CYCU 8-K
Cycurion, Inc. (CYCU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 5.02 Compensatory Arrangements of Certain Officers.
Approval of Amended and Restated 2025 Equity Incentive Plan
At the Annual Meeting held on July 23, 2026, Cycurion, Inc. (the “Company”) stockholders approved the Amended and Restated 2025 Equity Incentive Plan (the “A&R Equity Plan”), which was previously approved by the Board of Directors subject to stockholder approval.
The principal purpose of the A&R Equity Plan is to provide the Company with additional flexibility in structuring equity-based compensation arrangements and to assist the Company in attracting, retaining and motivating employees, directors and consultants.
The A&R Equity Plan amends and restates the Company’s existing 2025 Equity Incentive Plan to, among other things:
| ● | permit awards to be granted with respect to preferred stock of the Company in addition to common stock; | |
| ● | permit restricted preferred stock, preferred stock units, dividend equivalent rights based on preferred stock, stock appreciation rights based on preferred stock, and other equity awards referencing preferred stock; | |
| ● | provide that the share reserve may be satisfied through the issuance of either common stock or preferred stock, as determined by the plan administrator; | |
| ● | authorize adjustments and administration provisions applicable to awards referencing either common stock or preferred stock; and | |
| ● | retain substantially all other material provisions of the existing plan. |
The foregoing description of the A&R Equity Plan is qualified in its entirety by reference to the full text of the A&R Equity Plan, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendment to Second Amended and Restated Certificate of Incorporation
At the Annual Meeting, the Company’s stockholders approved an amendment to the Company’s Second Amended and Restated Certificate of Incorporation establishing a classified Board of Directors.
Effective July 23, 2026, Article 5.2(b) of the Company’s Second Amended and Restated Certificate of Incorporation was amended to divide the Board of Directors into three classes, designated Class I, Class II and Class III, with staggered terms of office. Following the initial classification, directors elected at each annual meeting will generally serve three-year terms and until their successors are duly elected and qualified.
The amendment further authorizes the Board of Directors to assign incumbent directors to the respective classes upon effectiveness of the classified board structure.
The foregoing description is qualified in its entirety by reference to the Third Amendment to the Second Amended and Restated Certificate of Incorporation, filed as Exhibit 3.1 hereto and incorporated herein by reference.
Amendment to Second Amended and Restated Bylaws
In connection with the stockholder approval of the classified board structure, the Company also adopted an Amendment to its Second Amended and Restated Bylaws, effective July 23, 2026.
The Amendment to the Second Amended and Restated Bylaws, among other things:
| ● | establishes a three-class Board of Directors with staggered terms; | |
| ● | provides that the initial Class I, Class II and Class III directors will serve until the Company’s 2027, 2028 and 2029 annual meetings, respectively; | |
| ● | provides that newly created directorships and vacancies on the Board will be filled by the remaining directors and that any director so elected will serve for the remainder of the applicable class term; | |
| ● | provides that directors may be removed only for cause by the holders of a majority of the voting power of the outstanding shares entitled to vote in the election of directors; | |
| ● | implements advance notice procedures for stockholder nominations of director candidates; and | |
| ● | makes related conforming changes to Article III of the Company’s bylaws. |
The foregoing description is qualified in its entirety by reference to the Amendment to the Second Amended and Restated Bylaws, filed as Exhibit 3.2 hereto and incorporated herein by reference.
Item 5.07 Submission of Matters to a Vote of Security Holders.
On July 23, 2026, the Company held its 2026 Annual Meeting of Stockholders (the “Annual Meeting”). Holders of the Company’s Voting Stock as of the close of business on June 1, 2026, the record date for the Annual Meeting, were entitled to vote at the Annual Meeting. As of the record date, there were 12,247,792 shares of Voting Stock outstanding and entitled to vote, consisting of 10,662,429 shares of Common Stock and 1,585,363 shares of Preferred Voting Stock. A quorum was present at the Annual Meeting, with 6,928,675 shares of Voting Stock represented in person or by proxy, exceeding the 6,123,897 shares required to constitute a quorum. The matters voted upon at the Annual Meeting and the final voting results are set forth below
Proposal No. 1 - Charter Amendment to Establish a Classified Board
The Company’s stockholders approved the Amendment to the Company’s Amended and Restated Certificate of Incorporation to, among other things, implement a classified board structure under which the Board of Directors is divided into three classes with staggered three-year terms.
The voting results were as follows:
| For | Against | Abstain | Broker Non-Votes | |||
| 4,168,106 | 527,110 | 66,747 | 2,166,712 |
Accordingly, Proposal No. 1 was approved. Since Proposal No. 1 was approved, the Company’s Board of Directors is now classified into three classes consisting of Class I, Class II and Class III directors with staggered terms as contemplated by the amendment to the Company’s Certificate of Incorporation and bylaws.
Proposal No. 2 - Election of Directors
The Company’s stockholders elected the following five directors to serve on the Company’s Board of Directors. Following approval of Proposal No. 1, the directors were elected to the classes and terms set forth in the proxy statement.
The voting results were as follows:
| Nominee | For | Withheld | Broker Non-Votes | |||
| Emmit McHenry | 3,728,569 | 1,033,395 | 2,166,711 | |||
| Peter Ginsberg | 4,220,380 | 541,584 | 2,166,711 | |||
| Reginald S. Bailey, Sr. | 4,221,528 | 540,436 | 2,166,711 | |||
| L. Kevin Kelly | 4,211,224 | 550,740 | 2,166,711 | |||
| Kevin E. O’Brien | 4,274,384 | 487,580 | 2,166,711 |
Each nominee received the requisite vote for election and was elected to the Board of Directors.
Proposal No. 3 - Ratification of Independent Registered Public Accounting Firm
The Company’s stockholders ratified the appointment of WWC, P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026.
The voting results were as follows:
| For | Against | Abstain | ||
| 6,625,700 | 189,272 | 113,703 |
Accordingly, Proposal No. 3 was approved.
Proposal No. 4 - Advisory Vote on Executive Compensation
The Company’s stockholders approved, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed in the Company’s definitive proxy statement filed with the U.S. Securities and Exchange Commission on June 30, 2026, as amended.
The voting results were as follows:
| For | Against | Abstain | Broker Non-Votes | |||
| 4,050,402 | 603,797 | 107,764 | 2,166,712 |
Accordingly, Proposal No. 4 was approved on an advisory basis.
Proposal No. 5 - Advisory Vote on the Frequency of Future Say-on-Pay Votes
The Company’s stockholders voted, on a non-binding advisory basis, on the frequency with which future advisory votes on executive compensation should occur.
The voting results were as follows:
| 1 Year | 2 Years | 3 Years | Abstain | Broker Non-Votes | ||||
| 4,080,005 | 122,433 | 179,018 | 380,508 | 2,166,711 |
Consistent with the recommendation of the Company’s Board of Directors and the preference expressed by the Company’s stockholders, the Board of Directors has determined that the Company will continue to hold an advisory vote on executive compensation every one year until the next required advisory vote on the frequency of such votes.
Proposal No. 6 - Approval of Amended and Restated Equity Incentive Plan
The Company’s stockholders approved the Company’s Amended and Restated Equity Incentive Plan, which, among other things, provides the Company with additional flexibility in structuring equity-based awards by authorizing grants with respect to preferred stock in addition to common stock.
The voting results were as follows:
| For | Against | Abstain | Broker Non-Votes | |||
| 3,904,101 | 488,422 | 369,440 | 2,166,712 |
Accordingly, Proposal No. 6 was approved. Since Proposal No. 6 was approved, the A&R Equity Plan became effective as of July 23, 2026 in accordance with its terms.
Proposal No. 7 - Reverse Stock Split Proposal
The Company’s stockholders approved one or more amendments to the Company’s Amended and Restated Certificate of Incorporation to effect one or more reverse stock splits of the Company’s issued and outstanding common stock at a ratio ranging from 3-for-1 to 75-for-1, with aggregate reverse stock split authority not exceeding 250-for-1, with the timing, ratio and implementation thereof to be determined by the Board of Directors in its discretion and as more fully described in the Company’s definitive proxy statement.
The voting results were as follows:
| For | Against | Abstain | ||
| 4,805,325 | 1,428,575 | 694,775 |
Accordingly, Proposal No. 7 was approved.
Proposal No. 8 - Adjournment Proposal
The Company’s stockholders approved a proposal authorizing the adjournment of the Annual Meeting, if necessary or appropriate, to solicit additional proxies in favor of one or more proposals presented at the Annual Meeting.
The voting results were as follows:
| For | Against | Abstain | ||
| 5,899,563 | 960,593 | 68,519 |
Accordingly, Proposal No. 8 was approved.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
| Exhibit | Description | |
| 3.1 | Third Amendment to the Second Amended and Restated Certificate of Incorporation of Cycurion, Inc. | |
| 3.2 | Amendment to the Second Amended and Restated Bylaws of Cycurion, Inc. | |
| 10.1 | Amended and Restated 2025 Equity Incentive Plan | |
| 104 | Cover Page Interactive Data File |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CYCURION, INC. | ||||
| Date: | July 23, 2026 | By: | /s/ L. Kevin Kelly | |
| Name: | L. Kevin Kelly | |||
| Title: | Chief Executive Officer | |||
Exhibit 3.1
THIRD AMENDMENT TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CYCURION, INC.
July 23, 2026
Cycurion, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the Corporation is “Cycurion, Inc.”.
2. The original certificate of incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on April 28, 2021 under the name Western Acquisition Ventures Corp., as amended and restated on January 11, 2022 (the “Amended and Restated Certificate of Incorporation”), as further amended on January 13, 2023, July 11, 2023, January 10, 2024, April 10, 2024, July 2, 2024, October 9, 2024, and January 8, 2025, under the name Western Acquisition Ventures Corp., as amended and restated on February 14, 2025, under the name Cycurion, Inc., as further amended on September 29, 2025 and October 24, 2025 (the “Second Amended and Restated Certificate of Incorporation”).
3. This third amendment (this “Amendment”) amends the Second Amended and Restated Certificate of Incorporation, as previously amended.
4. This Amendment is adopted pursuant to, and is within the authority granted by, the approval of the Corporation’s stockholders. On July 23, 2026, holders of a majority of the Corporation’s issued and outstanding Common Stock, including certain holders of preferred stock voting together with the Common Stock, approved a proposal to amend the Corporation’s Second Amended and Restated Certificate of Incorporation, as set forth in the Corporation’s definitive proxy statement filed with the U.S. Securities and Exchange Commission on June 30, 2026, as amended, which proposal became effective on July 23, 2026.
5. Article 5.2(b) of the Corporation’s Second Amended and Restated Certificate of Incorporation is hereby amended and restated to read in full as follows:
“(b) Classification of Board of Directors.
Except for any directors elected by the holders of any series of preferred stock pursuant to any Certificate of Designations relating to any series of preferred stock, the members of the Board of Directors shall be divided into three classes, as nearly equal in number as possible, designated Class I, Class II and Class III. Class I directors shall initially serve until the first annual meeting of stockholders following the initial classification of directors, Class II directors shall initially serve until the second annual meeting of stockholders following the initial classification of directors and Class III directors shall initially serve until the third annual meeting of stockholders following the initial classification of directors. Commencing with the first annual meeting of stockholders following the initial classification of directors, directors of each class the term of which shall then expire shall be elected to hold office for a three-year term and until the election and qualification of their respective successors in office or their earlier resignation or removal. In case of any increase or decrease, from time to time, in the number of directors, the number of directors in each class shall be apportioned as nearly equal as possible. The Board of Directors is authorized to assign members of the Board of Directors already in office to such classes as it may determine at the time the classification of the Board of Directors becomes effective.”
6. The Board determined that the Amendment is advisable and in the best interests of the Corporation and its stockholders.
7. All of the other provisions of the Second Amended and Restated Certificate of Incorporation, as amended, shall remain unchanged.
8. This Amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer on this July 23, 2026.
| By: | L. Kevin Kelly | |
| Name: | L. Kevin Kelly | |
| Title: | Chief Executive Officer |
Exhibit 3.2
AMENDMENT TO SECOND AMENDED AND RESTATED BYLAWS
OF CYCURION, INC.
This Amendment to the Second Amended and Restated Bylaws (this “Amendment”) of Cycurion, Inc., a Delaware corporation (the “Corporation”), is adopted as of July 23, 2026 pursuant to the authority granted to the Board of Directors and stockholders under the Delaware General Corporation Law and the Corporation’s governing documents.
WHEREAS, the Corporation previously adopted the Second Amended and Restated Bylaws (the “Bylaws”);
WHEREAS, the Board of Directors has determined it is advisable and in the best interests of the Corporation and its stockholders to amend the Bylaws to provide for a classified Board of Directors;
WHEREAS, the Board of Directors has approved this Amendment and has recommended that the stockholders approve this Amendment; and
WHEREAS, the stockholders of the Corporation have approved this Amendment in accordance with applicable law and the Bylaws.
NOW, THEREFORE, the Bylaws are hereby amended as follows:
| 1. | Article III is hereby amended by amending and restating Sections 3.02 through 3.06 as follows: |
ARTICLE III
DIRECTORS
Section 3.01 Powers; Number. The business and affairs of the Corporation shall be managed by or under the direction of the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws required to be exercised or done by the stockholders. Directors need not be stockholders or residents of the State of Delaware. Subject to the Certificate of Incorporation, the number of directors shall be fixed exclusively by resolution of the Board; provided, however, that in no event shall the number of directors be less than one.
Section 3.02 Classification; Election; Terms. The Board of Directors shall be divided into three classes, designated Class I, Class II, and Class III, as nearly equal in number as possible. The initial terms of the directors shall be staggered such that Class I shall serve until the 2027 annual meeting, Class II shall serve until the 2028 annual meeting, and Class III shall serve until the 2029 annual meeting. At each annual meeting thereafter, directors elected to succeed those whose terms expire shall be elected for a term of three (3) years. Each director shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation or removal. Any increase or decrease in the number of directors shall be apportioned among the classes so as to maintain such classes as nearly equal in number as possible.
Section 3.03 Advance Notice for Nomination of Directors.
(a) Only persons who are nominated in accordance with the following procedures, other than such persons nominated pursuant to a consent in lieu of a meeting pursuant to Section 4.05, shall be eligible for election as directors of the Corporation, except as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of one or more series of Preferred Stock to elect directors. Nominations of persons for election to the Board at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors as set forth in the Corporation’s notice of such special meeting, may be made (i) by or at the direction of the Board or (ii) by any stockholder holding 10% or more of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote at such meeting (x) who is a stockholder of record entitled to vote in the election of directors on the date of the giving of the notice provided for in this Section 3.03 and on the record date for the determination of stockholders entitled to vote at such meeting and (y) who complies with the notice procedures set forth in this Section 3.03. (b) In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice to the Secretary must be received by the Secretary at the principal executive offices of the Corporation (i) in the case of an annual meeting, not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so received not earlier than the opening of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting was first made by the Corporation; and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 10th day following the day on which public announcement of the date of the special meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting or special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in this Section 3.03.
(c) Notwithstanding anything in Section 3.03(b) to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting is greater than the number of directors whose terms expire on the date of the annual meeting and there is no public announcement by the Corporation naming all of the nominees for the additional directors to be elected or specifying the size of the increased Board before the close of business on the 90th day prior to the anniversary date of the immediately preceding annual meeting of stockholders, a stockholder’s notice required by this Section 3.03 shall also be considered timely, but only with respect to nominees for the additional directorships created by such increase that are to be filled by election at such annual meeting, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the date on which such public announcement was first made by the Corporation.
(d) To be in proper written form, a stockholder’s notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice (A) the name and record address of such stockholder as they appear on the Corporation’s books and the name and address of the beneficial owner, if any, on whose behalf the nomination is made, (B) the class or series and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made, (C) a description of all arrangements or understandings relating to the nomination to be made by such stockholder among such stockholder, the beneficial owner, if any, on whose behalf the nomination is made, each proposed nominee and any other person or persons (including their names), (D) a representation that such stockholder (or a qualified representative of such stockholder) intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such stockholder and the beneficial owner, if any, on whose behalf the nomination is made that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
(e) If the Board or the chairman of the meeting of stockholders determines that any nomination was not made in accordance with the provisions of this Section 3.03, or that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 3.03, then such nomination shall not be considered at the meeting in question. Notwithstanding the foregoing provisions of this Section 3.03, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders of the Corporation to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.
(f) In addition to the provisions of this Section 3.03, a stockholder shall also comply with all of the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 3.03 shall be deemed to affect any rights of the holders of Preferred Stock to elect directors pursuant to the Certificate of Incorporation.
(g) Directors shall be elected at the annual meeting of stockholders, and with the prior approval of the Board may be elected (i) at any special meeting of stockholders called for such purpose or (ii) by written consent in lieu of meeting. Directors elected at the annual meeting of stockholders, at any special meeting of stockholders or pursuant to a consent in lieu of a meeting, including to fill any vacancies as provided in Section 3.05 hereof, shall hold office for the term applicable to the class of directors to which such director has been assigned in accordance with Section 3.02, and until such director’s successor is elected and qualified or until the director’s earlier death, resignation or removal. This Section 3.03 shall also apply to any elected directors proposed by stockholders for vacant directorships and new directorships, and any such directors shall be assigned to the appropriate class of the Board and serve only for the remainder of the full term of such class.
Section 3.04 Compensation. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, the Board shall have the authority to fix the compensation of directors, including for service on a committee of the Board, and may be paid either a fixed sum for attendance at each meeting of the Board or other compensation as director. The directors may be reimbursed their expenses, if any, of attendance at each meeting of the Board. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service on the committee.
Section 3.05 Newly Created Directorships and Vacancies. Any newly created directorships resulting from an increase in the authorized number of directors and any vacancies occurring in the Board of Directors shall be filled solely by the affirmative votes of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director. Any director so elected shall be assigned by the Board to the class of directors to which such vacancy or directorship relates and shall hold office for the remainder of the full term of such class and until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation or removal.
Section 3.06 Removal. Except as otherwise provided by applicable law or the Certificate of Incorporation, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote in the election of directors, voting together as a single class.
| 2. | All other provisions of the Bylaws shall remain unchanged and in full force and effect. |
| 3. | This Amendment shall become effective upon approval by the Corporation’s stockholders at the 2026 Annual Meeting of Stockholders. |
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be executed by its duly authorized officer as of the date first written above.
| CYCURION, INC. | ||
| By: | /s/ L. Kevin Kelly | |
| Name: | L. Kevin Kelly | |
| Title: | Chief Executive Officer | |
Exhibit 10.1
AMENDED AND RESTATED 2025 EQUITY INCENTIVE PLAN
OF CYCURION, INC.
This Amended and Restated 2025 Equity Incentive Plan (the “Plan”) is effective as of July 23, 2026, subject to approval by the stockholders of Cycurion, Inc. (the “Company”).
WHEREAS, the Company previously adopted the Plan to provide incentives to employees, directors and consultants of the Company through equity-based awards;
WHEREAS, the Plan currently authorizes the issuance of awards based solely on shares of the Company’s common stock;
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is advisable and in the best interests of the Company and its stockholders to amend the Plan to permit awards denominated in, payable in, or otherwise based on shares of preferred stock of the Company, including the issuance of preferred stock as a form of compensatory equity under the Plan; and
WHEREAS, the Board has approved this Amendment, subject to stockholder approval.
NOW, THEREFORE, the Plan is hereby amended and restated as follows:
1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel, to provide additional incentives to Employees, Directors, and Consultants and to promote the success of the Company’s business, including by permitting the issuance of both Common Stock and Preferred Stock as forms of equity-based compensation.
2. Definitions. The following definitions shall apply as used herein and in the individual Award Agreements except as defined otherwise in an individual Award Agreement. In the event a term is separately defined in an individual Award Agreement, such definition shall supersede the definition contained in this Section 2.
(a) “Administrator” means the Board or any of the Committees appointed to administer the Plan.
(b) “Applicable Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of federal and state securities laws, the corporate laws of the state of the Company’s incorporation, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.
(c) “Assumed” means that pursuant to a Change in Control either (i) the Award is expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law) by the successor entity or a Related Entity thereof in connection with the Change in Control with appropriate adjustments to the number and type of securities of the successor entity or a Related Entity thereof subject to the Award and the exercise or purchase price thereof which at least preserves the compensation element of the Award existing at the time of the Change in Control as determined in accordance with the instruments evidencing the agreement to assume the Award and Applicable Laws.
(d) “Award” means the grant of an Option, an award of Preferred Stock, SAR, Dividend Equivalent Right, Restricted Stock, Restricted Stock Unit, or other right or benefit under the Plan.
(e) “Award Agreement” means the written agreement or instrument evidencing the grant of an Award executed by the Company and the Participant, including any amendments thereto. An Award Agreement may be in the form of an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or certificates, notices, or similar instruments, as determined by the Administrator.
(f) “Board” means the Board of Directors of the Company.
(g) “Cause” means, with respect to the termination by the Company or a Related Entity of the Participant’s Continuous Service, that such termination is for “Cause” as such term (or word of like import) is expressly defined in a then-effective written agreement between the Participant and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Participant’s (i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii) dishonesty, intentional misconduct, or material breach of any agreement with the Company or a Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.
(h) “Change in Control” means any of the following transactions; provided, however, that the Administrator shall determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding, and conclusive:
(i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated;
(ii) the sale, transfer, or other disposition of all or substantially all of the assets of the Company;
(iii) the complete liquidation or dissolution of the Company;
(iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock or Preferred Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger; or
(v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan or a Related Entity) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities.
(i) “Code” means the Internal Revenue Code of 1986, as amended.
(j) “Committee” means any committee composed of members of the Board appointed by the Board to administer the Plan.
(k) “Common Stock” means the shares of common stock, par value $0.0001 per share, of the Company.
(l) “Company” means Cycurion, Inc., a Delaware corporation, and any successor entity.
(m) “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.
(n) “Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under Applicable Laws. A Participant’s Continuous Service shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the Participant provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (in each case, except as otherwise provided in the Award Agreement). Notwithstanding the foregoing, except as otherwise determined by the Administrator, in the event of any spin-off of a Related Entity, service as an Employee, Director or Consultant for such Related Entity following such spin-off shall be deemed to be Continuous Service for purposes of the Plan and any Award under the Plan. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. For purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds three (3) months, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the expiration of such three (3) month period.
(o) “Director” means a member of the Board or the Board of Directors or board of managers of any Related Entity.
(p) “Disability” means as such term (or word of like import) defined under the long-term disability policy of the Company or the Related Entity to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Company or the Related Entity to which the Participant provides service does not have a long-term disability plan in place, “Disability” means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.
(q) “Dividend Equivalent Right” means a right entitling the Participant to compensation measured by dividends paid with respect to Common Stock or Preferred Stock.
(r) “Employee” means any person, including an Officer or Director, who is in the employ of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.
(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(t) “Fair Market Value” means, as of any date, the value of Share determined as follows:
(i) If the Shares are listed on one or more established stock exchanges or national market systems, including, without limitation, The New York Stock Exchange, The NYSE American, The Nasdaq Global Select Market, The Nasdaq Global Market, or The Nasdaq Capital Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Shares are regularly quoted on an automated quotation system (including the OTCQX® Best Market, the OTCQB® Venture Market, or the Pink® Open Market of the OTC Markets Group Inc.) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share = shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Shares of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good faith and in a manner consistent with Applicable Laws.
For purposes of Awards denominated in Preferred Stock, the Fair Market Value of such Preferred Stock shall be determined by the Administrator in good faith, taking into account such factors as the Administrator deems appropriate, including without limitation the rights, preferences and privileges of such Preferred Stock, any applicable valuation methodologies, and the requirements of Applicable Laws.
(u) “Good Reason” means, with respect to the termination by the Participant of the Participant’s Continuous Service, that such termination is for “Good Reason” as such term (or word of like import) is expressly defined in a then-effective written agreement between the Participant and the Company or a Related Entity, or in the absence of such then-effective written agreement and definition, means the occurrence of any of the following events or conditions unless consented to by the Participant (and the Participant shall be deemed to have consented to any such event or condition unless the Participant provides written notice of the Participant’s non-acquiescence within 30 days of the effective time of such event or condition): (i) a change in the Participant’s responsibilities or duties which represents a material and substantial diminution in the Participant’s responsibilities; (ii) a material reduction in the Participant’s base salary; provided that an across-the-board reduction in the salary level of substantially all other individuals in positions similar to the Participant’s by the same percentage amount shall not constitute such a salary reduction; or (iii) requiring the Participant to be based at any place outside a 50-mile radius from the Participant’s job location or residence except for reasonably required travel on business.
(v) “Immediate Family” means any 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 Participant’s household (other than a tenant or employee), a trust in which these persons (or the Participant) have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent (50%) of the voting interests.
(w) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
(x) “Non-Qualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option.
(y) “Officer” means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(z) “Option” means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.
(aa) “Parent” means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code.
(bb) “Participant” means an Employee, Director, or Consultant who receives an Award under the Plan.
(cc) “Plan” means this Company Amended and Restated 2025 Equity Incentive Plan.
(dd) “Post-Termination Exercise Period” means the period specified in the Award Agreement of not less than thirty (30) days, commencing on the date of termination (other than termination by the Company or any Related Entity for Cause) of the Participant’s Continuous Service, or such longer period as may be applicable upon death or Disability.
(ee) “Preferred Stock” means the shares of preferred stock, par value $0.0001 per share, of the Company, including any class or series thereof designated by the Board in accordance with the Company’s Certificate of Incorporation, as amended.
(ff) “Related Entity” means any (i) Parent or Subsidiary of the Company (or, if with respect to an entity other than the Company, Parent, or Subsidiary of such person) and (ii) any other entity controlling, controlled by, or under common control with the Company (or, if with respect to an entity other than the Company, controlling, controlled by, or under common control with such entity).
(gg) “Replaced” means that, pursuant to a Change in Control, the Award is replaced with a comparable stock award or a cash incentive award or program of the Company, the successor entity (if applicable) or a Related Entity of either of them which preserves the compensation element of such Award existing at the time of the Change in Control and provides for subsequent payout in accordance with the same (or, for the Participant, a more favorable) vesting schedule applicable to such Award. The determination of Award comparability shall be made by the Administrator and its determination shall be final, binding, and conclusive.
(hh) “Restricted Stock” means Shares issued under the Plan to the Participant for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator. Dividends payable with respect to Restricted Stock that is subject to performance vesting shall be held subject to the vesting of the underlying Shares.
(ii) “Restricted Stock Units” means an Award which may be earned in whole or in part upon the passage of time or the attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares, or other securities as established by the Administrator in the Award Agreement.
(jj) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.
(kk) “SAR” means a stock appreciation right that entitles the Participant to Shares or cash compensation, or a combination thereof, as established by the Administrator, measured by appreciation in the value of Common Stock or Preferred Stock.
(ll) “Securities Act” means the Securities Act of 1933, as amended
(mm) “Share” means a share of Common Stock and Preferred Stock, as determined by the Administrator.
(nn) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10 below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 25,000,000 Shares. For the avoidance of doubt, such Shares may consist of Common Stock or Preferred Stock, and Awards may be settled in shares of Common Stock, Preferred Stock, or a combination thereof, as determined by the Administrator. Subject to the provisions of Section 10 below, any increase to the maximum aggregate number of Shares which may be issued pursuant to all Awards shall be subject to stockholder approval. The Shares may be authorized, but unissued, or reacquired Common Stock or Preferred Stock. Any Shares issued in the form of Preferred Stock shall be counted against the share reserve on the basis of one Share for each such share issued, unless the Administrator determines that an equivalent value methodology is appropriate.
(b) Any Shares covered by an Award (or portion of an Award) that is forfeited, canceled, or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares that may be issued under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that, if unvested Shares are forfeited or repurchased by the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall become available for future grant under the Plan. To the extent not prohibited by the listing requirements of The Nasdaq Stock Market LLC (or other established stock exchange or national market system on which the Common Stock is listed) or Applicable Laws, any Shares covered by an Award that are surrendered or withheld: (i) in payment of the Award exercise or purchase price (including pursuant to the “net exercise” of an option pursuant to Section 7(b)(vi)) or (ii) in satisfaction of tax withholding obligations incident to the receipt, exercise, or vesting of an Award shall be deemed not to have been issued for purposes of determining the maximum number of Shares that may be issued pursuant to all Awards under the Plan, unless otherwise determined by the Administrator. References in this Section 3(b) to Shares shall include both Common Stock and Preferred Stock, and any Preferred Stock returned to the Plan shall again be available for issuance under the Plan.
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers. With respect to grants of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.
(ii) Administration With Respect to Consultants and Other Employees. With respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.
(iii) Officer Authorization to Grant Awards. The Board may authorize one or more Officers to grant Awards subject to such limitations as the Board determines from time to time and subject to limitations under Applicable Laws.
(b) Multiple Administrative Bodies. The Plan may be administered by different bodies with respect to Directors, Officers, Consultants, and Employees who are neither Directors nor Officers.
(c) Powers of the Administrator. Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion, to do all things that it determines to be necessary or appropriate in connection with the administration of the Plan, including, without limitation:
(i) to select the Employees, Directors, and Consultants to whom Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are granted hereunder;
(iii) to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions of any Award granted hereunder;
(vi) to establish additional terms, conditions, rules, or procedures to accommodate the rules or laws of applicable non-U.S. jurisdictions and to afford Participants favorable treatment under such rules or laws;
(vii) to amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the Participant’s rights under an outstanding Award shall not be made without the Participant’s written consent; provided, however, that an amendment or modification that may cause an Incentive Stock Option to become a Non-Qualified Stock Option shall not be treated as adversely affecting the rights of the Participant. Notwithstanding the foregoing, (A) the reduction or increase of the exercise price of any Option awarded under the Plan and the base appreciation amount of any SAR awarded under the Plan and (B) canceling an Option or SAR at a time when its exercise price or base appreciation amount (as applicable) exceeds the Fair Market Value of the underlying Shares, in exchange for another Option, SAR, Restricted Stock, or other Award or for cash, in each case, shall not be subject to stockholder approval;
(viii) to construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan; and
(ix) to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.
The express grant in the Plan of any specific power to the Administrator shall not be construed as limiting any power or authority of the Administrator; provided that the Administrator may not exercise any right or power reserved to the Board. Any decision made, or action taken, by the Administrator or in connection with the administration of this Plan shall be final, conclusive, and binding on all persons having an interest in the Plan.
(d) Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or as Officers or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related Entity to whom authority to act for the Board, the Administrator, or the Company is delegated shall be defended and indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit, or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit, or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation, action, suit, or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within thirty (30) days after the institution of such claim, investigation, action, suit, or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company’s expense to defend the same.
(e) Repayment. The Committee shall have the authority to require the participant to repay to the Company, within ten (10) days following receipt of written notice from the Company, any amount received or the amount realized as a result of any such exercise, vesting, issuance or payment.
5. Eligibility. Awards other than Incentive Stock Options may be granted to Employees, Directors, and Consultants. Incentive Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company. An Employee, Director, or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees, Directors, or Consultants who are residing in non-U.S. jurisdictions as the Administrator may determine from time to time.
6. Terms and Conditions of Awards.
(a) Types of Awards. The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director, or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash, or (iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions. Such awards include, without limitation, Options, SARs, sales or bonuses of Restricted Stock, Restricted Stock Units, or Dividend Equivalent Rights, and may include Awards that are denominated in, payable in, or otherwise based upon Preferred Stock, including but not limited to restricted Preferred Stock, Preferred Stock units, convertible Preferred Stock awards, or other equity-based awards referencing Preferred Stock. An Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, an Option will qualify as an Incentive Stock Option under the Code only to the extent the $100,000 limitation of Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on the aggregate Fair Market Value of the Shares subject to Options designated as Incentive Stock Options that become exercisable for the first time by a Participant during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For purposes of this calculation, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the grant date of the relevant Option. In the event that the Code or the regulations promulgated thereunder are amended after the date the Plan becomes effective to provide for a different limit on the Fair Market Value of Shares permitted to be subject to Incentive Stock Options, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment. Notwithstanding anything to the contrary, Incentive Stock Options may only be granted with respect to Common Stock and not Preferred Stock
(c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award, including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, forms of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria.
(d) Acquisitions and Other Transactions. The Administrator may issue Awards under the Plan in settlement, assumption, or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction.
(e) Deferral of Award Payment. The Administrator 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 or other consideration under an Award. The Administrator 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 Administrator deems advisable for the administration of any such deferral program.
(f) Separate Programs. The Administrator may establish one or more separate programs under the Plan for the purpose of issuing particular forms of Awards to one or more classes of Participants on such terms and conditions as determined by the Administrator from time to time.
(g) Early Exercise. The Award Agreement may, but need not, include a provision, whereby the Participant may elect at any time while an Employee, Director, or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.
(h) Term of Award. The term of each Award shall be the term stated in the Award Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Participant who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement. Notwithstanding the foregoing, the specified term of any Award shall not include any period for which the Participant has elected to defer the receipt of the Shares or cash issuable pursuant to the Award.
(i) Transferability of Awards. Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. Other Awards shall be transferable (i) by will or by the laws of descent and distribution and (ii) during the lifetime of the Participant, to the extent and in the manner authorized by the Administrator by gift or pursuant to a domestic relations order to members of the Participant’s Immediate Family. Notwithstanding the foregoing, the Participant may designate one or more beneficiaries of the Participant’s Award in the event of the Participant’s death on a beneficiary designation form provided by the Administrator.
(j) Time of Granting Awards. The date of grant of an Award shall for all purposes be the date on which the Administrator makes the determination to grant such Award, or such other later date as is determined by the Administrator.
(k) Award Exchange Programs. The Administrator may establish one or more programs under the Plan to permit selected Participants to exchange an Award under the Plan for one or more other types of Awards under the Plan on such terms and conditions as determined by the Administrator from time to time.
7. Award Exercise or Purchase Price, Consideration and Taxes.
(a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be such price as is determined by the Administrator in accordance with Applicable Laws.
(iii) In the case of SARs, the base appreciation amount shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(iv) In the case of the sale of Shares, the per Share purchase price, if any, shall be such price as is determined by the Administrator in accordance with Applicable Laws.
(v) In the case of other Awards, such price as is determined by the Administrator in accordance with Applicable Laws.
(vi) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d), the exercise or purchase price for the Award shall be determined in accordance with the provisions of the relevant instrument evidencing the agreement to issue such Award.
In the case of Awards denominated in Preferred Stock, the Administrator shall determine the applicable value, base price or exercise price, if any, in good faith and in a manner consistent with Applicable Laws.
(b) Consideration. Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator. In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following, provided that, if required under Applicable Laws, the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration required under such Applicable Laws:
(i) cash;
(ii) check;
(iii) delivery of the Participant’s promissory note with such recourse, interest, security, and redemption provisions as the Administrator determines as appropriate (but only to the extent that the acceptance or terms of the promissory note would not violate an Applicable Law);
(iv) surrender of Shares held for the requisite period, if any, necessary to avoid a charge to the Company’s earnings for financial reporting purposes, or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised;
(v) with respect to Options, payment through a broker-dealer sale and remittance procedure pursuant to which the Participant (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates (if then used) for the purchased Shares directly to such brokerage firm in order to complete the sale transaction;
(vi) with respect to Options, payment through a “net exercise”, such that, without the payment of any funds, the Participant may exercise the Option and receive the net number of Shares equal to (i) the number of Shares as to which the Option is being exercised, multiplied by (ii) a fraction, the numerator of which is the Fair Market Value per Share (on such date as is determined by the Administrator) less the exercise price per Share, and the denominator of which is such Fair Market Value per Share (the number of net Shares to be received shall be rounded down to the nearest whole number of Shares); or
(vii) any combination of the foregoing methods of payment.
The Administrator may at any time or from time to time, by adoption of or by amendment to the standard forms of Award Agreement described in Section 4(c)(iv), or by other means, grant Awards that do not permit all of the foregoing forms of consideration to be used in payment for the Shares or which otherwise restrict one or more forms of consideration.
(c) Taxes. No Shares shall be delivered under the Plan to any Participant or other person until such Participant or other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares. Upon exercise or vesting of an Award the Company shall withhold or collect from the Participant an amount sufficient to satisfy such tax obligations, including, but not limited to, by surrender of the whole number of Shares covered by the Award sufficient to satisfy the applicable tax withholding obligations incident to the exercise or vesting of an Award (limited to avoid, as determined by the Administrator, financial accounting charges under applicable accounting guidance and reduced to the lowest whole number of Shares if such number of Shares withheld would result in withholding a fractional Share with any remaining tax withholding settled in cash).
8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been made, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b)(v).
(b) Exercise of Award Following Termination of Continuous Service. In the event of termination of a Participant’s Continuous Service for any reason other than Disability or death (but not in the event of a Participant’s change of status from Employee to Consultant or from Consultant to Employee), such Participant may, but only during the Post-Termination Exercise Period (but in no event later than the expiration date of the term of such Award as set forth in the Award Agreement), exercise the portion of the Participant’s Award that was vested at the date of such termination or such other portion of the Participant’s Award as may be determined by the Administrator. The Participant’s Award Agreement may provide that upon the termination of the Participant’s Continuous Service for Cause, the Participant’s right to exercise the Award shall terminate concurrently with the termination of the Participant’s Continuous Service. In the event of a Participant’s change of status from Employee to Consultant, an Employee’s Incentive Stock Option shall convert automatically to a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change of status. To the extent that the Participant’s Award was unvested at the date of termination, or if the Participant does not exercise the vested portion of the Participant’s Award within the Post-Termination Exercise Period, the Award shall terminate.
(c) Disability of Participant. In the event of termination of a Participant’s Continuous Service as a result of his or her Disability, such Participant may, but only within six (6) months from the date of such termination (or such longer period as specified in the Award Agreement but in no event later than the expiration date of the term of such Award as set forth in the Award Agreement), exercise the portion of the Participant’s Award that was vested at the date of such termination; provided, however, that, if such Disability is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option, such Incentive Stock Option shall automatically convert to a Non-Qualified Stock Option on the day three (3) months and one (1) day following such termination. To the extent that the Participant’s Award was unvested at the date of termination, or if Participant does not exercise the vested portion of the Participant’s Award within the time specified herein, the Award shall terminate.
(d) Death of Participant. In the event of a termination of the Participant’s Continuous Service as a result of his or her death, or in the event of the death of the Participant during the Post-Termination Exercise Period or during the six (6)-month period following the Participant’s termination of Continuous Service as a result of his or her Disability, the Participant’s estate or a person who acquired the right to exercise the Award by bequest or inheritance may exercise the portion of the Participant’s Award that was vested as of the date of termination, within six (6) months from the date of death (or such longer period as specified in the Award Agreement but in no event later than the expiration of the term of such Award as set forth in the Award Agreement). To the extent that, at the time of death, the Participant’s Award was unvested, or if the Participant’s estate or a person who acquired the right to exercise the Award by bequest or inheritance does not exercise the vested portion of the Participant’s Award within the time specified herein, the Award shall terminate.
(e) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of an Award within the applicable time periods set forth in this Section 8 is prevented by the provisions of Section 9, the Award shall remain exercisable until one (1) month after the date the Participant is notified by the Company that the Award is exercisable, but in any event no later than the expiration of the term of such Award as set forth in the Award Agreement and only in a manner and to the extent permitted under Code Section 409A.
9. Conditions Upon Issuance of Shares.
(a) If at any time the Administrator determines that the delivery of Shares pursuant to the exercise, vesting, or any other provision of an Award is or may be unlawful under Applicable Laws, the vesting or right to exercise an Award or to otherwise receive Shares pursuant to the terms of an Award shall be suspended until the Administrator determines that such delivery is lawful and shall be further subject to the approval of counsel for the Company with respect to such compliance. The Company shall have no obligation to effect any registration or qualification of the Shares under federal or state laws.
(b) As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company and Section 11, the number and kind of Shares covered by each outstanding Award, and the number and kind of Shares that have been authorized for issuance under the Plan, but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for: (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, recapitalization, combination, or reclassification of the Shares, or similar transaction affecting the Shares; (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; or (iii) any other transaction with respect to Common Stock or Preferred Stock, including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete), or any similar transaction, including any recapitalization or reclassification involving Preferred Stock or the creation, modification, or conversion of any series of Preferred Stock; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” In the event of any distribution of cash or other assets to stockholders other than a normal cash dividend, the Administrator shall also make such adjustments as provided in this Section 10 or substitute, exchange or grant Awards to effect such adjustments (collectively, “adjustments”). Any such adjustments to outstanding Awards will be effected in a manner that precludes the enlargement of rights and benefits under such Awards. In connection with the foregoing adjustments, the Administrator may, in its discretion, prohibit the exercise of Awards or other issuance of Shares, cash or other consideration pursuant to Awards during certain periods of time.
Except as the Administrator determines, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award.
11. Changes in Control.
(a) Termination of Award to Extent Not Assumed in Change in Control. Effective upon the consummation of a Change in Control, all outstanding Awards under the Plan shall terminate. However, all such Awards shall not terminate to the extent they are Assumed in connection with the Change in Control.
(b) Acceleration of Award Upon Change in Control. The Administrator shall have the authority, exercisable either in advance of any actual or anticipated Change in Control or at the time of an actual Change in Control and exercisable at the time of the grant of an Award under the Plan or any time while an Award remains outstanding, to provide for the full or partial automatic vesting and exercisability of one or more outstanding unvested Awards under the Plan and the release from restrictions on transfer and repurchase or forfeiture rights of such Awards in connection with a Change in Control, on such terms and conditions as the Administrator may specify. The Administrator also shall have the authority to condition any such Award vesting and exercisability or release from such limitations upon the subsequent termination of the Continuous Service of the Participant within a specified period following the effective date of the Change in Control.
(c) Effect of Acceleration on Incentive Stock Options. Any Incentive Stock Option accelerated under this Section 11 in connection with a Change in Control shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 limitation of Section 422(d) of the Code is not exceeded.
12. Effective Date and Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 21, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend, or terminate the Plan. To the extent necessary to comply with Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required.
(b) No Award may be granted during any suspension of the Plan or after termination of the Plan.
(c) No suspension or termination of the Plan (including termination of the Plan under Section 12) shall adversely affect any rights under Awards already granted to a Participant.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan, including shares of Common Stock and Preferred Stock authorized for issuance under the Company’s Certificate of Incorporation.
(b) The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
15. Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company or any Related Entity thereof is reduced (for example, and without limitation, if the Participant is an Employee of the Company and the Employee has a change in status from full-time to part-time or takes an extended leave of absence) after the date of grant of any Award, the Administrator, in its sole discretion, may (x) make a corresponding reduction in the number of Shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting schedule applicable to such Award (in accordance with Section 409A of the Code, as applicable). In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so amended.
16. Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the U.S. Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any Shares until at least six (6) months following the date of grant of the Option or SAR (although the Award may vest prior to such date). Notwithstanding the foregoing, in accordance with the provisions of the U.S. Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six (6) months following the date of grant of such Award in the event of (i) such Employee’s death or Disability, (ii) a Change in Control in which such Award is not Assumed or Replaced, or (iii) such Participant’s retirement (as such term may be defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in accordance with the Company’s then current employment policies and guidelines). The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or an SAR will be exempt from his or her regular rate of pay.
17. Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to facilitate compliance with the Applicable Laws and practices in other countries in which the Company and its Related Entities operate or have Employees or other persons eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Related Entities shall be covered by the Plan; (b) determine which individuals outside the United States are eligible to participate in the Plan, which may include individuals who provide services to the Company or a Related Entity under an agreement with a foreign nation or agency; (c) modify the terms and conditions of the Plan with respect to any Award granted to individuals outside the United States or foreign nationals to comply with Applicable Laws or foreign policies, customs and practices; (d) modify the terms and conditions of any Award granted to individuals outside the United States or foreign nationals to comply with Applicable Laws or foreign policies, customs and practices (e) establish sub-plans, modify exercise procedures, and adopt other rules and/or procedures relating to the operation and administration of the Plan in jurisdictions other than the United States (including to qualify Awards for special tax treatment under laws of jurisdictions other than the United States); provided, however, that no such sub-plans and/or modifications shall increase the share limitations contained in Section 3; and (f) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Law in the United States.
18. Compliance with Section 409A of the Code. Unless otherwise expressly provided in an Award Agreement, the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A of the Code. If the Administrator determines that any Award granted hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award will incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and, to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement. To the extent that any amount constituting deferred compensation under Section 409A of the Code would become payable under this Plan by reason of a Change in Control, such amount shall become payable only if the event constituting a Change in Control would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of Code Section 409A. If a Participant holding an Award that constitutes deferred compensation under Section 409A of the Code is a specified employee within the meaning of Section 409A of the Code, no distribution or payment of any amount that is payable because of a separation from service (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that is six months following the date of such Participant’s separation from service or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule. In no event will any Participant have a right to payment or reimbursement or otherwise from the Company or its Related Entities, or their successors or assigns, for any taxes, penalties or interest imposed or other costs incurred as a result of Section 409A of the Code.
19. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not confer upon any Participant any right with respect to the Participant’s Continuous Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Participant’s Continuous Service at any time, with or without cause, including, but not limited to, Cause, and with or without notice. The ability of the Company or any Related Entity to terminate the employment of a Participant who is employed at will is in no way affected by its determination that the Participant’s Continuous Service has been terminated for Cause for the purposes of this Plan.
20. No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a “Pension Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.
21. Stockholder Approval. Continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. Any Award exercised before stockholder approval is obtained shall be rescinded if stockholder approval is not obtained within the time prescribed, and Shares issued on the exercise of any such Award shall not be counted in determining whether stockholder approval is obtained.
22. Information to Participants. To the extent required by Applicable Laws, the Company shall provide to each Participant, during the period for which such Participant has one or more Awards outstanding, copies of financial statements at least annually. The Company shall not be required to provide such information to persons whose duties in connection with the Company assure them access to equivalent information.
23. Unfunded Obligation. Participants shall have the status of general unsecured creditors of the Company. Any amounts payable to Participants pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, that the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of the Company or a Related Entity. The Participants shall have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.
24. Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
25. Electronic Delivery. Any reference herein to a “written” agreement or document will include any agreement or document delivered electronically or posted on the Company’s intranet (or other shared electronic medium indicated by the Company to which the Participant has access).
26. Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board, the submission of the Plan to the stockholders of the Company for approval, nor any provision of the Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of Awards otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.