Item 5.02 Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 22, 2020, the
Board of Directors of Canfield Medical Supply, Inc. (the “Company”) adopted the Canfield Medical Supply, Inc. 2020
Long-Term Incentive Compensation Plan (the “Plan”), subject to shareholder approval. On May 27, 2020, the Company
obtained the written consent of shareholders holding greater than 50% of the voting securities of the Company approving the Plan.
The Plan provides for the issuance of up to 6,939,980 shares of the Company’s common stock, $.0001 par value (the “Common
Stock”), all of which may be issued in respect of Incentive Stock Options Awards (“Awards”). The Plan is effective
as of July 1, 2020 and for a period of ten years thereafter. The Plan shall continue in effect until all matters relating to the
payment of Awards and administration of the Plan have been settled.
On the first day of each calendar year, commencing
January 1, 2021, or the first business day of the calendar year if the first day of the calendar year falls on a Saturday or Sunday,
the Awards of Common Stock available under the Plan will automatically increase in an amount equal to the lesser of (i) 5% of the
total number of shares of Common Stock outstanding as of December 31st of the preceding fiscal year or (ii) such number of shares
of Common Stock as determined by the Board, provided that no such increase shall be effective if it would violate any applicable
law or stock exchange rule or regulation, or result in adverse tax consequences to the Company or any Participant that would not
otherwise result but for the increase.
The Board shall administer
the Plan and may appoint the Compensation Committee to administer the Plan and delegate its powers as set forth and described under
the Plan.
The termination of
a participant’s directorship, employment, consulting relationship may result in the forfeiture of any unvested portion of
an award granted under the Plan. Except as otherwise provided in an Award Agreement: (i) if an Eligible Employee’s employment
with the Company terminates as a result of death, Disability or Retirement, the Eligible Employee (or personal representative in
the case of death) shall be entitled to purchase all or any part of the shares subject to any (x) vested Incentive Stock Option
for a period of up to three months from such date of termination (one year in the case of death or Disability), and (y) vested
Nonqualified Stock Option during the remaining term of the Option; and (ii) if an Eligible Employee’s employment terminates
for any other reason, the Eligible Employee shall be entitled to purchase all or any part of the shares subject to any vested Option
for a period of up to three months from such date of termination. In no event shall any Option be exercisable past the term of
the Option. The Board may, in its sole discretion, accelerate the vesting of unvested Options in the event of termination of employment
of any Participant.
In addition, except
as otherwise provided in an Award Agreement: (i) in the event a Consultant ceases to provide services to the Company or an Eligible
Director terminates service as a director of the Company, the unvested portion of any Award
shall be forfeited unless otherwise accelerated pursuant to the terms of the Eligible Director’s Award Agreement or by the
Board; and (ii) the Consultant or Eligible Director shall have a period of three years following the date he ceases to provide
consulting services or ceases to be a director, as applicable, to exercise any Nonqualified Stock Options which are otherwise exercisable
on his date of termination of service.
The Plan is filed with this Report as Exhibit
10.1 and is incorporated herein by reference. The foregoing description of the Plan is subject to and qualified in its entirety
to the Plan.