THIS
INFORMATION STATEMENT IS BEING PROVIDED TO
YOU
BY THE BOARD OF DIRECTORS OF MERIDIAN WASTE SOLUTIONS,
INC.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED
NOT TO SEND US A PROXY
Meridian Waste Solutions, Inc.
12540
Broadwell Road, Suite 2104
Milton,
GA 30004
Tel:
(404) 539-1147
INFORMATION STATEMENT
(Definitive)
February 14, 2017
NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT
GENERAL
INFORMATION
This Information Statement has been filed with the
Securities and Exchange Commission (the “
SEC
”) and is being sent, pursuant to Section
14C of the Exchange Act, to the holders of record as of February
10, 2017 (the “
Record
Date
”) of common stock,
par value $0.025 per share (the “
Common
Stock
”),
of Meridian Waste Solutions, Inc., a
New York corporation (the “
Company
,”
“
we
,” “
our
” or “
us
”), to notify the Common Stockholders of the
following:
On February 2, 2017, the Company received a
written consent in lieu of a meeting by the holders of 58.7% of the
voting power the Common Stock (the “
Majority
Stockholder
”) authorizing the following
action:
On
February 2, 2017, the Board presented for approval to the Majority
Stockholder the Plan Approval.
On
February 2, 2017, the Majority Stockholder approved the Plan
Approval by written consent in lieu of a meeting in accordance with
the New York Business Corporations Act. Accordingly,
your consent is not required and is not being
solicited.
We
will commence mailing the notice to the holders of Common
Stock, warrant holders and holders of the Company’s preferred
stock on or about February 13, 2017.
PLEASE NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY
STATEMENT, BUT RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM
YOU OF CERTAIN ACTIONS TAKEN BY THE MAJORITY
SHAREHOLDER.
The
entire cost of furnishing this Information Statement will be borne
by the Company. We will request brokerage houses, nominees,
custodians, fiduciaries and other like parties to forward this
Information Statement to the beneficial owners of the Common Stock
held of record by them.
The
following table sets forth the name of the Majority Stockholder,
the number of shares of Common Stock held by the Majority
Stockholder, the number of shares of Series A Preferred held by the
Majority Stockholder, the total number of votes that the Majority
Stockholder voted in favor of the Actions and the percentage of the
issued and outstanding voting equity of the Company that voted in
favor thereof.
|
Name
of
Majority
Stockholder
|
Number of Shares
of
Common Stock
held
|
Number of Shares of
Series A
Preferred held
|
Number of Votes
held
by Majority
Stockholder
|
Number of Votes
that Voted
in favor of the
Actions
|
Percentage of
the Voting
Equity that
Voted in
favor of the
Actions
|
|
Jeffrey
Cosman
|
1,015,897
|
51
|
7,716,501
|
7,716,501
|
58.7%
|
ACTION: APPROVAL OF THE 2016 EQUITY AND INCENTIVE PLAN FOR THE
PURPOSE OF ENCOURAGING AND ENABLING KEY EMPLOYEES, CONSULTANTS AND
NON-EMPLOYEE DIRECTORS TO ACQUIRE A PROPRIETARY INTEREST IN THE
COMPANY
This
Information Statement contains a brief summary of the material
aspects of the action approved by the Board and the Majority
Stockholder.
The
Plan Approval will become effective on the date that is twenty (20)
calendar days after the mailing of this information
statement.
We
currently expect that such effective date will be March 6,
2017.
Effective March 10, 2016, the Board approved,
authorized and adopted the 2016 Equity and Incentive Plan (the
“
Plan
”)
and certain forms of ancillary agreements to be used in connection
with the issuance of stock and/or options pursuant to the Plan (the
“
Plan
Agreements
”). The Plan
provides for the issuance of up to 375,000
shares of Common Stock (giving effect to the
Company’s 1-for-20 reverse stock split effected on November
3, 2016) through the grant of non-qualified options (the
“
Non-qualified
Options
”), incentive
options (the “
Incentive Options
”
and together with the Non-qualified Options, the
“
Options
”)
and restricted stock (the “
Restricted Stock
”)
to directors, officers, consultants, attorneys, advisors and
employees.
The
Plan is our only ongoing plan providing stock-based awards to
employees and non-employee directors. In addition to stock-based
compensation, the Plan also authorizes the issuance of awards
payable in cash. Our ability to provide long-term incentives in the
form of equity compensation aligns management’s interests
with the interests of our stockholders and fosters an ownership
mentality that drives optimal decision-making for the long-term
health and profitability of our Company. Equally important, equity
compensation is critical to our continuing ability to attract,
retain and motivate qualified corporate executives and retain
management. Our ability to grant equity compensation has been
important to our past success, and we expect it to be crucial to
achieving our long-term growth.
Plan Highlights
The
essential features of our Plan are outlined below. The following
description is not complete and is qualified by reference to the
full text of our Plan, which is appended to this Information
Statement as Exhibit A.
Options are subject to the
following conditions
:
(i)
The Committee determines the exercise price of Incentive Options at
the time the Incentive Options are granted. The assigned exercise
price must be no less than 100% of the Fair Market Value (as
defined in the Plan) of the Company’s Common Stock. In the
event that the recipient is a Ten Percent Owner (as defined in the
Plan), the exercise price must be no less than 110% of the Fair
Market Value of the Company.
(ii) The exercise price of each Non-qualified
Option will be at least 100% of the Fair Market Value of such share
of the Company’s Common Stock on the date the Non-qualified
Option is granted,
unless
the
Committee, in its sole and absolute discretion, elects to set the
exercise price of such Non-qualified Option below Fair Market
Value.
(iii) The Committee fixes the term of
Options,
provided
that Options may not be exercisable more
than ten years from the date the Option is granted,
and
provided
further
that Incentive
Options granted to a Ten Percent Owner may not be exercisable more
than five years from the date the Incentive Option is
granted.
(iv)
The Committee may designate the vesting period of Options. In the
event that the Committee does not designate a vesting period for
Options, the Options will vest in equal amounts on each fiscal
quarter of the Company through the five (5) year anniversary of the
date on which the Options were granted. The vesting period
accelerates upon the consummation of a Sale Event (as defined in
the Plan).
(v)
Options
are not transferable except to a recipient’s family members
or partnerships in which such family members are the only partners
and Options are exercisable only by the Options’ recipient,
except upon the recipient’s death.
(vi)
Incentive Options may not be issued in an amount or manner where
the amount of Incentive Options exercisable in one year entitles
the holder to Common Stock of the Company with an aggregate Fair
Market value of greater than $100,000.
Awards of
Restricted Stock are subject to the following
conditions
:
(i)
The Committee grants Restricted Stock Options and determines the
restrictions on each Restricted Stock Award (as defined in the
Plan). Upon the grant of a Restricted Stock Award and the payment
of any applicable purchase price, grantee is considered the record
owner of the Restricted Stock and entitled to vote the Restricted
Stock if such Restricted Stock is entitled to voting
rights.
(ii)
Restricted Stock may not be delivered to the grantee until the
Restricted Stock has vested.
(iii)
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as provided in the Plan
or in the Award Agreement (as defined in the Plan).
Upon a
Termination Event (as defined in the Plan), the Company or its
assigns shall have the right and option to repurchase from a Holder
of Shares (as defined in the Plan) received pursuant to a
Restricted Stock Award any Shares that are still subject to a risk
of forfeiture as of the Termination Event (as defined in the
Plan).
Purpose
The
objective of the Plan is to encourage and enable the officers,
employees, directors, consultants and other key persons of the
Company and its subsidiaries, upon whose judgment, initiative and
efforts the Company largely depends for the successful conduct of
its business, to acquire a proprietary interest in the
Company.
Grants
The Plan permits the granting of incentive stock
options, nonqualified stock options, stock awards, restricted stock
units, stock appreciation rights (“SARs”) and other
equity-based awards (collectively, “grants”). Although
all employees and all of the employees of our subsidiaries are
eligible to receive grants under our Plan, the grant to any
particular employee is subject to the discretion of
the
Board, or at the discretion of the Board, or by a committee of the
Board, comprised of not less than two directors (such body that
administers the Plan, the “Committee”)
.
The
maximum number of shares of our Common Stock that we may issue
under the Plan may not exceed 375,000, and no more than 25,000 may
be granted as incentive stock options under Section 422 of the
Internal Revenue Code of 1986, as amended (the
“Code”). If a grant expires or terminates
for any reason before it is fully vested or exercised, or if any
grant is forfeited, we may again make the number of shares subject
to that grant that the participant has not purchased or that has
not vested subject to another grant under the Plan.
We
have made and will make appropriate adjustments to outstanding
grants and to the number or kind of shares subject to the Plan in
the event of a stock split, reverse stock split, stock dividend,
share combination or reclassification and certain other types of
corporate transactions, including a merger or a sale of all or
substantially all of our assets.
Administration
The
Plan shall be administered by the Committee.
The Committee shall have the authority and
power:
(i)
to
select the individuals to whom Awards may from time to time be
granted;
(ii)
to
determine the time or times of grant, and the amount, if any, of
Incentive Stock Options, Non-Qualified Stock Options, SARs,
Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, or any combination of the foregoing, granted to any
one or more grantees;
(iii)
to
determine the number and types of Shares to be covered by any Award
and, subject to the provisions of the Plan, the price, exercise
price, conversion ratio or other price relating
thereto;
(iv)
to determine and, subject to the Plan, to modify from time to time
the terms and conditions, including restrictions, not inconsistent
with the terms of the Plan, of any Award, which terms and
conditions may differ among individual Awards and grantees, and to
approve the form of Award Agreements;
(v)
to
accelerate at any time the exercisability or vesting of all or any
portion of any Award;
(vi)
to
impose any limitations on Awards, including limitations on
transfers, repurchase provisions and the like, and to exercise
repurchase rights or obligations;
(vii)
subject
to any restrictions imposed under the Plan or by Section 409A, to
extend at any time the period in which Stock Options may be
exercised; and
(viii)
at
any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including Award Agreements);
to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the
administration of the Plan.
All
decisions and interpretations of the Committee shall be binding on
all persons, including the Company and all Holders.
Grant Instruments
All
grants will be subject to the terms and conditions set forth in our
Plan and to such other terms and conditions consistent with our
Plan as the Committee deems appropriate and as are specified in
writing by the Committee to the individual in a grant instrument or
an amendment to the grant instrument. All grants will be made
conditional upon the acknowledgement of the grantee in writing or
by acceptance of the grant, that all decisions and determinations
of the Compensation Committee will be final and binding on the
grantee, his or her beneficiaries and any other person having or
claiming an interest under such grant.
Terms and Conditions of Grants
The
grant instrument will state the number of shares subject to the
grant and the other terms and conditions of the grant, consistent
with the requirements of our Plan. The purchase price per share
subject to an option (or the exercise price per share in the case
of a SAR) must equal at least the fair market value of a share of
the Company’s common stock on the date of grant. The exercise
price per share for the Shares covered by a Stock Option shall be
determined by the Committee at the time of grant but shall not be
less than 100%of the Fair Market Value on the Grant Date. In the
case of an Incentive Stock Option that is granted to a Ten Percent
Owner, the exercise price per share for the Shares covered by such
Incentive Stock Option shall not be less than 110% of the Fair
Market Value on the Grant Date.
Under
the Plan, the term “Fair Market Value” of the Stock on
any given date means the fair market value of the Stock determined
in good faith by the Committee based on the reasonable application
of a reasonable valuation method that is consistent with Section
409A of the Code. If the Stock is admitted to trade on a national
securities exchange, the determination shall be made by reference
to the closing price reported on such exchange. If there is no
closing price for such date, the determination shall be made by
reference to the last date preceding such date for which there is a
closing price. If the date for which Fair Market Value is
determined is the first day when trading prices for the Stock are
reported on a national securities exchange, the Fair Market Value
shall be the “Price to the Public” (or
equivalent).
“Ten
Percent Owner” means an employee who owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code)
more than 10 percent of the combined voting power of all classes of
stock of the Company or any parent of the Company or any
Subsidiary.
Transferability
Restricted
Stock, Stock Options, SARs and, prior to exercise, the Shares
issuable upon exercise of such Stock Option, shall not be
transferable by the optionee otherwise than by will, or by the laws
of descent and distribution, and all Stock Options shall be
exercisable, during the optionee’s lifetime, only by the
optionee, or by the optionee’s legal representative or
guardian in the event of the optionee’s incapacity.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may provide in the Award Agreement regarding a given
Stock Option or Restricted Stock award that the optionee may
transfer by gift, without consideration for the transfer, his or
her Non-Qualified Stock Options to his or her family members (as
defined in Rule 701 of the Securities Act), to trusts for the
benefit of such family members, or to partnerships in which such
family members are the only partners (to the extent such trusts or
partnerships are considered “family members” for
purposes of Rule 701 of the Securities Act), provided that the
transferee agrees in writing with the Company to be bound by all of
the terms and conditions of this Plan and the applicable Award
Agreement, including the execution of a stock power upon the
issuance of Shares.
Amendment and Termination
The
Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award
for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the consent of the holder of
the Award. The Committee may exercise its discretion to reduce the
exercise price of outstanding Stock Options or effect repricing
through cancellation of outstanding Stock Options and by granting
such holders new Awards in replacement of the cancelled Stock
Options. To the extent determined by the Committee to be required
either by the Code to ensure that Incentive Stock Options granted
under the Plan are qualified under Section 422 of the Code or
otherwise, Plan amendments shall be subject to approval by the
Company stockholders entitled to vote at a meeting of stockholders.
The Board reserves the right to amend the Plan and/or the terms of
any outstanding Stock Options to the extent reasonably necessary to
comply with the requirements of the exemption pursuant to paragraph
(0(4) of Rule 12h-1 of the Exchange Act.
Federal Income Tax Consequences
The
following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of
participation in our Plan and does not attempt to describe all
possible federal or other tax consequences of such participation or
tax consequences based on particular circumstances.
Incentive
Stock Options.
The grant
of an incentive stock option under our Plan will not result in any
federal income tax consequences to the optionee or us. An optionee
recognizes no federal taxable income upon exercising an incentive
stock option (subject to the alternative minimum tax rules
discussed below), and we receive no deduction at the time of
exercise. In the event of a disposition of stock acquired upon
exercise of an incentive stock option, the tax consequences depend
upon how long the optionee has held the shares of common stock. If
the optionee does not dispose of the shares within two years after
the incentive stock option was granted, nor within one year after
the incentive stock option was exercised, the optionee will
recognize a long-term capital gain (or loss) equal to the
difference between the sale price of the shares and the purchase
price. We are not entitled to any deduction under these
circumstances.
If
the optionee fails to satisfy either of the foregoing holding
periods, he or she must recognize ordinary income in the year of
the disposition (referred to as a “disqualifying
disposition”). The amount of such ordinary income generally
is the lesser of (i) the difference between the amount
realized on the disposition and the purchase price or (ii) the
difference between the fair market value of the stock on the
exercise date and the purchase price. Any gain in excess of the
amount taxed as ordinary income will be treated as a long or
short-term capital gain, depending on whether the stock was held
for more than one year. In the year of the disqualifying
disposition, we are entitled to a deduction equal to the amount of
ordinary income recognized by the optionee, subject to possible
limitations imposed by Section 162(m) of the Code and as long
as the optionee’s total compensation is deemed reasonable in
amount.
The
“spread” under an incentive stock option, i.e., the
difference between the fair market value of the shares at the time
of exercise and the purchase price, is classified as an item of
adjustment in the year of exercise for purposes of the alternative
minimum tax. If an optionee’s alternative minimum tax
liability exceeds such optionee’s regular income tax
liability, the optionee will owe the larger amount of taxes. In
order to avoid the application of alternative minimum tax with
respect to incentive stock options, the optionee must sell the
shares within the same calendar year in which the incentive stock
options are exercised. However, such a sale of shares within the
same year of exercise will constitute a disqualifying disposition,
as described above.
In
the event an incentive stock option is amended, such option may be
considered deferred compensation and subject to the rules of
Section 409A of the Code. An option subject to
Section 409A of the Code that fails to comply with the rules
of Section 409A can result in the acceleration of income
recognition, a 20% additional tax obligation, plus penalties and
interest. In addition, the amendment of an incentive stock option
may convert the option from an incentive stock option to a
nonqualified stock option.
Nonqualified
Stock Option.
The grant of
a nonqualified stock option under our Plan will not result in any
federal income tax consequences to the optionee or us. Upon
exercise of a nonqualified stock option, the optionee is subject to
income taxes at the rate applicable to ordinary compensation income
on the difference between the option purchase price and the fair
market value of the shares on the date of exercise. This income is
subject to withholding for federal income and employment tax
purposes. We are entitled to an income tax deduction in the amount
of the income recognized by the optionee, subject to possible
limitations imposed by Section 162(m) of the Code and as long
as we withhold the appropriate taxes with respect to such income
(if required) and the optionee’s total compensation is deemed
reasonable in amount. Any gain or loss on the optionee’s
subsequent disposition of the shares of common stock will receive
long or short-term capital gain or loss treatment, depending on
whether the shares are held for more than one year following
exercise. We will not receive a tax deduction for any such
gain.
In
the event a nonqualified stock option is amended, such option may
be considered deferred compensation and subject to the rules of
Section 409A of the Code, which provide rules regarding the
timing of payment of deferred compensation. An option subject to
Section 409A of the Code which fails to comply with the rules
of Section 409A may result in the acceleration of income
recognition, a 20% additional tax obligation, plus penalties and
interest.
Stock
Awards.
The grant of a
stock award will subject the recipient to ordinary compensation
income on the difference between the amount paid (if any) for such
stock and the fair market value of the shares on the date that the
restrictions lapse. This income is subject to withholding for
federal income and employment tax purposes. We are entitled to an
income tax deduction in the amount of the ordinary income
recognized by the recipient, subject to possible limitations
imposed by Section 162(m) of the Code and as long as we
withhold the appropriate taxes with respect to such income (if
required) and the recipient’s total compensation is deemed
reasonable in amount. Any gain or loss on the recipient’s
subsequent disposition of the shares will receive long or
short-term capital gain or loss treatment depending on how long the
stock has been held since the restrictions lapsed. We will not
receive a tax deduction for any such gain.
Recipients
of stock awards may make an election under Section 83(b) of
the Code (a “Section 83(b) Election”) to recognize
as ordinary compensation income in the year that such stock awards
are granted, the amount equal to the spread between the amount paid
for such stock and the fair market value on the date of the
issuance of the stock. If such an election is made, the recipient
recognizes no further amounts of compensation income upon the lapse
of any restrictions and any gain or loss on subsequent
disposition will be long or short-term capital gain to the
recipient. A Section 83(b) Election must be made within
30 days from the time the stock awards are
issued.
Stock
Units.
Recipients of stock
units generally should not recognize income until such units are
converted into cash or shares of stock. Upon conversion, the
recipient will normally recognize taxable ordinary income for
federal income tax purposes equal to the amount of cash and fair
market value of the shares, if any, received upon such conversion.
Recipients who are employees generally will be subject to
withholding for federal income tax purposes upon conversion of the
stock units and withholding for employment tax purposes when the
stock units vest. Participants willrecognize gain upon the
disposition of any shares received upon conversion of the stock
units equal to the excess of the amount realized on such
disposition over the ordinary income recognized with respect to
such shares under the principles set forth above. That gain will be
taxable as long or short-term capital gain depending on whether the
shares were held for more than one year. We will be entitled to a
tax deduction to the extent and in the year that ordinary income is
recognized by the recipient, subject to possible limitations
imposed by Section 162(m) of the Code and as long as we
withhold the appropriate taxes with respect to such income (if
required) and the recipient’s total compensation is deemed
reasonable in amount.
Stock
units also can be considered nonqualified deferred compensation and
subject to Section 409A of the Code. A grant of stock unit
that does not meet the requirements of Section 409A of the
Code will result in the acceleration of income recognition, a 20%
additional tax obligation, plus penalties and
interest.
SARs.
Recipients
of SARs generally should not recognize income until a SAR is
exercised (assuming there is no ceiling on the value of the right).
Upon exercise, the recipient will normally recognize taxable
ordinary income for federal income tax purposes equal to the amount
of cash and fair market value of the shares, if any, received upon
such exercise. Recipients who are employees generally will be
subject to withholding for federal income and employment tax
purposes with respect to income recognized upon exercise of a SAR.
Recipients will recognize gain upon the disposition of any shares
received on exercise of a SAR equal to the excess of the amount
realized on such disposition over the ordinary income recognized
with respect to such shares under the principles set forth above.
That gain will be taxable as long or short-term capital gain
depending on whether the shares were held for more than one year.
We will be entitled to a tax deduction to the extent and in the
year that ordinary income is recognized by the recipient, subject
to possible limitations imposed by Section 162(m) of the Code
and as long as we withhold the appropriate taxes with respect to
such income (if required) and the recipient’s total
compensation is deemed reasonable in amount.
In
the event a SAR is amended, such SAR may be considered deferred
compensation and subject to the rules of Section 409A of the
Code, which provide rules regarding the timing of payment of
deferred compensation. A SAR subject to Section 409A of the
Code that fails to comply with the rules of Section 409A may
result in the acceleration of income recognition, a 20% additional
tax obligation, plus penalties and interest.
Other
equity awards.
Recipients
of unrestricted stock will recognize ordinary income equal to the
difference between the amount paid for such unrestricted stock and
the fair market value of the unrestricted stock on the grant date.
This income is subject to withholding for federal income and
employment tax purposes. Any gain or loss on the recipient’s
subsequent disposition of the shares receives long or short-term
capital gain or loss treatment depending on how long the stock has
been held since the date such unrestricted stock was granted. We
will be entitled to a tax deduction to the extent and in the year
that ordinary income is recognized by the recipient, subject to
possible limitations imposed by Section 162(m) of the Code and
as long as we withhold the appropriate taxes with respect to such
income (if required) and the recipient’s total compensation
is deemed reasonable in amount.
Dividends
and dividend equivalents.
Recipients of awards that earn dividends or
dividend equivalents recognize ordinary income on any dividend
payments received with respect to unvested and/or unexercised
shares subject to such awards, which income is subject to
withholding for federal income and employment tax
purposes.
Tax Withholding
Each
grantee shall, no later than the date as of which the value of an
Award or of any Shares or other amounts received thereunder first
becomes includable in the gross income of the grantee for income
tax purposes, pay to the Company, or make arrangements satisfactory
to the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld by the Company
with respect to such income. The Company and any Subsidiary 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
grantee.
Plan Benefits
The
Compensation Committee will make future awards at its discretion,
and we therefore cannot determine the number of options and other
awards that may be awarded in the future to eligible participants
(including our executive officers, directors, our executive
officers as a group or all of our employees as a group, excluding
executive officers).
The
above description of the Plan does not purport to be complete and
is qualified in its entirety by the full text of the Plan, enclosed
herewith as Appendix A.
Compensation of Directors
During
the years ended December 31, 2015 and 2014, our directors did not
receive a fee for physical attendance at meetings of the Board of
Directors or a committee thereof.
Dissenters’ Rights
Stockholders
do not have dissenters’ rights or appraisal rights in
connection with the Plan Approval.
ACTIONS TO BE TAKEN
This
Information Statement contains a brief summary of the material
aspects of the actions approved by the Board and the Majority
Stockholder.
The
Plan Approval will become effective on the date that is twenty (20)
calendar days after the mailing of this information statement to
stockholders.
We
currently expect that such effective date will be March 6,
2017.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of February 2, 2017, certain
information with respect to the beneficial ownership of our common
stock by each shareholder known by us to be the beneficial owner of
more than 5% of our Common Stock and by each of our current
directors and executive officers. Each person has sole voting and
investment power with respect to the shares of Common Stock, except
as otherwise indicated.
This
table is prepared based on information supplied to us by the listed
security holders, any Schedules 13D or 13G and Forms 3 and 4, and
other public documents filed with the SEC.
Under
the rules of the Securities and Exchange Commission, a person is
deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or direct the
voting of the security, or investment power, which includes the
power to vote or direct the voting of the security. The person is
also deemed to be a beneficial owner of any security of which that
person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one
person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner of
securities as to which he or she may not have any pecuniary
beneficial interest.
Shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise or conversion of options
are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the table
below.
|
Shareholder
|
Common Stock
Owned Beneficially
|
Percent of Class (1)
|
Series A Preferred Stock
Owned Beneficially
|
Percent of Class (2)
|
|
Jeffrey Cosman,
Chairman, Chief Executive Officer, Chairman
12540 Broadwell
Road, Suite 2104
Milton, GA
30004
|
1,318,560
(3)
|
19.56
%
|
51
|
100
%
|
Joseph
D’Arelli,
Chief Financial
Officer
12540 Broadwell
Road, Suite 2104
Milton, GA
30004
|
15,000
|
*
%
|
0
|
0
%
|
Walter H.
Hall,
Chief Operating
Officer, Director
12540 Broadwell
Road, Suite 2104
Milton, GA
30004
|
100,350
|
1.56
%
|
0
|
0
%
|
Joseph Ardagna,
Director
12540 Broadwell
Road, Suite 2104
Milton, GA
30004
|
1,962
|
*
%
|
0
|
0
%
|
Jackson Davis,
Director
12540 Broadwell
Road, Suite 2104
Milton, GA
30004
|
1,962
|
*
%
|
0
|
0
%
|
Thomas Cowee,
Director
12540 Broadwell
Road, Suite 2104
Milton, GA
30004
|
1,962
|
*
%
|
0
|
0
%
|
All
directors and officers as a group (5 persons)
|
1,439,796
|
21.36
%
|
51
|
100
%
|
5% or greater
shareholders
|
|
|
|
|
The Goldman Sachs
Group, Inc.
200 West
Street
New York, NY
10282
|
421,326
|
6.54
%
|
0
|
0
%
|
|
|
1,861,122
|
27.61
%
|
51
|
100
%
|
______________
|
(1)
|
Based
on a total of 6,438,112 shares of common stock outstanding as of
February 2, 2017, except as otherwise indicated.
|
|
(2)
|
Based
on a total of 51 shares of Series A Preferred outstanding as of
February 2, 2017.
|
|
(3)
|
Includes 1,560
shares owned by Rush The Puck, LLC, a limited liability company in
which Mr. Cosman is the majority owner. Includes 302,663 warrants
to purchase common stock at an exercise price of $5.16 per
share.
|
There
are no arrangements, known to the Company, including any pledge by
any person of securities of the Company, the operation of which may
at a subsequent date result in a change in control of the
Company.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN
ADDRESS
If
hard copies of the materials are requested, we will send only one
Information Statement and other corporate mailings to stockholders
who share a single address unless we received contrary instructions
from any stockholder at that address. This practice, known as
“householding,” is designed to reduce our printing and
postage costs. However, the Company will deliver promptly upon
written or oral request a separate copy of the Information
Statement to a stockholder at a shared address to which a single
copy of the Information Statement was delivered. You may make such
a written or oral request by (a) sending a written notification
stating (i) your name, (ii) your shared address and (iii) the
address to which the Company should direct the additional copy of
the Information Statement, to Meridian Waste Solutions, Inc., 12540
Broadwell Road, Suite 2104, Milton, Georgia 30004.
If
multiple stockholders sharing an address have received one copy of
this Information Statement or any other corporate mailing and would
prefer the Company to mail each stockholder a separate copy of
future mailings, you may mail notification to, or call the Company
at, its principal executive offices. Additionally, if current
stockholders with a shared address received multiple copies of this
Information Statement or other corporate mailings and would prefer
the Company to mail one copy of future mailings to stockholders at
the shared address, notification of such request may also be made
by mail or telephone to the Company’s principal executive
offices.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
INFORMATION
This
Information Statement may contain “forward-looking
statements” made under the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995.
The statements include, but are not limited to, statements
concerning the effects of the Plan Approval and statements using
terminology such as “expects,” “should,”
“would,” “could,” “intends,”
“plans,” “anticipates,”
“believes,” “projects” and
“potential.” Such statements reflect the current view
of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions. Known and unknown
risks, uncertainties and other factors could cause actual results
to differ materially from those contemplated by the
statements.
In
evaluating these statements, you should specifically consider
various factors that may cause our actual results to differ
materially from any forward-looking statements. You should
carefully review the risks listed, as well as any cautionary
language, in this Information Statement and the risk factors
detailed under “Risk Factors” in the documents
incorporated by reference in this Information Statement, which
provide examples of risks, uncertainties and events that may cause
our actual results to differ materially from any expectations we
describe in our forward-looking statements. There may be other
risks that we have not described that may adversely affect our
business and financial condition. We disclaim any obligation to
update or revise any of the forward-looking statements contained in
this Information Statement. We caution you not to rely upon any
forward-looking statement as representing our views as of any date
after the date of this Information Statement. You should carefully
review the information and risk factors set forth in other reports
and documents that we file from time to time with the
SEC.
ADDITIONAL INFORMATION
We are subject to the disclosure requirements of
the Exchange Act, and in accordance therewith, file reports,
information statements and other information, including annual and
quarterly reports on Form 10-K and 10-Q, respectively, with the
SEC. Reports and other information filed by the Company can be
inspected and copied at the public reference facilities maintained
by the SEC, 100 F Street, N.E., Washington, DC 20549. In addition,
the SEC maintains a web site on the Internet (
http://www.sec.gov
)
that contains reports, information statements and other information
regarding issuers that file electronically with the SEC through the
Electronic Data Gathering, Analysis and Retrieval
System.
A
copy of any public filing is also available, at no cost, by writing
to Meridian Waste Solutions, Inc., 12540 Broadwell Road, Suite
2104, Milton, Georgia 30004. Any statement contained in a document
that is incorporated by reference will be modified or superseded
for all purposes to the extent that a statement contained in this
Information Statement (or in any other document that is
subsequently filed with the SEC and incorporated by reference)
modifies or is contrary to such previous statement. Any statement
so modified or superseded will not be deemed a part of this
Information Statement except as so modified or
superseded.
|
This Information Statement is provided to the holders of Common
Stock of the Company only for information purposes in connection
with the Actions, pursuant to and in accordance with Rule 14c-2 of
the Exchange Act. Please carefully read this Information
Statement.
By Order of the Board of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Jeffrey Cosman
Jeffrey
Cosman
Chairman
and Chief Executive Officer
Dated:
February 14, 2017
Appendix A
MERIDIAN WASTE SOLUTIONS,
INC.
2016 EQUITY AND INCENTIVE PLAN
SECTION1.
GENERAL
PURPOSE OF THE PLAN: DEFINITIONS
The
name of the plan is the MERIDIAN WASTE SOLUTIONS, INC. 2016 EQUITY
AND INCENTIVE PLAN (the “Plan”). The purpose of the
Plan is to encourage and enable the officers, employees, directors,
Consultants and other key persons of MERIDIAN WASTE SOLUTIONS,
INC., a New York corporation (including any successor entity, the
“Company”) and its Subsidiaries, upon whose judgment,
initiative and efforts the Company largely depends for the
successful conduct of its business, to acquire a proprietary
interest in the Company.
The
following terms shall be defined as set forth below:
“Affiliate”
of any Person means a Person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with the
first mentioned Person. A Person shall be deemed to control another
Person if such first Person possesses directly or indirectly the
power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of
voting securities, by contract or otherwise.
“Award”
or
“Awards,”
except where referring to a particular
category of grant under the Plan, shall include Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights
(“SAR”), Restricted Stock Awards (including preferred
stock), Unrestricted Stock Awards, Restricted Stock Units or any
combination of the foregoing.
“Award
Agreement”
means a
written or electronic agreement setting forth the terms and
provisions applicable to an Award granted under the Plan. Each
Award Agreement may contain terms and conditions in addition to
those set forth in the Plan; provided, however, in the event of any
conflict in the terms of the Plan and the Award Agreement, the
terms of the Plan shall govern.
“Board”
means the Board of Directors of the
Company.
“Cause”
shall have the meaning as set forth in
the Award Agreement(s). In the case that any Award Agreement does
not contain a definition of “Cause,” it shall mean (i)
the granteeís dishonest statements or acts with respect to the
Company or any Affiliate of the Company, or any current or
prospective customers, suppliers vendors or other third parties
with which such entity does business; (ii) the granteeís
commission of (A) a felony or (B) any misdemeanor involving moral
turpitude, deceit, dishonesty or fraud; (iii) the granteeís
failure to perform his assigned duties and responsibilities to the
reasonable satisfaction of the Company which failure continues, in
the reasonable judgment of the Company, after written notice given
to the grantee by the Company; (iv) the granteeís gross
negligence, willful misconduct or insubordination with respect to
the Company or any Affiliate of the Company; or (v) the
granteeís material violation of any provision of any
agreement(s) between the grantee and the Company relating to
noncompetition, nonsolicitation, nondisclosure and/or assignment of
inventions.
“Chief Executive
Officer”
means the Chief
Executive Officer of the Company or, if there is no Chief Executive
Officer, then the President of the Company.
“Code”
means the Internal Revenue Code of
1986, as amended, and any successor Code, and related rules,
regulations and interpretations.
“Committee”
means the Committee of the Board
referred to in Section 2.
“Consultant”
means any entity or natural person
that provides bona fide services to the Company (including a
Subsidiary), and such services are not in connection with the offer
or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the
Companyís securities.
“Disability”
means “disability” as
defined in Section 422(c) of the Code.
“Effective
Date”
means the date on
which the Plan is adopted as set forth in this
Plan.
“Exchange
Act”
means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
“Fair Market
Value”
of the Stock on
any given date means the fair market value of the Stock determined
in good faith by the Committee based on the reasonable application
of a reasonable valuation method that is consistent with Section
409A of the Code. If the Stock is admitted to trade on a national
securities exchange, the determination shall be made by reference
to the closing price reported on such exchange. If there is no
closing price for such date, the determination shall be made by
reference to the last date preceding such date for which there is a
closing price. If the date for which Fair Market Value is
determined is the first day when trading prices for the Stock are
reported on a national securities exchange, the Fair Market Value
shall be the “Price to the Public” (or
equivalent).
“Good
Reason”
shall have the
meaning as set forth in the Award Agreement(s). In the case that
any Award Agreement does not contain a definition of “Good
Reason,” it shall mean (i) a material diminution in the
granteeís base salary except for across-the-board salary
reductions similarly affecting all or substantially all similarly
situated employees of the Company or (ii) a change of more than 100
miles in the geographic location at which the grantee provides
services to the Company, so long as the grantee provides at least
90 daysí notice to the Company following the initial
occurrence of any such event and the Company fails to cure such
event within 30 days thereafter.
“Grant
Date”
means the date that
the Committee designates in its approval of an Award in accordance
with applicable law as the date on which the Award is granted,
which date may not precede the date of such Committee
approval.
“Holder”
means, with respect to an Award or any
Shares, the Person holding such Award or Shares, including the
initial recipient of the Award or any Permitted
Transferee.
“Incentive Stock
Option”
means any Stock
Option designated and qualified as an “incentive stock
option” as defined in Section 422 of the
Code.
“Non-Qualified
Stock Option”
means any
Stock Option that is not an Incentive Stock
Option.
“Option”
or
“Stock
Option”
means any option
to purchase shares of Stock granted pursuant to Section
5.
“Permitted
Transferees”
shall mean
any of the following to whom a Holder may transfer Shares hereunder
(as set forth in Section 9(a)(ii)(A)): the Holderís child,
stepchild, grandchild, parent, step-parent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing
the Holderís household (other than a tenant or employee), a
trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons control
the management of assets, and any other entity in which these
persons own more than fifty percent of the voting interests;
provided, however, that any such trust does not require or permit
distribution of any Shares during the term of the Award Agreement
unless subject to its terms. Upon the death of the Holder, the term
Permitted Transferees shall also include such deceased
Holderís estate, executors, administrators, personal
representatives, heirs, legatees and distributees, as the case may
be.
“Person”
shall mean any individual,
corporation, partnership (limited or general), limited liability
company, limited liability partnership, association, trust, joint
venture, unincorporated organization or any similar
entity.
“Restricted Stock
Award”
means Awards
granted pursuant to Section 7 and “Restricted Stock”
means Shares issued pursuant to such Awards.
“Restricted Stock
Unit”
means an Award of
phantom stock units to a grantee, which may be settled in cash or
Shares as determined by the Committee, pursuant to Section
8.
“Sale
Event”
means the
consummation of (i) the dissolution or liquidation of the Company,
(ii) the sale of all or substantially all of the assets of the
Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation pursuant to which
the holders of the Companyís outstanding voting power
immediately prior to such transaction do not own a majority of the
outstanding voting power of the surviving or resulting entity (or
its ultimate parent, if applicable), (iv) the acquisition of all or
a majority of the outstanding voting stock of the Company in a
single transaction or a series of related transactions by a Person
or group of Persons, or (v) any other acquisition of the business
of the Company, as determined by the Board; provided, however, that
any capital raising event, or a merger effected solely to change
the Companyís domicile shall not constitute a “Sale
Event.”
“Section
409A”
means Section 409A
of the Code and the regulations and other guidance promulgated
thereunder.
“Securities
Act”
means the Securities
Act of 1933, as amended, and the rules and regulations
thereunder.
“Service
Relationship”
means any
relationship as a full-time employee, part-time employee, director
or other key person (including Consultants) of the Company or any
Subsidiary or any successor entity (e.g., a Service Relationship
shall be deemed to continue without interruption in the event an
individualís status changes from full-time employee to
part-time employee or Consultant).
“Shares”
means shares of
Stock.
“Stock”
means the Common Stock, par value
$0.025 per share, of the Company.
“Stock
Appreciation Right” means any right to receive from the
Company upon exercise by an optionee or settlement, in cash,
Shares, or a combination thereof, the excess of (i) the Fair Market
Value of one Share on the date of exercise or settlement over (ii)
the exercise price of the right on the date of grant, or if granted
in connection with an Option, on the date of grant of the
Option.
“Subsidiary”
means any corporation or other entity
(other than the Company) in which the Company has more than a 50
percent interest, either directly or
indirectly.
“Ten Percent
Owner”
means an employee
who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10 percent of the combined
voting power of all classes of stock of the Company or any parent
of the Company or any Subsidiary.
“Termination
Event”
means the
termination of the Award recipientís Service Relationship with
the Company and its Subsidiaries for any reason whatsoever,
regardless of the circumstances thereof, and including, without
limitation, upon death, disability, retirement, discharge or
resignation for any reason, whether voluntarily or involuntarily.
The following shall not constitute a Termination Event: (i) a
transfer to the service of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another
Subsidiary or (ii) an approved leave of absence for military
service or sickness, or for any other purpose approved by the
Committee, if the individualís right to re-employment is
guaranteed either by a statute or by contract or under the policy
pursuant to which the leave of absence was granted or if the
Committee otherwise so provides in writing.
“Unrestricted Stock
Award”
means any Award
granted pursuant to Section 7 and “Unrestricted Stock”
means Shares issued pursuant to such Awards.
SECTION2.
ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND
DETERMINE AWARDS
(a)
Administration
of Plan
. The Plan shall be
administered by the Board, or at the discretion of the Board, by a
committee of the Board, comprised of not less than two directors.
All references herein to the “Committee” shall be
deemed to refer to the group then responsible for administration of
the Plan at the relevant time (i.e., either the Board of Directors
or a committee or committees of the Board, as
applicable).
(b)
Powers
of Committee
. The Committee
shall have the power and authority to grant Awards consistent with
the terms of the Plan, including the power and
authority:
(i)
to
select the individuals to whom Awards may from time to time be
granted;
(ii)
to
determine the time or times of grant, and the amount, if any, of
Incentive Stock Options, Non-Qualified Stock Options, SARs,
Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, or any combination of the foregoing, granted to any
one or more grantees;
(iii)
to
determine the number and types of Shares to be covered by any Award
and, subject to the provisions of the Plan, the price, exercise
price, conversion ratio or other price relating
thereto;
(iv)
to
determine and, subject to Section 12, to modify from time to time
the terms and conditions, including restrictions, not inconsistent
with the terms of the Plan, of any Award, which terms and
conditions may differ among individual Awards and grantees, and to
approve the form of Award Agreements;
(v)
to
accelerate at any time the exercisability or vesting of all or any
portion of any Award;
(vi)
to
impose any limitations on Awards, including limitations on
transfers, repurchase provisions and the like, and to exercise
repurchase rights or obligations;
(vii)
subject
to Section 5(a)(ii) and any restrictions imposed by Section 409A,
to extend at any time the period in which Stock Options may be
exercised; and
(viii)
at
any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including Award Agreements);
to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the
administration of the Plan.
All
decisions and interpretations of the Committee shall be binding on
all persons, including the Company and all Holders.
(c)
Award
Agreement
. Awards under the
Plan shall be evidenced by Award Agreements that set forth the
terms, conditions and limitations for each
Award.
(d)
Indemnification
.
Neither the Board nor the Committee, nor any member of either or
any delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board and the
Committee (and any delegate thereof) shall be entitled in all cases
to indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including, without limitation,
reasonable attorneysí fees) arising or resulting therefrom to
the fullest extent permitted by law and/or under the Companyís
governing documents, including its certificate of incorporation or
bylaws, or any directorsí and officersí liability
insurance coverage which may be in effect from time to time and/or
any indemnification agreement between such individual and the
Company.
(e)
Foreign
Award Recipients
.
Notwithstanding any provision of the Plan to the contrary, in order
to comply with the laws in other countries in which the Company and
any Subsidiary operate or have employees or other individuals
eligible for Awards, the Committee, in its sole discretion, shall
have the power and authority to: (i) determine which Subsidiaries,
if any, shall be covered by the Plan; (ii) determine which
individuals, if any, outside the United States are eligible to
participate in the Plan; (iii) modify the terms and conditions of
any Award granted to individuals outside the United States to
comply with applicable foreign laws; (iv) establish subplans and
modify exercise procedures and other terms and procedures, to the
extent the Committee determines such actions to be necessary or
advisable (and such subplans and/or modifications shall be attached
to the Plan as appendices); provided, however, that no such
subplans and/or modifications shall increase the share limitation
contained in Section 3(a) hereof; and (v) take any action, before
or after an Award is made, that the Committee determines to be
necessary or advisable to obtain approval or comply with any local
governmental regulatory exemptions or
approvals.
SECTION3.
STOCK ISSUABLE UNDER THE PLAN; MERGERS AND OTHER TRANSACTIONS;
SUBSTITUTION
(a)
Stock
Issuable
. The maximum number of
Shares reserved and available for issuance under the Plan shall be
7,500,000 Shares, subject to adjustment as provided in Section
3(b). For purposes of this limitation, the Shares underlying any
Awards that are forfeited, canceled, reacquired by the Company
prior to vesting, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back
to the Shares available for issuance under the Plan.. Subject to
such overall limitations, Shares may be issued up to such maximum
number pursuant to any type or types of Award, and no more than
500,000 Shares may be issued pursuant to Incentive Stock Options.
The Shares available for issuance under the Plan may be authorized
but unissued Shares or Shares reacquired by the Company. Beginning
on the date that the Company becomes subject to Section 162(m) of
the Code, (i) Options with respect to no more than 500,000 Shares
shall be granted to any one individual in any calendar year period
and (ii) no more than 5,000,000 Shares shall be granted to any one
individual in any calendar year period. The value of any Shares
granted to a non-employee director of the Company, when added to
any annual cash payments or awards, shall not exceed an aggregate
value of four hundred thousand dollars ($400,000) in any calendar
year.
(b)
Changes
in Stock
. Subject to Section
3(c) hereof, if, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in the Companyís
capital stock, the outstanding Shares are increased or decreased or
are exchanged for a different number or kind of shares or other
securities of the Company, or additional Shares or new or different
shares or other securities of the Company or other non-cash assets
are distributed with respect to such Shares or other securities, in
each case, without the receipt of consideration by the Company, or,
if, as a result of any merger or consolidation, or sale of all or
substantially all of the assets of the Company, the outstanding
Shares are converted into or exchanged for other securities of the
Company or any successor entity (or a parent or subsidiary
thereof), the Committee shall make an appropriate and proportionate
adjustment in (i) the maximum number of Shares reserved for
issuance under the Plan, (ii) the number and kind of Shares or
other securities subject to any then outstanding Awards under the
Plan, (iii) the repurchase price, if any, per Share subject to each
outstanding Award, and (iv) the exercise price for each Share
subject to any then outstanding Stock Options under the Plan,
without changing the aggregate exercise price (i.e., the exercise
price multiplied by the number of Stock Options) as to which such
Stock Options remain exercisable. The Committee shall in any event
make such adjustments as may be required by the laws of New York
and the rules and regulations promulgated thereunder. The
adjustment by the Committee shall be final, binding and conclusive.
No fractional Shares shall be issued under the Plan resulting from
any such adjustment, but the Committee in its discretion may make a
cash payment in lieu of fractional shares.
(c)
Sale
Events
.
(i)
Options
.
(A)
In
the case of and subject to the consummation of a Sale Event, the
Plan and all outstanding Options and SARs issued hereunder shall
become one hundred percent (100%) vested upon the effective time of
any such Sale Event. New stock options or other awards of the
successor entity or parent thereof shall be substituted therefor,
with an equitable or proportionate adjustment as to the number and
kind of shares and, if appropriate, the per share exercise prices,
as such parties shall agree (after taking into account any
acceleration hereunder and/or pursuant to the terms of any Award
Agreement).
(B)
In
the event of the termination of the Plan and all outstanding
Options and SARs issued hereunder pursuant to Section 3(c), each
Holder of Options shall be permitted, within a period of time prior
to the consummation of the Sale Event as specified by the
Committee, to exercise all such Options or SARs which are then
exercisable or will become exercisable as of the effective time of
the Sale Event; provided, however, that the exercise of Options not
exercisable prior to the Sale Event shall be subject to the
consummation of the Sale Event.
(C)
Notwithstanding
anything to the contrary in Section 3(c)(i)(A), in the event of a
Sale Event, the Company shall have the right, but not the
obligation, to make or provide for a cash payment to the Holders of
Options, without any consent of the Holders, in exchange for the
cancellation thereof, in an amount equal to the difference between
(A) the value as determined by the Committee of the consideration
payable per share of Stock pursuant to the Sale Event
(the“Sale Price”) times the number of Shares subject to
outstanding Options being cancelled (to the extent then vested and
exercisable, including by reason of acceleration in connection with
such Sale Event, at prices not in excess of the Sale Price) and (B)
the aggregate exercise price of all such outstanding vested and
exercisable Options.
(ii)
Restricted
Stock and Restricted Stock Unit Awards
.
(A)
In
the case of and subject to the consummation of a Sale Event, all
unvested Restricted Stock and unvested Restricted Stock Unit Awards
issued hereunder shall become one hundred percent (100%) vested,
with an equitable or proportionate adjustment as to the number and
kind of shares subject to such awards as such parties shall agree
(after taking into account any acceleration hereunder and/or
pursuant to the terms of any Award Agreement).
(B)
Such
Restricted Stock shall be repurchased from the Holder thereof at
the then Fair Market Value of such shares, (subject to adjustment
as provided in Section 3(b)) for such Shares.
(C)
Notwithstanding
anything to the contrary in Section 3(c)(ii)(A), in the event of a
Sale Event, the Company shall have the right, but not the
obligation, to make or provide for a cash payment to the Holders of
Restricted Stock or Restricted Stock Unit Awards, without consent
of the Holders, in exchange for the cancellation thereof, in an
amount equal to the Sale Price times the number of Shares subject
to such Awards, to be paid at the time of such Sale Event or upon
the later vesting of such Awards.
SECTION4.
ELIGIBILITY
Grantees
under the Plan will be such full or part-time officers and other
employees, directors, Consultants and key persons of the Company
and any Subsidiary who are selected from time to time by the
Committee in its sole discretion; provided, however, that Awards
shall be granted only to those individuals described in Rule 701(c)
of the Securities Act.
SECTION5.
STOCK
OPTIONS
Upon
the grant of a Stock Option, the Company and the grantee shall
enter into an Award Agreement. The terms and conditions of each
such Award Agreement shall be determined by the Committee, and such
terms and conditions may differ among individual Awards and
grantees.
Stock
Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. Incentive Stock Options may
be granted only to employees of the Company or any Subsidiary that
is a “subsidiary corporation” within the meaning of
Section 424(f) of the Code. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
(a)
Terms
of Stock Options
. The Committee
in its discretion may grant Stock Options to those individuals who
meet the eligibility requirements of Section 4. Stock Options shall
be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem
desirable.
(i)
Exercise
Price
. The exercise price per
share for the Shares covered by a Stock Option shall be determined
by the Committee at the time of grant but shall not be less than
100 percent of the Fair Market Value on the Grant Date. In the case
of an Incentive Stock Option that is granted to a Ten Percent
Owner, the exercise price per share for the Shares covered by such
Incentive Stock Option shall not be less than 110 percent of the
Fair Market Value on the Grant Date.
(ii)
Option
Term
. The term of each Stock
Option shall be fixed by the Committee, but no Stock Option shall
be exercisable more than ten years from the Grant Date. In the case
of an Incentive Stock Option that is granted to a Ten Percent
Owner, the term of such Stock Option shall be no more than five
years from the Grant Date.
(iii)
Exercisability;
Rights of a Stockholder
. Stock
Options shall become exercisable and/or vested at such time or
times, whether or not in installments, as shall be determined by
the Committee at or after the Grant Date. The Award Agreement may
permit a grantee to exercise all or a portion of a Stock Option
immediately at grant; provided that the Shares issued upon such
exercise shall be subject to restrictions and a vesting schedule
identical to the vesting schedule of the related Stock Option, such
Shares shall be deemed to be Restricted Stock for purposes of the
Plan, and the optionee may be required to enter into an additional
or new Award Agreement as a condition to exercise of such Stock
Option. An optionee shall have the rights of a stockholder only as
to Shares acquired upon the exercise of a Stock Option and not as
to unexercised Stock Options. An optionee shall not be deemed to
have acquired any Shares unless and until a Stock Option shall have
been exercised pursuant to the terms of the Award Agreement and
this Plan and the optioneeís name has been entered on the
books of the Company as a stockholder.
(iv)
Method
of Exercise
. Stock Options may
be exercised by an optionee in whole or in part, by the optionee
giving written or electronic notice of exercise to the Company,
specifying the number of Shares to be purchased. Payment of the
purchase price may be made by one or more of the following methods
(or any combination thereof) to the extent provided in the Award
Agreement:
(A)
In
cash, by certified or bank check, by wire transfer of immediately
available funds, or other instrument acceptable to the
Committee;
(B)
If
permitted by the Committee, by the optionee delivering to the
Company a promissory note, if the Board has expressly authorized
the loan of funds to the optionee for the purpose of enabling or
assisting the optionee to effect the exercise of his or her Stock
Option; provided, that at least so much of the exercise price as
represents the par value of the Stock shall be paid in cash if
required by state law;
(C)
If
permitted by the Committee, through the delivery (or attestation to
the ownership) of Shares that have been purchased by the optionee
on the open market or that are beneficially owned by the optionee
and are not then subject to restrictions under any Company plan. To
the extent required to avoid variable accounting treatment under
applicable accounting rules, such surrendered Shares if originally
purchased from the Company shall have been owned by the optionee
for at least six months. Such surrendered Shares shall be valued at
Fair Market Value on the exercise date;
(D)
If
permitted by the Committee and by the optionee delivering to the
Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the
Company cash or a check payable and acceptable to the Company for
the purchase price; provided that in the event the optionee chooses
to pay the purchase price as so provided, the optionee and the
broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Committee shall
prescribe as a condition of such payment procedure; or
(E)
If
permitted by the Committee, and only with respect to Stock Options
that are not Incentive Stock Options, by a “net
exercise” arrangement pursuant to which the Company will
reduce the number of Shares issuable upon exercise by the largest
whole number of Shares with a Fair Market Value that does not
exceed the aggregate exercise price.
Payment
instruments will be received subject to collection. No certificates
for Shares so purchased will be issued to the optionee or, with
respect to uncertificated Stock, no transfer to the optionee on the
records of the Company will take place, until the Company has
completed all steps it has deemed necessary to satisfy legal
requirements relating to the issuance and sale of the Shares, which
steps may include, without limitation, (i) receipt of a
representation from the optionee at the time of exercise of the
Option that the optionee is purchasing the Shares for the
optioneeís own account and not with a view to any sale or
distribution of the Shares or other representations relating to
compliance with applicable law governing the issuance of
securities, (ii) the legending of the certificate (or notation on
any book entry) representing the Shares to evidence the foregoing
restrictions, and (iii) obtaining from optionee payment or
provision for all withholding taxes due as a result of the exercise
of the Option. The delivery of certificates representing the shares
of Stock (or the transfer to the optionee on the records of the
Company with respect to uncertificated Stock) to be purchased
pursuant to the exercise of a Stock Option will be contingent upon
(A) receipt from the optionee (or a purchaser acting in his or her
stead in accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such Shares and the
fulfillment of any other requirements contained in the Award
Agreement or applicable provisions of laws and (B) if required by
the Company, the optionee shall have entered into any stockholders
agreements or other agreements with the Company and/or certain
other of the Companyís stockholders relating to the Stock. In
the event an optionee chooses to pay the purchase price by
previously-owned Shares through the attestation method, the number
of Shares transferred to the optionee upon the exercise of the
Stock Option shall be net of the number of Shares attested to by
the Optionee.
(b)
Annual
Limit on Incentive Stock Options
. To the extent required for “incentive
stock option” treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the Grant Date) of
the Shares with respect to which Incentive Stock Options granted
under the Plan and any other plan of the Company or its parent and
any Subsidiary that become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000 or such
other limit as may be in effect from time to time under Section 422
of the Code. To the extent that any Stock Option exceeds this
limit, it shall constitute a Non-Qualified Stock
Option.
(c)
Termination
.
Any portion of a Stock Option that is not vested and exercisable on
the date of termination of an optioneeís Service Relationship
shall immediately expire and be null and void. Once any portion of
the Stock Option becomes vested and exercisable, the
optioneeís right to exercise such portion of the Stock Option
(or the optioneeís representatives and legatees as applicable)
in the event of a termination of the optioneeís Service
Relationship shall continue until the earliest of: (i) the date
which is: (A) 12 months following the date on which the
optioneeís Service Relationship terminates due to death or
Disability (or such longer period of time as determined by the
Committee and set forth in the applicable Award Agreement), or (B)
three months following the date on which the optioneeís
Service Relationship terminates if the termination is due to any
reason other than death or Disability (or such longer period of
time as determined by the Committee and set forth in the applicable
Award Agreement), or (ii) the Expiration Date set forth in the
Award Agreement; provided that notwithstanding the foregoing, an
Award Agreement may provide that if the optioneeís Service
Relationship is terminated for Cause, the Stock Option shall
terminate immediately and be null and void upon the date of the
optioneeís termination and shall not thereafter be
exercisable.
SECTION
6.
STOCK
APPRECIATION RIGHTS.
The
Committee is authorized to grant SARs to optionees with the
following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of
the Plan, as the Committee shall determine ñ
(a)
SARs may be granted under the Plan to optionees either alone or in
addition to other Awards granted under the Plan and may, but need
not, relate to specific Option granted under Section
5.
(b)
The exercise price per Share under a SAR shall be determined by the
Committee, provided, however, that except in the case of a
substitute Award, such exercise price shall not be less than the
fair market value of a Share on the date of grant of such
SAR.
(c)
The term of each SAR shall be fixed by the Committee but shall not
exceed 10 years from the date of grant of such SAR.
(d)
The Committee shall determine the time or times at which a SAR may
be exercised or settled in whole or in part. Unless otherwise
determined by the Committee or unless otherwise set forth in an
Award Agreement, the provisions set forth in Section 5 above with
respect to exercise of an Award following termination of service
shall apply to any SAR. The Committee may specify in an Award
Agreement that an “in-the-money” SAR shall be
automatically exercised on its expiration date.
SECTION
7.
RESTRICTED
STOCK AWARDS
(a)
Nature
of Restricted Stock Awards
. The
Committee may, in its sole discretion, grant (or sell at par value
or such other purchase price determined by the Committee) to an
eligible individual under Section 4 hereof a Restricted Stock Award
under the Plan. The Committee shall determine the restrictions and
conditions applicable to each Restricted Stock Award at the time of
grant. Conditions may be based on the type of stock upon which
restrictions are placed, continuing employment (or other Service
Relationship), achievement of pre-established performance goals and
objectives and/or such other criteria as the Committee may
determine. Upon the grant of a Restricted Stock Award, the Company
and the grantee shall enter into an Award Agreement. The terms and
conditions of each such Award Agreement shall be determined by the
Committee, and such terms and conditions may differ among
individual Awards and grantees.
(b)
Rights
as a Stockholder
. Upon the
grant of the Restricted Stock Award and payment of any applicable
purchase price, a grantee of Restricted Stock shall be considered
the record owner of and shall be entitled to vote the Restricted
Stock if, and to the extent, such Shares are entitled to voting
rights, subject to such conditions contained in the Award
Agreement. The grantee shall be entitled to receive all dividends
and any other distributions declared on the Shares; provided,
however, that the Company is under no duty to declare any such
dividends or to make any such distribution. Unless the Committee
shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such
Restricted Stock is vested as provided in subsection (d) below of
this Section, and the grantee shall be required, as a condition of
the grant, to deliver to the Company a stock power endorsed in
blank and such other instruments of transfer as the Committee may
prescribe.
(c)
Restrictions
.
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as specifically provided
herein or in the Award Agreement. Except as may otherwise be
provided by the Committee either in the Award Agreement or, subject
to Section 12 below, in writing after the Award Agreement is
issued, if a granteeís Service Relationship with the Company
and any Subsidiary terminates, the Company or its assigns shall
have the right, as may be specified in the relevant instrument, to
repurchase some or all of the Shares subject to the Award at such
purchase price as is set forth in the Award
Agreement.
(d)
Vesting
of Restricted Stock
. The
Committee at the time of grant shall specify in the Award Agreement
the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
substantial risk of forfeiture imposed shall lapse and the
Restricted Stock shall become vested, subject to such further
rights of the Company or its assigns as may be specified in the
Award Agreement.
SECTION
8.
UNRESTRICTED
STOCK AWARDS
The
Committee may, in its sole discretion, grant (or sell at par value
or such other purchase price determined by the Committee) to an
eligible person under Section 4 hereof an Unrestricted Stock Award
under the Plan. Unrestricted Stock Awards may be granted in respect
of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.
SECTION
9.
RESTRICTED
STOCK UNITS
(a)
Nature
of Restricted Stock Units
. The
Committee may, in its sole discretion, grant to an eligible person
under Section 4 hereof Restricted Stock Units under the Plan. The
Committee shall determine the restrictions and conditions
applicable to each Restricted Stock Unit at the time of grant.
Vesting conditions may be based on continuing employment (or other
Service Relationship), achievement of pre-established performance
goals and objectives which may be based on targets for revenue,
revenue growth, EBITDA, net income, earnings per share and/or other
such criteria as the Committee may determine. Upon the grant of
Restricted Stock Units, the grantee and the Company shall enter
into an Award Agreement. The terms and conditions of each such
Award Agreement shall be determined by the Committee and may differ
among individual Awards and grantees. On or promptly following the
vesting date or dates applicable to any Restricted Stock Unit, but
in no event later than March 15 of the year following the year in
which such vesting occurs, such Restricted Stock Unit(s) shall be
settled in the form of cash or shares of Stock, as specified in the
Award Agreement. Restricted Stock Units may not be sold, assigned,
transferred, pledged, or otherwise encumbered or disposed
of.
(b)
Rights
as a Stockholder
. A grantee
shall have the rights of a stockholder only as to Shares, if any,
acquired upon settlement of Restricted Stock Units. A grantee shall
not be deemed to have acquired any such Shares unless and until the
Restricted Stock Units shall have been settled in Shares pursuant
to the terms of the Plan and the Award Agreement, the Company shall
have issued and delivered a certificate representing the Shares to
the grantee (or transferred on the records of the Company with
respect to uncertificated stock), and the granteeís name has
been entered in the books of the Company as a
stockholder.
(c)
Termination
.
Except as may otherwise be provided by the Committee either in the
Award Agreement or in writing after the Award Agreement is issued,
a granteeís right in all Restricted Stock Units that have not
vested shall automatically terminate upon the granteeís
cessation of Service Relationship with the Company and any
Subsidiary for any reason.
SECTION
10.
TRANSFER RESTRICTIONS; COMPANY RIGHT OF FIRST REFUSAL; COMPANY
REPURCHASE RIGHTS
(a)
Restrictions
on Transfer
.
(i)
Non-Transferability
of Stock Options
. Restricted
Stock awards granted under Section 7, Stock Options, SARs and,
prior to exercise, the Shares issuable upon exercise of such Stock
Option, shall not be transferable by the optionee otherwise than by
will, or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the optioneeís lifetime,
only by the optionee, or by the optioneeís legal
representative or guardian in the event of the optioneeís
incapacity. Notwithstanding the foregoing, the Committee, in its
sole discretion, may provide in the Award Agreement regarding a
given Stock Option or Restricted Stock award that the optionee may
transfer by gift, without consideration for the transfer, his or
her Non-Qualified Stock Options to his or her family members (as
defined in Rule 701 of the Securities Act), to trusts for the
benefit of such family members, or to partnerships in which such
family members are the only partners (to the extent such trusts or
partnerships are considered “family members” for
purposes of Rule 701 of the Securities Act), provided that the
transferee agrees in writing with the Company to be bound by all of
the terms and conditions of this Plan and the applicable Award
Agreement, including the execution of a stock power upon the
issuance of Shares. Stock Options, SARs and the Shares issuable
upon exercise of such Stock Options, shall be restricted as to any
pledge, hypothecation, or other transfer, including any short
position, any “put equivalent position” (as defined in
the Exchange Act) or any “call equivalent position” (as
defined in the Exchange Act) prior to exercise.
(ii)
Shares
.
No Shares shall be sold, assigned, transferred, pledged,
hypothecated, given away or in any other manner disposed of or
encumbered, whether voluntarily or by operation of law, unless (i)
the transfer is in compliance with the terms of the applicable
Award Agreement, all applicable securities laws (including, without
limitation, the Securities Act), and with the terms and conditions
of this Section 9, (ii) the transfer does not cause the Company to
become subject to the reporting requirements of the Exchange Act,
and the transferee consents in writing to be bound by the
provisions of the Plan and the Award Agreement, including this
Section 10. In connection with any proposed transfer, the Committee
may require the transferor to provide at the transferorís own
expense an opinion of counsel to the transferor, satisfactory to
the Committee, that such transfer is in compliance with all
foreign, federal and state securities laws (including, without
limitation, the Securities Act). Any attempted transfer of Shares
not in accordance with the terms and conditions of this Section 9
shall be null and void, and the Company shall not reflect on its
records any change in record ownership of any Shares as a result of
any such transfer, shall otherwise refuse to recognize any such
transfer and shall not in any way give effect to any such transfer
of Shares. The Company shall be entitled to seek protective orders,
injunctive relief and other remedies available at law or in equity
including, without limitation, seeking specific performance or the
rescission of any transfer not made in strict compliance with the
provisions of this Section 10. Subject to the foregoing general
provisions, and unless otherwise provided in the applicable Award
Agreement, Shares may be transferred pursuant to the following
specific terms and conditions (provided that with respect to any
transfer of Restricted Stock, all vesting and forfeiture provisions
shall continue to apply with respect to the original
recipient):
(A)
Transfers
to Permitted Transferees
. The
Holder may transfer any or all of the Shares to one or more
Permitted Transferees; provided, however, that following such
transfer, such Shares shall continue to be subject to the terms of
this Plan (including this Section 9) and such Permitted
Transferee(s) shall, as a condition to any such transfer, deliver a
written acknowledgment to that effect to the Company and shall
deliver a stock power to the Company with respect to the Shares.
Notwithstanding the foregoing, the Holder may not transfer any of
the Shares to a Person whom the Company reasonably determines is a
direct competitor or a potential competitor of the Company or any
of its Subsidiaries.
(B)
Transfers
Upon Death
. Upon the death of
the Holder, any Shares then held by the Holder at the time of such
death and any Shares acquired after the Holderís death by the
Holderís legal representative shall be subject to the
provisions of this Plan, and the Holderís estate, executors,
administrators, personal representatives, heirs, legatees and
distributees shall be obligated to convey such Shares to the
Company or its assigns under the terms contemplated by the Plan and
the Award Agreement.
(b)
Right
of First Refusal
. In the event
that a Holder desires at any time to sell or otherwise transfer all
or any part of his or her Shares (other than shares of Restricted
Stock which by their terms are not transferrable), the Holder first
shall give written notice to the Company of the Holderís
intention to make such transfer. Such notice shall state the number
of Shares that the Holder proposes to sell (the “Offered
Shares”), the price and the terms at which the proposed sale
is to be made and the name and address of the proposed transferee.
At any time within 30 days after the receipt of such notice by the
Company, the Company or its assigns may elect to purchase all or
any portion of the Offered Shares at the price and on the terms
offered by the proposed transferee and specified in the notice. The
Company or its assigns shall exercise this right by mailing or
delivering written notice to the Holder within the foregoing 30-day
period. If the Company or its assigns elect to exercise its
purchase rights under this Section 9(b), the closing for such
purchase shall, in any event, take place within 45 days after the
receipt by the Company of the initial notice from the Holder. In
the event that the Company or its assigns do not elect to exercise
such purchase right, or in the event that the Company or its
assigns do not pay the full purchase price within such 45-day
period, the Holder shall be required to pay a transaction
processing fee of $10,000 to the Company (unless waived by the
Committee) and then may, within 60 days thereafter, sell the
Offered Shares to the proposed transferee and at the same price and
on the same terms as specified in the Holderís notice. Any
Shares not sold to the proposed transferee shall remain subject to
the Plan. If the Holder is a party to any stockholders agreements
or other agreements with the Company and/or certain other of the
Companyís stockholders relating to the Shares, (i) the
transferring Holder shall comply with the requirements of such
stockholders agreements or other agreements relating to any
proposed transfer of the Offered Shares, and (ii) any proposed
transferee that purchases Offered Shares shall enter into such
stockholders agreements or other agreements with the Company and/or
certain of the Companyís stockholders relating to the Offered
Shares on the same terms and in the same capacity as the
transferring Holder.
(c)
Companyís
Right of Repurchase
.
(i)
Right
of Repurchase for Unvested Shares Issued Upon the Exercise of an
Option
. Upon a Termination
Event, the Company or its assigns shall have the right and option
to repurchase from a Holder of Shares acquired upon exercise of a
Stock Option which is still subject to a risk of forfeiture as of
the Termination Event. Such repurchase rights may be exercised by
the Company within the later of (A) six months following the date
of such Termination Event or (B) seven months after the acquisition
of Shares upon exercise of a Stock Option. The repurchase price
shall be equal to the lower of the original per share price paid by
the Holder, subject to adjustment as provided in Section 3(b) of
the Plan, or the current Fair Market Value of such Shares as of the
date the Company elects to exercise its repurchase
rights.
(ii)
Right
of Repurchase With Respect to Restricted Stock
. Upon a Termination Event, the Company or its
assigns shall have the right and option to repurchase from a Holder
of Shares received pursuant to a Restricted Stock Award any Shares
that are still subject to a risk of forfeiture as of the
Termination Event. Such repurchase right may be exercised by the
Company within six months following the date of such Termination
Event. The repurchase price shall be the lower of the original per
share purchase price paid by the Holder, subject to adjustment as
provided in Section 3(b) of the Plan, or the current Fair Market
Value of such Shares as of the date the Company elects to exercise
its repurchase rights.
(iii)
Procedure
.
Any repurchase right of the Company shall be exercised by the
Company or its assigns by giving the Holder written notice on or
before the last day of the repurchase period of its intention to
exercise such repurchase right. Upon such notification, the Holder
shall promptly surrender to the Company, free and clear of any
liens or encumbrances, any certificates representing the Shares
being purchased, together with a duly executed stock power for the
transfer of such Shares to the Company or the Companyís
assignee or assignees. Upon the Companyís or its
assigneeís receipt of the certificates from the Holder, the
Company or its assignee or assignees shall deliver to him, her or
them a check for the applicable repurchase price; provided,
however, that the Company may pay the repurchase price by
offsetting and canceling any indebtedness then owed by the Holder
to the Company.
(d)
Escrow
Arrangement
.
(i)
Escrow
.
In order to carry out the provisions of this Section 9 of this Plan
more effectively, the Company shall hold any Shares issued pursuant
to Awards granted under the Plan in escrow together with separate
stock powers executed by the Holder in blank for transfer. The
Company shall not dispose of the Shares except as otherwise
provided in this Plan. In the event of any repurchase by the
Company (or any of its assigns), the Company is hereby authorized
by the Holder, as the Holderís attorney-in-fact, to date and
complete the stock powers necessary for the transfer of the Shares
being purchased and to transfer such Shares in accordance with the
terms hereof. At such time as any Shares are no longer subject to
the Companyís repurchase and first refusal rights, the Company
shall, at the written request of the Holder, deliver to the Holder
a certificate representing such Shares with the balance of the
Shares to be held in escrow pursuant to this
Section.
(ii)
Remedy
.
Without limitation of any other provision of this Plan or other
rights, in the event that a Holder or any other Person is required
to sell a Holderís Shares pursuant to the provisions of
Sections 9(b) or (c) hereof and in the further event that he or she
refuses or for any reason fails to deliver to the Company or its
designated purchaser of such Shares the certificate or certificates
evidencing such Shares together with a related stock power, the
Company or such designated purchaser may deposit the applicable
purchase price for such Shares with a bank designated by the
Company, or with the Companyís independent public accounting
firm, as agent or trustee, or in escrow, for such Holder or other
Person, to be held by such bank or accounting firm for the benefit
of and for delivery to him, her, them or it, and/or, in its
discretion, pay such purchase price by offsetting any indebtedness
then owed by such Holder as provided above. Upon any such deposit
and/or offset by the Company or its designated purchaser of such
amount and upon notice to the Person who was required to sell the
Shares to be sold pursuant to the provisions of Sections 9(b) or
(c), such Sharesshall at such time be deemed to have been sold,
assigned, transferred and conveyed to such purchaser, such Holder
shall have no further rights thereto (other than the right to
withdraw the payment thereof held in escrow, if applicable), and
the Company shall record such transfer in its stock transfer book
or in any appropriate manner.
(e)
Lockup
Provision
. If requested by the
Company, a Holder shall not sell or otherwise transfer or dispose
of any Shares (including, without limitation, pursuant to Rule 144
under the Securities Act) held by him or her for such period
following the effective date of a public offering by the Company of
Shares as the Company shall specify reasonably and in good faith.
If requested by the underwriter engaged by the Company, each Holder
shall execute a separate letter confirming his or her agreement to
comply with this Section.
(f)
Adjustments
for Changes in Capital Structure
. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in the Common Stock,
the outstanding Shares are increased or decreased or are exchanged
for a different number or kind of securities of the Company, the
restrictions contained in this Section 9 shall apply with equal
force to additional and/or substitute securities, if any, received
by Holder in exchange for, or by virtue of his or her ownership of,
Shares.
(g)
Termination
.
The terms and provisions of Section 9(b) and Section 9(c) (except
for the Companyís right to repurchase Shares still subject to
a risk of forfeiture upon a Termination Event) shall terminate upon
consummation of any Sale Event, in either case as a result of which
Shares are registered under Section 12 of the Exchange Act and
publicly-traded on any national security
exchange.
SECTION
11.
TAX
WITHHOLDING
(a)
Payment
by Grantee
. Each grantee shall,
no later than the date as of which the value of an Award or of any
Shares or other amounts received thereunder first becomes
includable in the gross income of the grantee for income tax
purposes, pay to the Company, or make arrangements satisfactory to
the Committee regarding payment of, any Federal, state, or local
taxes of any kind required by law to be withheld by the Company
with respect to such income. The Company and any Subsidiary 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 grantee.
The Companyís obligation to deliver stock certificates (or
evidence of book entry) to any grantee is subject to and
conditioned on any such tax withholding obligations being satisfied
by the grantee.
(b)
Payment
in Stock
. The Companyís
minimum required tax withholding obligation may be satisfied, in
whole or in part, by the Company withholding from Shares to be
issued pursuant to an Award a number of Shares having an aggregate
Fair Market Value (as of the date the withholding is effected) that
would satisfy the minimum withholding amount
due.
SECTION
12.
SECTION 409A
AWARDS
.
To
the extent that any Award is determined to constitute
“nonqualified deferred compensation” within the meaning
of Section 409A (a “409A Award”), the Award shall be
subject to such additional rules and requirements as may be
specified by the Committee from time to time. In this regard, if
any amount under a 409A Award is payable upon a “separation
from service” (within the meaning of Section 409A) to a
grantee who is considered a “specified employee”
(within the meaning of Section 409A), then no such payment shall be
made prior to the date that is the earlier of (i) six months and
one day after the granteeís separation from service, or (ii)
the granteeís death, but only to the extent such delay is
necessary to prevent such payment from being subject to interest,
penalties and/or additional tax imposed pursuant to Section 409A.
The Company makes no representation or warranty and shall have no
liability to any grantee under the Plan or any other Person with
respect to any penalties or taxes under Section 409A that are, or
may be, imposed with respect to any Award.
SECTION
13.
AMENDMENTS
AND TERMINATION
The
Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award
for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the consent of the holder of
the Award. The Committee may exercise its discretion to reduce the
exercise price of outstanding Stock Options or effect repricing
through cancellation of outstanding Stock Options and by granting
such holders new Awards in replacement of the cancelled Stock
Options. To the extent determined by the Committee to be required
either by the Code to ensure that Incentive Stock Options granted
under the Plan are qualified under Section 422 of the Code or
otherwise, Plan amendments shall be subject to approval by the
Company stockholders entitled to vote at a meeting of stockholders.
Nothing in this Section 12 shall limit the Boardís or
Committeeís authority to take any action permitted pursuant to
Section 3(c). The Board reserves the right to amend the Plan and/or
the terms of any outstanding Stock Options to the extent reasonably
necessary to comply with the requirements of the exemption pursuant
to paragraph (0(4) of Rule 12h-1 of the Exchange Act.
SECTION
14.
STATUS
OF PLAN
With
respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by
a grantee, a grantee shall have no rights greater than those of a
general creditor of the Company unless the Committee shall
otherwise expressly so determine in connection with any
Award.
SECTION
15.
GENERAL
PROVISIONS
(a)
No
Distribution; Compliance with Legal Requirements
. The Committee may require each person acquiring
Shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the Shares without
a view to distribution thereof. No Shares shall be issued pursuant
to an Award until all applicable securities law and other legal and
stock exchange or similar requirements have been satisfied. The
Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards, as it
deems appropriate.
(b)
Delivery
of Stock Certificates
. Stock
certificates to grantees under the Plan shall be deemed delivered
for all purposes when the Company or a stock transfer agent of the
Company shall have mailed such certificates in the United States
mail, addressed to the grantee, at the granteeís last known
address on file with the Company; provided that stock certificates
to be held in escrow pursuant to Section 9 of the Plan shall be
deemed delivered when the Company shall have recorded the issuance
in its records. Uncertificated Stock shall be deemed delivered for
all purposes when the Company or a stock transfer agent of the
Company shall have given to the grantee by electronic mail (with
proof of receipt) or by United States mail, addressed to the
grantee, at the granteeís last known address on file with the
Company, notice of issuance and recorded the issuance in its
records (which may include electronic “book entry”
records).
(c)
No
Employment Rights
. The adoption
of the Plan and the grant of Awards do not confer upon any Person
any right to continued employment or Service Relationship with the
Company or any Subsidiary.
(d)
Trading
Policy Restrictions
. Option
exercises and other Awards under the Plan shall be subject to the
Companyís insider trading policy-related restrictions, terms
and conditions as may be established by the Committee, or in
accordance with policies set by the Committee, from time to
time.
(e)
Designation
of Beneficiary
. Each grantee to
whom an Award has been made under the Plan may designate a
beneficiary or beneficiaries to exercise any Award on or after the
granteeís death or receive any payment under any Award payable
on or after the granteeís death. Any such designation shall be
on a form provided for that purpose by the Committee and shall not
be effective until received by the Committee. If no beneficiary has
been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall
be the granteeís estate.
(f)
Legend
.
Any certificate(s) representing the Shares shall carry
substantially the following legend (and with respect to
uncertificated Stock, the book entries evidencing such shares shall
contain the following notation):
The
transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including repurchase and restrictions against transfers
contained in the Plan and any agreements entered into thereunder by
and between the company and the holder of this certificate (a copy
of which is available at the offices of the company for
examination).
(g)
Information
to Holders of Options
. In the
event the Company is relying on the exemption from the registration
requirements of Section 12(g) of the Exchange Act contained in
paragraph (f)(1) of Rule 12h-1 of the Exchange Act, the Company
shall provide the information described in Rule 701(e)(3), (4) and
(5) of the Securities Act to all holders of Options in accordance
with the requirements thereunder. The foregoing notwithstanding,
the Company shall not be required to provide such information
unless the option holder has agreed in writing, on a form
prescribed by the Company, to keep such information
confidential.
SECTION16.
EFFECTIVE
DATE OF PLAN
The
Plan shall become effective upon adoption by the Board and shall be
approved by stockholders in accordance with applicable state law
and the Companyís articles of incorporation and bylaws within
12 months thereafter. If the stockholders fail to approve the Plan
within 12 months after its adoption by the Board of Directors, then
any Awards granted or sold under the Plan shall be rescinded and no
additional grants or sales shall thereafter be made under the Plan.
Subject to such approval by stockholders and to the requirement
that no Shares may be issued hereunder prior to such approval,
Stock Options and other Awards may be granted hereunder on and
after adoption of the Plan by the Board. No grants of Stock Options
and other Awards may be made hereunder after the tenth anniversary
of the date the Plan is adopted by the Board or the date the Plan
is approved by the Companyís stockholders, whichever is
earlier.
SECTION17.
GOVERNING
LAW
This
Plan, all Awards and any controversy arising out of or relating to
this Plan and all Awards shall be governed by and construed in
accordance with the laws of the State of New York as to matters
within the scope thereof, without regard to conflict of law
principles that would result in the application of any law other
than the law of the State of New York.
DATE ADOPTED BY THE BOARD OF
DIRECTORS:
March 10, 2016.
DATE ADOPTED BY THE
SHAREHOLDERS:
______________________________.
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