UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the
Securities Exchange Act of 1934
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Preliminary Information Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
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Definitive Information Statement |
CARDIFF LEXINGTON CORPORATION
(Name of Registrant as Specified In Its Charter)
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Fee paid previously with preliminary materials |
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Fee computed on table in exhibit required by Item 25(b) of Schedule 14A per Item 1 of this Schedule and Exchange Act Rules 14c-5(g) and 0-11 |
3753 Howard
Hughes Parkway, Suite 200
Las Vegas,
NV 89169
Notice of Action Taken Pursuant to Written Consent
of Stockholders
Dear Stockholder:
The accompanying Information Statement is furnished
to holders of shares of common stock of Cardiff Lexington Corporation (“we,” “us,” “our”
or “our company”) pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and Regulation 14C and Schedule 14C thereunder, in connection with an approval by written consent of the holders of our
voting stock.
The purpose of this Notice and Information Statement
is to notify our stockholders that, on January 31, 2024, we received written consents from stockholders to adopt the Cardiff Lexington
Corporation 2024 Equity Incentive Plan (the “Plan”) providing for the issuance of equity incentive awards, such as
stock options, restricted stock and restricted stock units, to our employees, consultants and directors.
Our board of directors approved the Plan and recommended
that our stockholders approve it as well. In connection with the adoption of the Plan, our board of directors elected to seek the written
consent of the holders of our outstanding voting shares in order to reduce associated costs and adopt the Plan in a timely manner.
Equity-based compensation is a critical part of
our compensation program and the Plan will enable us to provide stock-based incentives that align the interests of our employees, consultants
and directors with those of our stockholders by motivating our employees to achieve long-term results and rewarding them for their achievements.
We also believe that the Plan will help us attract and retain talented employees, consultants and directors who will contribute to the
company’s long-term success.
This Notice and the accompanying Information Statement
are being furnished to you to inform you that the Plan has been approved by stockholders. The board of directors is not soliciting
your proxy in connection with the Plan and proxies are not requested from stockholders.
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BY ORDER OF THE BOARD OF DIRECTORS, |
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/s/ Daniel Thompson |
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Daniel Thompson |
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Chairman of the Board |
February 14, 2024
THE ACCOMPANYING INFORMATION STATEMENT IS BEING
MAILED
TO STOCKHOLDERS ON OR ABOUT FEBRUARY 14, 2024
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
CARDIFF LEXINGTON CORPORATION
3753 Howard
Hughes Parkway, Suite 200
Las Vegas,
NV 89169
INFORMATION STATEMENT
NO VOTE OR OTHER ACTION OF THE COMPANY’S
STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION
STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is first being mailed
on or about February 14, 2024 to the holders of record of the outstanding common stock of Cardiff Lexington Corporation, a Nevada corporation
(“we,” “us,” “our” or “our company”), as of the close of business
on January 31, 2024 (the “Record Date”), pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). This Information Statement relates to a written consent in lieu of a meeting, dated
January 31, 2024 (the “Written Consent”), of stockholders owning as of the Record Date at least a majority of the outstanding
shares of our common stock and preferred stock, voting together as a single class.
The Written Consent approved and adopted the Cardiff
Lexington Corporation 2024 Equity Incentive Plan (the “Plan”) providing for the issuance of equity incentive awards,
such as stock options, restricted stock and restricted stock units, to our employees, consultants and directors.
The Written Consent is sufficient under the Nevada
Revised Statutes, our amended and restated articles of incorporation and our bylaws to approve the Plan. Accordingly, the Plan will
not be submitted to the other stockholders for a vote, and this Information Statement is being furnished to such other stockholders to
provide them with certain information concerning the Written Consent in accordance with the requirements of the Exchange Act, and the
regulations promulgated under the Exchange Act, including Regulation 14C.
AUTHORIZATION BY THE BOARD OF DIRECTORS AND
STOCKHOLDERS
On January 31, 2024, our board of directors unanimously
adopted the Plan. In connection with the adoption of these resolutions, our board of directors elected to seek the written consent of
stockholders in order to reduce associated costs and adopt the Plan in a timely manner. On January 31, 2024, Daniel Thompson, the Chairman
of the Board, and Alex Cunningham, our Chief Executive Officer (the “Majority Stockholders”), executed and delivered
the Written Consent to us.
Pursuant to the Nevada Revised Statutes, our amended
and restated articles of incorporation and our bylaws, any action required or permitted to be taken at a meeting of the stockholders may
be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority
of the voting power of our outstanding voting stock, except that if a different proportion of voting power is required for such an action
at a meeting, then that proportion of written consents is required.
Pursuant to the Nevada Revised Statutes, our amended
and restated articles of incorporation and our bylaws, approval of the Plan at a meeting would require the affirmative vote of at least
a majority of the total number of shares of our outstanding common stock, series A preferred stock, series B preferred stock, series C
preferred stock, series E preferred stock, series I preferred stock, series J preferred stock, series L preferred stock and series R preferred
stock, voting together as a single class.
Holders of shares of our common stock, series
B preferred stock, series C preferred stock, series E preferred stock, series J preferred stock and series L preferred stock are entitled
to one (1) vote per share. Holders of shares of our series I preferred stock are entitled to five (5) votes per share. Holders of our
series R preferred stock are entitled to a number of votes equal to the number of shares into which the series R preferred stock is convertible
(estimated to be 400 votes per share as of the Record Date). Each share of series A preferred stock is entitled to a number of votes at
any time equal to (i) 25% of the number of votes then held or entitled to be made by all other equity securities of our company, including,
without limitation, the common stock, plus (ii) one (1).
As of the Record Date, we had issued and outstanding
2,361,441 shares of common stock, 2 shares of series A preferred stock, 1,973,804 shares of series B preferred stock, 122 shares of series
C preferred stock, 155,750 shares of series E preferred stock, 13,980,000 shares of series I preferred stock, 1,713,584 shares of series
J preferred stock, 319,493 shares of series L preferred stock and 165 shares of series R preferred stock. As of the Record Date, the Majority
Stockholders owned 2,000,666 shares of common stock, 2 shares of series A preferred stock, 19,312 shares of series B preferred stock,
2 shares of series C preferred stock and 10,920,500 shares of series I preferred stock, or approximately 82% of the total votes eligible
to be cast.
Accordingly, we have obtained all necessary corporate
approvals. We are not seeking written consent from any other stockholder, and other stockholders will not be given an opportunity to vote
with respect to the actions described in this Information Statement. All necessary corporate approvals have been obtained. This Information
Statement is furnished solely for the purposes of advising stockholders of the action taken by Written Consent and giving stockholders
notice of such actions taken as required by the Exchange Act.
As the action taken by the Majority Stockholder
was by written consent, there will be no security holders’ meeting and representatives of the principal accountants for the current
year and for the most recently completed fiscal year will not have the opportunity to make a statement if they desire to do so and will
not be available to respond to appropriate questions from our stockholders.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding
beneficial ownership of our voting stock as of the Record Date by (i) each of our executive officers and directors; (ii) all of our executive
officers and directors as a group; and (iii) each person who is known by us to beneficially own more than 5% of our common stock. Unless
otherwise specified, the address of each of the persons set forth below is in care of our company, 3753 Howard Hughes Parkway, Suite
200, Las Vegas, NV 89169.
Name and Address of Beneficial Owner |
Title of Class |
Amount and Nature of Beneficial Ownership(1) |
Percent of Voting Stock(2) |
Daniel Thompson, Chairman of the Board(3) |
Common Stock |
46,449,007 |
40.39% |
Alex Cunningham, Chief Executive Officer and Director(4) |
Common Stock |
48,637,883 |
42.30% |
Matthew T. Shafer, Chief Financial Officer(5) |
Common Stock |
25,000 |
* |
Zia Choe, Chief Accounting Officer(6) |
Common Stock |
34,550 |
* |
All executive officers and directors (4 persons) |
Common Stock |
95,146,439 |
82.71% |
* Less than 1%
(1) | Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting
or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power
and investment power with respect to the shares of our common stock. |
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(2) | Percentage of total voting stock represents total ownership with respect to all shares of our voting stock,
which includes the common stock, series A preferred stock, series B preferred stock, series C preferred stock, series E preferred stock,
series I preferred stock, series J preferred stock, series L preferred stock and series R preferred stock, voting as a single class. As
of the Record Date, there were 2 shares of series A preferred stock, 1,973,804 shares of series B preferred stock, 122 shares of series
C preferred stock, 155,750 shares of series E preferred stock, 13,980,000 shares of series I preferred stock, 1,713,584 shares of series
J preferred stock, 319,493 shares of series L preferred stock and 165 shares of series R preferred stock issued and outstanding. Each
share of series A preferred stock is entitled to a number of votes at any time equal to 25% of the number of votes then held or entitled
to be made by all other equity securities of our company, plus one (equivalent to 19,122,550 votes as of the Record Date). Each share
of series B preferred stock, series C preferred stock, series E preferred stock, series J preferred stock and series L preferred stock
is entitled to one (1) vote per share. Each share of series I preferred stock is entitled to five (5) votes per share. Each share of series
R preferred stock is entitled to a number of votes equal to the number of shares into which the series R preferred stock is convertible
(estimated to be 400 votes per share as of the Record Date). For each beneficial owner above, any options, warrants or other convertible
securities exercisable within 60 days have been included in the denominator. |
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(3) | Includes (i) 1,000,333 shares of common stock, (ii) 1 share of series A preferred stock, (iii) 26,124
shares of common stock issuable upon the conversion of 13,062 shares of series B preferred stock, (iv) 100,000 shares of common stock
issuable upon the conversion of 1 share of series C preferred stock and (v) 5,240,000 shares of series I preferred stock. |
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(4) | Includes (i) 1,000,333 shares of common stock, (ii) 1 share of series A preferred stock, (iii) 12,500
shares of common stock issuable upon the conversion of 6,250 shares of series B preferred stock, (iv) 100,000 shares of common stock issuable
upon the conversion of 1 share of series C preferred stock and (v) 5,680,500 shares of series I preferred stock. |
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(5) | Represents 5,000 shares of series I preferred stock. |
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(6) | Represents 6,300 shares of common stock issuable upon the conversion of 3,150 shares of series B preferred
stock and 5,650 shares of series I preferred stock. |
We do not currently have any arrangements which
if consummated may result in a change of control of our company.
THE PLAN
General
On January 31, 2024, our board of directors, believing
it to be in the best interests of our company and our stockholders, approved the Plan. We believe that equity-based compensation is a
critical part of our compensation program. The Plan will enable the us to provide stock-based incentives that align the interests of our
employees, consultants and directors with those of our stockholders by motivating our employees to achieve long-term results and rewarding
them for their achievements. We also believe that the Plan will help us attract and retain talented employees, consultants and directors
who will contribute to our long-term success.
Material Terms of the Plan
The following is a summary which describes the
principal features of the Plan, but it is qualified in its entirety by reference to the full text of the Plan.
Purposes
The purpose of this Plan is to provide a means
whereby employees, directors, consultants of our company and its affiliates develop a sense of proprietorship and personal involvement
in the development and financial success of our company, and to encourage them to devote their best efforts to the business of our company,
thereby advancing the interests of our company and its stockholders. A further purpose of this Plan is to provide a means through which
we may attract able individuals to provide services to or for the benefit of our company and to provide a means for such individuals to
acquire and maintain share ownership in our company, thereby strengthening their concern for the welfare of our company.
Types of Awards
Awards that may be granted include incentive stock
options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, and performance compensation
awards. These awards offer our officers, employees, consultants and directors the possibility of future value, depending on the long-term
price appreciation of our common stock and the award holder’s continuing service with our company.
Eligible Recipients
Persons eligible to receive awards under the Plan
will be those officers, employees, directors and consultants of our company and its subsidiaries who are selected by the administrator.
Administration
The Plan is administered by our board of directors;
provided that if and when we establish a compensation committee, the compensation committee will administer the Plan. Among other things,
the administrator has the authority to select persons who will receive awards, determine the types of awards and the number of shares
to be covered by awards, and to establish the terms, conditions, performance criteria, restrictions and other provisions of awards. The
administrator has authority to establish, amend and rescind rules and regulations relating to the Plan.
Shares available subject to the plan
The maximum number of shares of our common stock
that may be delivered to participants under the Plan is 2,000,000, subject to adjustment for certain corporate changes affecting the common
stock, such as stock splits. In addition, the number of shares of common stock available for issuance under the Plan will automatically
increase on January 1 of each calendar year during the term of the Plan by an amount equal five percent (5%) of the total number of shares
of common stock issued and outstanding on December 31 of the immediately preceding calendar year. Shares subject to an award under
the Plan for which the award is canceled, forfeited or expires again become available for grants under the Plan. Shares subject to an
award that is settled in cash will not again be made available for grants under the Plan.
Stock Options
General. Share options give the option
holder the right to acquire from us a designated number of common stock at a purchase price that is fixed upon the grant of the option.
Stock options granted may be either tax-qualified stock options (so-called “incentive stock options”) or non-qualified stock
options. Subject to the provisions of the Plan, the administrator has the authority to determine all grants of stock options. That determination
will include: the number of stock subject to any option; the exercise price per stock; the expiration date of the option; the manner,
time and date of permitted exercise; other restrictions, if any, on the option or the stock underlying the option; and any other terms
and conditions as the administrator may determine.
Option Price. The exercise price for stock
options will be determined at the time of grant. Normally, the exercise price will not be less than the fair market value on the date
of grant. As a matter of tax law, the exercise price for any incentive share option awarded may not be less than the fair market value
of the shares on the date of grant. However, incentive stock option grants to any person owning more than 10% of our voting power must
have an exercise price of not less than 110% of the fair market value on the grant date.
Exercise of Options. An option may
be exercised only in accordance with the terms and conditions for the option agreement as established by the administrator at the time
of the grant. The option must be exercised by notice to us, accompanied by payment of the exercise price. Payments may be made either:
(i) in cash or its equivalent; (ii) by tendering (either by actual delivery or attestation) previously acquired stock having an aggregate
fair market value at the time of exercise equal to the exercise price; (iii) a cashless exercise (broker-assisted exercise) through a
“same day sale” commitment; (iv) by a combination of (i), (ii), and (iii); or (v) any other method approved or accepted by
the administrator in its sole discretion.
Expiration or Termination. Options,
if not previously exercised, will expire on the expiration date established by the administrator at the time of grant. In the case of
incentive stock options, such term cannot exceed ten years provided that in the case of holders of more than 10% of our voting power,
such term cannot exceed five years. Options will terminate before their expiration date if the holder’s service with our company
or a subsidiary terminates before the expiration date. The option may remain exercisable for specified periods after certain terminations
of employment, including terminations as a result of death, disability or retirement, with the precise period during which the option
may be exercised to be established by the administrator and reflected in the grant evidencing the award.
Incentive and Non-Qualified Options. As
described elsewhere in this summary, an incentive share option is an option that is intended to qualify under certain provisions of the
U.S. Internal Revenue Code of 1986, as amended (the “Code”), for more favorable tax treatment than applies to non-qualified
share options. Any option that does not qualify as an incentive share option will be a non-qualified share option. Under the Code, certain
restrictions apply to incentive stock options. For example, the exercise price for incentive stock options may not be less than the fair
market value of the shares on the grant date and the term of the option may not exceed ten years. In addition, an incentive stock option
may not be transferred, other than by will or the laws of descent and distribution, and is exercisable during the holder’s lifetime
only by the holder. In addition, no incentive stock options may be granted to a holder that is first exercisable in a single year if that
option, together with all incentive stock options previously granted to the holder that also first become exercisable in that year, relate
to shares having an aggregate fair market value in excess of $100,000, measured at the grant date.
Stock Appreciation Rights
Stock appreciation rights (“SARs”),
which may be granted alone or in tandem with options, have an economic value similar to that of options. When an SAR for a particular
number of stock is exercised, the holder receives a payment equal to the difference between the market price of the stock on the date
of exercise and the exercise price of the stock under the SAR. Again, the exercise price for SARs normally is the market price of the
shares on the date the SAR is granted. Under the Plan, holders of SARs may receive this payment - the appreciation value - either in cash
or shares valued at the fair market value on the date of exercise. The form of payment will be determined by us.
Restricted Awards
Restricted awards are shares awarded to participants
at no cost. Restricted awards can take the form of awards of restricted stock, which represent issued and outstanding shares subject to
vesting criteria, or restricted share units, which represent the right to receive shares subject to satisfaction of the vesting criteria.
Restricted stock awards are forfeitable and non-transferable until the shares vest. The vesting date or dates and other conditions for
vesting are established when the shares are awarded. These awards will be subject to such conditions, restrictions and contingencies as
the administrator shall determine at the date of grant. Those may include requirements for continuous service and/or the achievement of
specified performance goals.
Performance Criteria
Under the Plan, one or more performance criteria
will be used by the administrator in establishing performance goals. Any one or more of the performance criteria may be used on an absolute
or relative basis to measure the performance of our company, as the administrator may deem appropriate, or as compared to the performance
of a group of comparable companies, or published or special index that the administrator deems appropriate.
Other Material Provisions
Awards will be evidenced by a written agreement,
in such form as may be approved by the administrator. In the event of various changes to the capitalization of our company, such as stock
splits, stock dividends and similar re-capitalizations, an appropriate adjustment will be made by the administrator to the number of shares
covered by outstanding awards or to the exercise price of such awards. The administrator is also permitted to include in the written agreement
provisions that provide for certain changes in the award in the event of a change of control of our company, including acceleration of
vesting. Except as otherwise determined by the administrator at the date of grant, awards will not be transferable, other than by will
or the laws of descent and distribution. Prior to any award distribution, we are permitted to deduct or withhold amounts sufficient to
satisfy any employee withholding tax requirements. Our board also has the authority, at any time, to discontinue the granting of awards.
The board also has the authority to alter or amend the Plan or any outstanding award or may terminate the Plan as to further grants, provided
that no amendment will, without the approval of our stockholders, to the extent that such approval is required by law or the rules of
an applicable exchange, increase the number of shares available under the Plan, change the persons eligible for awards under the Plan,
extend the time within which awards may be made, or amend the provisions of the Plan related to amendments. No amendment that would adversely
affect any outstanding award made under the Plan can be made without the consent of the holder of such award.
New Plan Benefits
There have been no awards under the Plan. Future
awards, if any, that will be made to eligible persons under the Plan are subject to the discretion of the administrator and, therefore,
we cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to our officers, employees,
directors and consultants under the Plan.
INTERESTS OF CERTAIN PERSONS
IN MATTERS TO BE ACTED UPON
Although no equity grants have been made under
the Plan, our officers and directors, including the Majority Stockholders, are eligible to receive grants under the Plan. As a result,
they could be considered to have an interest in the approval of the Plan.
Other than as described in the prior paragraph,
none of our officers, directors or significant stockholders, or their affiliates, has any substantial interest in the actions described
in this information statement.
DISSENTER’S RIGHTS
OF APPRAISAL
Neither the Nevada Revised Statutes nor our amended
and restated articles of incorporation provide holders of our common stock with dissenters’ or appraisal rights in connection with
approval of the Plan.
STOCKHOLDERS ENTITLED TO
INFORMATION STATEMENT
This Information Statement is being mailed to
you on or about February 14, 2024. We will pay all costs associated with the distribution of this information statement, including
the costs of printing and mailing. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending this Information Statement to the beneficial owners of our common stock.
Our board of directors established January 31,
2024 as the Record Date for the determination of stockholders entitled to receive this Information Statement.
DELIVERY OF DOCUMENTS TO
STOCKHOLDERS SHARING AN ADDRESS
We may deliver only one Information Statement
to multiple stockholders sharing an address, unless we have received contrary instructions from one or more of the stockholders. We will
promptly deliver a separate copy of this Information Statement to a stockholder at a shared address to which a single copy was delivered,
upon written or oral request to us at the following address and telephone number:
Cardiff Lexington Corporation
3753 Howard Hughes Parkway, Suite 200
Las Vegas, NV 89169
Attn: Corporate Secretary
Phone: (844) 628-2100
In addition, a stockholder can direct a notification
to us at the phone number and mailing address listed above that the stockholder wishes to receive a separate information statement in
the future. Stockholders sharing an address that receive multiple copies can request delivery of a single copy of the information statements
by contacting us at the phone number and mailing address listed above.
WHERE YOU CAN FIND MORE
INFORMATION
We file periodic reports, proxy statements and
other information with the SEC. Our SEC filings are available from the SEC’s website at www.sec.gov, which contains reports, proxy
and information statements and other information regarding issuers that file electronically with the SEC. Additionally, we will make
these filings available, free of charge, on our website at www.cardifflexington.com as soon as reasonably practicable after we electronically
file such materials with, or furnish them to, the SEC. The information on our website, other than these filings, is not, and should not
be, considered part of this Information Statement and is not incorporated by reference into this Information Statement.
CARDIFF LEXINGTON CORPORATION
2024 EQUITY INCENTIVE PLAN
1.
Purpose; Eligibility.
1.1.
General Purpose. The name of this plan is the Cardiff Lexington Corporation 2024 Equity Incentive Plan (the “Plan”).
The purposes of the Plan are to (a) enable Cardiff Lexington Corporation, a Nevada corporation (the “Company”), and
any Affiliate to attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s long-term
success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the stockholders of the
Company; and (c) promote the success of the Company’s business.
1.2.
Eligible Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company
and its Affiliates and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants
and Directors after the receipt of Awards.
1.3.
Available Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock
Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards.
2.
Definitions.
“Affiliate”
means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under
common control with, the Company, including, without limitation, any corporation that is a “parent corporation” or a
“subsidiary corporation” with respect to the Company, and any other non-corporate entity that would be such a
subsidiary corporation if such entity were a corporation.
“Applicable
Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate
law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common
Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under the
Plan.
“Award”
means any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation
Right, a Restricted Award, a Performance Share Award or a Performance Compensation Award.
“Award
Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and
conditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronically
to any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.
“Beneficial
Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the
Exchange Act), 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 terms “Beneficially Owns” and “Beneficially
Owned” have a corresponding meaning.
“Board”
means the Board of Directors of the Company, as constituted at any time.
“Cause”
means:
With respect to any
Employee or Consultant: (a) if the Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates
and such agreement provides for a definition of Cause, the definition contained therein; or (b) if no such agreement exists, or if such
agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude
or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate;
(ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates;
(iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; or (iv) material violation of state or federal
securities laws.
With respect to any Director,
a determination by a majority of the disinterested Board members that the Director has engaged in any of the following: (a) malfeasance
in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing the director’s appointment; (d) willful
conversion of corporate funds; or (e) repeated failure to participate in Board meetings on a regular basis despite having received proper
notice of the meetings in advance.
The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.
“Change in
Control” means (a) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company
and its subsidiaries, taken as a whole, to any Person that is not a subsidiary of the Company; (b) the Incumbent Directors cease for
any reason to constitute at least a majority of the Board; (c) the date which is 10 business days prior to the consummation of a
complete liquidation or dissolution of the Company; (d) the acquisition by any Person of Beneficial Ownership of more than 50% (on a
fully diluted basis) of either (i) the then outstanding shares of Common Stock of the Company, taking into account as outstanding
for this purpose such Common Stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt,
and the exercise of any similar right to acquire such Common Stock (the “Outstanding Company Common Stock”) or
(ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Plan,
the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company or any Affiliate, (B) any
acquisition by any employee benefit plan sponsored or maintained by the Company or any subsidiary, (C) any acquisition which
complies with clauses, (i), (ii) and (iii) of subsection (e) of this definition or (D) in respect of an Award held by a particular
Participant, any acquisition by the Participant or any group of persons including the Participant (or any entity controlled by the
Participant or any group of persons including the Participant); or (e) the consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the
Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A)
the entity resulting from such Business Combination (the “Surviving Company”), or (B) if applicable, the ultimate
parent entity that directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of
the members of the board of directors (or the analogous governing body) of the Surviving Company (the “Parent
Company”), is represented by the Outstanding Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which the Outstanding Company Voting Securities were
converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same
proportion as the voting power of the Outstanding Company Voting Securities among the holders thereof immediately prior to the
Business Combination; (ii) no Person (other than any employee benefit plan sponsored or maintained by the Surviving Company or the
Parent Company) is or becomes the Beneficial Owner, directly or indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect members of the board of directors of the Parent Company (or the analogous governing
body) (or, if there is no Parent Company, the Surviving Company); and (iii) at least a majority of the members of the board of
directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company)
following the consummation of the Business Combination were Board members at the time of the Board’s approval of the execution
of the initial agreement providing for such Business Combination. The foregoing notwithstanding, if the Award constitutes
non-qualified deferred compensation under Section 409A of the Code, in no event shall a Change in Control be deemed to have occurred
unless such change shall satisfy the definition of a change in control under Section 409A of the Code.
“Code”
means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be
deemed to include a reference to any regulations promulgated thereunder.
“Committee”
means the compensation committee of the Board, or if no such committee has been established, the full Board, or a committee of one
or more members appointed to administer the Plan in accordance with Section 3.3 and Section 3.4.
“Common
Stock” means the common stock, $0.001 par value per share, of the Company, or such other securities of the Company as may
be designated by the Committee from time to time in substitution thereof.
“Consultant”
means any individual who is engaged by the Company or any Affiliate to render consulting or advisory services.
“Continuous
Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant
or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no
interruption or termination of the Participant’s Continuous Service; provided further that if any Award is subject to
Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For
example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of
Continuous Service unless otherwise required by Section 409A of the Code. The Committee or its delegate, in its sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal or family leave of absence.
“Director”
means a member of the Board.
“Disability”
means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section
6.10 hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination
of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations
where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section
6.10 hereof within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a
Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in
which a Participant participates. The foregoing notwithstanding, if the Award is subject to Section 409A of the Code, in no event
shall a Disability be deemed to have occurred unless such disability satisfies the requirements of Section 409A of the Code.
“Effective
Date” shall mean January 31, 2024.
“Employee”
means any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, for
purposes of determining eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or a
parent or subsidiary corporation within the meaning of Section 424 of the Code. Mere service as a Director or payment of a
director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or
an Affiliate.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market
Value” means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any
established stock exchange or a national market system, including without limitation, the New York Stock Exchange or the Nasdaq
Stock Market, the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing
price on the date immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported in
the Wall Street Journal or similar publication. In the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Committee and such determination shall be conclusive and binding on all persons; provided
that if an Award is subject to Section 409A of the Code, then the Fair Market Value shall be determined in accordance with
Section 409A of the Code.
“Grant
Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an
Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution,
then such date as is set forth in such resolution.
“Incentive Stock
Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
“Incumbent Directors” means
individuals who, on the Effective Date, constitute the Board, provided that any individual becoming a Director subsequent to the
Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors
then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee
for Director without objection to such nomination) shall be an Incumbent Director. No individual initially elected or nominated as a director
of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or
threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Director.
“Non-qualified Stock
Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
“Officer” means
a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
“Option” means
an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.
“Optionholder” means
a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
“Option Exercise
Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.
“Participant” means
an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Compensation
Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Section 7.4
of the Plan.
“Performance Criteria” means
the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period
with respect to any Performance Compensation Award under the Plan. The Performance Criteria that will be used to establish the Performance
Goal(s) shall be based on the attainment of specific levels of performance of the Company (or Affiliate, division, business unit or operational
unit of the Company) and may include the following: (a) net earnings or net income (before or after taxes); (b) basic or diluted
earnings per share (before or after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit or gross profit
growth; (f) net operating profit (before or after taxes); (g) return on assets, capital, invested capital, equity, or sales; (h) cash
flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after
taxes, interest, depreciation and/or amortization; (j) gross or operating margins; (k) improvements in capital structure; (l) budget and
expense management; (m) productivity ratios; (n) economic value added or other value added measurements; (o) share price (including, but
not limited to, growth measures and total stockholder return); (p) expense targets; (q) margins; (r) operating efficiency; (s) working
capital targets; (t) enterprise value; (u) safety record; (v) completion of acquisitions or business expansion; (w) achieving research
and development goals and milestones; (x) achieving product commercialization goals; and (y) other criteria as may be set by the Committee
from time to time.
Any one or more of the Performance
Criteria may be used on an absolute or relative basis to measure the performance of the Company and/or an Affiliate as a whole or any
division, business unit or operational unit of the Company and/or an Affiliate or any combination thereof, as the Committee may deem appropriate,
or as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion,
deems appropriate, or the Committee may select Performance Criterion (o) above as compared to various stock market indices. The Committee
also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance
Criteria specified in this paragraph, provided that if the Award is subject to Section 409A of the Code, such accelerated vesting does
not violate the rules of Code Section 409A. The Committee shall, within the first 90 days of a Performance Period (or, such longer or
shorter time period as the Committee shall determine) define in an objective fashion the manner of calculating the Performance Criteria
it selects to use for such Performance Period. In the event that applicable tax and/or securities laws change to permit the Committee
discretion to alter the governing Performance Criteria without obtaining stockholder approval of such changes, the Committee shall have
sole discretion to make such changes without obtaining stockholder approval.
“Performance Formula” means,
for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to
the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance
Compensation Award has been earned for the Performance Period.
“Performance Goals” means,
for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.
The Committee is authorized at any time during the first 90 days of a Performance Period (or such longer or shorter time period as the
Committee shall determine) or at any time thereafter, in its sole and absolute discretion, to adjust or modify the calculation of a Performance
Goal for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants based on the following
events: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles,
or other laws or regulatory rules affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders
for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively determinable
category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.
“Performance Period” means
the one or more periods of time not less than one fiscal quarter in duration, as the Committee may select, over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance
Compensation Award.
“Performance Share” means
the grant of a right to receive a number of actual shares of Common Stock or share units based upon the performance of the Company during
a Performance Period, as determined by the Committee.
“Permitted Transferee” means:
(a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management
of assets, and any other entity in which these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties
designated by the Committee in connection with a program established and approved by the Committee pursuant to which Participants may
receive a cash payment or other consideration in consideration for the transfer of a Non-qualified Stock Option; and (c) such other transferees
as may be permitted by the Committee in its sole discretion.
“Restricted Award” means
any Award granted pursuant to Section 7.2(a).
“Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
“Securities Act” means
the Securities Act of 1933, as amended.
“Stock Appreciation
Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, an amount
payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified
in the Stock Appreciation Right Award Agreement.
“Ten Percent Stockholder” means
a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any of its Affiliates.
3.
Administration.
3.1.
Authority of Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the
Board. Subject to the terms of the Plan and the provisions of Section 409A of the Code (if applicable), the Committee’s charter
and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee shall have the authority:
(a)
to construe and interpret the Plan and apply its provisions;
(b)
to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
(c)
to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(d)
to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve “insiders”
within the meaning of Section 16 of the Exchange Act;
(e)
to determine when Awards are to be granted under the Plan and the applicable Grant Date;
(f)
from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall be granted;
(g)
to determine the number of shares of Common Stock to be made subject to each Award;
(h)
to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;
(i)
to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and
vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;
(j)
to determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, the performance measures
that will be used to establish the performance goals, the performance period(s) and the number of Performance Shares earned by a Participant;
(k)
to designate an Award (including a cash bonus) as a Performance Compensation Award and to select the Performance Criteria that
will be used to establish the Performance Goals;
(l)
to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding
Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations
under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment
shall also be subject to the Participant’s consent;
(m)
to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination
of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under
the Company’s employment policies;
(n)
to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that
triggers anti-dilution adjustments;
(o)
to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any
instrument or agreement relating to, or Award granted under, the Plan; and
(p)
to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration
of the Plan.
The Committee also may modify
the purchase price or the exercise price of any outstanding Award, provided that if the modification effects a repricing, stockholder
approval shall be required before the repricing is effective.
3.2.
Committee Decisions Final. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and
binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.
3.3.
Delegation. The Committee may delegate administration of the Plan to a subcommittee or subcommittees of one or more members
of the Committee, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated.
The Committee shall have the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise
(and references in this Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish
the Committee at any time and re-vest in the Board the administration of the Plan. The members of the Committee shall be appointed by
and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional
members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused,
in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of
only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members
and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed
by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may
determine to be advisable.
3.4.
Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee
Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3.
However, if the Board intends to satisfy such exemption requirements, with respect to Awards to any insider subject to Section 16 of the
Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee
Directors. Within the scope of such authority, the Board or the Committee may delegate to a committee of one or more members of the Board
who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange
Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under
the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.
3.5.
Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of the Committee,
and to the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including
attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to
which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted
under the Plan, and against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has
been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding
that such Committee did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the
Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however,
that within 60 days after institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the
opportunity at its own expense to handle and defend such action, suit or proceeding.
4.
Shares Subject to the Plan.
4.1.
Subject to adjustment in accordance with Section 11, a total 2,000,000 shares of Common Stock shall be available
for the grant of Awards under the Plan. In addition, the number of shares of Common Stock available for issuance under the Plan will automatically
increase on January 1 of each calendar year during the term of the Plan by an amount equal to five percent (5%) of the total number of
shares of Common Stock issued and outstanding on December 31 of the immediately preceding calendar year. Shares of Common Stock granted
in connection with all Awards under the Plan shall be counted against this limit as one (1) share of Common Stock for every one (1) share
of Common Stock granted in connection with such Award. During the terms of the Awards, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Awards. Notwithstanding the foregoing, the maximum aggregate number of shares
that may be issued as Incentive Stock Options is equal to the maximum number of shares available for issuance under the plan without taking
into account any automatic increases in the share reserve according to this Section 4.1.
4.2.
Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.
4.3.
Any shares of Common Stock subject to an Award that is canceled, forfeited or expires prior to exercise or realization, either
in full or in part, shall again become available for issuance under the Plan. Any shares of Common Stock that again become available for
future grants pursuant to this Section 4.3 shall be added back as one (1) share. Notwithstanding anything to the contrary
contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan
if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding
obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement
of the Award.
5.
Eligibility.
5.1.
Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock
Options may be granted to Employees, Consultants and Directors and those individuals whom the Committee determines are reasonably expected
to become Employees, Consultants and Directors following the Grant Date.
5.2.
Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the Option Exercise
Price is at least 110% of the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisable after the expiration
of five years from the Grant Date.
6.
Option Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted
shall be subject to the conditions set forth in this Section 6, and to such other conditions not inconsistent with the Plan
as may be reflected in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified
Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares
of Common Stock purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any
Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option
is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms
of such Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical,
but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:
6.1.
Term. Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, no Incentive Stock Option
shall be exercisable after the expiration of 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the
Plan shall be determined by the Committee; provided, however, no Non-qualified Stock Option shall be exercisable after the expiration
of 10 years from the Grant Date.
6.2.
Exercise Price of An Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent
Stockholders, the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common
Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option
Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of the Code.
6.3.
Exercise Price of a Non-qualified Stock Option. The Option Exercise Price of each Non-qualified Stock Option shall be not
less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a
Non-qualified Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option
is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 409A of the Code.
6.4.
Consideration. The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted
by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) in
the discretion of the Committee, upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) by delivery
to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the
Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation
equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between
the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”);
(ii) a “cashless” exercise program established with a broker; (iii) by reduction in the number of shares of Common Stock otherwise
deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise;
(iv) any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee.
Unless otherwise specifically provided in the Option, the exercise price of Common Stock acquired pursuant to an Option that is paid by
delivery (or attestation) to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company that have been held for more than six months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes). Notwithstanding the foregoing, during any period for which the Common
Stock is publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system) an exercise
by a Director or Officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit
by the Company, directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect
to any Award under this Plan.
6.5.
Transferability of An Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding
the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.6.
Transferability of a Non-qualified Stock Option. A Non-qualified Stock Option may, in the sole discretion of the Committee,
be transferable to a Permitted Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. If the
Non-qualified Stock Option does not provide for transferability, then the Non-qualified Stock Option shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.7.
Vesting of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may,
but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may
vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for
an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event, provided that
if such Award is subject to Section 409A of the Code, such acceleration of vesting and exercisability complies with the provisions of
Section 409A of the Code.
6.8.
Termination of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement the terms
of which have been approved by the Committee, in the event an Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled
to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three
months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set
forth in the Award Agreement; provided that, if the termination of Continuous Service is by the Company for Cause, all outstanding
Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does
not exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.
6.9.
Extension of Termination Date. An Optionholder’s Award Agreement may also provide that if the exercise of the Option
following the termination of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance
of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the
expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination
of the Participant’s Continuous Service that is three months after the end of the period during which the exercise of the Option
would be in violation of such registration or other securities law requirements.
6.10.
Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending
on the earlier of (a) the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the
Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the
Award Agreement, the Option shall terminate.
6.11.
Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was
entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within
the period ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option
as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein
or in the Award Agreement, the Option shall terminate.
6.12.
Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such
limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.
7.
Provisions of Awards Other Than Options.
7.1.
Stock Appreciation Rights.
(a)
General. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation
Right so granted shall be subject to the conditions set forth in this Section 7.1, and to such other conditions not inconsistent
with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free Standing
Rights”) or in tandem with an Option granted under the Plan (“Related Rights”). All such grants shall be
exempt from, or comply with, the provisions of Section 409A of the Code.
(b)
Grant Requirements. Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the Option
is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive
Stock Option must be granted at the same time the Incentive Stock Option is granted.
(c)
Term of Stock Appreciation Rights. The term of a Stock Appreciation Right granted under the Plan shall be determined by
the Committee; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant
Date.
(d)
Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions
on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation
Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall
not be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon the occurrence
of a specified event, provided that if such Award is subject to Section 409A of the Code, such acceleration of vesting and exercisability
complies with the provisions of Section 409A of the Code.
(e)
Exercise and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company
an amount equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified
in the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on
the date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk
of forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined
by the Committee.
(f)
Exercise Price. The exercise price of a Free Standing Stock Appreciation Right shall be determined by the Committee, but
shall not be less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right.
A Related Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative
thereto shall have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the
related Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation
Right, by its terms, shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation
Right and related Option exceeds the exercise price per share thereof and no Stock Appreciation Rights may be granted in tandem with an
Option unless the Committee determines that the requirements of Section 7.1(b) are satisfied.
(g)
Reduction in the Underlying Option Shares. Upon any exercise of a Related Right, the number of shares of Common Stock for
which any related Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been
exercised. The number of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any
related Option by the number of shares of Common Stock for which such Option has been exercised.
7.2.
Restricted Awards.
(a)
General. A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical
Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number
of shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose
for such period (the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the
Plan shall be evidenced by an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section
7.2, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
(b)
Restricted Stock and Restricted Stock Units.
(i)
Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted
Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that
the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable
restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory
to the Committee, if applicable and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement.
If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock
power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the
rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to
receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall similarly be
held in escrow by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends so
placed in escrow at a rate and subject to such terms as determined by the Committee. The cash dividends or stock dividends so placed in
escrow by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed
to the Participant in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount
of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall
have no right to such dividends.
(ii)
The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock
shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment
of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee
may also grant Restricted Stock Units with a deferral feature, if permitted in Section 409A of the Code, whereby settlement is deferred
beyond the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock
Units”). At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common
Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”).
Dividend Equivalents shall not be paid but shall be credited to the Participant’s account, and interest may be credited on the amount
of cash Dividend Equivalents credited to the Participant’s account at a rate and subject to such terms as determined by the Committee.
Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock
Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement
of such Restricted Stock Unit or Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant
shall have no right to such Dividend Equivalents.
(c)
Restrictions.
(i)
Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted
Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is
used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions
on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable
Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights
of the Participant to such shares and as a stockholder with respect to such shares shall terminate without further obligation on the part
of the Company.
(ii)
Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration
of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable
Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the Participant to
such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part of the Company and (B) such
other terms and conditions as may be set forth in the applicable Award Agreement.
(iii)
The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock, Restricted Stock Units
and Deferred Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising
after the date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.
(d)
Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at
the time or times set forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted Award may be granted
or settled for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of
vesting in the terms of any Award Agreement upon the occurrence of a specified event, provided that if such Award is subject to Section
409A of the Code, such acceleration is consistent with the provisions of Section 409A of the Code.
(e)
Delivery of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period with
respect to any shares of Restricted Stock, the restrictions set forth in Section 7.2(c) and the applicable Award Agreement
shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the
stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted
Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Participant’s account with
respect to such Restricted Stock and the interest thereon, if any. Upon the expiration of the Restricted Period with respect to any outstanding
Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding Deferred Stock Units, the Company
shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding vested
Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with
respect to each such Vested Unit in accordance with Section 7.2(b)(ii) hereof and the interest thereon or, at the discretion
of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if
any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion,
elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment
is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common
Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in the case of
Deferred Stock Units, with respect to each Vested Unit.
(f)
Stock Restrictions. Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form
as the Company deems appropriate.
7.3.
Performance Share Awards.
(a)
Grant of Performance Share Awards. Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement.
Each Performance Share Award so granted shall be subject to the conditions set forth in this Section 7.3, and to
such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee shall have the
discretion to determine: (i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted
to any Participant; (ii) the performance period applicable to any Award; (iii) the conditions that must be satisfied for a Participant
to earn an Award; and (iv) the other terms, conditions and restrictions of the Award.
(b)
Earning Performance Share Awards. The number of Performance Shares earned by a Participant will depend on the extent to
which the performance goals established by the Committee are attained within the applicable Performance Period, as determined by the Committee.
No payout shall be made with respect to any Performance Share Award except upon written certification by the Committee that the minimum
threshold performance goal(s) have been achieved.
7.4.
Performance Compensation Awards.
(a)
General. The Committee shall have the authority, at the time of grant of any Award described in this Plan (other than Options
and Stock Appreciation Rights granted with an exercise price equal to or greater than the Fair Market Value per share of Common Stock
on the Grant Date), to designate such Award as a Performance Compensation Award. In addition, the Committee shall have the authority to
make an Award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award.
(b)
Eligibility. The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or
such shorter or longer time period as the Committee shall determine) which Participants will be eligible to receive Performance Compensation
Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance
Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance
Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation
Award shall be decided solely in accordance with the provisions of this Section 7.4. Moreover, designation of a Participant
eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible
to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive
an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period
or in any other period.
(c)
Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period,
the Committee shall have full discretion to select the length of such Performance Period (provided any such Performance Period shall be
not less than one fiscal quarter in duration), the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that
will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply to the
Company and the Performance Formula. Within the first 90 days of a Performance Period (or such shorter or longer time period as the Committee
shall determine), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise
its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section 7.4(c)
and record the same in writing.
(d)
Payment of Performance Compensation Awards.
(i)
Condition to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed
by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such
Performance Period.
(ii)
Limitation. A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the
extent that: (A) the Performance Goals for such period are achieved; and (B) the Performance Formula as applied against such Performance
Goals determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance
Period.
(iii)
Certification. Following the completion of a Performance Period, the Committee shall review and certify in writing whether,
and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the
amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine
the actual size of each Participant’s Performance Compensation Award for the Performance Period.
(iv)
Use of Discretion. The Committee shall not have the discretion to grant or provide payment in respect of Performance Compensation
Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained.
(v)
Timing of Award Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants
as soon as administratively practicable following completion of the certifications required by this Section 7.4 but in no
event later than 2 1/2 months following the end of the fiscal year during which the Performance Period is completed.
8.
Securities Law Compliance. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or
sold thereunder unless and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fully
complied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed
and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committee may require. The
Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however,
that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued
or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission
or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until
such authority is obtained.
9.
Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof,
shall constitute the general funds of the Company.
10.
Miscellaneous.
10.1.
Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Award
may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the
provisions in the Award stating the time at which it may first be exercised or the time during which it will vest, provided that if such
Award is subject to Section 409A of the Code, any such acceleration or exercisability or vesting is in compliance with the provisions
of Section 409A of the Code.
10.2.
Stockholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant
has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to
the date such Common Stock certificate is issued, except as provided in Section 11 hereof.
10.3.
No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto
shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the
Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without
notice and with or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
10.4.
Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed
to result from either (a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate
to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if
the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with
Section 409A of the Code if the applicable Award is subject thereto.
10.5.
Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the
Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition
of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation
paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to
withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock
of the Company.
11.
Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure
of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction
such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization
occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and
Stock Appreciation Rights, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 and the
maximum number of shares of Common Stock with respect to which any one person may be granted Awards during any period stated in Section
4 will be equitably adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration
subject to such Awards to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant
to this Section 11, unless the Committee specifically determines that such adjustment is in the best interests of the Company
or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 11
will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the
Code and in the case of Non-qualified Stock Options, ensure that any adjustments under this Section 11 will not constitute
a modification of such Non-qualified Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section
11 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange
Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and
binding for all purposes.
12.
Effect of Change in Control.
12.1.
In the discretion of the Board and the Committee, any Award Agreement may provide, or the Board or the Committee may provide by
amendment of any Award Agreement or otherwise, notwithstanding any provision of the Plan to the contrary, that in the event of a Change
in Control, Options and/or Stock Appreciation Rights shall become immediately exercisable with respect to all or a specified portion of
the shares subject to such Options or Stock Appreciation Rights, and/or the Restricted Period shall expire immediately with respect to
all or a specified portion of the shares of Restricted Stock or Restricted Stock Units.
12.2.
In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance
notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof,
the value of such Awards based upon the price per share of Common Stock received or to be received by other stockholders of the Company
in the event. In the case of any Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a
share of Common Stock in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without
the payment of consideration therefor.
12.3.
The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially
all of the assets and business of the Company and its Subsidiaries, taken as a whole.
13.
Amendment of the Plan and Awards.
13.1.
Amendment of Plan. The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof at any
time; provided that (a) no amendment to the persons eligible to receive Awards set forth in Section 1.2 or to
the maximum number of shares as to which Awards may be granted set forth in Section 4.1 (except for adjustments pursuant
to Section 11), shall be made without stockholder approval, and (b) no such amendment, alteration, suspension, discontinuation
or termination shall be made without stockholder approval if such approval is necessary to comply with any Applicable Laws (including,
without limitation, as necessary to comply with any tax or regulatory requirement applicable to this Plan or to prevent the Company from
being denied a tax deduction under Section 162(m) of the Code); and provided further, that any such amendment, alteration, suspension,
discontinuance or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of
any Award theretofore granted shall not to that extent be effective without the prior written consent of the affected Participant, holder
or beneficiary.
13.2.
Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary
or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided under the provisions
of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation
provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.
13.3.
No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment
of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
13.4.
Amendment of Awards. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive
any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted
or the associated Award Agreement, prospectively or retroactively; provided, however that any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant
with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant.
14.
General Provisions.
14.1.
Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits
with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events,
in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation,
confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant,
a termination of the Participant’s Continuous Service for Cause, or other conduct by the Participant that is detrimental to the
business or reputation of the Company and/or its Affiliates.
14.2.
Clawback. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government
regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant
to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law,
government regulation or stock exchange listing requirement).
14.3.
Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
14.4.
Sub-plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky, securities,
tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations
and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan,
but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.
14.5.
Deferral of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants the
opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event
that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an
Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual
of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Committee deems advisable for the administration of any such deferral program. All of such programs and procedures
shall be consistent with the rules of Section 409A of the Code.
14.6.
Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to establish
any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.
14.7.
Recapitalizations. Each Award Agreement shall contain provisions required to reflect the provisions of Section 11.
14.8.
Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amounts due
within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for
purposes of this Plan, thirty (30) days shall be considered a reasonable period of time.
14.9.
No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee
shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of
Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.
14.10.
Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with
this Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.
14.11.
Section 409A. The Plan and all Awards granted under the Plan are intended to comply with Section 409A of the Code to the
extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan and all Awards Agreements 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 of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding
anything to the contrary in the Plan or any Award Agreement, to the extent required to avoid accelerated taxation and tax penalties under
Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan or
Award Agreement during the six (6) month period immediately following the Participant’s termination of Continuous Service shall
instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’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 Participant under Section 409A of the Code and neither the Company nor the
Committee will have any liability to any Participant for such tax or penalty.
14.12.
Disqualifying Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the
Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant
Date of such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of such
Incentive Stock Option (a “Disqualifying Disposition”) shall be required to immediately advise the Company in writing
as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.
14.13.
Section 16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of
Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under
Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in
this Section 14.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid
such conflict.
14.14.
Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by
whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations
by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant
in writing with the Company during the Participant’s lifetime.
14.15.
Expenses. The costs of administering the Plan shall be paid by the Company.
14.16.
Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable,
whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality
or unenforceability and the remaining provisions shall not be affected thereby.
14.17.
Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the
construction of the provisions hereof.
14.18.
Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively
among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee
shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective
Award Agreements.
15.
Effective Date of Plan. The Plan shall become effective as of the Effective Date, but no Award shall be exercised
(or, in the case of a stock Award, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.
16.
Termination or Suspension of the Plan. The Plan shall terminate automatically on January 31, 2034. No Award shall
be granted pursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board may suspend or
terminate the Plan at any earlier date pursuant to Section 13.1 hereof, provided any such suspension or termination is consistent
with the provisions of Section 409A of the Code. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
17.
Choice of Law. Except to the extent governed by Federal law, the law of the State of Nevada shall govern all questions
concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of law rules.
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