by
such Award shall again be available for the grant of Awards under
the Plan.
4.2.4
Payment
of Option Price or Tax Withholding in Shares
The full number of shares of Common Stock with
respect to which an Option or SAR is granted shall count against
the aggregate number of shares available for grant under the
Plan. Accordingly, if in accordance with the terms of the
Plan, a Grantee pays the Option Price for an Option by either
tendering previously owned shares or having the Company withhold
shares, then such shares surrendered to pay the Option Price shall
continue to count against the aggregate number of shares available
for grant under the Plan set forth in
Section 4.1
above. In addition, if in accordance with
the terms of the Plan, a Grantee satisfies any tax withholding
requirement with respect to any taxable event arising as a result
of this Plan for any Award (including Restricted Stock and
Restricted Stock Units) by either tendering previously owned shares
or having the Company withhold shares, then such shares surrendered
to satisfy such tax withholding requirements shall continue to
count against the aggregate number of shares available for grant
under the Plan set forth in
Section 4.1
above. Any shares of Common Stock
repurchased by the Company with cash proceeds from the exercise of
Options shall not be added back to the pool of shares available for
grant under the Plan set forth in
Section 4.1
above.
4.2.5
Substitute
Awards
In
the case of any Substitute Award, such Substitute Award shall not
be counted against the number of shares reserved under the
Plan.
4.3
Award
Limits
4.3.1
Incentive Stock
Options.
Subject to adjustment under
Section 14
, 1,107,254,205 shares of Common Stock available
for issuance under the Plan shall be available for issuance under
Incentive Stock Options.
5.
|
EFFECTIVE DATE, DURATION, AND AMENDMENTS
|
5.1
Term.
The Plan shall be effective as of the Effective
Date, provided that it has been approved by the Company’s
stockholders. The Plan shall terminate automatically on the
ten (10) year anniversary of the Effective Date and may be
terminated on any earlier date as provided in
Section 5.2
.
5.2
Amendment and
Termination of the Plan.
The Board may, at any time and from time to time,
amend, suspend, or terminate the Plan as to any Awards which have
not been made. An amendment shall be contingent on approval of the
Company’s stockholders to the extent stated by the Board,
required by applicable law or required by applicable stock exchange
listing requirements. Notwithstanding the foregoing, any
amendment to
Section
3.2
shall be contingent
upon the approval of the Company’s stockholders. No
Awards shall be made after the Termination Date. The applicable
terms of the Plan, and any terms and conditions applicable to
Awards granted prior to the Termination Date shall survive the
termination of the Plan and continue to apply to such Awards.
No amendment, suspension, or termination of the Plan shall, without
the consent of the Grantee, materially impair rights or obligations
under any Award theretofore awarded.
6.
|
AWARD ELIGIBILITY AND LIMITATIONS
|
6.1
Service
Providers.
Subject to this
Section 6.1
, Awards may be made to any Service Provider,
including any Service Provider who is an officer, Non-Employee
Director, consultant or advisor of the Company or of any Affiliate,
as the Board shall determine and designate from time to time in its
discretion.
6.2
Successive
Awards.
An
eligible person may receive more than one Award, subject to such
restrictions as are provided herein.
6.3
Stand-Alone,
Additional, Tandem, and Substitute Awards.
Awards may, in the discretion of the Board, be
granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted
under another plan of the Company, any Affiliate, or any business
entity to be acquired by the Company or an Affiliate, or any other
right of a Grantee to receive payment from the Company or any
Affiliate. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award, the Board shall have
the right to require the surrender of such other Award in
consideration for the grant of the new Award. Subject
to
Section
3.2
, the Board shall have the
right, in its discretion, to make Awards in substitution or
exchange for any other award under another plan of the Company, any
Affiliate, or any business entity to be acquired by the Company or
an Affiliate. In addition, Awards may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other
plans of the Company or any Affiliate, in which the value of Stock
subject to the Award is equivalent in value to the cash
compensation (for example, Restricted Stock Units or Restricted
Stock).
Each
Award shall be evidenced by an Award Agreement, in such form or
forms as the Board shall from time to time determine, consistent
with the terms of the Plan. Without limiting the foregoing,
an Award Agreement may be provided in the form of a notice which
provides that acceptance of the Award constitutes acceptance of all
terms of the Plan and the notice. Award Agreements granted
from time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the
Plan. Each Award Agreement evidencing an Award of Options
shall specify whether such Options are intended to be Non-qualified
Stock Options or Incentive Stock Options, and in the absence of
such specification such options shall be deemed Non-qualified Stock
Options.
8.
|
TERMS AND CONDITIONS OF OPTIONS
|
8.1
Option
Price.
The Option Price of each Option shall be fixed by
the Board and stated in the related Award Agreement. The Option
Price of each Option (except those that constitute Substitute
Awards) shall be at least the Fair Market Value on the Grant Date
of a share of Stock;
provided
,
however
, that in the event that a Grantee is a Ten
Percent Stockholder as of the Grant Date, the Option Price of an
Option granted to such Grantee that is intended to be an Incentive
Stock Option shall be not less than 110 percent of the Fair Market
Value of a share of Stock on the Grant Date. In no case shall
the Option Price of any Option be less than the par value of a
share of Stock.
8.2
Vesting.
Subject to
Section
8.3
hereof, each Option
shall become exercisable at such times and under such conditions
(including, without limitation, performance requirements) as shall
be determined by the Board and stated in the Award
Agreement.
8.3
Term.
Each Option shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the
expiration of ten
(10)
years from the Grant Date, or under such
circumstances and on such date prior thereto as is set forth in the
Plan or as may be fixed by the Board and stated in the related
Award Agreement;
provided
,
however
, that in the event that the Grantee is a Ten
Percent Stockholder, an Option granted to such Grantee that is
intended to be an Incentive Stock Option at the Grant Date shall
not be exercisable after the expiration of five (5) years from its
Grant Date.
8.4
Limitations on
Exercise of Option.
Notwithstanding
any other provision of the Plan, in no event may any Option be
exercised, in whole or in part, (i) prior to the date the Plan is
approved by the stockholders of the Company as provided herein or
(ii) after the occurrence of an event which results in termination
of the Option.
8.5
Method of
Exercise.
An
Option that is exercisable may be exercised by the Grantee’s
delivery of a notice of exercise to the Company, setting forth the
number of shares of Stock with respect to which the Option is to be
exercised, accompanied by full payment for the shares. To be
effective, notice of exercise must be made in accordance with
procedures established by the Company from time to
time.
8.6
Rights of Holders of
Options.
Unless otherwise stated in the related Award
Agreement, an individual holding or exercising an Option shall have
none of the rights of a stockholder (for example, the right to
receive cash or dividend payments or distributions attributable to
the subject shares of Stock or to direct the voting of the subject
shares of Stock) until the shares of Stock covered thereby are
fully paid and issued to her/him. Except as provided in
Section 14
hereof or the related Award Agreement,
no adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such
issuance.
8.7
Delivery of Stock
Certificates.
Promptly
after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled, subject
to any transaction fees, as required, to the issuance of a stock
certificate or certificates evidencing his or her ownership of the
shares of Stock subject to the Option.
8.8
Limitations on Incentive Stock
Options.
An
Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any
Subsidiary of the Company; (ii) to the extent specifically provided
in the related Award Agreement; and (iii) to the extent that the
aggregate Fair Market Value (determined at the time the Option is
granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first
time during any calendar year (under the Plan and all other plans
of the Grantee’s employer and its Affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into
account in the order in which they were granted.
9.
|
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
|
9.1
Right to
Payment.
A SAR shall confer on the Grantee a right to
receive, upon exercise thereof, the excess of (i) the Fair Market
Value of one share of Stock on the date of exercise over (ii) the
SAR Exercise Price, as determined by the Board. The Award Agreement
for a SAR (except those that constitute Substitute Awards) shall
specify the SAR Exercise Price, which shall be fixed on the Grant
Date as not less than the Fair Market Value of a share of Stock on
that date. SARs may be granted alone or in conjunction with
all or part of an Option or at any subsequent time during the term
of such Option or in conjunction with all or part of any other
Award. A SAR granted in tandem with an outstanding Option following
the Grant Date of such Option shall have a grant price that is
equal to the Option Price;
provided
,
however
, that the SAR’s grant price may not be less
than the Fair Market Value of a share of Stock on the Grant Date of
the SAR to the extent required by Section 409A.
9.2
Other
Terms.
The
Board shall determine at the Grant Date, the time or times at which
and the circumstances under which a SAR may be exercised in whole
or in part (including based on achievement of performance goals
and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following Separation
from Service or upon other conditions, the method of exercise,
whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any
SAR.
9.3
Term
of SARs.
The term of a SAR granted under the Plan shall be
determined by the Board, in its sole discretion;
provided
,
however, that such term shall not exceed ten (10)
years.
9.4
Payment of SAR
Amount.
Upon
exercise of a SAR, a Grantee shall be entitled to receive payment
from the Company (in cash or Stock, as determined by the Board) in
an amount determined by multiplying:
(i)
the difference between the Fair Market Value of a
share of Stock on the date of exercise over the SAR Exercise Price;
by
(ii)
the number of shares of Stock with respect to which the SAR is
exercised.
10.
|
TERMS AND CONDITIONS OF RESTRICTED STOCK AND RESTRICTED STOCK
UNITS
|
10.1
Restrictions.
At the time of grant, the Board may, in its sole
discretion, establish a period of time (a
“
Restricted
Period
”) and any
additional restrictions including the satisfaction of corporate or
individual performance objectives applicable to an Award of
Restricted Stock or Restricted Stock Units as determined by the
Board. Each Award of Restricted Stock or Restricted Stock Units may
be subject to a different Restricted Period and additional
restrictions. Neither Restricted Stock nor Restricted Stock Units
may be sold, transferred, assigned, pledged or otherwise encumbered
or disposed of during the Restricted Period or prior to the
satisfaction of any other applicable
restrictions.
10.2
Restricted Stock
Certificates.
The Company shall issue stock, in the name of each
Grantee to whom Restricted Stock has been granted, stock
certificates or other evidence of ownership representing the total
number of shares of Restricted Stock granted to the Grantee, as
soon as reasonably practicable after the Grant Date. The Board may
provide in an Award Agreement that either (i) the Secretary of the
Company shall hold such certificates for the Grantee’s
benefit until such time as the Restricted Stock is forfeited to the
Company or the restrictions lapse, or (ii) such certificates shall
be delivered to the Grantee;
provided
,
however
, that such certificates shall bear a legend or
legends that comply with the applicable securities laws and
regulations and make appropriate reference to the restrictions
imposed under the Plan and the Award Agreement.
10.3
Rights of Holders of Restricted
Stock.
Unless the Board otherwise provides in an Award
Agreement and subject to
Section
16.12
, holders of Restricted
Stock shall have rights as stockholders of the Company, including
voting and dividend rights.
10.4
Rights of Holders of Restricted
Stock Units.
10.4.1
Settlement of
Restricted Stock Units.
Restricted
Stock Units may be settled in cash or Stock, as determined by the
Board and set forth in the Award Agreement. The Award Agreement
shall also set forth whether the Restricted Stock Units shall be
settled (i) within the time period specified for “short term
deferrals” under Section 409A or (ii) otherwise within the
requirements of Section 409A, in which case the Award Agreement
shall specify upon which events such Restricted Stock Units shall
be settled.
10.4.2
Voting and Dividend
Rights.
Unless otherwise stated in the applicable Award
Agreement and subject to
Section
16.12
, holders of Restricted
Stock Units shall not have rights as stockholders of the Company,
including no voting or dividend or dividend equivalents
rights.
10.4.3
Creditor’s
Rights.
A
holder of Restricted Stock Units shall have no rights other than
those of a general creditor of the Company. Restricted Stock Units
represent an unfunded and unsecured obligation of the Company,
subject to the terms and conditions of the applicable Award
Agreement.
10.5
Purchase of Restricted
Stock.
The Grantee shall be required, to the extent
required by applicable law, to purchase the Restricted Stock from
the Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the shares of Stock represented by such
Restricted Stock or (ii) the Purchase Price, if any, specified in
the related Award Agreement. If specified in the Award Agreement,
the Purchase Price may be deemed paid by Services already rendered.
The Purchase Price shall be payable in a form described in
Section
11
or, in the discretion
of the Board, in consideration for past Services
rendered.
10.6
Delivery of
Stock.
Upon
the expiration or termination of any Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the
restrictions applicable to shares of Restricted Stock or Restricted
Stock Units settled in Stock shall lapse, and, unless otherwise
provided in the Award Agreement, a stock certificate for such
shares shall be delivered, free of all such restrictions, to the
Grantee or the Grantee’s beneficiary or estate, as the case
may be.
11.
|
FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK
|
11.1
General
Rule.
Payment of the Option Price for the shares
purchased pursuant to the exercise of an Option or the Purchase
Price for Restricted Stock shall be made in cash or in cash
equivalents acceptable to the Company, except as provided in
this
Section
11
.
11.2
Surrender of
Stock.
To
the extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Stock may be made all or in part
through the tender to the Company of shares of Stock, which shares
shall be valued, for purposes of determining the extent to which
the Option Price or Purchase Price for Restricted Stock has been
paid thereby, at their Fair Market Value on the date of exercise or
surrender. Notwithstanding the foregoing, in the case of an
Incentive Stock Option, the right to make payment in the form of
already owned shares of Stock may be authorized only at the time of
grant.
11.3
Cashless
Exercise.
With respect to an Option only (and not with
respect to Restricted Stock), to the extent permitted by law and to
the extent the Award Agreement so provides, payment of the Option
Price may be made all or in part by delivery (on a form acceptable
to the Company) of an irrevocable direction to a licensed
securities broker acceptable to the Company to sell shares of Stock
and to deliver all or part of the sales proceeds to the Company in
payment of the Option Price and any withholding taxes described
in
Section 16.3
.
11.4
Other Forms of
Payment.
To
the extent the Award Agreement so provides, payment of the Option
Price or the Purchase Price for Restricted Stock may be made in any
other form that is consistent with applicable laws, regulations and
rules, including, but not limited to, the Company’s
withholding of shares of Stock otherwise due to the exercising
Grantee.
12.
|
OTHER STOCK-BASED AWARDS
|
12.1
Grant of Other Stock-based
Awards.
Other
Stock-based Awards may be granted either alone or in addition to or
in conjunction with other Awards under the Plan. Other
Stock-based Awards may be granted in lieu of other cash or other
compensation to which a Service Provider is entitled from the
Company or may be used in the settlement of amounts payable in
shares of Common Stock under any other compensation plan or
arrangement of the Company. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority to
determine the persons to whom and the time or times at which such
Awards shall be made, the number of shares of Common Stock to be
granted pursuant to such Awards, and all other conditions of such
Awards. Unless the Committee determines otherwise, any such
Award shall be confirmed by an Award Agreement, which shall contain
such provisions as the Committee determines to be necessary or
appropriate to carry out the intent of this Plan with respect to
such Award.
12.2
Terms of Other Stock-based
Awards.
Any Common Stock subject to Awards made under
this
Section
12
may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period
lapses.
13.1
General.
The
Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would
constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or
regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations. If
at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to
an Award upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares hereunder, no
shares of Stock may be issued or sold to the Grantee or any other
individual exercising an Option pursuant to such Award unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no
way affect the date of termination of the Award. Specifically, in
connection with the Securities Act, upon the exercise of any Option
or the delivery of any shares of Stock underlying an Award, unless
a registration statement under such Act is in effect with respect
to the shares of Stock covered by such Award, the Company shall not
be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the Grantee or any other
individual exercising an Option may acquire such shares pursuant to
an exemption from registration under the Securities Act. Any
determination in this connection by the Board shall be final,
binding, and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to
the Securities Act. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or
the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option
shall not be exercisable until the shares of Stock covered by such
Option are registered or are exempt from registration, the exercise
of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an
exemption.
13.2
Rule 16b-3.
During
any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the
Company that Awards and the exercise of Options granted to officers
and directors hereunder will qualify for the exemption provided by
Rule 16b-3 under the Exchange Act. To the extent that any provision
of the Plan or action by the Board or Committee does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative
to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. In the event that
Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify this Plan in any respect necessary to satisfy
the requirements of, or to take advantage of any features of, the
revised exemption or its replacement.
14.
|
EFFECT OF CHANGES IN CAPITALIZATION
|
14.1
Changes in
Stock.
If (i) the number of outstanding shares of Stock
is increased or decreased or the shares of Stock are changed into
or exchanged for a different number or kind of shares or other
securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company
occurring after the Effective Date or (ii) there occurs any
spin-off, split-up, extraordinary cash dividend or other
distribution of assets by the Company, the number and kinds of
shares for which grants of Awards may be made under the Plan
(including the per-Grantee maximums set forth in
Section
4
) shall be equitably adjusted
by the Company; provided that any such adjustment shall comply with
Section 409A. In addition, in the event of any such increase or
decease in the number of outstanding shares or other transaction
described in clause (ii) above, the number and kind of shares for
which Awards are outstanding and the Option Price per share of
outstanding Options and SAR Exercise Price per share of outstanding
SARs shall be equitably adjusted; provided that any such adjustment
shall comply with Section 409A.
14.2
Effect of Certain
Transactions.
Except as otherwise provided in an Award Agreement
and subject to the provisions of
Section 14.3
, in the event of a Corporate Transaction, the
Plan and the Awards issued hereunder shall continue in effect in
accordance with their respective terms, except that following a
Corporate Transaction either (i) each outstanding Award shall be
treated as provided for in the agreement entered into in connection
with the Corporate Transaction or (ii) if not so provided in such
agreement, each Grantee shall be entitled to receive in respect of
each share of Common Stock subject to any outstanding Awards, upon
exercise or payment or transfer in respect of any Award, the same
number and kind of stock, securities, cash, property or other
consideration that each holder of a share of Common Stock was
entitled to receive in the Corporate Transaction in respect of a
share of Common stock;
provided
,
however
, that, unless otherwise determined by the
Committee, such stock, securities, cash, property or other
consideration shall remain subject to all of the conditions,
restrictions and performance criteria which were applicable to the
Awards prior to such Corporate Transaction. Without limiting
the generality of the foregoing, the treatment of outstanding
Options and SARs pursuant to this
Section 14.2
in connection with a Corporate
Transaction in which the consideration paid or distributed to the
Company’s stockholders is not entirely shares of common stock
of the acquiring or resulting corporation may include the
cancellation of outstanding Options and SARs upon consummation of
the Corporate Transaction as long as, at the election of the
Committee, (i) the holders of affected Options and SARs have been
given a period of at least fifteen days prior to the date of the
consummation of the Corporate Transaction to exercise the Options
or SARs (to the extent otherwise exercisable) or (ii) the holders
of the affected Options and SARs are paid (in cash or cash
equivalents) in respect of each Share covered by the Option or SAR
being canceled an amount equal to the excess, if any, of the per
share price paid or distributed to stockholders in the Corporate
Transaction (the value of any non-cash consideration to be
determined by the Committee in its sole discretion) over the Option
Price or SAR Exercise Price, as applicable. For avoidance of
doubt, (1) the cancellation of Options and SARs pursuant to clause
(ii) of the preceding sentence may be effected notwithstanding
anything to the contrary contained in this Plan or any Award
Agreement and (2) if the amount determined pursuant to clause (ii)
of the preceding sentence is zero or less, the affected Option or
SAR may be cancelled without any payment therefore. The
treatment of any Award as provided in this
Section 14.2
shall be conclusively presumed to be
appropriate for purposes of
Section 14.1
.
14.3
Change in
Control
14.3.1
Consequences of a
Change in Control
In
the event of a Change in Control of the Company, the Board, in its
discretion, may, at any time an Award is granted, or at any time
thereafter, (i) accelerate the time period relating to the exercise
or vesting of the Award; or (ii) take one or more of the following
actions, which may vary among individual Grantees: (A) provide for
the purchase of the Award for an amount of cash or other property
that could have been received upon the exercise or vesting of the
Award (less any applicable Option Price or SAR Exercise Price in
the cash of Options and SARs); (B) adjust the terms of the Awards
in a manner determined by the Board to reflect the Change in
Control; (C) cause the Awards to be assumed, or new rights
substituted therefor, by another entity, through the continuance of
the Plan and the assumption of outstanding Awards, or the
substitution for such Awards of comparable value covering shares of
a successor corporation, with appropriate adjustments as to the
number and kind of shares and exercise prices, in which event the
Plan and such Awards, or the new options and rights substituted
therefor, shall continue in the manner and under the terms so
provided; (D) accelerate the time at which Options or SARs then
outstanding may be exercised so that such Options and SARs may be
exercised for a limited period of time on or before a specified
date fixed by the Board, after which specified date, all
unexercised Options and SARs shall terminate; or (E) make such
other provision as the Board may consider equitable.
14.3.2
Change in Control
Defined
Except as may otherwise be defined in an Award
Agreement, a “
Change in
Control
” shall mean the
occurrence of any of the following events: (i) the acquisition,
directly or indirectly, by any Person or group (within the meaning
of Section 13(d)(3) of the Exchange Act) of the Beneficial
Ownership of more than fifty percent of the outstanding securities
of the Company; (ii) a merger or consolidation in which the Company
is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is
incorporated; (iii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company; (i) a complete
liquidation or dissolution of the Company; or (v) any reverse
merger in which the Company is the surviving entity but in which
securities possessing more than fifty percent of the total combined
voting power of the Company’s outstanding securities are
transferred to a Person or Persons different from the Persons
holding those securities immediately prior to such
merger.
Notwithstanding
the foregoing, if it is determined that an Award hereunder is
subject to the requirements of Section 409A and payable upon a
Change in Control, the Company will not be deemed to have undergone
a Change in Control unless the Company is deemed to have undergone
a “change in control event” pursuant to the definition
of such term in Section 409A.
14.4
Adjustments
Adjustments under this
Section 14
related to shares of Stock or securities of the
Company shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. No fractional
shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the
nearest whole share.
15.
|
NO LIMITATIONS ON COMPANY
|
The
making of Awards pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its business
or assets.
16.
|
TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE
PLAN
|
16.1
Disclaimer of
Rights.
No
provision in the Plan or in any Award Agreement shall be construed
to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way
with any contractual or other right or authority of the Company
either to increase or decrease the compensation or other payments
to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award
Agreement, no Award granted under the Plan shall be affected by any
change of duties or position of the Grantee, so long as such
Grantee continues to be a Service Provider. The obligation of the
Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or
otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.
16.2
Nonexclusivity of the
Plan.
Neither
the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as
creating any limitations upon the right and authority of the Board
to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or
classes of individuals or specifically to a particular individual
or particular individuals), including, without limitation, the
granting of stock options as the Board in its discretion determines
desirable.
16.3
Withholding
Taxes.
The Company or an Affiliate, as the case may be,
shall have the right to deduct from payments of any kind otherwise
due to a Grantee any federal, state, or local taxes of any kind
required by law to be withheld (i) with respect to the vesting of
or other lapse of restrictions applicable to an Award, (ii) upon
the issuance of any shares of Stock upon the exercise of an Option
or SAR, or (iii) otherwise due in connection with an Award.
At the time of such vesting, lapse, or exercise, the Grantee shall
pay to the Company or the Affiliate, as the case may be, any amount
that the Company or the Affiliate may reasonably determine to be
necessary to satisfy such withholding obligation. Subject to the
prior approval of the Company or the Affiliate, which may be
withheld by the Company or the Affiliate, as the case may be, in
its sole discretion, the Grantee may elect to satisfy such
obligations, or the Company may require such obligations (up to
maximum statutory rates) to be satisfied, in whole or in part, (i)
by causing the Company or the Affiliate to withhold the number of
shares of Stock otherwise issuable to the Grantee as may be
necessary to satisfy such withholding obligation or (ii) by
delivering to the Company or the Affiliate shares of Stock already
owned by the Grantee. The shares of Stock so delivered or withheld
shall have an aggregate Fair Market Value equal to such withholding
obligations (up to maximum statutory rates). The Fair Market
Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as
of the date that the amount of tax to be withheld is to be
determined. A Grantee who has made an election pursuant to
this
Section
16.3
may satisfy his or her
withholding obligation only with shares of Stock that are not
subject to any repurchase, forfeiture, unfulfilled vesting, or
other similar requirements.
16.4
Captions.
The
use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of
any provision of the Plan or any Award Agreement.
16.5
Other
Provisions.
Each
Award Agreement may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board, in
its sole discretion. In the event of any conflict between the
terms of an employment agreement and the Plan, the terms of the
employment agreement govern.
16.6
Number and
Gender.
With
respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine
gender, etc., as the context requires.
16.7
Severability.
If
any provision of the Plan or any Award Agreement shall be
determined to be illegal or unenforceable by any court of law in
any jurisdiction, the remaining provisions hereof and thereof shall
be severable and enforceable in accordance with their terms, and
all provisions shall remain enforceable in any other
jurisdiction.
16.8
Governing
Law.
The
Plan shall be governed by and construed in accordance with the laws
of the State of Nevada without giving effect to the principles of
conflicts of law, and applicable Federal law.
16.9
Section
409A.
The
Plan is intended to comply with Section 409A to the extent subject
thereto, and, accordingly, to the maximum extent permitted, the
Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within
the “short-term deferral period” as defined in Section
409A shall not be treated as deferred compensation unless
applicable laws require otherwise. Notwithstanding anything to the
contrary in the Plan, to the extent required to avoid accelerated
taxation and tax penalties under Section 409A, amounts that would
otherwise be payable and benefits that would otherwise be provided
pursuant to the Plan during the six (6) month period immediately
following the Grantee’s Separation from Service shall instead
be paid on the first payroll date after the six-month anniversary
of the Grantee’s Separation from Service (or the
Grantee’s death, if earlier). Notwithstanding the foregoing,
neither the Company nor the Committee shall have any obligation to
take any action to prevent the assessment of any excise tax or
penalty on any Grantee under Section 409A and neither the Company
nor the Committee will have any liability to any Grantee for such
tax or penalty.
16.10
Separation from
Service.
The
Board shall determine the effect of a Separation from Service upon
Awards, and such effect shall be set forth in the appropriate Award
Agreement. Without limiting the foregoing, the Board may
provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, the actions that will
be taken upon the occurrence of a Separation from Service,
including, but not limited to, accelerated vesting or termination,
depending upon the circumstances surrounding the Separation from
Service.
16.11
Transferability of
Awards.
16.11.1
Transfers in
General.
Except as provided in
Section
16.11.2
, no Award shall be
assignable or transferable by the Grantee to whom it is granted,
other than by will or the laws of descent and distribution, and,
during the lifetime of the Grantee, only the Grantee personally (or
the Grantee’s personal representative) may exercise rights
under the Plan.
16.11.2
Family
Transfers.
If authorized in the applicable Award Agreement, a
Grantee may transfer, not for value, all or part of an Award (other
than Incentive Stock Options) to any Family Member. For the
purpose of this
Section
16.11.2
, a “not for
value” transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of marital
property rights; or (iii) a transfer to an entity in which more
than fifty percent of the voting interests are owned by Family
Members (or the Grantee) in exchange for an interest in that
entity. Following a transfer under this
Section
16.11.2
, any such Award shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Subsequent transfers of
transferred Awards are prohibited except to Family Members of the
original Grantee in accordance with this
Section 16.11.2
or by will or the laws of descent and
distribution.
16.12
Dividends and Dividend
Equivalent Rights.
If
specified in the Award Agreement, the recipient of an Award (other
than Options or SARs) may be entitled to receive dividends or
dividend equivalents with respect to the Common Stock or other
securities covered by an Award. The terms and conditions of a
dividend equivalent right may be set forth in the Award
Agreement. Dividend equivalents credited to a Grantee may be
reinvested in additional shares of Stock or other securities of the
Company at a price per unit equal to the Fair Market Value of a
share of Stock on the date that such dividend was paid to
stockholders, as determined in the sole discretion of the
Committee. Notwithstanding any provision herein to the
contrary, in no event will dividends or dividend equivalents vest
or otherwise be paid out prior to the time that the underlying
Award (or portion thereof) has vested and, accordingly, will be
subject to cancellation and forfeiture if such Award does not vest
(including both time-based and performance-based
Awards).
The Plan was adopted by the Board of Directors on May 8,
2019.