cbdMD, Inc 8-K, filed Jan 14, 2021
cbdMD, Inc. (YCBD)
8-K
2021-01-14
For: 2021-01-08
View Original
Added on
April 08, 2026
About this 8-K
cbdMD, Inc filed this 8-K on January 14, 2021, reporting on events of January 8, 2021.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
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)
January 8,
2021
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cbdMD, INC.
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(Exact name of registrant as specified in its charter)
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North Carolina
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001-38299
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47-3414576
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(State or other jurisdiction of incorporation or
organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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8845 Red Oak Blvd, Charlotte, NC 28217
(Address of principal executive offices)(Zip Code)
Registrant's
telephone number, including area code: (704) 445-3060
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_______________________________________
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(Former name or former address, if changed since last
report)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (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:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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common
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YCBD
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NYSE
American
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8%
Series A Cumulative Convertible Preferred Stock
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YCBD PR
A
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NYSE
American
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Indicate by check mark whether the registrant is an emerging growth
company as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this
chapter).
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Emerging
growth company ☑
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If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Item
8.01
Other
Events.
On
January 8, 2021, the board of directors of cbdMD, Inc. approved the
2021 Equity Compensation Plan (the “2021 Plan”). Our
board of directors will recommend that the 2021 Plan be approved by
our shareholders at our upcoming 2021 annual meeting, presently
expected to be held in March 2021. While grants under the 2021 Plan
may be made to our employees prior to such time as the plan is
approved by our shareholders, (i) any such grant, if made, will not
vest or become exercisable, and (ii) no grants will be made to our
executive officers and/or members of our board of directors, until
such time as the 2021 Plan is approved by our shareholders and a
Additional Listing Application covering the shares of our common
stock reserved for issuance under the plan has been approved by
NYSE Regulation.
The
purpose of the 2021 Plan is to advance the interests of our company
by providing an incentive to attract, retain and motivate highly
qualified and competent persons who are important to us and upon
whose efforts and judgment the success of our company is largely
dependent. The 2021 Plan reserves 5,000,000 shares of our common
stock for issuance pursuant to the terms of the plan upon the grant
of plan options, restricted stock awards, or other stock-based
awards granted under the 2021 Plan. The 2021 Plan also contains an
“evergreen formula” pursuant to which the number of
shares of common stock available for issuance under the 2021 Plan
will automatically increase on October 1 of each calendar year
during the term of the 2021 Plan, beginning with calendar year
2022, by an amount equal to 1% of the total number of shares of
common stock outstanding on September 30 of the such calendar year,
up to a maximum of 250,000 shares.
The
2021 Plan will be administered by the Compensation, Corporate
Governance and Nominating Committee of our board of directors. Such
committee is comprised of independent member of our board of
directors in accordance with the rules of the NYSE American LLC,
the exchange on which our common stock and 8.0% Series A Cumulative
Convertible Preferred Stock is presently listed. The Compensation,
Corporate Governance and Nominating Committee will determine, from
time to time, those of individuals to whom stock awards or plan
options will be granted, the terms and provisions of each such
grant, the dates such grants will become exercisable, the number of
shares subject to each grant, the purchase price of such shares and
the form of payment of such purchase price. All other questions
relating to the administration of the 2021 Plan and the
interpretation of the provisions thereof are to be resolved at the
sole discretion of the Compensation, Corporate Governance and
Nominating Committee.
The 2021 Plan provides for the grant of restricted
stock awards, deferred stock grants, stock appreciation rights,
incentive stock options (“ISOs”)
and non-statutory stock options (“NSOs”).
Awards may be made or granted to our employees, officers, directors
and consultants who are deemed to have rendered or to be able to
render significant services to cbdMD or our subsidiaries and who
are deemed to have contributed or to have the potential to
contribute to the success of our company. Any plan option granted
under the 2021 Plan must provide for an exercise price of not less
than 100% of the fair market value of the underlying shares on the
date of such grant, but the exercise price of any ISO granted to an
eligible employee owning more than 10% of our common stock must be
at least 110% of such fair market value as determined on the date
of the grant. No ISOs may be granted to any person who is not an
employee of cbdMD or a subsidiary at the time of grant. The
recipient of any grant under the 2021 Plan, and the amount and
terms of a specific grant, will be determined by the Compensation,
Corporate Governance and Nominating Committee.
The term of each plan option will be fixed by the
Compensation, Corporate Governance and Nominating Committee;
provided,
however, that an ISO may be
granted only within the 10-year period commencing from the date of
adoption of the 2021 Plan by our board of directors and may only be
exercised within 10 years of the date of grant, or five years in
the case of an ISO granted to an optionee who, at the time of
grant, owns shares of our common stock possessing more than 10% of
the total combined voting power of all classes of stock of cbdMD.
The exercise price per share of common stock purchasable under a
plan option will be determined by the Compensation, Corporate
Governance and Nominating Committee at the time of grant and may
not be less than 100% of the fair market value on the day of grant,
or, in the case of a grant of an ISO to a 10% or greater
shareholder, not be less than 110% of the fair market value on the
date of grant.
Shares
of restricted stock may be awarded either alone or in addition to
other awards granted under the 2021 Plan. The Compensation,
Corporate Governance and Nominating Committee, subject to board of
directors authorization, if indicated, may determine the eligible
persons to whom, and the time or times at which, grants of
restricted stock will be awarded, the number of shares to be
awarded, the price (if any) to be paid by the holder, the time or
times within which such awards may be subject to forfeiture, the
vesting schedule and rights to acceleration thereof, and all other
terms and conditions of the awards. Restricted stock will
constitute issued and outstanding shares of our common stock for
all corporate purposes. The holder will have the right to vote such
restricted stock, to receive and retain all regular cash dividends
and other cash equivalent distributions as the board of directors
may in its sole discretion designate, pay or distribute on such
restricted stock and to exercise all other rights, powers and
privileges of a holder of common stock with respect to such
restricted stock, with the exceptions that (i) the holder will not
be entitled to delivery of the stock certificate or certificates
representing such restricted stock until the restriction period, if
any, has expired and unless all other vesting requirements with
respect thereto shall have been fulfilled; (ii) cbdMD will retain
custody of the stock certificate or certificates representing the
restricted stock during the restriction period; (iii) other than
regular cash dividends and other cash equivalent distributions as
the board of directors may in its sole discretion designate, pay or
distribute, we will retain custody of all distributions made or
declared with respect to the restricted stock until such time, if
ever, as the restricted stock with respect to which such retained
distributions may be made, paid or declared has become vested; (iv)
such award has not been forfeited.
Other
stock-based awards may be awarded, subject to limitations under
applicable law, that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on, or related to,
shares of common stock, as deemed by the Compensation, Corporate
Governance and Nominating Committee to be consistent with the
purposes of the 2021 Plan, including, without limitation, purchase
rights, shares of common stock awarded which are not subject to any
restrictions or conditions, or other rights convertible into shares
of common stock and awards valued by reference to the value of
securities of or the performance of specified subsidiaries. Other
stock-based awards may be awarded either alone or in addition to or
in tandem with any other awards under the 2021 Plan or any other
plan of cbdMD. Each other stock-based award will be subject to such
terms and conditions as may be determined by the Compensation,
Corporate Governance and Nominating Committee.
The 2021 Plan became effective on the date of its
adoption by our board of directors. To the extent that the 2021
Plan authorizes the award of ISOs, the failure to obtain
shareholder for the 2021 Plan by January 8, 2022 does not
invalidate the 2021 Plan; provided,
however, that (i) in the
absence of such shareholder approval, ISOs may not be awarded under
the 2021 Plan and (ii) any ISOs previously awarded under the 2021
Plan will automatically be converted into NSOs upon terms and
conditions determined by the Compensation, Corporate Governance and
Nominating Committee to reflect, as nearly as is reasonably
practicable in its sole determination, the terms and conditions of
the ISOs so converted. Our board of directors may at any time, and
from time to time, amend alter, suspend or discontinue any of the
provisions of the 2021 Plan, but no amendment, alteration,
suspension or discontinuance may be made that would impair the
rights of a holder of any outstanding grant or award under the 2021
without the such holder’s consent. Unless the plan is
suspended or terminated by the board of directors, the 2021 Plan
will on terminate 10 years from the date of the plan’s
adoption. Any termination of the 2021 Plan will not affect the
validity of any options previously granted
thereunder.
The
foregoing description of the terms and conditions of the 2021 Plan
is qualified in its entirety by reference to the 2021 Plan, the
form of which is filed as Exhibit 10.1 to this report.
Item
9.01
Financial
Statements and Exhibits.
(d)
Exhibits.
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Incorporated by Reference
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Filed or
Furnished
Herewith
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No.
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Exhibit Description
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Form
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Date Filed
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Number
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cbdMD,
Inc. 2021 Equity Compensation Plan
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Filed
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SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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cbdMD,
Inc.
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Date:
January 14, 2021
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By:
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/s/ T.
Ronan Kennedy
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T.
Ronan Kennedy, Chief Financial Officer
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Exhibit
10.1
cbdMD, INC.
2021 EQUITY COMPENSATION PLAN
1.
Purpose.
1.1
Purpose.
The purpose of this 2021 Equity Compensation Plan is to enable the
Company to offer to its employees, officers, directors and
consultants whose past, present and/or potential contributions to
the Company and its Subsidiaries have been, are or will be
important to the success of the Company, an opportunity to acquire
a proprietary interest in the Company. The types of long-term
incentive Awards that may be provided under the Plan will enable
the Company to respond to changes in compensation practices, tax
laws, accounting regulations and the size and diversity of its
businesses.
2.
Definitions.
2.1
Definitions.
For purposes of the Plan, the following terms shall be defined as
set forth below:
(a)
“Agreement”
means the agreement between the Company and the Holder setting
forth the terms and conditions of an Award under the Plan.
Agreements shall be in the form(s) attached
hereto.
(b)
“Award”
means Stock Options, Restricted Stock and/or other Stock Based
Awards awarded under the Plan.
(c)
“Board”
means the Board of Directors of the Company.
(d)
“Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
(e)
“Committee”
means the Compensation, Corporate Governance and Nominating
Committee of the Board or any other committee of the Board that the
Board may designate to administer the Plan or any portion thereof.
If no Committee is so designated, then all references in this Plan
to “Committee” shall mean the
Board.
(f)
“Common
Stock” means the common
stock of the Company, $0.001 par value per
share.
(g)
“Company”
means cbdMD, Inc., a corporation organized under the laws of the
State of North Carolina.
(h)
“Disability”
means physical or mental impairment as determined under procedures
established by the Committee for purposes of the
Plan.
(i)
“Effective
Date” means the date set
forth in Section 11.1, below.
(j)
“Fair
Market Value”, unless
otherwise required by any applicable provision of the Code or any
regulations issued thereunder, means, as of any given date: (i) if
the Common Stock is listed on a national securities exchange, the
closing price of the Common Stock in the principal trading market
for the Common Stock on such date, as reported by the exchange (or
on the last preceding trading date if such security was not traded
on such date); (ii) if the Common Stock is not listed on a national
securities exchange, but is traded in the over-the-counter market,
the closing bid price for the Common Stock on such date, as
reported by the OTC Markets Inc. or similar publisher of such
quotations; and (iii) if the fair market value of the Common Stock
cannot be determined pursuant to clause (i) or (ii) above, such
price as the Committee shall determine, in good
faith.
(k)
“Holder”
means a person who has received an Award under the
Plan.
(l)
“Incentive
Stock Option” means any
Stock Option intended to be and designated as an “incentive
stock option” within the meaning of Section 422 of the
Code.
(m)
“Nonqualified
Stock Option” means any
Stock Option that is not an Incentive Stock
Option.
(n)
“Normal
Retirement” means
retirement from active employment with the Company or any
Subsidiary, other than for Cause or due to death or disability, of
a Holder who; (i) has reached the age of 65; (ii) has reached the
age of 62 and has completed five years of service with the Company;
or (iii) has reached the age of 60 and has completed 10 years of
service with the Company.
(o)
“Other
Stock-Based Award” means
an Award under Section 8, below, that is valued in whole or in part
by reference to, or is otherwise based upon, Common
Stock.
(p)
“Parent”
means any present or future “parent corporation” of the
Company, as such term is defined in Section 424(e) of the
Code.
(q)
“Plan”
means the cbdMD, Inc. 2021 Equity Compensation Plan, as hereinafter
amended from time to time.
(r)
“Repurchase
Value” shall mean the
Fair Market Value in the event the Award to be repurchased under
Section 9.2 is comprised of shares of Common Stock and the
difference between Fair Market Value and the Exercise Price (if
lower than Fair Market Value) in the event the Award is a Stock
Option; in each case, multiplied by the number of shares subject to
the Award.
(s)
“Restricted
Stock” means Common
Stock, received under an Award made pursuant to Section 7, below
that is subject to restrictions under said Section
7.
(t)
“Stock
Option” or
“Option”
means any option to purchase shares of Common Stock that is granted
pursuant to the Plan.
(u)
“Subsidiary”
means any present or future “subsidiary corporation” of
the Company, as such term is defined in Section 424(f) of the
Code.
3.
Administration.
3.1
Committee
Membership. The Plan shall be
administered by the Committee, the Board or a committee designated
by the Board. Committee members shall serve for such term as the
Board may in each case determine, and shall be subject to removal
at any time by the Board. The Committee members, to the extent
deemed to be appropriate by the Board, shall be “non-employee
directors” as defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended
(“Exchange
Act”), and “outside
directors” within the meaning of Section 162(m) of the Code.
The Committee shall conduct itself in conformance with the
provisions of the Compensation, Corporate Governance and Nominating
Committee Charter.
3.2
Powers of
Committee. The Committee shall
have the authority and responsibility to recommend to the Board for
approval, Awards for Board members, executive officers,
non-executive employees and consultants of the Company, pursuant to
the terms of the Plan: (i) Stock Options, (ii) Restricted Stock,
and/or (iii) Other Stock-Based Awards. For purposes of illustration
and not of limitation, the Committee shall have the authority
(subject to the express provisions of this
Plan):
(a)
to select the officers, employees, directors and consultants of the
Company or any Subsidiary to whom Stock Options, Restricted Stock,
and/or Other Stock-Based Awards may from time to time be awarded
hereunder.
(b)
to determine the terms and conditions, not inconsistent with the
terms of the Plan or requisite Board approval, of any Award granted
hereunder including, but not limited to, number of shares, share
exercise price or types of consideration paid upon exercise of
Stock Options and the purchase price of Common Stock awarded under
the Plan (including without limitation by a Holder’s
conversion of deferred salary or other indebtedness of the Company
to the Holder), such as other securities of the Company or other
property, any restrictions or limitations, and any vesting,
exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall
determine;
(c)
to determine any specified performance goals or such other factors
or criteria which need to be attained for the vesting of an Award
granted hereunder;
(d)
to determine the terms and conditions under which Awards granted
hereunder are to operate on a tandem basis and/or in conjunction
with or apart from other equity awarded under this Plan and cash
Awards made by the Company or any Subsidiary outside of this Plan;
and
(e)
to determine the extent and circumstances under which Common Stock
and other amounts payable with respect to an Award hereunder shall
be deferred that may be either automatic or at the election of the
Holder; and
3.3
Interpretation of Plan.
3.3.1
Committee
Authority. Subject to Section
10, below, the Committee shall have the authority to adopt, alter
and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable,
to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and to determine the form and substance of
all Agreements relating thereto), and to otherwise supervise the
administration of the Plan. Subject to Section 10, below, all
decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee’s sole discretion,
subject to Board authorization if indicated, and shall be final and
binding upon all persons, including the Company, its Subsidiaries
and Holders.
3.3.2
Incentive
Stock Options. Anything in the
Plan to the contrary notwithstanding, no term or provision of the
Plan relating to Incentive Stock Options or any Agreement providing
for Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the
Plan be so exercised, so as to disqualify the Plan under Section
422 of the Code, or, without the consent of the Holder(s) affected,
to disqualify any Incentive Stock Option under such Section
422.
4.
Stock Subject to Plan.
4.1
Number of
Shares. The total number of
shares of Common Stock reserved and available for issuance under
the Plan shall be five million (5,000,000) shares. Shares of Common
Stock under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. The number of
shares of Common Stock available for issuance under the Plan shall
automatically increase on October 1 of each calendar year during
the term of the Plan, beginning with calendar year 2022, by an
amount equal to one percent (1%) of the total number of
shares of Common Stock of the Company issued and outstanding on
September 30 of such calendar year, but in no event shall any such
annual increase exceed Two Hundred Fifty Thousand (250,000) shares
of Common Stock. If any share of Common Stock that have been
granted pursuant to a Stock Option
ceases to be subject to a Stock Option, or if any shares of Common
Stock that are subject to any Restricted Stock, Deferred Stock
Award, or Other Stock-Based Award granted hereunder are forfeited
or any such Award otherwise terminates without a payment being made
to the Holder in the form of Common Stock, such shares shall again
be available for distribution in connection with future grants and
Awards under the Plan.
4.2
Adjustment
Upon Changes in Capitalization, Etc. In the event of any dividend (other than a cash
dividend) payable on shares of Common Stock, stock split, reverse
stock split, combination or exchange of shares, or other similar
event (not addressed in Section 4.3, below) occurring after the
grant of an Award, which results in a change in the shares of
Common Stock of the Company as a whole, (i) the number of shares
issuable in connection with any such Award and the purchase price
thereof, if any, shall be proportionately adjusted to reflect the
occurrence of any such event and (ii) the Committee shall
determine whether such change requires an adjustment in the
aggregate number of shares reserved for issuance under the Plan or
to retain the number of shares reserved and available under the
Plan in their sole discretion. Any
adjustment required by this Section 4.2 shall be made by the
Committee, in good faith, subject to Board authorization if
indicated, whose determination will be final, binding and
conclusive.
4.3
Certain
Mergers and Similar Transactions. In the event of (a) a dissolution or liquidation
of the Company, (b) a merger or consolidation in which the Company
is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in
which there is no substantial change in the shareholders of the
Company or their relative stock holdings and the Awards granted
under this Plan are assumed, converted or replaced by the successor
corporation, which assumption will be binding on all Awardees, (c)
a merger in which the Company is the surviving corporation but
after which the shareholders of the Company immediately prior to
such merger (other than any shareholder that merges, or which owns
or controls another corporation that merges, with the Company in
such merger) cease to own their shares or other equity interest in
the Company, (d) the sale of substantially all of the assets of the
Company, or (e) the acquisition, sale, or transfer of more than 50%
of the outstanding shares of the Company by tender offer or similar
transaction, any or all outstanding Awards may be assumed,
converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all
Awardees. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar
consideration to Awardees as was provided to shareholders (after
taking into account the existing provisions of the Awards). The
successor corporation may also issue, in place of outstanding
Shares of the Company held by the Holder, substantially similar
shares or other property subject to repurchase restrictions no less
favorable to the Holder. In the event such successor corporation
(if any) refuses or otherwise declines to assume or substitute
Awards, as provided above, (i) the vesting of any or all Awards
granted pursuant to this Plan will accelerate immediately prior to
the effective date of a transaction described in this Section 4.3
and (ii) any or all Options granted pursuant to this Plan will
become exercisable in full prior to the consummation of such event
at such time and on such conditions as the Committee determines. If
such Options are not exercised prior to the consummation of the
corporate transaction, they shall terminate at such time as
determined by the Committee. Subject to any greater rights granted
to Awardees under the foregoing provisions of this Section 4.3, in
the event of the occurrence of any transaction described in this
Section 4.3, any outstanding Awards will be treated as provided in
the applicable agreement or plan of merger, consolidation,
dissolution, liquidation, or sale of assets.
5.
Eligibility.
Awards
may be made or granted to employees, officers, directors and
consultants who are deemed to have rendered or to be able to render
significant services to the Company or its Subsidiaries and who are
deemed to have contributed or to have the potential to contribute
to the success of the Company. No Incentive Stock Option shall be
granted to any person who is not an employee of the Company or a
Subsidiary at the time of grant. Notwithstanding anything to the
contrary contained in the Plan, Awards covered or to be covered
under a registration statement on Form S-8 which may be filed with
the United States Securities and Exchange Commission may be made
under the Plan only if (a) they are made to natural persons, (b)
who provide bona fide services to the Company or its Subsidiaries,
and (c) the services are not in connection with the offer and sale
of securities in a capital raising transaction, and do not directly
or indirectly promote or maintain a market for the Company’s
securities.
6.
Stock Options.
6.1
Grant and
Exercise. Stock Options granted
under the Plan may be of two types: (i) Incentive Stock Options and
(ii) Nonqualified Stock Options. Any Stock Option granted under the
Plan shall contain such terms, not inconsistent with this Plan, or
with respect to Incentive Stock Options, not inconsistent with the
Plan and the Code, as the Committee may from time to time approve.
The Committee shall have the authority to grant Incentive Stock
Options or Non-qualified Stock Options, or both types of Stock
Options, which may be granted alone or in addition to other Awards
granted under the Plan. To the extent that any Stock Option
intended to qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate Nonqualified Stock
Option.
6.2
Terms and
Conditions. Stock Options
granted under the Plan shall be subject to the following terms and
conditions:
(a)
Option
Term. The term of each Stock
Option shall be fixed by the Committee; provided, however, that an
Incentive Stock Option may be granted only within the ten-year
period commencing from the Effective Date and may only be exercised
within ten years of the date of grant (or five years in the case of
an Incentive Stock Option granted to an optionee who, at the time
of grant, owns Common Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company
(“10%
Shareholder”).
(b)
Exercise
Price. The exercise price per
share of Common Stock purchasable under a Stock Option shall be
determined by the Committee at the time of grant and may not be
less than 100% of the Fair Market Value on the day of grant;
provided, however, that the exercise price of an Incentive Stock
Option granted to a 10% Shareholder shall not be less than 110% of
the Fair Market Value on the date of grant.
(c)
Exercisability.
Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the
Committee and as set forth in Section 9, below. If the Committee
provides, in its discretion, that any Stock Option is exercisable
only in installments, i.e., that it vests over time, the Committee
may waive such installment exercise provisions at any time at or
after the time of grant in whole or in part, based upon such
factors as the Committee shall determine.
(d)
Method of
Exercise. Subject to whatever
installment, exercise and waiting period provisions are applicable
in a particular case; Stock Options may be exercised in whole or in
part at any time during the term of the Option, by giving written
notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied
by payment in full of the purchase price, which shall be in cash
or, if provided in the Agreement, either in shares of Common Stock
(including Restricted Stock and other contingent Awards under this
Plan) or partly in cash and partly in such Common Stock, or such
other means which the Committee determines are consistent with the
Plan’s purpose and applicable law. Cash payments shall be
made by wire transfer, certified or bank check or personal check,
in each case payable to the order of the Company; provided,
however, that the Company shall not be required to deliver
certificates for shares of Common Stock with respect to which an
Option is exercised until the Company has confirmed the receipt of
good and available funds in payment of the purchase price thereof.
Payments in the form of Common Stock shall be valued at the Fair
Market Value on the date prior to the date of exercise. Such
payments shall be made by delivery of stock certificates in
negotiable form that are effective to transfer good and valid title
thereto to the Company, free of any liens or encumbrances. A Holder
shall have none of the rights of a shareholder with respect to the
shares subject to the Option until such shares shall be transferred
to the Holder upon the exercise of the Option.
(e)
Transferability.
Except as may be set forth in the Agreement, no Stock Option shall
be transferable by the Holder other than by will or by the laws of
descent and distribution, and all Stock Options shall be
exercisable, during the Holder’s lifetime, only by the Holder
(or, to the extent of legal incapacity or incompetency, the
Holder’s guardian or legal
representative).
(f)
Termination by Reason
of Death. If a Holder’s
employment by the Company or a Subsidiary terminates by reason of
death, any Stock Option held by such Holder, unless otherwise
determined by the Committee at the time of grant and set forth in
the Agreement, shall thereupon automatically terminate, except that
the portion of such Stock Option that has vested on the date of
death may thereafter be exercised by the legal representative of
the estate or by the legatee of the Holder under the will of the
Holder, for a period of one year (or such other greater or lesser
period as the Committee may specify at grant) from the date of such
death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
(g)
Termination by Reason
of Disability. If a
Holder’s employment by the Company or any Subsidiary
terminates by reason of Disability, any Stock Option held by such
Holder, unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, shall there upon
automatically terminate, except that the portion of such Stock
Option that has vested on the date of termination may thereafter be
exercised by the Holder for a period of one year (or such other
greater or lesser period as the Committee may specify at the time
of grant) from the date of such termination of employment or until
the expiration of the stated term of such Stock Option, whichever
period is the shorter.
(h)
Other
Termination. Subject to the
provisions of Section 12, below, and unless otherwise determined by
the Committee at the time of grant and set forth in the Agreement,
if a Holder is an employee of the Company or a Subsidiary at the
time of grant and if such Holder’s employment by the Company
or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically
terminate, except that if the Holder’s employment is
terminated by the Company or a Subsidiary without cause or due to
Normal Retirement, then the portion of such Stock Option that has
vested on the date of termination of employment may be exercised
for the lesser of three months after termination of employment or
the balance of such Stock Option’s term.
(i)
Additional
Incentive Stock Option Limitation. In the case of an Incentive Stock Option, the
aggregate Fair Market Value (on the date of grant of the Option)
with respect to which Incentive Stock Options become exercisable
for the first time by a Holder during any calendar year (under all
such plans of the Company and its Parent and Subsidiary) shall not
exceed $100,000.
(j)
Buyout and
Settlement Provisions. The
Committee may at any time, subject to Board authorization, if
indicated, offer to repurchase a Stock Option previously granted,
based upon such terms and conditions as the Committee shall
establish and communicate to the Holder at the time that such offer
is made.
7.
Restricted Stock.
7.1
Grant.
Shares of Restricted Stock may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee,
subject to Board authorization, if indicated, shall determine the
eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be
awarded, the price (if any) to be paid by the Holder, the time or
times within which such Awards may be subject to forfeiture
(“Restriction
Period”), the vesting
schedule and rights to acceleration thereof, and all other terms
and conditions of the Awards.
7.2
Terms and
Conditions. Each Restricted
Stock Award shall be subject to the following terms and
conditions:
(a)
Certificates.
Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Holder to
whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock
and any securities constituting Retained Distributions (as defined
below) shall bear a legend to the effect that ownership of the
Restricted Stock (and such Retained Distributions), and the
enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with
the Company, together with stock powers or other instruments of
assignment, each endorsed in blank, which will permit transfer to
the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions that shall be
forfeited or that shall not become vested in accordance with the
Plan and the Agreement.
(b)
Rights of
Holder. Restricted Stock shall
constitute issued and outstanding shares of Common Stock for all
corporate purposes. The Holder will have the right to vote such
Restricted Stock, to receive and retain all regular cash dividends
and other cash equivalent distributions as the Board may in its
sole discretion designate, pay or distribute on such Restricted
Stock and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to such Restricted Stock, with
the exceptions that (i) the Holder will not be entitled to delivery
of the stock certificate or certificates representing such
Restricted Stock until the Restriction Period shall have expired
and unless all other vesting requirements with respect thereto
shall have been fulfilled; (ii) the Company will retain custody of
the stock certificate or certificates representing the Restricted
Stock during the Restriction Period; (iii) other than regular cash
dividends and other cash equivalent distributions as the Board may
in its sole discretion designate, pay or distribute, the Company
will retain custody of all distributions
(“Retained
Distributions”) made or
declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such
time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall
have become vested and with respect to which the Restriction Period
shall have expired; (iv) a breach of any of the restrictions, terms
or conditions contained in this Plan or the Agreement or otherwise
established by the Committee with respect to any Restricted Stock
or Retained Distributions will cause a forfeiture of such
Restricted Stock and any Retained Distributions with respect
thereto.
(c)
Vesting;
Forfeiture. Upon the expiration
of the Restriction Period with respect to each Award of Restricted
Stock and the satisfaction of any other applicable restrictions,
terms and conditions (i) all or part of such Restricted Stock shall
become vested in accordance with the terms of the Agreement,
subject to Section 9, below, and (ii) any Retained Distributions
with respect to such Restricted Stock shall become vested to the
extent that the Restricted Stock related thereto shall have become
vested, subject to Section 9, below. Any such Restricted Stock and
Retained Distributions that do not vest shall be forfeited to the
Company and the Holder shall not thereafter have any rights with
respect to such Restricted Stock and Retained Distributions that
shall have been so forfeited.
8.
Other Stock-Based Awards.
Other
Stock-Based Awards may be awarded, subject to limitations under
applicable law, that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on, or related to,
shares of Common Stock, as deemed by the Committee to be consistent
with the purposes of the Plan, including, without limitation,
purchase rights, shares of Common Stock awarded which are not
subject to any restrictions or conditions, or other rights
convertible into shares of Common Stock and Awards valued by
reference to the value of securities of or the performance of
specified Subsidiaries. Other Stock-Based Awards may be awarded
either alone or in addition to or in tandem with any other Awards
under this Plan or any other plan of the Company. Each other
Stock-Based Award shall be subject to such terms and conditions as
may be determined by the Committee.
9.
Accelerated Vesting and Exercisability.
9.1
Non-Approved
Transactions. If any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the “beneficial
owner” (as referred in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company’s
then outstanding securities in one or more transactions, and the
Board does not authorize or otherwise approve such acquisition,
then the vesting periods of any and all Stock Options and other
Awards granted and outstanding under the Plan shall be accelerated
and all such Stock Options and Awards will immediately and entirely
vest, and the respective holders thereof will have the immediate
right to purchase and/or receive any and all Common Stock subject
to such Stock Options and Awards on the terms set forth in this
Plan and the respective agreements respecting such Stock Options
and Awards.
9.2
Approved
Transactions. The Committee
may, subject to Board authorization, if indicated, in the event of
an acquisition of substantially all of the Company’s assets
or at least 50% of the combined voting power of the Company’s
then outstanding securities in one or more transactions (including
by way of merger or reorganization) which has been approved by the
Company’s Board of Directors, (i) accelerate the vesting of
any and all Stock Options and other Awards granted and outstanding
under the Plan, and (ii) require a Holder of any Award granted
under this Plan to relinquish such Award to the Company upon the
tender by the Company to Holder of cash in an amount equal to the
Repurchase Value of such Award.
10.
Amendment and Termination.
The
Board may at any time, and from time to time, amend alter, suspend
or discontinue any of the provisions of the Plan, but no amendment,
alteration, suspension or discontinuance shall be made that would
impair the rights of a Holder under any Agreement theretofore
entered into hereunder, without the Holder’s
consent.
11.
Term of Plan.
11.1
Effective
Date. The Plan shall become
effective at such time as the Plan is approved and adopted by the
Company’s Board of Directors (the “Effective
Date”), subject to the
following provisions:
(a)
to the extent that the Plan authorizes the Award of Incentive Stock
Options, shareholder approval for the Plan shall be obtained within
12 months of the Effective Date; and
(b)
the failure to obtain shareholder for the Plan as contemplated by
subparagraph (a) of this Section 11 shall not invalidate the Plan;
provided, however, that (i) in the absence of such shareholder
approval, Incentive Stock Options may not be awarded under the Plan
and (ii) any Incentive Stock Options theretofore awarded under the
Plan shall be converted into Non-Qualified Options upon terms and
conditions determined by the Committee to reflect, as nearly as is
reasonably practicable in its sole determination, the terms and
conditions of the Incentive Stock Options being so
converted.
11.2
Termination
Date. Unless otherwise
terminated by the Board, this Plan shall continue to remain
effective until the earlier of ten (10) years from the Effective
Date or such time as no further Awards may be granted and all
Awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options
may be made only during the ten-year period following the Effective
Date.
12.
General Provisions.
12.1 Written
Agreements. Each Award granted
under the Plan shall be confirmed by, and shall be subject to the
terms, of the Agreement executed by the Company and the Holder. The
Committee may terminate any Award made under the Plan if the
Agreement relating thereto is not executed and returned to the
Company within 10 days after the Agreement has been delivered to
the Holder for his or her execution.
12.2 Unfunded Status of
Plan. The Plan is intended to
constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payments not yet made to
a Holder by the Company, nothing contained herein shall give any
such Holder any rights that are greater than those of a general
creditor of the Company.
12.3 Employees.
(a)
Engaging
in Competition with the Company; Disclosure of Confidential
Information. If a
Holder’s employment with the Company or a Subsidiary is
terminated for any reason whatsoever, and within three months after
the date thereof such Holder either (i) accepts employment with any
competitor of, or otherwise engages in competition with, the
Company or (ii) discloses to anyone outside the Company or uses any
confidential information or material of the Company in violation of
the Company’s policies or any agreement between the Holder
and the Company, the Committee, in its sole discretion, may require
such Holder to return to the Company the economic value of any
Award that was realized or obtained by such Holder at any time
during the period beginning on that date that is six months prior
to the date such Holder’s employment with the Company is
terminated.
(b)
Termination for
Cause. The Committee may, if a
Holder’s employment with the Company or a Subsidiary is
terminated for cause, annul any Award granted under this Plan to
such employee and, in such event, the Committee, in its sole
discretion, may require such Holder to return to the Company the
economic value of any Award that was realized or obtained by such
Holder at any time during the period beginning on that date that is
six months prior to the date such Holder’s employment with
the Company is terminated.
(c)
No Right
of Employment. Nothing
contained in the Plan or in any Award hereunder shall be deemed to
confer upon any Holder who is an employee of the Company or any
Subsidiary any right to continued employment with the Company or
any Subsidiary, nor shall it interfere in any way with the right of
the Company or any Subsidiary to terminate the employment of any
Holder who is an employee at any time.
12.4. Investment
Representations; Company Policy. The Committee may require each person acquiring
shares of Common Stock pursuant to a Stock Option or other Award
under the Plan to represent to and agree with the Company in
writing that the Holder is acquiring the shares for investment
without a view to distribution thereof. Each person acquiring
shares of Common Stock pursuant to a Stock Option or other Award
under the Plan shall be required to abide by all policies of the
Company in effect at the time of such acquisition and thereafter
with respect to the ownership and trading of the Company’s
securities.
12.5
Additional
Incentive Arrangements. Nothing
contained in the Plan shall prevent the Board from adopting such
other or additional incentive arrangements as it may deem
desirable, including, but not limited to, the granting of Stock
Options and the Awarding of Common Stock and cash otherwise than
under the Plan; and such arrangements may be either generally
applicable or applicable only in specific
cases.
12.6 Withholding
Taxes. Not later than the date
as of which an amount must first be included in the gross income of
the Holder for Federal income tax purposes with respect to any
option or other Award under the Plan, the Holder shall pay to the
Company, or make arrangements satisfactory to the Committee
regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such
amount. If permitted by the Committee, tax withholding or payment
obligations may be settled with Common Stock, including Common
Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditioned upon such payment or arrangements and the Company or
the Holder’s employer (if not the Company) shall, to the
extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Holder from the
Company or any Subsidiary.
12.7 Governing
Law. The Plan and all Awards
made and actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of North
Carolina.
12.8 Other Benefit
Plans. Any Award granted under
the Plan shall not be deemed compensation for purposes of computing
benefits under any retirement plan of the Company or any Subsidiary
and shall not affect any benefits under any other benefit plan now
or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation (unless required
by specific reference in any such other plan to Awards under this
Plan).
12.9
Non-Transferability.
Except as otherwise expressly provided in the Plan or the
Agreement, no right or benefit under the Plan may be alienated,
sold, assigned, hypothecated, pledged, exchanged, transferred,
encumbered or charged, and any attempt to alienate, sell, assign,
hypothecate, pledge, exchange, transfer, encumber or charge the
same shall be void.
12.10 Applicable
Laws. The obligations of the
Company with respect to all Stock Options and Awards under the Plan
shall be subject to (i) all applicable laws, rules and regulations
and such approvals by any governmental agencies as may be required,
including, without limitation, the Securities Act of 1933, as
amended (the “Securities
Act”), and (ii) the rules
and regulations of any securities exchange on which the Common
Stock may be listed or quoted.
12.11
Conflicts.
If any of the terms or provisions of
the Plan or an Agreement conflict with the requirements of Section
422 of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with such requirements.
Additionally, if this Plan or any Agreement does not contain any
provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein and
therein with the same force and effect as if such provision had
been set out at length herein and therein. If any of the terms or
provisions of any Agreement conflict with any terms or provisions
of the Plan, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of
the Plan. Additionally, if any Agreement does not contain any
provision required to be included therein under the Plan, such
provision shall be deemed to be incorporated therein with the same
force and effect as if such provision had been set out at length
therein.
12.12
Non-Registered
Stock. The shares of Common
Stock to be distributed under this Plan have not been, as of the
Effective Date, registered under the Securities Act or any
applicable state or foreign securities laws and the Company has no
obligation to any Holder to register the Common Stock or to assist
the Holder in obtaining an exemption from the various registration
requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation
system.
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