PLSH 8-K
Panacea Life Sciences Holdings, Inc. (PLSH)
8-K
2021-06-29
For: 2021-06-28
View Original
Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): June 28,
2021
EXACTUS, INC.
(Exact
name of the registrant as specified in its charter)
|
Nevada
|
000-55828
|
27-1085858
|
|
(State
or other jurisdiction of
|
(Commission
|
(IRS
Employer
|
|
of
incorporation)
|
File
Number)
|
Identification
No.)
|
80 NE 4th Avenue, Suite 28, Delray Beach, FL 33483
(Address
of principle executive offices) (Zip code)
Registrant’s
telephone number, including area code: (509) 999-9695
_____________________________________________________________________
(Former
name or address if changed since last report)
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 (see General Instruction A.2
below):
[
] 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).
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)).
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)).
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
|
Trading symbol(s)
|
|
Name of exchange on which registered
|
|
N/A
|
|
N/A
|
|
N/A
|
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).
Emerging
growth company ☐
If 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. ☐
SECTION 3 – SECURITIES AND TRADING MARKETS
Item
3.02 Unregistered Sales of Equity Securities.
During
the first and second quarter of 2021 we resolved numerous claims
and lawsuits against the Company. As a result, we agreed to issue a
total of approximately 2,959,616 shares of our restricted common
stock, par value $0.001 per share (“Common Stock”) in
connection with previously unpaid employee compensation and claims
asserted by various vendors and consultants, as more fully
described in Item 7.01. The foregoing
issuances do not involve any public offering and are exempt
from registration pursuant to Section 4(a)(2) of the Securities Act
of 1933, as amended.
After
giving effect to the issuances described above, and the conversion
of shares of our preferred stock (without regard to the beneficial
ownership blockers of our Series A Preferred Stock outstanding), a
total of 145,654,137 shares of our Common Stock will be issued and
outstanding, on a fully-diluted basis. As of the date of this
Agreement, 450 shares of our Series A Preferred Stock and 1,500,000
shares of our Series B-1 Preferred Stock and 6,000,000 shares of
our Series B-2 Preferred Stock are issued and outstanding which are
exercisable for our Common Stock. 9,000,000 shares of our Common
Stock may be issued upon conversion of our Series A Preferred Stock
outstanding, 187,000 shares of our Common Stock may be issued upon
conversion of our Series B-1 Preferred Stock outstanding, and
750,000 shares of our Common Stock may be issued upon conversion of
our Series B-2 Preferred Stock outstanding.
Item
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On June
28, 2021, Lawrence Wert, our Executive Chairman, and Andrew
Johnson, our Chief Strategy Officer were appointed the Principal
Executive Officer and Principal Accounting Officer, respectively,
of the Company. On June 26, 2021, Daniel Alberttis resigned as the
Company’s Chief Operating Officer and Director and John Price
resigned as the Company’s Chief Financial Officer and
Director. Mr. Price was chairman of our Audit Committee and a
member of our Compensation and Governance Committee. The
resignations were not a result of any disagreement between the
Company on any matter relating to the Compay’s operations,
policies or practices. Effective with the resignation the size of
our Board of Directors (“Board”) is two directors
consisting of Mr. Wert and Julian Pittam. Mr. Wert and Mr. Johnson
were awarded 1,000,000 and 100,000 five-year options, respectively,
under the 2021 Plan subject to approval of the 2021 Plan by
shareholders vesting 50% upon issuance and 50% upon the
satisfaction of certain conditions.
2021 Plan
On June
28, 2021, the Board approved and adopted, subject to shareholder
approval on or prior to June 28, 2022, the Company’s 2021
Equity Incentive Plan (the “2021 Plan”).
The
2021 Plan authorizes the issuance of up to an aggregate maximum of
20% of the issued and outstanding shares of the Common Stock after
giving effect to future anticipated issuances, subject to
adjustment as described in the 2021 Plan. The 2021 Plan shall be
administered by the Board or a committee appointed by the Board
(the “Committee”), which shall consist of two or more
directors who qualify as (i) “Independent Directors”
(as such term is defined under the rules of the NASDAQ Stock
Market), and (ii) “Non-Employee Directors” (as such
term is defined in Rule 16b-3 of the Securities Exchange Act of
1934, as amended). The Committee, in its discretion, selects the
individuals to whom awards may be granted, the time or times at
which such awards are granted, and the terms of such awards. The
2021 Plan authorizes the Company to grant stock options, restricted
stock, preferred stock, other stock based awards, and performance
awards. Awards may be granted to the Company’s directors,
officers, consultants, advisors and employees. Unless earlier
terminated by the Board, the 2021 Plan will terminate, and no
further awards may be granted, after June 27, 2031.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal Year.
Reverse Split
On June
26, 2021, the Board authorized the Company to file a certificate of
amendment (the “Amendment”) to its Amended and Restated
Articles of Incorporation with the Secretary of State of the State
of Nevada in order to effectuate a reverse stock split of the
Company’s issued and outstanding common stock, par value
$0.001 per share on a one (1) for twenty-eight (28) basis (the
“Reverse Stock Split”).
The
Reverse Stock Split will be effective with the Financial Industry
Regulatory Authority (“FINRA”) upon notification from
FINRA and the Company’s Common Stock is expected to
thereafter trade with a “D” added, under the symbol
“EXDID” or other symbol, for the 20 business days
following approval to designate that it is trading on a
post-reverse split basis. The Company will file an additional
Current Report on Form 8-K and issue a press release upon
notification of the trading dates by FINRA and will have a new
CUSIP number together with an amendment to its Articles of
Incorporation with the State of Nevada upon effectiveness by
FINRA.
As a
result of the Reverse Stock Split, every twenty-eight (28) shares
of the Company’s pre-reverse split Common Stock will be
combined and reclassified into one share of the Company’s
Common Stock. No fractional shares of Common Stock will be issued
as a result of the Reverse Stock Split. Shareholders who otherwise
would be entitled to a fractional share shall receive the next
higher number of whole shares.
As
previously disclosed on our Current Report on Form 8-K filed on
April 6, 2021, on March 31, 2021, shareholders of record holding a
majority of the outstanding voting capital of the Company approved
a reverse stock split of the Company’s issued and outstanding
common stock by a ratio of not less than one-for-twenty-five and
not more than one-for-one-hundred at any time prior to December 31,
2021, with such ratio to be determined by the Company’s Board
of Directors, in its sole discretion. The Reverse Stock Split ratio
of one (1) for twenty-eight (28) basis was approved by the
Company’s Board of Directors on June 28, 2021.
Amended Articles and Bylaws
On June
26, 2021, the Board approved an amendment to the Company’s
Articles of Incorporation (“Articles Amendment”) and
submission of the Articles Amendment to the shareholders of the
Company for approval, and an amendment to the Company’s
bylaws (the “Bylaw Amendment”).
The
Articles Amendment, which is subject to shareholder approval and
filing with the State of Nevada, generally updates Article VII
“Indemnity” to provide indemnification for directors,
officers, employees and agents of the Company serving at the
request of the Company or another entity.
The
Bylaw Amendment, which is immediately
effective upon approval by the Board, generally provides various
procedures and requirements for Special Meetings of shareholders,
sets the quorum for meetings of shareholders for the transaction of
any business to one-third (1/3) of the outstanding shares of stock
entitled to vote, establishes procedures for action by written
consent and establishing a record date for voting by written
consent, establishes certain advance notice requirements for
shareholder proposals, provides for discretionary and mandatory
indemnification of directors, officers, employees and agents of the
Company and establishes the State of New York as the sole and
exclusive forum for certain disputes and litigation, including any
derivative action, an action claiming breach of fiduciary duty, any
action asserting a claim arising under the Nevada Revised Statues,
the Articles of Incorporation of the Bylaws, and under any
“internal affairs” doctrine.
The
foregoing descriptions of the Articles Amendment and Bylaw
Amendment do not purport to be complete and are qualified in their
entirety by reference to the complete text of the Articles
Amendment and Bylaw Amendment which shall be filed prior to the due
date for the Company’s next quarterly report on Form 10-Q in
accordance with the Rules and Regulations of the SEC.
SECTION 7 - REGULATION FD
Item 7.01 Regulation FD Disclosure.
Two
pending lawsuits against the Company have been settled and
dismissed: (1) Case No. 2021-011761 CA 01 pending in Miami-Dade
County, Florida; and (2) Case No. 50-2021 CA 000853 MB pending in
Palm Beach County, Florida. The terms of the settlements are
required to be kept confidential.
SECTION 8 – OTHER EVENTS
Item 8.01 Other Events.
On June
28,2021 the Board established three new series of preferred stock
(“Preferred Stock”) designated as Series C Convertible
Preferred Stock, Series C-1 Convertible
Preferred Stock and Series D Convertible
Preferred Stock and authorized the filing of a Certificate of
Designation of Preferences, Rights and Limitations of Series C
Convertible Preferred Stock, Series C-1 Convertible Preferred Stock
and Series C-2 Convertible Preferred Stock in the State of Nevada.
The Board designated for issuance 1,000,000, 10,000 and 10,000
shares, respectively, for issuance. Each share of Preferred Stock
is convertible into shares of the Company’s Common Stock as
provided in the Certificate of Designation therefore. No shares of
Preferred Stock have been issued as of the date of this Current
Report on Form 8-K.
The Company
estimates approximately $585,000 of previously reported liabilities
and potential payments were eliminated or settled during the second
quarter of 2021 upon the payment of approximately $115,000 cash and
agreement to issue shares of Common Stock, including approximately
$335,000 previously reported as “Accounts Payable”,
$250,000 previously reported as “Subscription Payable”
relating to the acquisition of Green Goddess Extracts, LLC and
$88,000 to a third-party vendor related to our prior Interim Chief
Executive Officer. In addition, during
most of 2020 we were engaged in marketing of hemp derived products
sourced from our leased farming operations. Through our
majority-owned subsidiary, Exactus One World, LLC
(“EOW”) we held one-year leases for approximately 200
acres of farmland in southwest Oregon for growing hemp. Our initial
efforts to pursue agricultural development, including farm soil
preparation, planting, harvesting, transportation and drying, were
situated at farms from which we shipped hemp biomass to third
parties for processing. Due to a rapid decline in commodity prices
for industrial hemp experienced during 2020 we suspended all
farming operations during 2020, and entered into a supply agreement
with Hemptown USA, Inc. to provide us with industrial hemp.
During the second quarter of 2021, the Company secured confirmation
from the managers of EOW that the leases terminated on or about
February 2020. Accordingly, the Company does not believe it is
required to account for future leasing obligations following the
termination of such leases and expects to seek to eliminate various
accrued lease obligations from future financial reports and filings
with the SEC, subject to confirmation from our
auditors.
The
foregoing description of the Series C Convertible Preferred Stock,
Series C-1 Convertible Preferred Stock and Series D Convertible
Preferred Stock does not purport to be complete and is qualified in
its entirety by reference to the complete text of the Certificates
of Designation of Preferences, Rights and Limitations, which are
filed as Exhibit 3.1, 3.2 and 3.3 hereto and which is incorporated
herein by reference.
Our Quarterly
Report for the quarter ended March 31, 2021 filed with the SEC
incorrectly reported the number of shares of our Series A Preferred
Stock authorized and outstanding. As previously reported in our
Current Report on Form 8-K filed with the SEC on
February 18, 2021, on February 16, 2021 we authorized 1,000 shares
of a new 0% Series A Convertible Preferred Stock with a stated
value of $1,000 per share and a conversion price of $0.05 per share
and issued 500 shares to an institutional
investor.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)
Exhibits.
The
exhibit listed in the following Exhibit Index is furnished as part
of this Current Report on Form 8-K.
|
Exhibit No.
|
Description
|
|
|
|
|
Certificate of Designation of Preferences, Rights and Limitations
of Series C Convertible Preferred Stock.
|
|
|
|
|
|
Certificate of Designation of Preferences, Rights and Limitations
of Series C-1 Convertible Preferred Stock.
|
|
|
|
|
|
Certificate of Designation of Preferences, Rights and Limitations
of Series D Convertible Preferred Stock.
|
|
|
|
|
|
2021 Executive Incentive Plan.
|
|
|
|
|
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on behalf of the
undersigned hereunto duly authorized.
|
|
EXACTUS,
INC.
|
|
Date:
June 28, 2021
|
By:
/s/ Lawrence
Wert
Name:
Lawrence Wert
Title:
Principal Executive Officer
|
Exhibit
3.1
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C CONVERTIBLE PREFERRED STOCK
The
undersigned, Chief Executive Officer of Exactus, Inc., a Nevada
corporation (the “Corporation”), DOES HEREBY CERTIFY
that the following resolutions were duly adopted by the Board of
Directors of the Corporation by unanimous written consent on June
__, 2021;
WHEREAS, the Board of Directors is
authorized within the limitations and
restrictions stated in the Certificate of Incorporation of the
Corporation, as amended, to provide by resolution or resolutions
for the issuance of Fifty
Million (50,000,000) shares of Preferred Stock, par value $0.0001 per share, of the Corporation,
in such series and with such designations, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions as the
Corporation’s Board of Directors shall fix by resolution or
resolutions providing for the issuance thereof duly adopted by the
Board of Directors; and
WHEREAS, it is the desire of the Board of
Directors, pursuant to its authority as aforesaid, to authorize and
fix the terms of a series of Preferred Stock and the number of
shares constituting such series; and
WHEREAS, all
currency amounts set forth herein shall be stated in United States
Dollars (USD).
NOW,
THEREFORE, BE IT RESOLVED:
1. Designation and Authorized
Shares. The Corporation shall be authorized to issue one
million (1,000,000) shares of Series C Convertible Preferred Stock,
par value $0.0001 per share (the “Series C Preferred
Stock”).
2. Stated
Value. Each share of Series C
Preferred Stock shall have a stated value of $6.046 per share
(the “Stated Value”). The
Series C Preferred Stock shall have a participation right as to
certain contingent recoveries of the Panacea Life Sciences, Inc.
(“Panacea”), the Corporation’s wholly-owned
subsidiary, up to 100% of the Stated Value of Series C Preferred
Stock, as more particularly set forth in Section
6.
3. Liquidation.
3.1 Upon the
liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of
Series C Preferred Stock shall be entitled to receive, for each
share thereof, out of assets of the Corporation legally available
therefor, a preferential amount in cash equal to (and not more
than) the Stated Value. All preferential amounts to be paid to the
holders of Series C Preferred Stock in connection with such
liquidation, dissolution or winding up shall be paid before the
payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to the holders of any
other class or series of capital stock of the Corporation other
than the Series C-1 Convertible Preferred Stock and the Series D
Convertible Preferred Stock of the Corporation which shall rank
parri passu with the Series C-1 Preferred Stock. If upon any such
distribution the assets of the Corporation shall be insufficient to
pay the holders of the outstanding shares of Series C Preferred
Stock, the Series C-1 Convertible Preferred Stock and the Series D
Convertible Preferred Stock the full amounts to which they shall be
entitled, such holders shall share ratably in any distribution of
assets in accordance with the sums which would be payable on such
distribution if all sums payable thereon were paid in
full.
-1-
3.2 Any
distribution in connection with the liquidation, dissolution or
winding up of the Corporation, or any bankruptcy or insolvency
proceeding, shall be made in cash to the extent possible. Whenever
any such distribution shall be paid in property other than cash,
the value of such distribution shall be the fair market value of
such property as determined in good faith by the Board of Directors
of the Corporation.
4. Voting.
Except as otherwise expressly required by law, each holder of
Series C Preferred Stock shall be entitled to vote on all matters
submitted to shareholders of the Corporation and shall be entitled
to the number of votes for each share of Series C Preferred Stock
owned at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is
established, at the date such vote is taken or any written consent
of shareholders is solicited, equal to the number of shares of
Common Stock (as defined below) that such shares of Series C
Preferred Stock are convertible into at such time. Except as
otherwise required by law, the holders of shares of Series C
Preferred Stock shall vote together with the holders of Common
Stock on all matters and shall not vote as a separate
class.
5. Conversion.
5.1 Conversion Right. Each holder
of Series C Preferred Stock may, from time to time, convert any or
all of such holder’s shares of Series C Preferred Stock into
fully paid and non-assessable shares of Common Stock in an amount
equal to 64.1 shares of the Corporation’s common stock, par
value $0.0001 per share (the “Common Stock”) for each
one (1) share of Series C Preferred Stock surrendered (the
“Conversion Rate”). The Corporation shall not issue any
fraction of a share of Common Stock upon any conversion. If the
issuance would result in the issuance of a fraction of a share of
Common Stock, the Corporation shall round such fraction of a share
of Common Stock up to the nearest whole share.
5.2 Conversion
Procedure. In order to exercise
the conversion privilege under this Section 5, the holder of any
shares of Series C Preferred Stock to be converted shall give
written notice to the Corporation at its principal office that such
holder elects to convert such shares of Series C Preferred Stock or
a specified portion thereof into shares of Common Stock as set
forth in such notice (the “Conversion Notice”, and such date
of delivery of the Conversion Notice to the Corporation, the
“Conversion Notice Delivery
Date”). Within two (2) business days following the
Conversion Notice Delivery Date, the Corporation shall issue and
deliver a certificate or certificates representing the number of
shares of Common Stock determined pursuant to this Section 5 (the
“Share Delivery
Date”). In case of conversion under this Section 5 of
only a part of the shares of Series C Preferred Stock represented
by a certificate surrendered to the Corporation, the Corporation
upon the request of a holder shall issue and deliver to the holder
or its designee a new certificate for the number of shares of
Series C Preferred Stock which have not been converted, upon
receipt of the original certificate or certificates representing
shares of Series C Preferred Stock so converted. Until such time as
the certificate or certificates representing shares of Series C
Preferred Stock which have been converted are surrendered to the
Corporation and a certificate or certificates representing the
Common Stock into which such shares of Series C Preferred Stock
have been converted have been issued and delivered, the certificate
or certificates representing the shares of Series C Preferred Stock
which have been converted shall represent the shares of Common
Stock into which such shares of Series C Preferred Stock have been
converted. The Corporation shall pay all documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common
Stock issuable upon conversion of the Series C Preferred
Stock.
-2-
(i) Buy-In. If, by the Share Delivery Date,
the Corporation fails for any reason to deliver the shares of
Common Stock issuable upon conversion of the Series C Preferred
Stock, as set forth in the Conversion Notice, and after such Share
Delivery Date, the converting holder purchases, in an arm’s
length open market transaction or otherwise, shares of Common Stock
(the “Covering
Shares”) in order to make delivery in satisfaction of
a sale of Common Stock by the converting holder (the
“Sold Shares”),
which delivery such converting holder anticipated to make using the
shares to be issued upon such conversion (a “Buy-In”), the converting holder
shall have the right to require the Corporation to pay to the
converting holder the Buy-In Adjustment Amount. The
Corporation shall pay the Buy-In Adjustment Amount to the
converting holder in immediately available funds immediately upon
demand by the converting holder. For purposes of this Certificate
of Designation, the term “Buy-In Adjustment Amount” means
the amount equal to the excess, if any, of (i) the converting
holder’s total purchase price (including brokerage
commissions, if any) for the Covering Shares associated with a
Buy-In, over (ii) the net proceeds (after brokerage
commissions, if any) received by the converting holder from the
sale of the Sold Shares. By way of illustration and not
in limitation of the foregoing, if the converting holder purchases
shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In, with respect
to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Corporation will be required to
pay to the converting holder will be $1,000.
5.3 Other Provisions.
(i) Reservation
of Common Stock. The
Corporation shall at all times reserve from its authorized Common
Stock a sufficient number of shares to provide for conversion of
all Series C Preferred Stock from time to time
outstanding.
(ii) Record
Holders. The Corporation and
its transfer agent, if any, for the Series C Preferred Stock may
deem and treat the record holder of any shares of Series C
Preferred Stock as reflected on the books and records of the
Corporation as the sole true and lawful owner thereof for all
purposes, and neither the Corporation nor any such transfer agent
shall be affected by any notice to the
contrary.
(iii) Restriction
and Limitations. Except as expressly provided herein or as
required by law so long as any shares of Series C Preferred Stock
remain outstanding, the Corporation shall not, without the vote or
written consent of the holders of at least a majority of the then
outstanding shares of the Series C Preferred Stock, take any action
to modify the terms of the shares of Series C Preferred stock or
take any other action, including the creation of a new class or
series of stock in the Corporation or the modification of the terms
of any existing series or class of stock in the Corporation, which
would, in the reasonable opinion of the holder, adversely affect
any of the preferences, limitations or relative rights of the
Series C Preferred Stock.
-3-
6. Participation
Right.
6.1 Optional
Participation. At
any time on or prior to December 31, 2023 (the “Participation Period”), each
holder of Series C Preferred Stock shall have the right upon at
least five (5) days prior written notice to request and the
Corporation shall thereupon be obligated to pay such holder(s),
exclusively from the proceeds of the Corporation Acquired Claims
(as defined below) an amount in cash equal to their Stated Value
plus all accrued and unpaid dividends and distributions thereon (in
each such case, a “Participation Payment”), provided
at the time of the Participation Payment (as defined below) the
Corporation would have current assets on a consolidated basis of at
least $2,500,000, the lesser of: (A) such number of shares of
Series C Preferred Stock as have a combined Stated Value equal to
one-hundred (100%) percent of the amount of contingent recoveries
or payments irrevocably paid to and received by the Corporation
(net of all cost, fees and expenses) from the Corporation Acquired
Claims (as defined below), or (B) the remaining shares of Series C
Preferred Stock issued and outstanding.
6.2 Definition of Corporation Acquired
Claims. “Corporation
Acquired Claims” shall mean (a) recoveries (through
litigation, settlement or otherwise) of cash or assets from those
claims and obligations of third parties to pay the Corporation or
Panacea and attributable to any of the following claims: (i)
proceeds received from or relating to the pending litigation
involving Blue Circle Development, LLC and certain governments and
referenced in Schedule 3.07 to that certain Securities Exchange
Agreement dated June [
], 2021 by and among the Corporation, Panacea and the
shareholders of Panacea named therein, and (b) net proceeds
received by Panacea in the future from the sale of shares of common
stock of 22nd Century Group, Inc.
owned by the Panacea as of the date of execution of this
Certificate of Designation of Preferences, Rights and Limitations
of Series C Preferred Stock.
6.3 Interest on Unpaid Participation
Amounts. If the Corporation fails to make a Participation
Payment as required under this Section 6 within seven (7) days
following delivery of a holder’s election to accept a
Participation Payment, then the Corporation shall pay and each electing holder of Series C
Preferred Stock shall be entitled to receive, with respect to each share of Series C Preferred
Stock then held by such holder, interest at a rate of six
(6%) percent per annum (“Interest”) on the Stated Value of
all then outstanding shares of Series C Preferred Stock calculated
for such purpose from the date of issuance of the Series C
Preferred Stock as to which such Participation Payment applies. For
greater certainty, the foregoing Interest shall be in addition to
such other available remedies as the holder may have against the
Corporation for failure to make a Participation Payment when
due.
6.4 Payment Procedures.
Participation Payments and Interest shall be payable to holders of
record of Series C Preferred Stock as they appear on the stock
books of the Corporation on the applicable date of request during
the Participation Period or the Interest payment dates. To the
extent the amounts received by the Corporation or Panacea with
respect to one or more Corporation Acquired Claims are less than
what would be required to satisfy the payment rights of each holder
of Series C Preferred Stock that elects to receive a Participation
Payment pursuant to Section 6.1, then such amounts shall be
distributed pro rata among the electing holders of Series C
Preferred Stock based on the number of shares of Series C Preferred
Stock held by the electing holders.
-4-
6.5 Notice of Corporation Acquired
Claims. Whenever the Corporation receives proceeds from any
Corporation Acquired Claim during the Participation Period, the
Corporation shall promptly notify each holder of Series C Preferred
Stock in writing of such event, including the amounts received by
the Corporation.
7. Certain
Adjustments.
7.1 Stock Dividends and
Stock Splits. If the Corporation, at any time while the
Series C Preferred Stock is outstanding: (A) shall pay a stock
dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by
the Corporation pursuant to the Series C Preferred Stock), (B)
subdivide outstanding shares of Common Stock into a larger number
of shares, (C) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of shares of the Common Stock any
shares of capital stock of the Corporation, the Conversion Rate in
effect immediately prior to any such event shall be proportionately
adjusted, and each share of Series C Preferred Stock shall receive
such consideration as if such number of shares of Series C
Preferred Stock had been, immediately prior to such foregoing
dividend, distribution, subdivision, combination or
reclassification, the holder of the number of shares of Common
Stock into which it could convert at such time. Any adjustment made
pursuant to this Section shall become effective immediately upon
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately upon the effective date in the case of a subdivision,
combination or re-classification.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate this
___ day of June 2021.
By:
S/
Larry Wert
Name:
Larry Wert
Title:
Chief Executive Officer
-5-
Exhibit
3.2
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES C-1 CONVERTIBLE PREFERRED STOCK
The
undersigned, Chief Executive Officer of Exactus, Inc., a Nevada
corporation (the “Corporation”), DOES HEREBY CERTIFY
that the following resolutions were duly adopted by the Board of
Directors of the Corporation by unanimous written consent on June
__, 2021;
WHEREAS, the Board of Directors is
authorized within the limitations and
restrictions stated in the Certificate of Incorporation of the
Corporation, as amended, to provide by resolution or resolutions
for the issuance of Fifty
Million (50,000,000) shares of Preferred Stock, par value $0.0001 per share, of the Corporation,
in such series and with such designations, preferences and
relative, optional or other special rights and qualifications,
limitations or restrictions as the Corporation’s Board of
Directors shall fix by resolution or resolutions providing for the
issuance thereof duly adopted by the Board of Directors;
and
WHEREAS, it is the desire of the Board of
Directors, pursuant to its authority as aforesaid, to authorize and
fix the terms of a series of Preferred Stock and the number of
shares constituting such series; and
WHEREAS, all
currency amounts set forth herein shall be stated in United States
Dollars (USD).
NOW,
THEREFORE, BE IT RESOLVED:
1. Designation and Authorized
Shares. The Corporation shall be authorized to issue ten
thousand (10,000) shares of Series C-1 Convertible Preferred Stock,
par value $0.0001 per share (the “Series C-1 Preferred
Stock”).
2. Stated
Value. Each share of Series C-1
Preferred Stock shall have a stated value of $281.25 per share
(the “Stated Value”).
3. Liquidation.
3.1 Upon the
liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of
Series C-1 Preferred Stock shall be entitled to receive, for each
share thereof, out of assets of the Corporation legally available
therefor, a preferential amount in cash equal to (and not more
than) the Stated Value. All preferential amounts to be paid to the
holders of Series C-1 Preferred Stock in connection with such
liquidation, dissolution or winding up shall be paid before the
payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to the holders of any
other class or series of capital stock of the Corporation other
than Series A Preferred Stock and Series B Preferred Stock of the
Corporation, which shall be senior securities to the Series C-1
Preferred Stock, and Series C Convertible Preferred Stock and
Series D Convertible Preferred Stock which shall rank parri passu
with the Series C-1 Preferred Stock. If upon any such distribution
the assets of the Corporation shall be insufficient to pay the
holders of the outstanding shares of Series C-1 Preferred Stock,
the Series C Convertible Preferred Stock and the Series D
Convertible Preferred Stock the full amounts to which they shall be
entitled, such holders shall share ratably in any distribution of
assets in accordance with the sums which would be payable on such
distribution if all sums payable thereon were paid in
full.
-1-
3.2 Any
distribution in connection with the liquidation, dissolution or
winding up of the Corporation, or any bankruptcy or insolvency
proceeding, shall be made in cash to the extent possible. Whenever
any such distribution shall be paid in property other than cash,
the value of such distribution shall be the fair market value of
such property as determined in good faith by the Board of Directors
of the Corporation.
4. Voting.
Except as otherwise expressly required by law, each holder of
Series C-1 Preferred Stock shall be entitled to vote on all matters
submitted to shareholders of the Corporation and shall be entitled
to the number of votes for each share of Series C-1 Preferred Stock
owned at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is
established, at the date such vote is taken or any written consent
of shareholders is solicited, equal to the number of shares of
Common Stock (as defined below) that such shares of Series C-1
Preferred Stock are convertible into at such time. Except as
otherwise required by law, the holders of shares of Series C-1
Preferred Stock shall vote together with the holders of Common
Stock on all matters and shall not vote as a separate
class.
5. Conversion.
5.1 Conversion Right. Each holder
of Series C-1 Preferred Stock may, from time to time, convert any
or all of such holder’s shares of Series C-1 Preferred Stock
into fully paid and non-assessable shares of Common Stock in an
amount equal to 2,981.74177 shares of the Corporation’s
common stock, par value $0.0001 per share (the “Common
Stock”) for each one (1) share of Series C-1 Preferred Stock
surrendered (the “Conversion Rate”). The Corporation
shall not issue any fraction of a share of Common Stock upon any
conversion. If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall round
such fraction of a share of Common Stock up to the nearest whole
share.
5.2 Conversion
Procedure. In order to exercise
the conversion privilege under this Section 5, the holder of any
shares of Series C-1 Preferred Stock to be converted shall give
written notice to the Corporation at its principal office that such
holder elects to convert such shares of Series C-1 Preferred Stock
or a specified portion thereof into shares of Common Stock as set
forth in such notice (the “Conversion Notice”, and such date
of delivery of the Conversion Notice to the Corporation, the
“Conversion Notice Delivery
Date”). Within two (2) business days following the
Conversion Notice Delivery Date, the Corporation shall issue and
deliver a certificate or certificates representing the number of
shares of Common Stock determined pursuant to this Section 5 (the
“Share Delivery
Date”). In case of conversion under this Section 5 of
only a part of the shares of Series C-1 Preferred Stock represented
by a certificate surrendered to the Corporation, the Corporation
upon the request of a holder shall issue and deliver to the holder
or its designee a new certificate for the number of shares of
Series C-1 Preferred Stock which have not been converted, upon
receipt of the original certificate or certificates representing
shares of Series C-1 Preferred Stock so converted. Until such time
as the certificate or certificates representing shares of Series
C-1 Preferred Stock which have been converted are surrendered to
the Corporation and a certificate or certificates representing the
Common Stock into which such shares of Series C-1 Preferred Stock
have been converted have been issued and delivered, the certificate
or certificates representing the shares of Series C-1 Preferred
Stock which have been converted shall represent the shares of
Common Stock into which such shares of Series C-1 Preferred Stock
have been converted. The Corporation shall pay all documentary,
stamp or similar issue or transfer tax due on the issue of shares
of Common Stock issuable upon conversion of the Series C-1
Preferred Stock.
-2-
(i) Buy-In. If, by the Share Delivery Date,
the Corporation fails for any reason to deliver the shares of
Common Stock issuable upon conversion of the Series C-1 Preferred
Stock, as set forth in the Conversion Notice, and after such Share
Delivery Date, the converting holder purchases, in an arm’s
length open market transaction or otherwise, shares of Common Stock
(the “Covering
Shares”) in order to make delivery in satisfaction of
a sale of Common Stock by the converting holder (the
“Sold Shares”),
which delivery such converting holder anticipated to make using the
shares to be issued upon such conversion (a “Buy-In”), the converting holder
shall have the right to require the Corporation to pay to the
converting holder the Buy-In Adjustment Amount. The
Corporation shall pay the Buy-In Adjustment Amount to the
converting holder in immediately available funds immediately upon
demand by the converting holder. For purposes of this Certificate
of Designation, the term “Buy-In Adjustment Amount” means
the amount equal to the excess, if any, of (i) the converting
holder’s total purchase price (including brokerage
commissions, if any) for the Covering Shares associated with a
Buy-In, over (ii) the net proceeds (after brokerage
commissions, if any) received by the converting holder from the
sale of the Sold Shares. By way of illustration and not
in limitation of the foregoing, if the converting holder purchases
shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In, with respect
to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Corporation will be required to
pay to the converting holder will be $1,000.
5.3 Other Provisions.
(i) Reservation
of Common Stock. The
Corporation shall at all times reserve from its authorized Common
Stock a sufficient number of shares to provide for conversion of
all Series C-1 Preferred Stock from time to time
outstanding.
(ii) Record
Holders. The Corporation and
its transfer agent, if any, for the Series C-1 Preferred Stock may
deem and treat the record holder of any shares of Series C-1
Preferred Stock as reflected on the books and records of the
Corporation as the sole true and lawful owner thereof for all
purposes, and neither the Corporation nor any such transfer agent
shall be affected by any notice to the
contrary.
(iii) Restriction
and Limitations. Except as expressly provided herein or as
required by law so long as any shares of Series C-1 Preferred Stock
remain outstanding, the Corporation shall not, without the vote or
written consent of the holders of at least a majority of the then
outstanding shares of the Series C-1 Preferred Stock, take any
action to modify the terms of the shares of Series C-1 Preferred
Stock or take any other action, including the creation of a new
class or series of stock in the Corporation or the modification of
the terms of any existing series or class of stock in the
Corporation, which would, in the reasonable opinion of the holder,
adversely affect any of the preferences, limitations or relative
rights of the Series C-1 Preferred Stock.
6. Certain
Adjustments.
-3-
6.1 Stock Dividends and
Stock Splits. If the Corporation, at any time while the
Series C-1 Preferred Stock is outstanding: (A) shall pay a stock
dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by
the Corporation pursuant to the Series C-1 Preferred Stock), (B)
subdivide outstanding shares of Common Stock into a larger number
of shares, (C) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of shares of the Common Stock any
shares of capital stock of the Corporation, the Conversion Rate in
effect immediately prior to any such event shall be proportionately
adjusted, and each share of Series C-1 Preferred Stock shall
receive such consideration as if such number of shares of Series
C-1 Preferred Stock had been, immediately prior to such foregoing
dividend, distribution, subdivision, combination or
reclassification, the holder of the number of shares of Common
Stock into which it could convert at such time. Any adjustment made
pursuant to this Section shall become effective immediately upon
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately upon the effective date in the case of a subdivision,
combination or re-classification.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate this
___ day of June 2021.
By:
S/
Larry Wert
Name:
Larry Wert
Title:
Chief Executive Officer
-4-
Exhibit
3.3
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS AND LIMITATIONS
OF
SERIES D CONVERTIBLE PREFERRED STOCK
The
undersigned, Chief Executive Officer of Exactus, Inc., a Nevada
corporation (the “Corporation”), DOES HEREBY CERTIFY
that the following resolutions were duly adopted by the Board of
Directors of the Corporation by unanimous written consent on June
__, 2021;
WHEREAS, the Board of Directors is
authorized within the limitations and
restrictions stated in the Certificate of Incorporation of the
Corporation, as amended, to provide by resolution or resolutions
for the issuance of Fifty
Million (50,000,000) shares of Preferred Stock, par value $0.0001 per share, of the Corporation,
in such series and with such designations, preferences and
relative, optional or other special rights and qualifications,
limitations or restrictions as the Corporation’s Board of
Directors shall fix by resolution or resolutions providing for the
issuance thereof duly adopted by the Board of Directors;
and
WHEREAS, it is the desire of the Board of
Directors, pursuant to its authority as aforesaid, to authorize and
fix the terms of a series of Preferred Stock and the number of
shares constituting such series; and
WHEREAS, all
currency amounts set forth herein shall be stated in United States
Dollars (USD).
NOW,
THEREFORE, BE IT RESOLVED:
1. Designation and Authorized
Shares. The Corporation shall be authorized to issue ten
thousand (10,000) shares of Series D Convertible Preferred Stock,
par value $0.0001 per share (the “Series D Preferred
Stock”).
2. Stated
Value. Each share of Series D
Preferred Stock shall have a stated value of $430 per share
(the “Stated Value”).
3. Liquidation.
3.1 Upon the
liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, each holder of
Series D Preferred Stock shall be entitled to receive, for each
share thereof, out of assets of the Corporation legally available
therefor, a preferential amount in cash equal to (and not more
than) the Stated Value. All preferential amounts to be paid to the
holders of Series D Preferred Stock in connection with such
liquidation, dissolution or winding up shall be paid before the
payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to the holders of any
other class or series of capital stock of the Corporation other
than Series A Preferred Stock and Series B Preferred Stock of the
Corporation, which shall be senior securities to the Series D
Preferred Stock, and Series C Convertible Preferred Stock and
Series C-1 Convertible Preferred Stock which shall rank parri passu
with the Series D Preferred Stock. If upon any such distribution
the assets of the Corporation shall be insufficient to pay the
holders of the outstanding shares of Series D Preferred Stock, the
Series C Convertible Preferred Stock and the Series C-1 Convertible
Preferred Stock the full amounts to which they shall be entitled,
such holders shall share ratably in any distribution of assets in
accordance with the sums which would be payable on such
distribution if all sums payable thereon were paid in
full.
-1-
3.2 Any
distribution in connection with the liquidation, dissolution or
winding up of the Corporation, or any bankruptcy or insolvency
proceeding, shall be made in cash to the extent possible. Whenever
any such distribution shall be paid in property other than cash,
the value of such distribution shall be the fair market value of
such property as determined in good faith by the Board of Directors
of the Corporation.
4. Voting.
Except as otherwise expressly required by law, each holder of
Series D Preferred Stock shall be entitled to vote on all matters
submitted to shareholders of the Corporation and shall be entitled
to the number of votes for each share of Series D Preferred Stock
owned at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is
established, at the date such vote is taken or any written consent
of shareholders is solicited, equal to the number of shares of
Common Stock (as defined below) that such shares of Series D
Preferred Stock are convertible into at such time. Except as
otherwise required by law, the holders of shares of Series D
Preferred Stock shall vote together with the holders of Common
Stock on all matters and shall not vote as a separate
class.
5. Conversion.
5.1 Conversion Right. Each holder
of Series D Preferred Stock may, from time to time, convert any or
all of such holder’s shares of Series D Preferred Stock into
fully paid and non-assessable shares of Common Stock in an amount
equal to 4,558.75186 shares of the Corporation’s common
stock, par value $0.0001 per share (the “Common Stock”)
for each one (1) share of Series D Preferred Stock surrendered (the
“Conversion Rate”). The Corporation shall not issue any
fraction of a share of Common Stock upon any conversion. If the
issuance would result in the issuance of a fraction of a share of
Common Stock, the Corporation shall round such fraction of a share
of Common Stock up to the nearest whole share.
5.2 Conversion
Procedure. In order to exercise
the conversion privilege under this Section 5, the holder of any
shares of Series D Preferred Stock to be converted shall give
written notice to the Corporation at its principal office that such
holder elects to convert such shares of Series D Preferred Stock or
a specified portion thereof into shares of Common Stock as set
forth in such notice (the “Conversion Notice”, and such date
of delivery of the Conversion Notice to the Corporation, the
“Conversion Notice Delivery
Date”). Within two (2) business days following the
Conversion Notice Delivery Date, the Corporation shall issue and
deliver a certificate or certificates representing the number of
shares of Common Stock determined pursuant to this Section 5 (the
“Share Delivery
Date”). In case of conversion under this Section 5 of
only a part of the shares of Series D Preferred Stock represented
by a certificate surrendered to the Corporation, the Corporation
upon the request of a holder shall issue and deliver to the holder
or its designee a new certificate for the number of shares of
Series D Preferred Stock which have not been converted, upon
receipt of the original certificate or certificates representing
shares of Series D Preferred Stock so converted. Until such time as
the certificate or certificates representing shares of Series D
Preferred Stock which have been converted are surrendered to the
Corporation and a certificate or certificates representing the
Common Stock into which such shares of Series D Preferred Stock
have been converted have been issued and delivered, the certificate
or certificates representing the shares of Series D Preferred Stock
which have been converted shall represent the shares of Common
Stock into which such shares of Series D Preferred Stock have been
converted. The Corporation shall pay all documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common
Stock issuable upon conversion of the Series D Preferred
Stock.
-2-
(i) Buy-In. If, by the Share Delivery Date,
the Corporation fails for any reason to deliver the shares of
Common Stock issuable upon conversion of the Series D Preferred
Stock, as set forth in the Conversion Notice, and after such Share
Delivery Date, the converting holder purchases, in an arm’s
length open market transaction or otherwise, shares of Common Stock
(the “Covering
Shares”) in order to make delivery in satisfaction of
a sale of Common Stock by the converting holder (the
“Sold Shares”),
which delivery such converting holder anticipated to make using the
shares to be issued upon such conversion (a “Buy-In”), the converting holder
shall have the right to require the Corporation to pay to the
converting holder the Buy-In Adjustment Amount. The
Corporation shall pay the Buy-In Adjustment Amount to the
converting holder in immediately available funds immediately upon
demand by the converting holder. For purposes of this Certificate
of Designation, the term “Buy-In Adjustment Amount” means
the amount equal to the excess, if any, of (i) the converting
holder’s total purchase price (including brokerage
commissions, if any) for the Covering Shares associated with a
Buy-In, over (ii) the net proceeds (after brokerage
commissions, if any) received by the converting holder from the
sale of the Sold Shares. By way of illustration and not
in limitation of the foregoing, if the converting holder purchases
shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In, with respect
to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Corporation will be required to
pay to the converting holder will be $1,000.
5.3 Other Provisions.
(i) Reservation
of Common Stock. The
Corporation shall at all times reserve from its authorized Common
Stock a sufficient number of shares to provide for conversion of
all Series D Preferred Stock from time to time
outstanding.
(ii) Record
Holders. The Corporation and
its transfer agent, if any, for the Series D Preferred Stock may
deem and treat the record holder of any shares of Series D
Preferred Stock as reflected on the books and records of the
Corporation as the sole true and lawful owner thereof for all
purposes, and neither the Corporation nor any such transfer agent
shall be affected by any notice to the
contrary.
(iii) Restriction
and Limitations. Except as expressly provided herein or as
required by law so long as any shares of Series D Preferred Stock
remain outstanding, the Corporation shall not, without the vote or
written consent of the holders of at least a majority of the then
outstanding shares of the Series D Preferred Stock, take any action
to modify the terms of the shares of Series D Preferred Stock or
take any other action, including the creation of a new class or
series of stock in the Corporation or the modification of the terms
of any existing series or class of stock in the Corporation, which
would, in the reasonable opinion of the holder, adversely affect
any of the preferences, limitations or relative rights of the
Series D Preferred Stock.
-3-
6. Certain
Adjustments.
6.1 Stock Dividends and
Stock Splits. If the Corporation, at any time while the
Series D Preferred Stock is outstanding: (A) shall pay a stock
dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by
the Corporation pursuant to the Series D Preferred Stock), (B)
subdivide outstanding shares of Common Stock into a larger number
of shares, (C) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of shares of the Common Stock any
shares of capital stock of the Corporation, the Conversion Rate in
effect immediately prior to any such event shall be proportionately
adjusted, and each share of Series D Preferred Stock shall receive
such consideration as if such number of shares of Series D
Preferred Stock had been, immediately prior to such foregoing
dividend, distribution, subdivision, combination or
reclassification, the holder of the number of shares of Common
Stock into which it could convert at such time. Any adjustment made
pursuant to this Section shall become effective immediately upon
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately upon the effective date in the case of a subdivision,
combination or re-classification.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate this
___ day of June 2021.
By:
S/
Larry Wert
Name:
Larry Wert
Title:
Chief Executive Officer
-4-
Exhibit
10.1
2021
EQUITY INCENTIVE PLAN
1. Purpose
of the Plan.
This
2021 Equity Incentive Plan (the “Plan”) is intended as an
incentive, to retain in the employ of and as directors, officers,
consultants, advisors and employees to ________________, a Nevada
corporation (the “Company”), and any
Subsidiary of the Company, within the meaning of Section 424(f) of
the United States Internal Revenue Code of 1986, as amended (the
“Code”), persons of
training, experience and ability, to attract new directors,
officers, consultants, advisors and employees whose services are
considered valuable, to encourage the sense of proprietorship and
to stimulate the active interest of such persons in the development
and financial success of the Company and its
Subsidiaries.
It is
further intended that certain options granted pursuant to the Plan
shall constitute incentive stock options within the meaning of
Section 422 of the Code (the “Incentive Options”) while
certain other options granted pursuant to the Plan shall be
nonqualified stock options (the “Nonqualified Options”).
Incentive Options and Nonqualified Options are hereinafter referred
to collectively as “Options.”
The
Company intends that the Plan meet the requirements of Rule 16b-3
(“Rule
16b-3”) promulgated under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and that
transactions of the type specified in subparagraphs (c) to (f)
inclusive of Rule 16b-3 by officers and directors of the Company
pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. Further, the Plan is intended to satisfy
the performance-based compensation exception to the limitation on
the Company’s tax deductions imposed by Section 162(m) of the
Code with respect to those Options for which qualification for such
exception is intended. In all cases, the terms, provisions,
conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company’s intent as stated in
this Section 1.
2. Administration
of the Plan.
The
Board of Directors of the Company (the “Board”) shall appoint and
maintain as administrator of the Plan a Committee (the
“Committee”) consisting of
two or more directors who are (i) “Independent
Directors” (as such term is defined under the rules of the
NASDAQ Stock Market), (ii) “Non-Employee Directors” (as
such term is defined in Rule 16b-3) and (iii) “Outside
Directors” (as such term is defined in Section 162(m) of the
Code), which shall serve at the pleasure of the Board. The
Committee, subject to Sections 3, 5 and 6 hereof, shall have full
power and authority to designate recipients of Options, restricted
stock (“Restricted
Stock”), preferred stock which may or may not be
convertible (“Preferred Stock”),
restricted share units (“RSUs”), and warrants
which may qualify as Incentive Warrants or Non-Qualified Warrants
(as such terms are defined herein, collectively,
“Warrants”),
and to determine the terms and conditions of the respective
agreements (which need not be identical) and to interpret the
provisions and supervise the administration of the Plan. The
Committee shall have the authority, without limitation, to
designate which Options granted under the Plan shall be Incentive
Options and which shall be Nonqualified Options. To the extent any
Option does not qualify as an Incentive Option, it shall constitute
a separate Nonqualified Option.
In lieu
of grants of Options and Restricted Stock, the Committee has the
full power to and authority under the Plan to designate
Participants to receive shares of the Company’s Preferred
Stock. Further, to the extent that the Committee shall determine
that the issuance of Options, Restricted Stock, RSUs or Warrants to
a Participant (as defined below) could cause the beneficial
ownership by such Participant or its affiliates to exceed more than
9.99% of the total outstanding shares of Common Stock of the
Company upon the exercise of the Option or Warrant or the vesting
of the Restricted Stock or RSU, as applicable, the Committee shall
also have the full power and authority under the Plan to designate
Participants to receive shares of the Company’s preferred
stock in either a series of preferred that has already been
authorized and designated by the Board or in a new series of
preferred that shall be authorized and designated by the Board in
accordance with the Company’s Amended and Restated Articles
of Incorporation. The Committee shall determine the terms and
conditions of the issuance of any Preferred Stock issued pursuant
to the Plan (which terms and conditions may include standard equity
blockers, conditions to issuance and the conversion price of the
Preferred Stock) and any related agreements (which need not be
identical) with respect to the issuance of the Preferred Stock and
to interpret the provisions and supervise the administration of the
Plan with respect to the issuance of any Preferred
Stock.
Subject
to the provisions of the Plan, the Committee shall interpret the
Plan and all Options, Restricted Stock, RSUs, Preferred Stock and
Warrants (collectively, the “Securities”) granted
under the Plan, shall make such rules as it deems necessary for the
proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the
Plan and shall correct any defects or supply any omission or
reconcile any inconsistency in the Plan or in any Securities
granted under the Plan in the manner and to the extent that the
Committee deems desirable to carry into effect the Plan or any
Securities. The act or determination of a majority of the Committee
shall be the act or determination of the Committee and any decision
reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a
majority of the Committee at a meeting duly held for such purpose.
Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other
Sections of the Plan shall be conclusive on all
parties.
-1-
In the
event that for any reason the Committee is unable to act or if the
Committee at the time of any grant, award or other acquisition
under the Plan does not consist of two or more Non-Employee
Directors, or if there shall be no such Committee, or if the Board
otherwise determines to administer the Plan, then the Plan shall be
administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be
references to the Board, and any such grant, award or other
acquisition may be approved or ratified in any other manner
contemplated by subparagraph (d) of Rule 16b-3; provided, however, that grants to the
Company’s Chief Executive Officer or to any of the
Company’s other four most highly compensated officers that
are intended to qualify as performance-based compensation under
Section 162(m) of the Code may only be granted by the
Committee.
3. Designation
of Optionees and Grantees.
The
persons eligible for participation in the Plan as recipients of
Options (the “Optionees”), Restricted
Stock, Preferred Stock, RSUs or Warrants (the “Grantees” and together
with Optionees, the “Participants”) shall
include directors, officers and employees of, and consultants and
advisors to, the Company or any Subsidiary; provided that Incentive
Options may only be granted to employees of the Company and any
Subsidiary. In selecting Participants, and in determining the
number of shares to be covered by each Option or Warrant or award
of Restricted Stock, Preferred Stock or RSU granted to
Participants, the Committee may consider any factors it deems
relevant, including, without limitation, the office or position
held by the Participant or the Participant’s relationship to
the Company, the Participant’s degree of responsibility for
and contribution to the growth and success of the Company or any
Subsidiary, the Participant’s length of service, promotions
and potential. A Participant who has been granted an Option,
Restricted Stock, Preferred Stock, RSU or Warrant, hereunder, may
be granted additional Options, Restricted Stock, Preferred Stock,
RSUs or Warrants, if the Committee shall so determine.
4. Stock
Reserved for the Plan.
Subject
to adjustment as provided in Section 8 hereof, a total of 5,367,007
shares of the Company’s common stock, par value $0.0001 per
share (the “Common
Stock”) (after giving effect to a 1:27.7018 reverse
split of Common Stock outstanding as of June 17, 2021), shall be
subject to the Plan. The shares of Common Stock subject to the Plan
shall consist of unissued shares, treasury shares or previously
issued shares held by any Subsidiary of the Company, and such
number of shares of Common Stock shall be and is hereby reserved
for such purpose. Any of such shares of Common Stock that may
remain unissued and that are not subject to outstanding Options,
Preferred Stock or Warants at the termination of the Plan shall
cease to be reserved for the purposes of the Plan, but until
termination of the Plan, the Company shall at all times reserve a
sufficient number of shares of Common Stock to meet the
requirements of the Plan. Should any Securities expire or be
canceled prior to its exercise, satisfaction of conditions or
vesting in full, as applicable, or should the number of shares of
Common Stock to be delivered upon the exercise or vesting in full
of an Option or Warrant or award of Restricted Stock or RSU or
conversion of Preferred Stock be reduced for any reason, the shares
of Common Stock theretofore subject to such Option, Warrant,
Restricted Stock, RSU or Preferred Stock, as applicable, may be
subject to future Options, Warrants, Restricted Stock, RSUs or
Preferred Stock under the Plan, except where such reissuance is
inconsistent with the provisions of Section 162(m) of the Code
where qualification as performance-based compensation under Section
162(m) of the Code is intended.
5A. Terms
and Conditions of Options.
Options
granted under the Plan shall be subject to the following conditions
and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(a) Option
Price. The purchase price of each share of Common Stock
purchasable under an Incentive Option shall be determined by the
Committee at the time of grant, but shall not be less than 100% of
the Fair Market Value (as defined below) of such share of Common
Stock on the date the Option is granted; provided, however, that with respect to
an Optionee who, at the time such Incentive Option is granted, owns
(within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the
Company or of any Subsidiary, the purchase price per share of
Common Stock shall be at least 110% of the Fair Market Value per
share of Common Stock on the date of grant. The purchase price of
each share of Common Stock purchasable under a Nonqualified Option
shall not be less than 100% of the Fair Market Value of such share
of Common Stock on the date the Option is granted. The exercise
price for each Option shall be subject to adjustment as provided in
Section 8 below. “Fair Market Value” means
the closing price on the final trading day immediately prior to the
grant date of the Common Stock on the NASDAQ Capital Market LLC or
other principal securities exchange or OTC Bulletin Board on which
shares of Common Stock are listed (if the shares of Common Stock
are so listed), or, if not so listed, the mean between the closing
bid and asked prices of publicly traded shares of Common Stock in
the over the counter market, or, if such bid and asked prices shall
not be available, as reported by any nationally recognized
quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code.
Anything in this Section 5A(a) to the contrary notwithstanding, in
no event shall the purchase price of a share of Common Stock be
less than the minimum price permitted under the rules and policies
of any national securities exchange on which the shares of Common
Stock are listed.
-2-
(b) Option
Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years
after the date such Option is granted and in the case of an
Incentive Option granted to an Optionee who, at the time such
Incentive Option is granted, owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting
power of all classes of stock of the Company or of any Subsidiary,
no such Incentive Option shall be exercisable more than five years
after the date such Incentive Option is granted.
(c) Exercisability.
Subject to Section 5A(j) hereof, Options shall be exercisable at
such time or times and subject to such terms and conditions as
shall be determined by the Committee at the time of grant;
provided,
however, that in
the absence of any Option vesting periods designated by the
Committee at the time of grant, Options shall vest and become
exercisable as to one-third of the total number of shares subject
to the Option on each of the first, second and third anniversaries
of the date of grant; and provided further that no Options shall be
exercisable until such time as any vesting limitation required by
Section 16 of the Exchange Act, and related rules, shall be
satisfied if such limitation shall be required for continued
validity of the exemption provided under Rule
16b-3(d)(3).
Upon
the occurrence of a “Change in Control” (as hereinafter
defined), the Committee may accelerate the vesting and
exercisability of outstanding Options, in whole or in part, as
determined by the Committee in its sole discretion. In its sole
discretion, the Committee may also determine that, upon the
occurrence of a Change in Control, each outstanding Option shall
terminate within a specified number of days after notice to the
Optionee thereunder, and each such Optionee shall receive, with
respect to each share of Common Stock subject to such Option, an
amount equal to the excess of the Fair Market Value of such shares
immediately prior to such Change in Control over the exercise price
per share of such Option; such amount shall be payable in cash, in
one or more kinds of property (including the property, if any,
payable in the transaction) or a combination thereof, as the
Committee shall determine in its sole discretion.
For
purposes of the Plan, unless otherwise defined in an employment
agreement between the Company and the relevant Optionee, a Change
in Control shall be deemed to have occurred if:
(i) a
tender offer (or series of related offers) shall be made and
consummated for the ownership of 50% or more of the outstanding
voting securities of the Company, unless as a result of such tender
offer more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate
by the stockholders of the Company (as of the time immediately
prior to the commencement of such offer), any employee benefit plan
of the Company or its Subsidiaries, and their
affiliates;
(ii) the
Company shall be merged or consolidated with another corporation,
unless as a result of such merger or consolidation more than 50% of
the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the stockholders of
the Company (as of the time immediately prior to such transaction),
any employee benefit plan of the Company or its Subsidiaries, and
their affiliates;
(iii) the
Company shall sell substantially all of its assets to another
corporation that is not wholly owned by the Company, unless as a
result of such sale more than 50% of such assets shall be owned in
the aggregate by the stockholders of the Company (as of the time
immediately prior to such transaction), any employee benefit plan
of the Company or its Subsidiaries and their affiliates;
or
(iv) a
Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates.
Notwithstanding
the foregoing, if Change of Control is defined in an employment
agreement between the Company and the relevant Optionee, then, with
respect to such Optionee, Change of Control shall have the meaning
ascribed to it in such employment agreement.
-3-
For
purposes of this Section 5A(c), ownership of voting securities
shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on
the date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; provided, however, that a Person shall
not include (A) the Company or any of its Subsidiaries; (B) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries; (C) an
underwriter temporarily holding securities pursuant to an offering
of such securities; or (D) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportion as their ownership of stock of the
Company.
(d) Method
of Exercise. Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period,
by giving written notice to the Company specifying the number of
shares of Common Stock to be purchased, accompanied by payment in
full of the purchase price, in cash, or by check or such other
instrument as may be acceptable to the Committee. As determined by
the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i)
in the form of Common Stock owned by the Optionee (based on the
Fair Market Value of the Common Stock which is not the subject of
any pledge or security interest, (ii) in the form of shares of
Common Stock or Preferred Stock withheld by the Company from the
shares of Common Stock otherwise to be received with such withheld
shares of Common Stock having a Fair Market Value equal to the
exercise price of the Option, or (iii) by a combination of the
foregoing, such Fair Market Value determined by applying the
principles set forth in Section 5A(a), provided that the combined
value of all cash and cash equivalents and the Fair Market Value of
any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method
of payment will not cause a disqualifying disposition of all or a
portion of the Common Stock received upon exercise of an Incentive
Option. An Optionee shall have the right to dividends and other
rights of a stockholder with respect to shares of Common Stock
purchased upon exercise of an Option at such time as the Optionee
(i) has given written notice of exercise and has paid in full for
such shares, and (ii) has satisfied such conditions that may be
imposed by the Company with respect to the withholding of
taxes.
(e) Non-transferability
of Options. Options are not transferable and may be
exercised solely by the Optionee during his lifetime or after his
death by the person or persons entitled thereto under his will or
the laws of descent and distribution. The Committee, in its sole
discretion, may permit a transfer of a Nonqualified Option to (i) a
trust for the benefit of the Optionee, (ii) a member of the
Optionee’s immediate family (or a trust for his or her
benefit) or (iii) pursuant to a domestic relations order. Any
attempt to transfer, assign, pledge or otherwise dispose of, or to
subject to execution, attachment or similar process, any Option
contrary to the provisions hereof shall be void and ineffective and
shall give no right to the purported transferee.
(f) Termination
by Death. Unless otherwise determined by the Committee, if
any Optionee’s employment with or service to the Company or
any Subsidiary terminates by reason of death, the Option may
thereafter be exercised, to the extent then exercisable (or on such
accelerated basis as the Committee shall determine at or after
grant), by the legal representative of the estate or by the legatee
of the Optionee under the will of the Optionee, for a period of one
(1) year after the date of such death (or, if later, such time as
the Option may be exercised pursuant to Section 14(d) hereof) or
until the expiration of the stated term of such Option as provided
under the Plan, whichever period is shorter.
(g) Termination
by Reason of Disability. Unless otherwise determined by the
Committee, if any Optionee’s employment with or service to
the Company or any Subsidiary terminates by reason of Disability
(as defined below), then any Option held by such Optionee may
thereafter be exercised, to the extent it was exercisable at the
time of termination due to Disability (or on such accelerated basis
as the Committee shall determine at or after grant), but may not be
exercised after ninety (90) days after the date of such termination
of employment or service (or, if later, such time as the Option may
be exercised pursuant to Section 14(d) hereof) or the expiration of
the stated term of such Option, whichever period is shorter;
provided,
however, that, if
the Optionee dies within such ninety (90) day period, any
unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time
of death for a period of one (1) year after the date of such death
(or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or for the stated term of such Option,
whichever period is shorter. “Disability” shall mean an
Optionee’s total and permanent disability; provided, that if Disability is defined
in an employment agreement between the Company and the relevant
Optionee, then, with respect to such Optionee, Disability shall
have the meaning ascribed to it in such employment
agreement
-4-
(h) Termination
by Reason of Retirement. Unless otherwise determined by the
Committee, if any Optionee’s employment with or service to
the Company or any Subsidiary terminates by reason of Normal or
Early Retirement (as such terms are defined below), any Option held
by such Optionee may thereafter be exercised to the extent it was
exercisable at the time of such Retirement (or on such accelerated
basis as the Committee shall determine at or after grant), but may
not be exercised after ninety (90) days after the date of such
termination of employment or service (or, if later, such time as
the Option may be exercised pursuant to Section 14(d) hereof) or
the expiration of the stated term of such Option, whichever date is
earlier; provided,
however, that, if
the Optionee dies within such ninety (90) day period, any
unexercised Option held by such Optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time
of death, for a period of one (1) year after the date of such death
(or, if later, such time as the Option may be exercised pursuant to
Section 14(d) hereof) or for the stated term of such Option,
whichever period is shorter.
For
purposes of this paragraph (h), “Normal Retirement” shall
mean retirement from active employment with the Company or any
Subsidiary on or after the normal retirement date specified in the
applicable Company or Subsidiary pension plan or if no such pension
plan, age 65, and “Early Retirement” shall
mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the
applicable Company or Subsidiary pension plan or if no such pension
plan, age 55.
(i) Other
Terminations. Unless otherwise determined by the Committee
upon grant, if any Optionee’s employment with or service to
the Company or any Subsidiary is terminated by such Optionee for
any reason other than death, Disability, Normal or Early Retirement
or Good Reason (as defined below), the Option shall thereupon
terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment or
service may be exercised for the lesser of ninety (90) days after
the date of termination (or, if later, such time as the Option may
be exercised pursuant to Section 14(d) hereof) or the balance of
such Option’s term, which ever period is shorter. The
transfer of an Optionee from the employ of or service to the
Company to the employ of or service to a Subsidiary, or vice versa,
or from one Subsidiary to another, shall not be deemed to
constitute a termination of employment or service for purposes of
the Plan.
(i) In
the event that the Optionee’s employment or service with the
Company or any Subsidiary is terminated by the Company or such
Subsidiary for “cause” any unexercised portion of any
Option shall immediately terminate in its entirety. For purposes
hereof, unless otherwise defined in an employment agreement between
the Company and the relevant Optionee, “Cause” shall
exist upon a good-faith determination by the Board, following a
hearing before the Board at which an Optionee was represented by
counsel and given an opportunity to be heard, that such Optionee
has been accused of fraud, dishonesty or act detrimental to the
interests of the Company or any Subsidiary of Company or that such
Optionee has been accused of or convicted of an act of willful and
material embezzlement or fraud against the Company or of a felony
under any state or federal statute; provided, however, that it is
specifically understood that “Cause” shall not include
any act of commission or omission in the good-faith exercise of
such Optionee’s business judgment as a director, officer or
employee of the Company, as the case may be, or upon the advice of
counsel to the Company. Notwithstanding the foregoing, if Cause is
defined in an employment agreement between the Company and the
relevant Optionee, then, with respect to such Optionee, Cause shall
have the meaning ascribed to it in such employment
agreement.
(ii) In
the event that an Optionee is removed as a director, officer or
employee by the Company at any time other than for
“Cause” or resigns as a director, officer or employee
for “Good Reason” the Option granted to such Optionee
may be exercised by the Optionee, to the extent the Option was
exercisable on the date such Optionee ceases to be a director,
officer or employee. Such Option may be exercised at any time
within one (1) year after the date the Optionee ceases to be a
director, officer or employee (or, if later, such time as the
Option may be exercised pursuant to Section 14(d) hereof), or the
date on which the Option otherwise expires by its terms; which ever
period is shorter, at which time the Option shall terminate;
provided,
however, if the
Optionee dies before the Options terminate and are no longer
exercisable, the terms and provisions of Section 5A(f) shall
control. For purposes of this Section 5A(i), and unless otherwise
defined in an employment agreement between the Company and the
relevant Optionee, Good Reason shall exist upon the occurrence of
the following:
-5-
(A)
the assignment to
Optionee of any duties inconsistent with the position in the
Company that Optionee held immediately prior to the
assignment;
(B)
a Change of Control
resulting in a significant adverse alteration in the status or
conditions of Optionee’s participation with the Company or
other nature of Optionee’s responsibilities from those in
effect prior to such Change of Control, including any significant
alteration in Optionee’s responsibilities immediately prior
to such Change in Control; and
(C)
the failure by the
Company to continue to provide Optionee with benefits substantially
similar to those enjoyed by Optionee prior to such
failure.
Notwithstanding the
foregoing, if Good Reason is defined in an employment agreement
between the Company and the relevant Optionee, then, with respect
to such Optionee, Good Reason shall have the meaning ascribed to it
in such employment agreement.
(j) Limit
on Value of Incentive Option. The aggregate Fair Market
Value, determined as of the date the Incentive Option is granted,
of Common Stock for which Incentive Options are exercisable for the
first time by any Optionee during any calendar year under the Plan
(and/or any other stock option plans of the Company or any
Subsidiary) shall not exceed $100,000.
5B. Terms
and Conditions of Warrants.
Warrants may be
issued under the Plan in the form of (a) warrants which qualify as
Incentive Options (“Incentive Warrants”) or
(b) warrants that do not qualify as incentive stock options
(“Non-Qualified
Warrants”). Warrants issued under the Plan shall be
subject to the following conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(a) Warrant
Grants. The Committee may grant Warrants to purchase shares
of Common Stock from the Company, to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and
other terms and conditions, as the Committee shall determine, subject to the provisions
of the Plan. The term “Incentive Warrant” means a
Warrant that is intended to qualify for special federal income tax
treatment pursuant to Sections 421 and 422 of the Code as now
constituted or subsequently amended, or pursuant to a successor
provision of the Code, and which is so designated in the applicable
Award Agreement. Any Warrant that is not specifically designated as
an Incentive Warrant shall under no circumstances be considered an
Incentive Warrant. Any Warrant that is not an Incentive Warrant is
referred to herein as a “Non-Qualified Warrant.” The
Committee may grant Incentive Warrants only to employees, and any
grants of Warrants to any other key persons shall only be
Non-Qualified Warrants.
(b) Warrant
Exercise Price. Each Award Agreement with respect to a
Warrant shall set forth the amount (the “Warrant Exercise Price”)
payable by the Grantee to the Company upon exercise of the Warrant
evidenced thereby. The Warrant Exercise Price per share shall be
determined by the Committee; provided, however, that with respect to
an Grantee who, at the time an Incentive Warrant is granted, owns
(within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the
Company or of any Subsidiary, the purchase price per share of
Common Stock shall be at least 110% of the Fair Market Value per
share of Common Stock on the date of issuance. The purchase price
of each share of Common Stock purchasable under a Non-Qualified
Warrant shall not be less than 100% of the Fair Market Value of
such share of Common Stock on the date such Warrant is issued. The
exercise price for each Warrant shall be subject to adjustment as
provided in Section 8 below.
-6-
(c) Term.
Subject to Section 5B(i) hereof, the term of each Warrant shall be
fixed by the Committee, but no Warrant shall be exercisable more
than ten (10) years after the date such Warrant is
issued.
(d) Exercisability.
Subject to Section 5B(i) hereof, Warrants shall be exercisable at
such time or times and subject to such terms and conditions as
shall be determined by the Committee at the time of issuance;
provided,
however, that in
the absence of any Warrant vesting periods designated by the
Committee at the time of issuance, Warrants shall vest and become
exercisable as to one-third of the total number of shares subject
to the Warrant on each of the first, second and third anniversaries
of the date of issuance; and, provided further, that no Warrants
shall be exercisable until such time as any vesting limitation
required by Section 16 of the Exchange Act, and related rules,
shall be satisfied if such limitation shall be required for
continued validity of the exemption provided under Rule
16b-3(d)(3).
Upon
the occurrence of a “Change in Control” (as defined in
Section 5A(c) hereof), the Committee may accelerate the vesting and
exercisability of outstanding Warrants, in whole or in part, as
determined by the Committee in its sole discretion. In its sole
discretion, the Committee may also determine that, upon the
occurrence of a Change in Control, each outstanding Warrant shall
terminate within a specified number of days after notice to the
Grantee thereunder, and each such Grantee shall receive, with
respect to each share of Common Stock subject to such Warrant, an
amount equal to the excess of the Fair Market Value of such shares
immediately prior to such Change in Control over the exercise price
per share of such Warrant; such amount shall be payable in cash, in
one or more kinds of property (including the property, if any,
payable in the transaction) or a combination thereof, as the
Committee shall determine in its sole discretion.
For
purposes of this Section 5B(d), ownership of voting securities
shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on
the date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in
Section 5A(c) hereof.
(e) Method
of Exercise. Warrants to the extent then exercisable may be
exercised in whole or in part from time to time as to all or part
of the shares as to which such award is then exercisable, by giving
written notice to the Company specifying the number of shares of
Common Stock to be purchased, accompanied by payment in full of the
purchase price, in cash, or by check or such other instrument as
may be acceptable to the Committee. As determined by the Committee,
in its sole discretion, at or after issuance, payment in full or in
part may be made at the election of the Grantee (i) in the form of
Common Stock owned by the Grantee (based on the Fair Market Value
of the Common Stock which is not the subject of any pledge or
security interest), (ii) in the form of shares of Common Stock or
Preferred Stock withheld by the Company from the shares of Common
Stock otherwise to be received with such withheld shares of Common
Stock having a Fair Market Value equal to the Warrant Exercise
Price of the Warrant, or (iii) by a combination of the foregoing,
such Fair Market Value determined by applying the principles set
forth in Section 5B(b), provided that the combined value of all
cash and cash equivalents and the Fair Market Value of any shares
surrendered to the Company is at least equal to such exercise price
and except with respect to (ii) above, such method of payment will
not cause a disqualifying disposition of all or a portion of the
Common Stock received upon exercise of an Incentive Warrant. A
Grantee shall have the right to dividends and other rights of a
stockholder with respect to shares of Common Stock purchased upon
exercise of a Warrant at such time as the Grantee (i) has given
written notice of exercise and has paid in full for such shares,
and (ii) has satisfied such conditions that may be imposed by the
Company with respect to the withholding of taxes.
(f) Non-transferability
of Warrants. Warrants are not transferable and may be
exercised solely by the Grantee during his lifetime or after his
death by the person or persons entitled thereto under his will or
the laws of descent and distribution. The Committee, in its sole
discretion, may permit a transfer of a Non-Qualified Warrant to (i)
a trust for the benefit of the Grantee, (ii) a member of the
Grantee’s immediate family (or a trust for his or her
benefit) or (iii) pursuant to a domestic relations order. Any
attempt to transfer, assign, pledge or otherwise dispose of, or to
subject to execution, attachment or similar process, any Warrant
contrary to the provisions hereof shall be void and ineffective and
shall give no right to the purported transferee.
(g) Termination.
Unless otherwise determined by the Committee at or after issuance,
Warrants
issued to the Grantee that have not vested shall be
forfeited upon termination of the Grantee in accordance with
Section 5A(f), (g), (h) and (i), as applicable. The Committee may
provide (on or after issuance) that restrictions or forfeiture
conditions relating to the Warrants will be waived in whole or in
part in the event of termination resulting from specified causes,
and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to the
Warrants.
-7-
(h) Special
Rules for Incentive Warrants. No Warrant that remains
exercisable for more than three months following a Grantee’s
termination of employment for any reason other than death
(including death within three months after termination of
employment or within one year after a termination of employment due
to disability) or disability, or for more than one year following a
Grantee’s termination of employment as the result of his
becoming disabled, may be treated as an Incentive
Warrant.
(i) Limitations
of Incentive Warrants.
(i) Exercisability
Limitation. The aggregate Fair Market Value, determined as
of the date the Incentive Warrant is issued, of Common Stock for
which Incentive Warrants are exercisable for the first time by any
Grantee during any calendar year under the Plan (and/or any other
stock option plans of the Company or any Subsidiary) shall not
exceed $100,000.
(ii) 10%
Owners. Notwithstanding the provisions of this Section
5B(d), an Incentive Warrant may not be issued under the Plan to an
individual who, at the time the Warrant is issued, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its Subsidiary (as such
ownership may be determined for purposes of Section 422(b) (6) of
the Code), unless (i) at the time such Incentive Warrant is issued
the Warrant Exercise Price is at least 110% of the Fair Market
Value of the shares subject thereto and (ii) the Incentive Warrant
by its terms is not exercisable after the expiration of five (5)
years from the date it is issuance.
6A. Terms
and Conditions of Restricted Stock.
Restricted Stock
may be granted under this Plan aside from, or in association with,
any other award and shall be subject to the following conditions
and shall contain such additional terms and conditions (including
provisions relating to the acceleration of vesting of Restricted
Stock upon a Change of Control), not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(a) Grantee
rights. A Grantee shall have no rights to an award of
Restricted Stock unless and until Grantee accepts the award within
the period prescribed by the Committee and, if the Committee shall
deem desirable, makes payment to the Company in cash, or by check
or such other instrument as may be acceptable to the Committee.
After acceptance and issuance of a certificate or certificates, as
provided for below, the Grantee shall have the rights of a
stockholder with respect to Restricted Stock subject to the
non-transferability and forfeiture restrictions described in
Section 6(d) below.
(b) Issuance
of Certificates. The Company shall issue in the
Grantee’s name a certificate or certificates for the shares
of Common Stock associated with the award promptly after the
Grantee accepts such award.
(c) Delivery
of Certificates. Unless otherwise provided, any certificate
or certificates issued evidencing shares of Restricted Stock shall
not be delivered to the Grantee until such shares are free of any
restrictions specified by the Committee at the time of
grant.
(d) Forfeitability,
Non-transferability of Restricted Stock. Shares of
Restricted Stock are forfeitable until the terms of the Restricted
Stock grant have been satisfied. Shares of Restricted Stock are not
transferable until the date on which the Committee has specified
such restrictions have lapsed. Unless otherwise provided by the
Committee at or after grant, distributions in the form of dividends
or otherwise of additional shares or property in respect of shares
of Restricted Stock shall be subject to the same restrictions as
such shares of Restricted Stock.
(e) Change
of Control. Upon the occurrence of a Change in Control as
defined in Section 5A(c), the Committee may accelerate the vesting
of outstanding Restricted Stock, in whole or in part, as determined
by the Committee, in its sole discretion.
(f) Termination
of Employment. Unless otherwise determined by the Committee
at or after grant, in the event the Grantee ceases to be an
employee or otherwise associated with the Company for any other
reason, all shares of Restricted Stock theretofore awarded to him
which are still subject to restrictions shall be forfeited and the
Company shall have the right to complete the blank stock power. The
Committee may provide (on or after grant) that restrictions or
forfeiture conditions relating to shares of Restricted Stock will
be waived in whole or in part in the event of termination resulting
from specified causes, and the Committee may in other cases waive
in whole or in part restrictions or forfeiture conditions relating
to Restricted Stock.
-8-
6B. Terms
and Conditions of Preferred Stock.
In lieu
of grants of Options, Warrants, Restricted Stock and RSUs, to the
extent that the Committee shall determine that the issuance of
Options, Warrants, Restricted Stock or RSUs to a Participant could
cause the beneficial ownership by such Participant or its
affiliates to exceed more than 9.99% of the total outstanding
shares of Common Stock of the Company upon the exercise of the
Option or Warrant or the vesting of the Restricted Stock or RSU, as
applicable, Preferred Stock may be granted under this Plan aside
from, or in association with, any other award and shall be subject
to the following conditions and shall contain such additional terms
and conditions (including provisions relating to the acceleration
of vesting of Restricted Stock or RSU upon a Change of Control),
not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:
(a) Grantee
rights. A Grantee shall have no rights to an award of
Preferred Stock unless and until all of the following conditions
have been met (A) the Committee designates an award of Preferred
Stock in a series of Preferred Stock that has already been
authorized and designated the Board, the Board passes a resolution
authorizing and designating a new series of Preferred Stock on the
terms and conditions determined by the Committee, (B) if
applicable, the Company files a Certificate of Designation with the
Secretary of State of the State of Nevada that sets forth the
rights, preferences and other terms of any newly authorized and
designated series of the Preferred Stock, and (C) Grantee accepts
the award within the period prescribed by the Committee and, if the
Committee shall deem desirable, executes an agreement that sets
forth the terms and conditions of the issuance of the award of
Preferred Stock as may be acceptable to the Committee. After
acceptance and issuance of a certificate or certificates, as
provided for below, the Grantee shall have the rights set forth in
the applicable Certificate of Designation and any related agreement
with respect to the Preferred Stock award. The Preferred Stock
shall also be subject to the non-transferability and forfeiture
restrictions described in Section 6B(d) below.
(b) Issuance
of Certificates. The Company shall issue in the
Grantee’s name a certificate or certificates for the shares
of Preferred Stock associated with the award promptly after the
Grantee accepts such award. The Company shall issue in the
Grantee’s name a certificate or certificates for the shares
of Common Stock underlying the Preferred Stock associated with the
award promptly after the Grantee converts the Preferred Stock in
accordance with the terms and conditions set forth in the
applicable Certificate of Designation and related agreement, if
any.
(c) Delivery
of Certificates. Unless otherwise provided, any certificate
or certificates issued evidencing shares of Preferred Stock and/or
the underlying Common Stock issuable upon the conversion of the
Preferred Stock shall not be delivered to the Grantee until such
shares are free of any restrictions specified by the Committee at
the time of grant.
(d) Forfeitability,
Non-transferability of Preferred Stock. Shares of Preferred
Stock and any underlying shares of Common Stock issuable upon the
conversion of the Preferred Stock are forfeitable until the terms
of the Preferred Stock grant have been satisfied. Shares of
Preferred Stock and any underlying shares of Common Stock issuable
upon the conversion of the Preferred Stock are not transferable
until the date on which the Committee has specified such have
lapsed. Unless otherwise provided by the Committee at or after
grant, distributions in the form of dividends or otherwise of
additional shares or property in respect of shares of Preferred
Stock if the applicable Certificate of Designation provides for
such distributions, shall be subject to the same restrictions as
such shares of Preferred Stock.
(e) Change
of Control. Upon the occurrence of a Change in Control as
defined in Section 5A(c), the Committee may waive any conditions
and/or restrictions to the issuance of any contingent award of
Preferred Stock, in whole or in part, as determined by the
Committee, in its sole discretion.
(f) Termination
of Employment or Consulting Agreement. Unless otherwise
determined by the Committee at or after grant, in the event the
Grantee ceases to be, as applicable, an employee, a consultant or
otherwise associated with the Company for any other reason, all
shares of Preferred Stock theretofore awarded to him which are
still subject to restrictions shall be forfeited and the Company
shall have the right to complete the blank stock power. The
Committee may provide (on or after grant) that restrictions or
forfeiture conditions relating to shares of Preferred Stock will be
waived in whole or in part in the event of termination resulting
from specified causes, and the Committee may in other cases waive
in whole or in part restrictions or forfeiture conditions relating
to Preferred Stock.
-9-
(g) Maximum
Percentage. Notwithstanding
anything to the contrary set forth herein, the Company shall not
effect any conversion of Preferred Stock issued under the
Plan, and no Participant shall have
the right to convert any Preferred Stock, to the extent that after giving effect to such
conversion, the beneficial owner of such shares (together with such
Participant's affiliates) would have acquired, through conversion
of such Preferred Stock or
otherwise, beneficial ownership of a number of shares of Common
Stock that exceeds 9.99% (the "Maximum
Percentage") of the number of
shares of Common Stock outstanding immediately after giving effect
to such conversion. The Company shall not give effect to any
voting rights of such Preferred Stock, and any Participant shall
not have the right to exercise voting rights with respect to any
Preferred Stock pursuant hereto, to the extent that giving effect
to such voting rights would result in such Participant (together
with its affiliates) being deemed to beneficially own in excess of
the Maximum Percentage of the number of shares of Common Stock
outstanding immediately after giving effect to such exercise,
assuming such exercise as being equivalent to conversion.
For purposes of the foregoing, the
number of shares of Common Stock beneficially owned by a
Participant and its affiliates shall include the number of shares
of Common Stock issuable upon conversion of the Preferred
Stock with respect to which the
determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A)
conversion of the remaining, nonconverted shares of
Preferred Stock beneficially owned by
such Participant or any of its affiliates and (B) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any notes
or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained in this Section 6B(g)
beneficially owned by such Participant or any of its affiliates.
Except as set forth in the preceding sentence, for purposes of this
Section 6B(g), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Section 6B(g), in
determining the number of outstanding shares of Common Stock, a
Participant may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company's most recent Form 10-K, Form
10-Q, or Form 8-K, as the case may be, (2) a more recent public
announcement by the Company, or (3) any other notice by the Company
or its transfer agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written
request of any Participant, the Company shall within one (1)
business day following the receipt of such notice, confirm orally
and in writing to any such Participant the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including the Preferred Stock,
by such Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. By
written notice to the Company, the Participant may from time to
time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% specified in such notice;
provided, that (i) any such increase will not be effective until
the sixty-first (61st) day after such notice is delivered to the
Company, and (ii) any such increase or decrease will apply only to
the Holder providing such written notice and not to any other
Holder. In the event that the Company cannot pay any portion of any
dividend, distribution, grant or issuance hereunder to a
Participant solely by reason of this Section 6B(g) (such shares,
the "Limited
Shares"), notwithstanding
anything to the contrary contained herein, the Company shall not be
required to pay cash in lieu of the payment that otherwise would
have been made in such Limited Shares, but shall hold any such
Limited Shares in abeyance for such Holder until such time, if
ever, that the delivery of such Limited Shares shall not cause the
Participant to exceed the Maximum Percentage, at which time such
Participant shall be delivered such Limited Shares to the extent as
if there had been no such limitation. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 6B(g) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended beneficial ownership
limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such
limitation.
6C. Terms
and Conditions of Restricted Stock Units.
Restricted Stock
Units, or RSUs, may be granted under this Plan aside from, or in
association with, any other award and shall be subject to the
following conditions and shall contain such additional terms and
conditions (including provisions relating to the acceleration of
vesting of RSUs upon a Change of Control), not inconsistent with
the terms of the Plan, as the Committee shall deem
desirable:
(a) Grantee
rights. A Grantee shall have no rights to an award of RSUs
unless and until Grantee accepts the award within the period
prescribed by the Committee and, if the Committee shall deem
desirable, makes payment to the Company in cash, or by check or
such other instrument as may be acceptable to the Committee. After
acceptance and issuance of a certificate or certificates, as
provided for below, the Grantee shall have the rights of a
stockholder with respect to the RSUs subject to the
non-transferability and forfeiture restrictions described in
Section 6C(d) below.
-10-
(b) Vesting.
At the time
of the grant of RSUs, the Committee may place restrictions on RSUs
that shall lapse, in whole or in part, upon the passage of time.
Unless otherwise provided in an Award Agreement, upon the vesting
of a RSU, there shall be delivered to the Grantee, within 30 days
of the date on which such Award (or any portion thereof) vests, the
number of shares of common stock equal to the number of RSUs
becoming so vested.
(c) Non-transferability
of RSUs. Prior to the time that
shares of common stock underlying RSUs have been delivered to the
Grantee, RSUs are not transferable and may be exercised
solely by the Grantee during his lifetime or after his death by the
person or persons entitled thereto under his will or the laws of
descent and distribution. The Committee, in its sole discretion,
may permit a transfer of an RSU to (i) a trust for the benefit of
the Grantee, (ii) a member of the Grantee’s immediate family
(or a trust for his or her benefit) or (iii) pursuant to a domestic
relations order. Any attempt to transfer, assign, pledge or
otherwise dispose of, or to subject to execution, attachment or
similar process, any RSU contrary to the provisions hereof shall be
void and ineffective and shall give no right to the purported
transferee.
(d) Change
of Control. Upon the occurrence of a Change in Control as
defined in Section 5A(c), the Committee may accelerate the vesting
of outstanding RSUs, in whole or in part, as determined by the
Committee, in its sole discretion.
(e) Dividend
Equivalents. To the extent provided in an Award Agreement,
and subject to the requirements of Section 409A of the Code,
an award of RSUs may provide the Grantee with the right to receive
dividend equivalent payments with respect to common stock subject
to such award, which payments may be settled in cash or common
stock, as determined by the Committee. Any such settlements and any
crediting of dividend equivalents may, at the time of grant of the
RSU, be made subject to the transfer restrictions, forfeiture
risks, vesting and conditions of the RSUs and subject to such other
conditions, restrictions and contingencies as the Committee shall
establish at the time of grant of the RSU, including the
reinvestment of such credited amounts in common stock equivalents,
provided that all such conditions, restrictions and contingencies
shall comply with the requirements of Section 409A of the
Code.
(f) Termination.
Unless otherwise determined by the Committee at or after grant,
RSUs
awarded to the Grantee that have not vested shall be
forfeited upon termination of the Grantee in accordance with
Section 5A(f), (g), (h) and (i), as applicable. The Committee may
provide (on or after grant) that restrictions or forfeiture
conditions relating to the RSUs will be waived in whole or in part
in the event of termination resulting from specified causes, and
the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to the
RSUs.
7. Term
of Plan.
No
Securities shall be granted pursuant to the Plan on or after the
date which is ten years from the effective date of the Plan, but
Options and Warrants and awards of Restricted Stock and/or
Preferred Stock and/or RSUs theretofore granted may extend beyond
that date.
8. Capital
Change of the Company.
In the
event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate
structure affecting the Common Stock of the Company, the Committee
shall make an appropriate and equitable adjustment in the number
and kind of shares reserved for issuance under the Plan and (A) in
the number and price of shares subject to outstanding Options or
Warrants granted or issued under the Plan, to the end that after
such event each Optionee’s or Grantee’s proportionate
interest shall be maintained (to the extent possible) as
immediately before the occurrence of such event and (B) in the
number and conversion price of shares subject to outstanding
Preferred Stock granted under the Plan, to the end that after such
event each Participant’s (who has received a grant of
Preferred Stock) proportionate interest shall be maintained (to the
extent possible) as immediately before the occurrence of such
event. The Committee shall, to the extent feasible, make such other
adjustments as may be required under the tax laws so that any
Incentive Options or Incentive Warrants previously granted or
issued shall not be deemed modified within the meaning of Section
424(h) of the Code. Appropriate adjustments shall also be made in
the case of outstanding Restricted Stock or RSUs granted under the
Plan.
The
adjustments described above will be made only to the extent
consistent with continued qualification of the Option or Warrant
under Section 422 of the Code (in the case of an Incentive Option
or Incentive Warrant) and Section 409A of the Code.
-11-
9. Purchase
for Investment/Conditions.
Unless
the Securities, and shares of Common Stock underlying such
Securities, covered by the Plan have been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or the
Company has determined that such registration is unnecessary, each
person exercising or receiving Securities under the Plan may be
required by the Company to give a representation in writing that he
is acquiring the securities for his own account for investment and
not with a view to, or for sale in connection with, the
distribution of any part thereof. The Committee may impose any
additional or further restrictions on awards of Securities as shall
be determined by the Committee at the time of award.
10. Taxes.
(a) The
Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Securities
granted under the Plan with respect to the withholding of any taxes
(including income or employment taxes) or any other tax
matters.
(b) If
any Grantee, in connection with the acquisition of Restricted
Stock, makes the election permitted under Section 83(b) of the Code
(that is, an election to include in gross income in the year of
transfer the amounts specified in Section 83(b)), such Grantee
shall notify the Company of the election with the Internal Revenue
Service pursuant to regulations issued under the authority of Code
Section 83(b).
(c) If
any Grantee shall make any disposition of shares of Common Stock
issued pursuant to the exercise of an Incentive Option or Incentive
Warrant under the circumstances described in Section 421(b) of the
Code (relating to certain disqualifying dispositions), such Grantee
shall notify the Company of such disposition within ten (10) days
hereof.
11. Effective
Date of Plan.
The
Plan shall be effective on May 24, 2021; provided, however, that
the Plan must subsequently be approved by majority vote of the
Company’s shareholders in accordance with the rules and
regulations of the NASDAQ Stock Market LLC no later than May 23,
2022.
12. Amendment
and Termination.
The
Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any
Participant under Securities theretofore granted without the
Participant’s consent, and except that no amendment shall be
made which, without the approval of the shareholders of the Company
would:
(a) materially
increase the number of shares that may be issued under the Plan,
except as is provided in Section 8;
(b) materially
increase the benefits accruing to the Participants under the
Plan;
(c) materially
modify the requirements as to eligibility for participation in the
Plan;
(d) decrease
the exercise price of an Incentive Option or Incentive Warrant to
less than 100% of the Fair Market Value per share of Common Stock
on the date of grant or issuance thereof or the exercise price of a
Nonqualified Option or Non-Qualified Warrant to less than 100% of
the Fair Market Value per share of Common Stock on the date of
grant or issuance thereof;
(e) extend
the term of any Option or Warrant beyond that provided for in
Section 5A(b) and Section 5B(c), respectively;
(f) except
as otherwise provided in Sections 5A(d), 5B(e) and 8 hereof, reduce
the exercise price of outstanding Options or Warrants or effect
repricing through cancellations and re-grants of new Options or
Warrants;
-12-
(g) increase
the number of shares of Common Stock
to be issued or issuable under the Plan to an amount that is equal
to or in excess of 19.99% of the number of shares of Common Stock
outstanding before the issuance of the stock or securities;
or
(h) otherwise
require stockholder approval pursuant to the rules and regulations
of the NASDAQ Stock Market LLC.
Subject
to the forgoing, the Committee may amend the terms of any Option or
Warrant theretofore granted, prospectively or retrospectively, but
no such amendment shall impair the rights of any Optionee or
Grantee without the Optionee’s or Grantee’s
consent.
It is
the intention of the Board that the Plan comply strictly with the
provisions of Section 409A of the Code and Treasury Regulations and
other Internal Revenue Service guidance promulgated thereunder (the
“Section 409A
Rules”) and the Committee shall exercise its
discretion in granting awards hereunder (and the terms of such
awards), accordingly. The Plan and any grant of an award hereunder
may be amended from time to time (without, in the case of an award,
the consent of the Participant) as may be necessary or appropriate
to comply with the Section 409A Rules.
13. Government
Regulations.
The
Plan, and the grant and exercise or conversion, as applicable, of
Securities hereunder, and the obligation of the Company to issue
and deliver shares under such Securities shall be subject to all
applicable laws, rules and regulations, and to such approvals by
any governmental agencies, national securities exchanges and
interdealer quotation systems as may be required.
14. General
Provisions.
(a) Certificates.
All certificates for shares of Common Stock or Preferred Stock
delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the
Securities and Exchange Commission, or other securities commission
having jurisdiction, any applicable Federal or state securities
law, any stock exchange or interdealer quotation system upon which
the Common Stock is then listed or traded and the Committee may
cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions.
(b) Employment
Matters. Neither the adoption of the Plan nor any grant or
award under the Plan shall confer upon any Participant who is an
employee of the Company or any Subsidiary any right to continued
employment or, in the case of a Participant who is a director,
continued service as a director, with the Company or a Subsidiary,
as the case may be, nor shall it interfere in any way with the
right of the Company or any Subsidiary to terminate the employment
of any of its employees, the service of any of its directors or the
retention of any of its consultants or advisors at any
time.
(c) Limitation
of Liability. No member of the Committee, or any officer or
employee of the Company acting on behalf of the Committee, shall be
personally liable for any action, determination or interpretation
taken or made in good faith with respect to the Plan, and all
members of the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in
respect of any such action, determination or
interpretation.
(d) Registration
of Stock. Notwithstanding any other provision in the Plan,
no Option or Warrant may be exercised unless and until the Common
Stock to be issued upon the exercise thereof has been registered
under the Securities Act and applicable state securities laws, or
are, in the opinion of counsel to the Company, exempt from such
registration in the United States. The Company shall not be under
any obligation to register under applicable federal or state
securities laws any Common Stock to be issued upon the exercise of
an Option or Warrant granted or issued hereunder in order to permit
the exercise of an Option or Warrant and the issuance and sale of
the Common Stock subject to such Option or Warrant, although the
Company may in its sole discretion register such Common Stock at
such time as the Company shall determine. If the Company chooses to
comply with such an exemption from registration, the Common Stock
issued under the Plan may, at the direction of the Committee, bear
an appropriate restrictive legend restricting the transfer or
pledge of the Common Stock represented thereby, and the Committee
may also give appropriate stop transfer instructions with respect
to such Common Stock to the Company’s transfer
agent.
-13-
15. Non-Uniform
Determinations.
The
Committee’s determinations under the Plan, including, without
limitation, (i) the determination of the Participants to receive
awards, (ii) the form, amount and timing of such awards, (iii) the
terms and provisions of such awards and (ii) the agreements
evidencing the same, need not be uniform and may be made by it
selectively among Participants who receive, or who are eligible to
receive, awards under the Plan, whether or not such Participants
are similarly situated.
16. Governing
Law.
The
validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance
with the internal laws of the State of Nevada, without giving
effect to principles of conflicts of laws, and applicable federal
law.
17. Additional Issuance
Restrictions.
If the
Company has not obtained the approval of its stockholders in
accordance with NASDAQ Listing Rule 5635(d), then the Company may
not issue any Securities under this Plan that would upon the
issuance of any Securities or upon the exercise on conversion of
such Securities, as applicable, into shares of the Company’s
Common Stock, when aggregated with any other shares of Common Stock
(i) held by a Participant, (ii) underlying any convertible security
held by a Participant, and (iii) issuable upon prior exercise of
any convertible security held by a Participant, would exceed 19.99%
shares of the Company’s Common Stock, subject to adjustment
for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock
that occur after the date of the adoption of this Plan (such number
of shares, the “Issuable Maximum”).
The Participant shall be entitled to a portion of the Issuable
Maximum as reasonably determined by the Committee so as not to
violate NASDAQ Listing Rule 5635(d). In addition, the Participant
may allocate its pro-rata portion of the Issuable Maximum among
Securities held by it in its sole discretion. Such portion shall be
adjusted upward ratably in the event a Participant no longer holds
any Securities and the amount of shares issued to such Participant
pursuant to its Securities was less than such Participant’s
pro-rata share of the Issuable Maximum.
-14-