Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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On
June 30, 2017, the Board of Directors of the Company adopted and approved the Company’s 2017 Employee Stock Option Plan
(the “Plan”), for which we will seek approval of our stockholders. The Company terminated its 2012 Stock Option Plan
following the expiration of all outstanding restricted stock units issued under that plan.
The
Plan authorizes the issuance over a ten-year period, options or Restricted Stock Awards to purchase up to a maximum of 25,000,000
shares of the Company’s common stock, subject to adjustment as described below.
Description
of the Plan
The
following is a summary of certain provisions of the Plan and is qualified in its entirety by reference to the complete text of
the Plan set forth in the exhibit to this report.
Under
the Plan, options may be granted which are intended to qualify as Incentive Stock Options (“ISOs”) under Section 422
of the Internal Revenue Code of 1986 (the “Code”) or which are not (“Non-ISOs”) intended to qualify as Incentive
Stock Options thereunder. The Plan also provides for restricted stock awards representing shares of common stock (“Restricted
Shares”) that are issued subject to such restrictions on transfer and other incidents of ownership and such forfeiture conditions
as the Committee (as defined below) may determine (“Restricted Stock Awards”). In connection with issuance of any Restricted
Shares, the Committee may (but shall not be obligated to) require the payment of a specified purchase price (which price may be
less than Fair Market Value).
The
Plan is administered by the Board of Directors or a committee (the “Committee”) which is appointed by the Board of Directors
from those of its members who are “non-employees” of the Company as defined in Rule 16b-3 under the Securities Exchange
Act of 1934 (the “Exchange Act”). Subject to the provisions of the Plan, the Board of Directors, or the Committee, if
one is appointed, has full authority to determine the persons to be granted options or Restricted Stock Awards under the Plan
and the terms of Restricted Stock Awards, the number and purchase price of the shares represented by each option, the time or
times at which the options may be exercised, and the terms and provisions of each option, which need not be uniform for all options.
Key
employees of the Company or its subsidiaries, as determined by the Board or Committee, and non-employee directors of and consultants
to the Company or its subsidiaries are eligible to receive options or Restricted Stock Awards under the Plan. The Plan authorizes
the Committee to grant, over a ten-year period, options or Restricted Stock Awards to purchase up to a maximum of 25,000,000 shares
of the Company’s common stock, subject to adjustment as described below. If any option expires or is terminated prior to its exercise
in full and prior to the termination of the Plan, the shares subject to such unexercised option shall again be available for the
grant of new options under the Plan. The consideration to be paid for the shares to be issued upon exercise of an option, including
the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, promissory note,
other shares of common stock which (i) either have been owned by the option holder for more than six (6) months on the date of
surrender or were not acquired, directly or indirectly, from the Corporation, and (ii) have a fair market value on the date of
surrender equal to the aggregate exercise price of the shares as to which the option shall be exercised, or any combination of
such methods of payment, or such other consideration and method of payment for the issuance of shares to the extent permitted
under the laws of Delaware. In making its determination as to the type of consideration to accept, the Board shall consider if
acceptance of such consideration may be reasonably expected to benefit the Company.
The
term of each option will not be more than ten (10) years from the date of grant. Options granted under the Plan may be exercised
only during the continuance of the Participant’s employment with the Company or one of its subsidiaries. The Plan permits an outstanding
ISO option to be exercised after termination of employment only to the extent that the option was exercisable on the date of termination
but in no event beyond the original term of the option (i) within one year by the estate or rightful heir(s) of the optionee if
the optionee’s employment is terminated due to the optionee’s death; (ii) within one year after the date of such termination if
the termination is due to the optionee’s Disability (as defined in the Plan); or (iii) within three months after the date of such
termination if the termination was due to the optionee’s Retirement (as defined in the Plan) or was for reasons other than death
or Disability and other than “for cause” (as defined in the Plan). Upon termination of an optionee’s employment “for
cause,” any unexercised options held by the optionee will be forfeited. In the event of the dissolution, liquidation or sale
of all or substantially all of the assets of the Company, to the extent it has not been previously exercised an option will terminate
immediately prior to the consummation of such proposed action. In the event of the merger of the Company with or into another
corporation, the option shall be assumed or an equivalent option shall be substituted by such successor corporation or, if such
successor corporation does not agree to assume the option or substitute an equivalent option, the Board shall provide for the
option holder to have the right to exercise the option as to all of the optioned shares, including shares as to which the option
would not otherwise be exercisable.
Options
granted under the Plan may be in the form of “incentive stock options” which qualify as such under Section 422 of
the Code or non-qualified stock options which do not meet the criteria for incentive stock options under Section 422. Options
granted under the Plan are, generally, transferable only by will or by the laws of descent and distribution, and may be exercised
during the lifetime of the optionee only by the optionee or by his legal representative in the event of his Disability.