Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Adoption of the 2016 Stock Incentive Plan
On
December 7, 2016, the Board of Directors (the “Board”) of CareView Communications, Inc., a Nevada corporation (the
“Company”) approved the CareView Communications, Inc. 2016 Stock Incentive Plan (“the Plan”). The Plan
became effective December 7, 2016 and will terminate on December 6, 2026 (unless terminated earlier as described in the Plan).
The Plan permits the granting of awards in the form of nonqualified stock options, stock appreciation rights, restricted stock
awards, performance awards, performance-based awards and
any combination of the foregoing
.
Subject to adjustments
as provided in the Plan, a total of 20,000,000 shares of the Company’s common stock, par value $0.001 per share (“common
stock”), will be available for issuance under the Plan.
Purpose
The purpose of the Plan
is to enhance the incentive for participants to contribute to our growth, thereby benefiting the Company and our shareholders,
and to align the economic interests of the participants with those of our shareholders by providing (i) key employees of the Company
and its subsidiaries, (ii) certain consultants and advisors who perform services for the Company or its subsidiaries, and (iii)
members of the Board, with the opportunity to acquire shares of the common stock or receive monetary payments based on the value
of such shares.
Participation and Administration
The Plan shall be administered
by the compensation committee of the Company, and except as specifically reserved to the Board under the terms of the Plan, the
compensation committee shall have full and final authority to operate, manage and administer the Plan. Employees, officers, directors,
consultants or advisors are eligible for awards under the Plan.
Awards are subject to the
terms, conditions, limitations, restrictions, vesting and forfeiture provisions determined by our compensation committee, in its
sole discretion subject to certain limitations provided in the Plan. Each award will be evidenced by an award agreement, which
will govern that award’s terms and conditions, which may include provisions for vesting, the effect of termination of service
on the award, and other restrictions or contingencies and the requirement to enter into tax elections.
Stock Options and Stock Appreciation Rights
Grant and Vesting
.
The compensation committee may, in its discretion, determine the number of options and stock appreciation rights (“SARs”)
to be granted. Such options will be nonqualified stock options. The compensation committee will determine when the options and
SARs will vest.
Option and SAR Exercise
.
The per share exercise price of an option or SAR will be determined by the compensation committee, but will not be less than the
last reported sale price on the national securities exchange or the NASDAQ National Market on which it is traded on the relevant
date or, if there were no trades on that date, the latest preceding date upon which a sale was reported. If the common stock is
not principally traded on a national securities exchange or the NASDAQ National Market, the exercise price will not be less than
the mean between the last reported “bid” and “asked” prices of common stock on the relevant date, as reported
on NASDAQ or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial
reporting service, as applicable and as the compensation committee determines. If the common stock is not publicly traded or, if
publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above,
the exercise price will not be less than the fair market value as reasonably determined by the compensation committee.
Our compensation committee
will determine the term during which each option and SAR may be exercised, except that no option or SAR may be exercisable more
than ten years from the grant date.
Payment of the option exercise
price may be made in cash or, in the discretion of the compensation committee, in shares of our common stock, or by a combination
of these methods. The compensation committee may also authorize the payment of the exercise price in a broker-assisted cashless
exercise subject to such limitations as it may determine. The compensation committee may also prescribe any other method of paying
the exercise price that it determines to be consistent with applicable law and the purpose of the Plan, including, without limitation,
in lieu of the exercise of an option by delivery of shares of common stock, providing the Company with a notarized statement attesting
to the number of shares owned for at least six months, where upon verification by the Company, the Company would issue the number
of incremental shares to which the Participant is entitled upon exercise of the option.
When a SAR is exercised,
the Company will pay in cash, common stock or a combination thereof, an amount equal to the excess of (i) the fair market value,
or other specified valuation, of a specified number of shares of common stock on the date the right is exercised, over (ii) the
fair market value of such shares on the date of grant, or other specified valuation (which shall be no less than the fair market
value on the date of grant). The compensation committee will determine whether cash shall be paid in lieu of fractional shares
or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
A Form of Nonqualified
Stock Option Agreement under which options may be granted pursuant to the Plan has been filed as an exhibit to this Form 8-K.
Restricted Stock Awards
Restricted stock
awards consist of outstanding shares of our common stock that is subject to transfer and/or forfeiture restrictions for a period
of time. The award agreement will specify whether a participant will have all of the rights of any other stockholder, including
voting and dividend rights.
A restricted
stock unit is an unfunded, unsecured contractual right to receive shares of our common stock, cash or other property at a future
date, subject to such terms and conditions as our compensation committee may determine.
Grant and
Vesting
. Subject to the provisions of the Plan, our compensation committee will determine the terms and conditions of each
restricted stock award, including restrictions on the sale or other disposition of such shares and the right of the Company to
reacquire such shares for no consideration upon termination of a Participant’s employment within specified periods or prior
to becoming vested.
Performance Awards
Performance
awards provide Participants with the right to receive shares of our common stock or cash at the end of a specified period. The
compensation committee will determine the number, amount and timing of each performance awards. The compensation committee may
condition the payment of performance awards upon the attainment of specific performance goals or such other terms and conditions
as the compensation committee deems appropriate, including forfeiture restrictions.
Performance-Based Awards
Certain restricted
stock awards, nonqualified stock options, SARs or performance awards granted under the Plan may be granted in a manner such that
they qualify for the performance based compensation exemption under Section 162(m) of the Code (“performance-based awards”).
Performance-based awards entitle the recipient to receive the stated consideration upon, and to the extent of, satisfaction of
pre-established performance criteria.
Grant and
Vesting
. Performance-based awards will vest based on the achievement of pre-determined performance goals established by the
compensation committee in accordance with the Plan. The compensation committee may determine the number and type of performance-based
awards to be granted to the recipient, as well as the performance period and performance goals applicable to the award. After establishment
of a performance goal, the compensation committee may not revise such performance goal or increase the amount of the performance-based
award that will be paid or vested upon the attainment of such performance goal.
Performance
Goals
. The compensation committee will establish in writing objective performance-based goals applicable to a given period.
Adjustments Upon Certain Events
In the event of a stock
split, stock dividend, split-up, split-off, spin-off, recapitalization, merger, consolidation, reorganization, combination or exchange
of shares, a sale by the Company of all or part of its assets, or in the event of any distribution to stockholders of other than
a normal cash dividend, or other extraordinary or unusual event, if the compensation committee determines, in its discretion, that
such change equitably requires an adjustment in the terms of any awards or the number of shares of common stock that are subject
to awards, such adjustment shall be made by the compensation committee and will be final, conclusive and binding for all purposes
of the Plan.
In the event of a change
in control of the Company, our compensation committee may determine, in its sole discretion, that all or a portion of each outstanding
award is exercisable in full upon the change in control or at such other date or dates that the compensation committee may determine,
and that any forfeiture and vesting restrictions will lapse on such date or dates. In its sole discretion, our compensation committee
may also determine that, upon the occurrence of a change in control, each outstanding option and SAR will terminate within a specified
number of days, and each such Participant will receive, with respect to each share of common stock subject to such option and SAR,
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 and SAR. Such payment may be made in cash, in one or more kinds of property or a combination thereof,
as determined by the compensation committee in its sole discretion
Transferability
Awards granted under the
Plan are not transferable or assignable other than by will or the laws of descent and distribution or pursuant to a qualified domestic
relations order. The compensation committee may provide, in an Agreement for a Nonqualified Stock Option, for its transferability
as a gift to family members, one or more trusts for the benefit of family members, or one or more partnerships of which family
members are the only partners, according to such terms as the compensation committee may determine, provided that the Participant
receives no consideration for the transfer and the transferred option shall continue to be subject to the same terms and conditions
as were applicable to the option immediately before the transfer.
The foregoing description
of the Plan is qualified in its entirety by reference to the Plan, a copy of which is filed as Exhibit 10.1 to this Current Report
on Form 8-K and is incorporated herein by reference.
After approving the Plan,
the Board awarded non-qualified stock options for an aggregate of 4,754,969 shares with an exercise price of $.10 per share. The
Company's President and Chief Executive Officer, Steven G. Johnson, and Chief Operating Officer, Sandra K. McRee, were each granted
an option for 2,000,000 shares. Shares vest over a period of three years on the anniversary date of the grant.