INFORMATION
STATEMENT
PURSUANT
TO SECTION 14(C)
OF
THE SECURITIES EXCHANGE ACT OF 1934
AND
RULE 14C-2 THEREUNDER
NO
VOTE OR OTHER ACTION OF THE COMPANY’S SHAREHOLDERS IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
THE
COMPANY IS NOT ASKING YOU FOR A PROXY AND
YOU
ARE REQUESTED NOT TO SEND A PROXY.
This
Information Statement is being furnished to the stockholders of Cemtrex, Inc., a Delaware corporation (the “Company”),
as of the close of business on the record date, July 17, 2020. The purpose of the Information Statement is to notify the
Company’s shareholders that on July 17, 2020, the Company received written consents in lieu of a meeting of shareholders
(the “Written Consent”) from the holders of the Company’s Series C Preferred Stock, representing 81.3%
of the combined voting power of the Company’s common and preferred stock. The Written Consent adopted resolutions that
approved the Company’s 2020 Equity Incentive Plan (the “Plan”) and reserved 2,000,000 shares of the Company’s
common stock for issuance under the Plan.
You
are urged to read the Information Statement in its entirety for a description of the actions taken by the majority of shareholders
of the Company. The resolutions will become effective twenty calendar days after this Information Statement is first mailed to
the Company’ shareholders.
Because
shareholders holding at least a majority of the voting rights of our outstanding common stock and preferred stock have voted in
favor of the foregoing actions, and have sufficient voting power to approve such actions through their ownership of common stock
and preferred stock, no other shareholder consents will be solicited in connection with the transactions described in this Information
Statement. The Board is not soliciting proxies in connection with the adoption of these resolutions, and proxies are not requested
from shareholders.
In
accordance with the Company’s bylaws, the Board of Directors has fixed the close of business on July 17, 2020 as
the record date for determining the shareholders entitled to notice of the above noted actions. This Information Statement is
being mailed on or about July 26, 2020 to shareholders of record on the record date.
DISTRIBUTION
AND COSTS
The
Company will pay all costs associated with the distribution of this Information Statement, including the costs of printing and
mailing. In addition, the Company will only deliver one Information Statement to multiple security holders sharing an address,
unless the Company has received contrary instructions from one or more of the security holders. Also, the Company will promptly
deliver a separate copy of this Information Statement and future shareholder communication documents to any security holder at
a shared address to which a single copy of this Information Statement was delivered, or deliver a single copy of this Information
Statement and future shareholder communication documents to any security holder or holders sharing an address to which multiple
copies are now delivered, upon written request to the Company at its address noted above.
Shareholders
may also address future requests regarding delivery of information statements by contacting the Company at the address noted above.
VOTE
REQUIRED; MANNER OF APPROVAL
Approval
of the Plan requires the affirmative vote of the holders of a majority of the voting power of the Company. Because the
shareholders holding at least a majority of the voting rights of the Company’s outstanding Series C Preferred Stock
have voted in favor of the foregoing actions, and have sufficient voting power to approve such actions through their ownership
of Series C Preferred Stock, no other shareholder consents will be solicited in connection with the transactions described
in this Information Statement. The Board is not soliciting proxies in connection with the adoption of these proposals, and proxies
are not requested from shareholders.
The
law pertaining to corporate actions of the Company, the Delaware General Corporation Law, provides in substance that shareholders
may take action without a meeting of the shareholders and without prior notice if a consent or consents in writing, setting forth
the action so taken, is signed by the holders of the outstanding voting shares holding not less than the minimum number of votes
that would be necessary to approve such action at a shareholders meeting. The actions taken in this Information Statement
require the written consent from holders of record of a majority of the outstanding shares of voting stock of the Company.
The
common stock, Series A Preferred Stock and Series C Preferred Stock and Series 1 Preferred Stock constitute the outstanding classes
of the Company’s voting securities. On July 17, 2020, the record date for determining the identity of stockholders
who are entitled to receive this Information Statement, the Company had 16,263,715 shares of common stock issued and outstanding,
1,000,000 shares of Series A Preferred Stock issued and outstanding, 100,000 shares Series C Preferred Stock issued and
outstanding and 2,327,817 shares of Series 1 Preferred Stock issued and outstanding.
Pursuant
to the certificate of designation relating to the Series A Preferred Stock, each issued and outstanding share of Series A Preferred
Stock is entitled to the number of votes equal to the result of (i) the total number of shares of Common Stock outstanding at
the time of such vote multiplied by 1.01, and divided by (ii) the total number of shares of Series A Preferred Stock outstanding
at the time of such vote, at each meeting of our shareholders with respect to any and all matters presented to our shareholders
for their action or consideration, including the election of directors. At the record date, there were 1,000,000 shares of Series
A Preferred Stock issued and outstanding. Accordingly, each outstanding share of Series A Preferred Stock is currently entitled
to 16.43 votes per share or an aggregate of 16,426,352, votes.
Pursuant
to the certificate of designation relating to the Series C Preferred Stock, each issued and outstanding share of Series C Preferred
Stock is entitled to the number of votes equal to the result of (i) the total number of shares of Common Stock outstanding at
the time of such vote multiplied by 10.01, and divided by (ii) the total number of shares of Series C Preferred Stock outstanding
at the time of such vote, at each meeting of our shareholders with respect to any and all matters presented to our shareholders
for their action or consideration, including the election of directors. At the record date, there were 100,000 shares of Series
C Preferred Stock issued and outstanding. Accordingly, each outstanding share of Series C Preferred Stock is currently entitled
to 1,627.99 votes per share or an aggregate of 162,799,786 votes.
Pursuant
to the certificate of designation for the Series 1 Preferred Stock, each share of Series 1 Preferred Stock is entitled to two
votes per share. At the record date, the Company had 2,327,817 shares of Series 1 Preferred Stock issued and outstanding,
or an aggregate of 4,665,634 votes.
Thus,
the combined voting power of all of the Series A Preferred Stock, Series C Preferred Stock, Series 1 Preferred Stock and common
stock was 200,145,487 votes as of the record date. Accordingly, the vote or written consent of the shareholders holding
at least 100,072,744 votes of the combined outstanding common stock, Series A Preferred Stock, Series C Preferred
Stock and Series 1 Preferred Stock is necessary to approve the Plan.
On
July 17, 2020, the Company received the Written Consent from the holders of 100,000 shares of the issued and outstanding
shares Series C Preferred Stock, representing 81.3% of the voting power represented by the outstanding shares of
common stock, Series A Preferred Stock, Series C Preferred Stock and Series 1 Preferred Stock. The Written Consent adopted resolutions
that approved the Plan and reserved 2,000,000 shares of the Company’s common stock for issuance under the Plan.
Under
Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), the corporate actions identified
in this Information Statement may not be implemented until twenty (20) calendar days after this Information Statement is first
mailed to the Company’s shareholders. As such, the adoption of the Plan is anticipated to be on or about August 15,
2020, twenty (20) days after the mailing of this Information Statement.
ACTION
#1
APPROVAL
OF THE PLAN
The
sole corporate action is to adopt the Plan. The purpose of the Plan is to attract and retain the best available personnel
for positions of substantial responsibility with the Company, to provide additional incentive to employees, directors and consultants
of the Company, and to promote the success of the Company’s business. Under the Plan the Company may issue up to an aggregate
total of 2,000,000 shares of the Company’s common stock. As of July 17, 2020, the Company has not issued any shares
of common stock under the Plan. A copy of the Plan is attached hereto as Appendix A. The following summary of the material
provisions of the Plan is qualified in its entirety by reference to the complete text of the Plan.
ELIGIBLE
PARTICIPANTS
Any
director, employee or consultant of the Company and any affiliate of the Company is eligible to be designated a participant in
the Plan. However, incentive stock options (“ISOs”) may be granted only to employees.
PLAN
ADMINISTRATION
The
Plan will be administered by the Company’s Board of Directors, or a committee appointed by the Board of Directors. The Board
may determine persons eligible for grants and the timing, type, amount, fair market value and other provisions of such grants.
The
Board will have authority, subject to the express provisions of the Plan, to construe the Plan and the award agreements granted
pursuant to the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all other determinations
in the judgment of the Board necessary or desirable for the administration of the Plan. The Board may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any option agreement in the manner and to the extent it shall deem
expedient to promote the best interests of the Company. The Board may suspend or terminate the Plan at any time.
AWARDS
UNDER THE PLAN
The
Plan provides for the granting of (i) ISOs, which qualify as incentive stock options under the Internal Revenue Code (the “Code”),
(ii) non-qualified options which do not qualify as incentive stock options under the Code (“NQSO”), restricted stock,
restricted stock units, performance shares, performance units, or other incentive payable in shares of common stock as may be
designated by the Board from time to time. Any options that expire prior to exercise or shares of stock which are forfeited will
become available for new grants.
ISOs
may not be granted at a purchase price less than the fair market value of the common stock on the date of grant (or, for an option
granted to a person holding more than 10% of the Company’s voting stock, at less than 110% of fair market value). No option
granted under the Plan will be exercisable after 10 years (five years in the case of a 10% shareholder) or such shorter period
as specified in the option agreement. An option will not be transferable except by will or by the laws of descent and distribution
and is exercisable during the lifetime of the option holder only by the option holder.
If
an option holder’s service with the Company terminates (other than for death or disability) the option holder may exercise
his or her option to the extent vested for three months. If an option holder’s service with the Company terminates due to
death or disability, the option holder may exercise his or her option to the extent vested twelve months.
Shares
of restricted stock or restricted stock unit awards granted under the Plan may be subject to forfeiture in accordance with a vesting
schedule determined by the Board, and, to the extent not vested may be forfeited to the Company upon the grantee’s termination
of service with the Company.
In
the event of the Company’s dissolution or liquidation, all outstanding awards under the Plan will terminate. The Board will
make proportionate adjustments in the case of a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, or distribution to stockholders other than a normal cash dividend. In the event of a change in control,
all outstanding awards, other than performance shares and performance units, shall become fully and immediately exercisable, and
all applicable deferral and restriction limitations or forfeiture provisions shall lapse, immediately prior to the change in control
and shall terminate at the effective time of the change in control.
TERM
The
Plan will terminate on July 17, 2030.
FEDERAL INCOME
TAX CONSEQUENCES
The
following generally summarizes the United States federal income tax consequences that generally will arise with respect to option
awards granted under the Plan. This summary is based on the tax laws in effect as of the date of this Information Statement. Changes
to these laws could alter the tax consequences described below.
To the
Optionees.
NSOs.
An optionee generally will not recognize any income for federal income tax purposes on the grant of an NSO. Upon the exercise
of an NSO, an optionee generally will recognize compensation taxable as ordinary income, equal to the difference between the fair
market value of the Company’s common stock on the date of exercise and the exercise price. This compensation is subject
to withholding taxes. An optionee will recognize gain or loss on the sale or exchange of stock acquired pursuant to an exercise
of an NSO. Such gain or loss will be equal to the difference between the optionee’s adjusted basis in the stock, which will
include the exercise price and any ordinary income recognized on exercise of the option, and the fair market value of the stock
on the date of sale or exchange. The gain may be subject to preferential tax treatment if the stock has been held for more than
one year.
ISOs.
An optionee will not recognize any income for federal income tax purposes on the grant of an ISO. Upon the exercise of an ISO,
tax is deferred until the underlying stock is sold (though the spread at exercise may be a tax preference for purposes of the
Alternative Minimum Tax). When sold, the ISO is taxed at the capital gains rate on the full amount of appreciation for the sales
proceeds over the option cost, provided the employee has satisfied the holding period prescribed for ISOs—the longer of
two (2) years from the date of grant or one (1) year from the date of exercise. If the ISO stock is sold within the holding period,
the option is taxed as an NSO.
Generally,
a participant will not recognize income upon the grant of restricted stock. When the shares of restricted stock vest, the participant
will recognize ordinary income equal to the fair market value of the stock and also will be subject to income and employment tax
withholding. We will receive a tax compensation deduction equal to the amount of ordinary income recognized by the participant.
A participant who receives a restricted stock award may elect to accelerate his or her tax obligation by submitting a Code Section
83(b) election within 30 days after the grant date, pursuant to which the participant will be taxed on the fair market value of
the restricted stock as of the grant date, and we will receive a tax compensation deduction as of the grant date equal to the
ordinary income recognized by the participant. Any gain or loss upon a subsequent disposition of the shares will be long-term
capital gain or loss if the shares are held for more than one year and otherwise will be short-term capital gain or loss. If,
after making the Section 83(b) election, the shares are forfeited, the participant will not be entitled to a loss deduction.
To the
Company.
With
the exception of ISO awards, the Company generally is entitled to a business expense deduction at the time and in the amount that
the optionee recognizes ordinary income in connection with the grant or exercise of the award. As to grants of ISOs, the Company
generally receives no deduction associated with such grant except when the recipient has a disqualifying disposition. Upon a disqualifying
disposition, the option loses its ISO status, converts to a NSO, and is taxed accordingly. As a result of Section 162(m) of the
Code, the Company’s deduction for certain awards under the Plan may be limited to the extent that the chief executive officer
or other executive officer whose compensation is required to be reported in the summary compensation table receives compensation
in excess of $1 million a year (other than performance-based compensation that otherwise meets the requirements of Section 162(m)
of the Code).
OTHER
MATTERS
The
Board knows of no other matters other than those described in this Information Statement which have been approved or considered
by the holders of a majority of the shares of the Company’s voting stock.
IF
YOU HAVE ANY QUESTIONS REGARDING THIS INFORMATION STATEMENT AND/OR THE PLAN, PLEASE CONTACT:
CEMTREX,
INC.
276 Greenpoint
Ave Bld. 8 Suite 208
Brooklyn,
NY 11222
Telephone:
(631) 756-9116
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Sincerely,
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/s/
Saagar Govil
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Saagar
Govil
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President
and Chief Executive Officer
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Appendix
A
CEMTREX,
INC.
(the
“Company”)
2020
INCENTIVE PLAN
Section
1. PURPOSE
The
purpose of the Cemtrex, Inc. 2020 Incentive Plan is to attract, retain and motivate employees, officers, directors, consultants,
agents, advisors and independent contractors of the Company and its Related Companies by providing them the opportunity to acquire
a proprietary interest in the Company and to align their interests and efforts to the long-term interests of the Company’s
stockholders.
Section
2. DEFINITIONS
Certain
capitalized terms used in the Plan have the meanings set forth in Appendix A.
Section
3. ADMINISTRATION
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3.1
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Administration
of the Plan
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The
Plan shall be administered by the Board or its Compensation Committee. The Compensation Committee shall be composed of two or
more directors, each of whom is a “non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under
the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission. As used in this Plan, the term
“Compensation Committee” shall be construed as if followed by the words “(if any)”; nothing in this Plan
requires the Board to have a Compensation Committee.
Notwithstanding
the foregoing, the Board may delegate responsibility for administering the Plan with respect to designated classes of Eligible
Persons to different committees consisting of one or more members of the Board, subject to such limitations as the Board deems
appropriate, except with respect to Awards to any Participants who are then subject to Section 16 of the Exchange Act. Members
of any committee shall serve for such term as the Board may determine, subject to removal by the Board at any time. To the extent
consistent with applicable law, the Board or the Compensation Committee may authorize one or more officers of the Company to grant
Awards to designated classes of Eligible Persons, within limits specifically prescribed by the Board or the Compensation Committee;
provided, however, that no such officer shall have or obtain authority to grant Awards to himself or herself or to any person
then subject to Section 16 of the Exchange Act. All references in the Plan to the “Committee” shall be, as applicable,
to the Board, the Compensation Committee or any other committee or any officer to whom the Board or the Compensation Committee
has delegated authority to administer the Plan.
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3.3
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Administration
and Interpretation by Committee
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(a)
Except for the terms and conditions explicitly set forth in the Plan and to the extent permitted by applicable law, the Committee
shall have full power and exclusive authority, subject to such orders or resolutions not inconsistent with the provisions of the
Plan as may from time to time be adopted by the Board, to
(i)
select the Eligible Persons to whom Awards may from time to time be granted under the Plan;
(ii)
determine the type or types of Awards to be granted to each Participant under the Plan;
(iii)
determine the number of shares of Common Stock, if any, to be covered by each Award granted under the Plan;
(iv)
determine the terms and conditions of any Award granted under the Plan;
(v)
approve the forms of notice or agreement for use under the Plan;
(vi)
determine whether, to what extent and under what circumstances Awards may be settled in cash, shares of Common Stock or other
property or canceled or suspended;
(vii)
determine whether, to what extent and under what circumstances cash, shares of Common Stock, other property and other amounts
payable with respect to an Award shall be deferred either automatically or at the election of the Participant;
(viii)
interpret and administer the Plan and any instrument evidencing an Award, notice or agreement executed or entered into under the
Plan;
(ix)
establish such rules and regulations as it shall deem appropriate for the proper administration of the Plan;
(x)
delegate ministerial duties to such of the Company’s employees as it so determines; and
(xi)
make any other determination and take any other action that the Committee deems necessary or desirable for administration of the
Plan.
(b)
The Committee shall have the right, without stockholder approval, to cancel or amend outstanding Options or SARs for the purpose
of repricing, replacing or regranting such Options or SARs with Options or SARs that have a purchase or grant price that is less
than the purchase or grant price for the original Options or SARs except in connection with adjustments provided in Section 15.
(c)
The effect on the vesting of an Award of a Company-approved leave of absence or a Participant’s working less than full-time
shall be determined by the Company’s chief human resources officer or other person performing that function or, with respect
to directors or executive officers, by the Committee, whose determination shall be final.
(d)
Decisions of the Committee shall be final, conclusive and binding on all persons, including the Company, any Participant, any
stockholder and any Eligible Person. A majority of the members of the Committee may determine its actions.
Section
4. SHARES SUBJECT TO THE PLAN
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4.1
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Authorized
Number of Shares
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Subject
to adjustment from time to time as provided in subsection 15.1, a maximum of 2,000,000 shares of Common Stock shall be available
for issuance under the Plan. Shares issued under the Plan shall be drawn from authorized and unissued shares or shares now held
or subsequently acquired by the Company as treasury shares.
(a)
Shares of Common Stock covered by an Award shall not be counted as used unless and until they are actually issued and delivered
to a Participant. If any Award lapses, expires, terminates or is canceled prior to the issuance of shares thereunder or if shares
of Common Stock are issued under the Plan to a Participant and thereafter are forfeited to or otherwise reacquired by the Company,
the shares subject to such Awards and the forfeited or reacquired shares shall again be available for issuance under the Plan.
Any shares of Common Stock
(i)
tendered by a Participant or retained by the Company as full or partial payment to the Company for the purchase price of an Award
or to satisfy tax withholding obligations in connection with an Award, or
(ii)
covered by an Award that is settled in cash, or in a manner such that some or all of the shares of Common Stock covered by the
Award are not issued,
shall
be available for Awards under the Plan. The number of shares of Common Stock available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested into additional shares of Common Stock or credited
as additional shares of Common Stock subject or paid with respect to an Award.
(b)
The Committee shall also, without limitation, have the authority to grant Awards as an alternative to or as the form of payment
for grants or rights earned or due under other compensation plans or arrangements of the Company.
(c)
Notwithstanding anything in the Plan to the contrary, the Committee may grant Substitute Awards under the Plan. Substitute Awards
shall not reduce the number of shares authorized for issuance under the Plan. In the event that an Acquired Entity has shares
available for awards or grants under one or more preexisting plans not adopted in contemplation of such acquisition or combination,
then, to the extent determined by the Committee, the shares available for grant pursuant to the terms of such preexisting plan
(as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable to holders of common stock of the entities that are parties
to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the number of shares of Common
Stock authorized for issuance under the Plan; provided, however, that Awards using such available shares shall not be made after
the date awards or grants could have been made under the terms of such preexisting plans, absent the acquisition or combination,
and shall only be made to individuals who were not employees or directors of the Company or a Related Company prior to such acquisition
or combination. In the event that a written agreement between the Company and an Acquired Entity pursuant to which a merger or
consolidation is completed is approved by the Board and that agreement sets forth the terms and conditions of the substitution
for or assumption of outstanding awards of the Acquired Entity, those terms and conditions shall be deemed to be the action of
the Committee without any further action by the Committee, except as may be required for compliance with Rule 16b-3 under the
Exchange Act, and the persons holding such awards shall be deemed to be Participants.
(d)
Notwithstanding the other provisions in this subsection, the maximum number of shares that may be issued upon the exercise of
Incentive Stock Options shall equal the aggregate share number stated in subsection 4.1, subject to adjustment as provided in
subsection 15.1.
Section
5. ELIGIBILITY
An
Award may be granted to any employee, officer or director of the Company or a Related Company whom the Committee from time to
time selects. An Award may also be granted to any consultant, agent, advisor or independent contractor for bona fide services
rendered to the Company or any Related Company that:
(a)
are not in connection with the offer and sale of the Company’s securities in a capital-raising transaction, and
(b)
do not directly or indirectly promote or maintain a market for the Company’s securities.
Section
6. AWARDS
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6.1
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Form,
Grant and Settlement of Awards
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The
Committee shall have the authority, in its sole discretion, to determine the type or types of Awards to be granted under the Plan.
Such Awards may be granted either alone or in addition to or in tandem with any other type of Award. Any Award settlement may
be subject to such conditions, restrictions and contingencies as the Committee shall determine.
Awards
granted under the Plan shall be evidenced by a written, including an electronic, notice or agreement that shall contain such terms,
conditions, limitations and restrictions as the Committee shall deem advisable and that are not inconsistent with the Plan.
The
Committee may permit or require a Participant to defer receipt of the payment of any Award if and to the extent set forth in the
instrument evidencing the Award at the time of grant. If any such deferral election is permitted or required, the Committee, in
its sole discretion, shall establish rules and procedures for such payment deferrals, which may include the grant of additional
Awards or provisions for the payment or crediting of interest or dividend equivalents, including converting such credits to deferred
stock unit equivalents; provided, however, that the terms of any deferrals under this subsection shall comply with all applicable
law, rules and regulations, including, without limitation, Section 409A of the Code.
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6.4
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Dividends
and Distributions
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Participants
may, if and to the extent the Committee so determines and sets forth in the instrument evidencing the Award at the time of grant,
be credited with dividends paid with respect to shares of Common Stock underlying an Award in a manner determined by the Committee
in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems
appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including
cash, shares of Common Stock, Restricted Stock or Stock Units.
Section
7. OPTIONS
The
Committee may grant Options designated as Incentive Stock Options or Nonqualified Stock Options.
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7.2
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Option
Exercise Price
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The
exercise price for shares purchased under an Option shall be at least 100% of the Fair Market Value on the Grant Date (and shall
not be less than the minimum exercise price required by Section 422 of the Code with respect to Incentive Stock Options), except
in the case of Substitute Awards.
Subject
to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of
a Nonqualified Stock Option shall be ten years from the Grant Date.
The
Committee shall establish and set forth in each instrument that evidences an Option the time at which, or the installments in
which, the Option shall vest and become exercisable, any of which provisions may be waived or modified by the Committee at any
time.
To
the extent an Option has vested and become exercisable, the Option may be exercised in whole or from time to time in part by delivery
to or as directed or approved by the Company of a properly executed stock option exercise agreement or notice, in a form and in
accordance with procedures established by the Committee, setting forth the number of shares with respect to which the Option is
being exercised, the restrictions imposed on the shares purchased under such exercise agreement, if any, and such representations
and agreements as may be required by the Committee, accompanied by payment in full as described in subsection 7.5 and Section
13. An Option may be exercised only for whole shares and may not be exercised for less than a reasonable number of shares at any
one time, as determined by the Committee.
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7.5
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Payment
of Exercise Price
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The
exercise price for shares purchased under an Option shall be paid in full to the Company by delivery of consideration equal to
the product of the Option exercise price and the number of shares purchased. Such consideration must be paid before the Company
will issue the shares being purchased and must be in a form or a combination of forms acceptable to the Committee for that purchase,
which forms may include:
(a)
cash;
(b)
check or wire transfer;
(c)
having the Company withhold shares of Common Stock that would otherwise be issued on exercise of the Option that have an aggregate
Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option;
(d)
tendering (either actually or, so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, by
attestation) shares of Common Stock owned by the Participant that have an aggregate Fair Market Value equal to the aggregate exercise
price of the shares being purchased under the Option;
(e)
so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, and to the extent permitted by law,
delivery of a properly executed exercise notice, together with irrevocable instructions to a brokerage firm designated or approved
by the Company to deliver promptly to the Company the aggregate amount of proceeds to pay the Option exercise price and any withholding
tax obligations that may arise in connection with the exercise, all in accordance with the regulations of the Federal Reserve
Board; or
(f)
such other consideration as the Committee may permit.
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7.6
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Effect
of Termination of Service
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The
Committee shall establish and set forth in each instrument that evidences an Option whether the Option shall continue to be exercisable,
and the terms and conditions of such exercise, after a Termination of Service, any of which provisions may be waived or modified
by the Committee at any time. If not so established in the instrument evidencing the Option, the Option shall be exercisable according
to the following terms and conditions, which may be waived or modified by the Committee at any time:
(a)
Any portion of an Option that is not vested and exercisable on the date of a Participant’s Termination of Service shall
expire on such date.
(b)
Any portion of an Option that is vested and exercisable on the date of a Participant’s Termination of Service shall expire
on the earliest to occur of:
(i)
if the Participant’s Termination of Service occurs for reasons other than Cause, Retirement, Disability or death, the date
that is three months after such Termination of Service;
(ii)
if the Participant’s Termination of Service occurs by reason of Retirement, Disability or death, the one-year anniversary
of such Termination of Service; and
(iii)
the Option Expiration Date.
Notwithstanding
the foregoing, if a Participant dies after his or her Termination of Service but while an Option is otherwise exercisable, the
portion of the Option that is vested and exercisable on the date of such Termination of Service shall expire upon the earlier
to occur of (y) the Option Expiration Date and (z) the one-year anniversary of the date of death, unless the Committee determines
otherwise. Also notwithstanding the foregoing, in case a Participant’s Termination of Service occurs for Cause, all Options
granted to the Participant shall automatically expire upon first notification to the Participant of such termination, unless the
Committee determines otherwise. If a Participant’s employment or service relationship with the Company is suspended pending
an investigation of whether the Participant shall be terminated for Cause, all the Participant’s rights under any Option
shall likewise be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered
after a Participant’s Termination of Service, any Option then held by the Participant may be immediately terminated by the
Committee, in its sole discretion.
(c)
If the exercise of the Option following a Participant’s Termination of Service, but while the Option is otherwise exercisable,
would be prohibited solely because the issuance of Common Stock would violate either the registration requirements under the Securities
Act or the Company’s insider trading policy, then the Option shall remain exercisable until the earlier of (i) the Option
Expiration Date and (ii) the expiration of a period of three months (or such longer period of time as determined by the Committee
in its sole discretion) after the Participant’s Termination of Service during which the exercise of the Option would not
be in violation of such Securities Act or insider trading policy requirements.
Section
8. INCENTIVE STOCK OPTION LIMITATIONS
Notwithstanding
any other provisions of the Plan, the terms and conditions of any Incentive Stock Options shall also comply in all respects with
Section 422 of the Code, or any successor provision, and any applicable regulations thereunder, including, to the extent required
thereunder, the following:
To
the extent the aggregate Fair Market Value (determined as of the Grant Date) of Common Stock with respect to which a Participant’s
Incentive Stock Options become exercisable for the first time during any calendar year (under the Plan and all other stock option
plans of the Company and its parent and subsidiary corporations) exceeds $100,000, such portion in excess of $100,000 shall be
treated as a Nonqualified Stock Option. In the event the Participant holds two or more such Options that become exercisable for
the first time in the same calendar year, such limitation shall be applied on the basis of the order in which such Options are
granted.
Individuals
who are not employees of the Company or one of its parent or subsidiary corporations may not be granted Incentive Stock Options.
The
exercise price of an Incentive Stock Option shall be at least 100% of the Fair Market Value of the Common Stock on the Grant Date,
and in the case of an Incentive Stock Option granted to a Participant who owns more than 10% of the total combined voting power
of all classes of the stock of the Company or of its parent or subsidiary corporations (a “Ten Percent Stockholder”),
shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date. The determination of more than 10%
ownership shall be made in accordance with Section 422 of the Code.
Subject
to earlier termination in accordance with the terms of the Plan and the instrument evidencing the Option, the maximum term of
an Incentive Stock Option shall not exceed ten years, and in the case of an Incentive Stock Option granted to a Ten Percent Stockholder,
shall not exceed five years.
An
Option designated as an Incentive Stock Option shall cease to qualify for favorable tax treatment as an Incentive Stock Option
to the extent it is exercised (if permitted by the terms of the Option) (a) more than three months after the date of a Participant’s
Termination of Service if termination was for reasons other than death or disability, (b) more than one year after the date of
a Participant’s Termination of Service if termination was by reason of disability, or (c) after the Participant has been
on leave of absence for more than 90 days, unless the Participant’s reemployment rights are guaranteed by statute or contract.
|
8.6
|
Taxation
of Incentive Stock Options
|
In
order to obtain certain tax benefits afforded to Incentive Stock Options under Section 422 of the Code, the Participant must hold
the shares acquired upon the exercise of an Incentive Stock Option for two years after the Grant Date and one year after the date
of exercise.
A
Participant may be subject to the alternative minimum tax at the time of exercise of an Incentive Stock Option. The Participant
shall give the Company prompt notice of any disposition of shares acquired on the exercise of an Incentive Stock Option prior
to the expiration of such holding periods.
For
the purposes of this Section, “disability” “parent corporation” and “subsidiary corporation”
shall have the meanings attributed to those terms for purposes of Section 422 of the Code.
Section
9. STOCK APPRECIATION RIGHTS
|
9.1
|
Grant
of Stock Appreciation Rights
|
The
Committee may grant Stock Appreciation Rights to Participants at any time on such terms and conditions as the Committee shall
determine in its sole discretion. An SAR may be granted in tandem with an Option or alone (“freestanding”). The grant
price of a tandem SAR shall be equal to the exercise price of the related Option. The grant price of a freestanding SAR shall
be established in accordance with procedures for Options set forth in subsection 7.2. An SAR may be exercised upon such terms
and conditions and for the term as the Committee determines in its sole discretion; provided, however, that, subject to earlier
termination in accordance with the terms of the Plan and the instrument evidencing the SAR, the maximum term of a freestanding
SAR shall be ten years, and in the case of a tandem SAR, (a) the term shall not exceed the term of the related Option and (b)
the tandem SAR may be exercised for all or part of the shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option, except that the tandem SAR may be exercised only with respect to the shares
for which its related Option is then exercisable.
|
9.2
|
Payment
of SAR Amount
|
Upon
the exercise of an SAR, a Participant shall be entitled to receive payment in an amount determined by multiplying:
(a)
the difference between the Fair Market Value of the Common Stock on the date of exercise over the grant price of the SAR by
(b)
the number of shares with respect to which the SAR is exercised.
At
the discretion of the Committee as set forth in the instrument evidencing the Award, the payment upon exercise of an SAR may be
in cash, in shares, in some combination thereof or in any other manner approved by the Committee in its sole discretion.
|
9.3
|
Waiver
of Restrictions
|
Subject
to subsection 18.5, the Committee, in its sole discretion, may waive any other terms, conditions or restrictions on any SAR under
such circumstances and subject to such terms and conditions as the Committee shall deem appropriate.
Section
10. STOCK AWARDS, RESTRICTED STOCK AND STOCK UNITS
|
10.1
|
Grant
of Stock Awards, Restricted Stock and Stock Units
|
The
Committee may grant Stock Awards, Restricted Stock and Stock Units on such terms and conditions and subject to such repurchase
or forfeiture restrictions, if any, which may be based on continuous service with the Company or a Related Company or the achievement
of any performance goals, as the Committee shall determine in its sole discretion, which terms, conditions and restrictions shall
be set forth in the instrument evidencing the Award.
|
10.2
|
Vesting
of Restricted Stock and Stock Units
|
Upon
the satisfaction of any terms, conditions and restrictions prescribed with respect to Restricted Stock or Stock Units, or upon
a Participant’s release from any terms, conditions and restrictions of Restricted Stock or Stock Units, as determined by
the Committee, and subject to the provisions of Section 13:
(a)
the shares of Restricted Stock covered by each Award of Restricted Stock shall become freely transferable by the Participant,
and
(b)
Stock Units shall be paid in shares of Common Stock or, if set forth in the instrument evidencing the Awards, in cash or a combination
of cash and shares of Common Stock.
Any
fractional shares subject to such Awards shall be paid to the Participant in cash.
|
10.3
|
Waiver
of Restrictions
|
Subject
to subsection 18.5, the Committee, in its sole discretion, may waive the repurchase or forfeiture period and any other terms,
conditions or restrictions on any Restricted Stock or Stock Unit under such circumstances and subject to such terms and conditions
as the Committee shall deem appropriate.
Section
11. PERFORMANCE AWARDS
The
Committee may grant Awards of Performance Shares, designate the Participants to whom Performance Shares are to be awarded and
determine the number of Performance Shares and the terms and conditions of each such Award. Performance Shares shall consist of
a unit valued by reference to a designated number of shares of Common Stock, the value of which may be paid to the Participant
by delivery of shares of Common Stock or, if set forth in the instrument evidencing the Award, of such property as the Committee
shall determine, including, without limitation, cash, shares of Common Stock, other property, or any combination thereof, upon
the attainment of performance goals, as established by the Committee, and other terms and conditions specified by the Committee.
Subject to subsection 18.5, the amount to be paid under an Award of Performance Shares may be adjusted on the basis of such further
consideration as the Committee shall determine in its sole discretion.
The
Committee may grant Awards of Performance Units, designate the Participants to whom Performance Units are to be awarded and determine
the number of Performance Units and the terms and conditions of each such Award. Performance Units shall consist of a unit valued
by reference to a designated amount of property other than shares of Common Stock, which value may be paid to the Participant
by delivery of such property as the Committee shall determine, including, without limitation, cash, shares of Common Stock, other
property, or any combination thereof, upon the attainment of performance goals, as established by the Committee, and other terms
and conditions specified by the Committee. Subject to subsection 18.5, the amount to be paid under an Award of Performance Units
may be adjusted on the basis of such further consideration as the Committee shall determine in its sole discretion.
Section
12. OTHER STOCK OR CASH-BASED AWARDS
Subject
to the terms of the Plan and such other terms and conditions as the Committee deems appropriate, the Committee may grant other
incentives payable in cash or in shares of Common Stock under the Plan.
Section
13. WITHHOLDING
The
Company may require the Participant to pay to the Company the amount of:
(a)
any taxes that the Company is required by applicable federal, state, local or foreign law to withhold with respect to the grant,
vesting or exercise of an Award (“tax withholding obligations”); and
(b)
any amounts due from the Participant to the Company or to any Related Company (“other obligations”).
The
Company shall not be required to issue any shares of Common Stock or otherwise settle an Award under the Plan until such tax withholding
obligations and other obligations are satisfied. The Committee may permit or require a Participant to satisfy all or part of the
Participant’s tax withholding obligations and other obligations by:
(i)
paying cash to the Company,
(ii)
having the Company withhold an amount from any cash amounts otherwise due or to become due from the Company to the Participant,
(iii)
having the Company withhold a number of shares of Common Stock that would otherwise be issued to the Participant (or become vested,
in the case of Restricted Stock) having a Fair Market Value equal to the tax withholding obligations and other obligations, or
(iv)
surrendering a number of shares of Common Stock the Participant already owns having a value equal to the tax withholding obligations
and other obligations.
The
value of the shares so withheld or tendered may not exceed the employer’s minimum required tax withholding rate.
Section
14. ASSIGNABILITY
No
Award or interest in an Award may be sold, assigned, pledged (as collateral for a loan or as security for the performance of an
obligation or for any other purpose) or transferred by a Participant or made subject to attachment or similar proceedings otherwise
than by will or by the applicable laws of descent and distribution, except to the extent the Participant designates one or more
beneficiaries on a Company-approved form who may exercise the Award or receive payment under the Award after the Participant’s
death. During a Participant’s lifetime, an Award may be exercised only by the Participant. Notwithstanding the foregoing
and to the extent permitted by Section 422 of the Code, the Committee, in its sole discretion, may permit a Participant to assign
or transfer an Award subject to such terms and conditions as the Committee shall specify.
Section
15. ADJUSTMENTS
|
15.1
|
Adjustment
of Shares
|
In
the event, at any time or from time to time, a stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to stockholders other than a normal cash dividend, or other change in the Company’s
corporate or capital structure results in
(a)
the outstanding shares of Common Stock, or any securities exchanged therefor or received in their place, being exchanged for a
different number or kind of securities of the Company or
(b)
new, different or additional securities of the Company or any other company being received by the holders of shares of Common
Stock,
then
the Committee shall make proportional adjustments in
(i)
the maximum number and kind of securities available for issuance under the Plan;
(ii)
the maximum number and kind of securities issuable as Incentive Stock Options as set forth in subsection 4.2; and
(iii)
the number and kind of securities that are subject to any outstanding Award and the per share price of such securities, without
any change in the aggregate price to be paid therefor.
The
determination by the Committee, as to the terms of any of the foregoing adjustments shall be conclusive and binding. Notwithstanding
the foregoing, the issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services rendered, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, outstanding Awards. Also notwithstanding
the foregoing, a dissolution or liquidation of the Company or a Company Transaction shall not be governed by this subsection but
shall be governed by subsections 15.2 and 15.3, respectively.
|
15.2
|
Dissolution
or Liquidation
|
To
the extent not previously exercised or settled, and unless otherwise determined by the Committee in its sole discretion, Awards
shall terminate immediately prior to the dissolution or liquidation of the Company. To the extent a vesting condition, forfeiture
provision or repurchase right applicable to an Award has not been waived by the Committee, the Award shall be forfeited immediately
prior to the consummation of the dissolution or liquidation.
Notwithstanding
any other provision of the Plan to the contrary, unless the Committee shall determine otherwise in the instrument evidencing the
Award or in a written employment, services or other agreement between the Participant and the Company or a Related Company, in
the event of a Change in Control:
(a)
All outstanding Awards, other than Performance Shares and Performance Units, shall become fully and immediately exercisable, and
all applicable deferral and restriction limitations or forfeiture provisions shall lapse, immediately prior to the Change in Control
and shall terminate at the effective time of the Change in Control; provided, however, that with respect to a Change in Control
that is a Company Transaction, such Awards shall become fully and immediately exercisable, and all applicable deferral and restriction
limitations or forfeiture provisions shall lapse, only if and to the extent such Awards are not converted, assumed or replaced
by the Successor Company. For the purposes of this paragraph, an Award shall be considered converted, assumed or replaced by the
Successor Company if following the Company Transaction the option or right confers the right to purchase or receive, for each
share of Common Stock subject to the Award immediately prior to the Company Transaction, the consideration (whether stock, cash
or other securities or property) received in the Company Transaction by holders of Common Stock for each share held on the effective
date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares); provided, however, that if such consideration received in the Company Transaction is
not solely common stock of the Successor Company, the Committee may, with the consent of the Successor Company, provide for the
consideration to be received upon the exercise of the Option, for each share of Common Stock subject thereto, to be solely common
stock of the Successor Company substantially equal in fair market value to the per share consideration received by holders of
Common Stock in the Company Transaction. The determination of such substantial equality of value of consideration shall be made
by the Committee, and its determination shall be conclusive and binding.
(b)
All Performance Shares or Performance Units earned and outstanding as of the date the Change in Control is determined to have
occurred shall be payable in full at the target level in accordance with the payout schedule pursuant to the instrument evidencing
the Award. Any remaining Performance Shares or Performance Units (including any applicable performance period) for which the payout
level has not been determined shall be prorated at the target payout level up to and including the date of such Change in Control
and shall be payable in full at the target level in accordance with the payout schedule pursuant to the instrument evidencing
the Award. Any existing deferrals or other restrictions not waived by the Committee in its sole discretion shall remain in effect.
(c)
Notwithstanding paragraphs 15.3(a) and 15.3(b), the Committee, in its sole discretion, may (unless otherwise provided in the instrument
evidencing the Award or in a written employment, services or other agreement between the Participant and the Company or a Related
Company) instead provide in the event of a Change in Control that is a Company Transaction
(i)
for adjustments to the Plan and outstanding Awards as contemplated by subsection 15.1 or
(ii)
that a Participant’s outstanding Awards shall terminate upon or immediately prior to such Company Transaction and that such
Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (x) the value of the per
share consideration received by holders of Common Stock in the Company Transaction, or, if the Company Transaction is a sale of
assets or otherwise does not result in direct receipt of consideration by holders of Common Stock, the value of the deemed per
share consideration received, in each case as determined by the Committee in its sole discretion, multiplied by the number of
shares of Common Stock subject to such outstanding Awards (to the extent then vested and exercisable or whether or not then vested
and exercisable, as determined by the Committee in its sole discretion) exceeds (y) if applicable, the respective aggregate exercise
price or grant price for such Awards.
|
15.4
|
Further
Adjustment of Awards
|
Subject
to subsections 15.2 and 15.3, the Committee shall have the discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation, dissolution or change in control of the Company, as defined by the Committee, to take such further
action as it determines to be necessary or advisable with respect to Awards. Such authorized action may include (but shall not
be limited to) establishing, amending or waiving the type, terms, conditions or duration of, or restrictions on, Awards so as
to provide for earlier, later, extended or additional time for exercise, lifting restrictions and other modifications, and the
Committee may take such actions with respect to all Participants, to certain categories of Participants or only to individual
Participants. The Committee may take such action before or after granting Awards to which the action relates and before or after
any public announcement with respect to such sale, merger, consolidation, reorganization, liquidation, dissolution or change in
control that is the reason for such action.
The
grant of Awards shall in no way affect the Company’s right to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
In
the event of any adjustment in the number of shares covered by any Award, each such Award shall cover only the number of full
shares resulting from such adjustment.
|
15.7
|
Section
409A of the Code
|
Notwithstanding
anything in this Plan to the contrary,
(a)
any adjustments made pursuant to this Section 15 or any other amendments to Awards that are considered “deferred compensation”
within the meaning of Section 409A of the Code shall be made in compliance with the requirements of Section 409A of the Code and
(b)
any adjustments made pursuant to this Section 15 or any other amendments to Awards that are not considered “deferred compensation”
subject to Section 409A of the Code
shall
be made in such a manner as to ensure that after such adjustment or amendment the Awards either
(i)
continue not to be subject to Section 409A of the Code or
(ii)
comply with the requirements of Section 409A of the Code.
Section
16. MARKET STANDOFF
In
the event of an underwritten public offering by the Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act, no person may sell, make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose of or transfer for value or otherwise agree to engage in any of the foregoing transactions with
respect to any shares issued pursuant to an Award granted under the Plan without the prior written consent of the Company or its
underwriters. Such limitations shall be in effect for such period of time as may be requested by the Company or such underwriters;
provided, however, that in no event shall such period exceed
(a)
180 days after the effective date of the registration statement for such public offering or
(b)
such longer period requested by the underwriter as is necessary to comply with regulatory restrictions on the publication of research
reports (including, but not limited to, NYSE Rule 472 or NASD Conduct Rule 2711).
In
the event of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting
the Company’s outstanding Common Stock effected as a class without the Company’s receipt of consideration, any new,
substituted or additional securities distributed with respect to any shares issued as or pursuant to an Award under the Plan shall
be immediately subject to the provisions of this Section 16, to the same extent such shares are at such time covered by such provisions.
In order to enforce the limitations of this Section 16, the Company may impose stop-transfer instructions with respect to the
purchased shares until the end of the applicable standoff period.
Section
17. AMENDMENT AND TERMINATION
|
17.1
|
Amendment,
Suspension or Termination
|
The
Board or the Compensation Committee may amend, suspend or terminate the Plan or any portion of the Plan at any time and in such
respects as it shall deem advisable; provided, however, that, to the extent required by applicable law, regulation or stock exchange
rule, stockholder approval shall be required for any amendment to the Plan; and provided, further, that any amendment that requires
stockholder approval may be made only by the Board and not by the Compensation Committee. Subject to subsection 17.3, the Committee
may amend the terms of any outstanding Award, prospectively or retroactively.
Unless
sooner terminated as provided herein, the Plan shall terminate 10 years from the Effective Date. After the Plan is terminated,
no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms
and conditions and the Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted
more than 10 years after the later of:
(a)
the adoption of the Plan by the Board and
(b)
the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422
of the Code.
|
17.3
|
Consent
of Participant
|
The
amendment, suspension or termination of the Plan or a portion thereof or the amendment of an outstanding Award shall not, without
the Participant’s consent, materially adversely affect any rights under any Award theretofore granted to a Participant under
the Plan. Any change or adjustment to an outstanding Incentive Stock Option shall not, without the consent of the Participant,
be made in a manner so as to constitute a “modification” that would cause such Incentive Stock Option to fail to continue
to qualify as an Incentive Stock Option. Notwithstanding the foregoing, any adjustments made pursuant to Section 15 shall not
be subject to these restrictions.
Section
18. GENERAL
|
18.1
|
No
Individual Rights
|
No
individual or Eligible Person shall have any claim to be granted any Award under the Plan, and the Company has no obligation for
uniformity of treatment of Eligible Persons or Participants under the Plan. Furthermore, nothing in the Plan or any Award granted
under the Plan shall be deemed to constitute an employment contract or confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way
the right of the Company or any Related Company to terminate a Participant’s employment or other relationship at any time,
with or without cause.
Notwithstanding
any other provision of the Plan, the Company shall have no obligation to issue or deliver any shares of Common Stock under the
Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company’s counsel, such issuance,
delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the Securities
Act or the laws of any state or foreign jurisdiction) and the applicable requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register for offering or resale or to qualify for exemption under
the Securities Act, or to register or qualify under the laws of any state or foreign jurisdiction, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations
or qualifications if made. As a condition to the exercise of an Option or any other receipt of Common Stock pursuant to an Award
under the Plan, the Company may require:
(a)
the Participant to represent and warrant at the time of any such exercise or receipt that such shares are being purchased or received
only for the Participant’s own account and without any present intention to sell or distribute such shares and
(b)
such other action or agreement by the Participant as may from time to time be necessary to comply with the federal, state and
foreign securities laws.
At
the option of the Company, a stop-transfer order against any such shares may be placed on the official stock books and records
of the Company, and a legend indicating that such shares may not be pledged, sold or otherwise transferred, unless an opinion
of counsel (satisfactory to the Company, in its sole discretion) is provided stating that such transfer is not in violation of
any applicable law or regulation, may be stamped on stock certificates to ensure exemption from registration. The Committee may
also require the Participant to execute and deliver to the Company a purchase agreement or such other agreement as may be in use
by the Company at such time that describes certain terms and conditions applicable to the shares. To the extent the Plan or any
instrument evidencing an Award provides for issuance of stock certificates to reflect the issuance of shares of Common Stock,
the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules
of any stock exchange.
Each
person who is or shall have been a member of the Board, or a committee appointed by the Board, or an officer of the Company to
whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting
from any claim, action, suit or proceeding to which such person may be a party or in which such person may be involved by reason
of any action taken or failure to act under the Plan and against and from any and all amounts paid by such person in settlement
thereof, with the Company’s approval, or paid by such person in satisfaction of any judgment in any such claim, action,
suit or proceeding against such person; provided, however, that such person shall give the Company an opportunity, at its own
expense, to handle and defend the same before such person undertakes to handle and defend it on such person’s own behalf.
This duty to indemnify shall not apply to the extent that:
(a)
such loss, cost, liability or expense is a result of such person’s own willful misconduct or
(b)
such indemnification is expressly prohibited by statute.
The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled
under the Company’s certificate of incorporation or bylaws, as a matter of law, or otherwise, or of any power that the Company
may have to indemnify or hold harmless.
|
18.4
|
No
Rights as a Stockholder
|
Unless
otherwise provided by the Committee or in the instrument evidencing the Award or in a written employment, services or other agreement,
no Award, other than a Stock Award, shall entitle the Participant to any cash dividend, voting or other right of a stockholder
unless and until the date of issuance under the Plan of the shares that are the subject of such Award.
|
18.5
|
Compliance
with Laws and Regulations
|
In
interpreting and applying the provisions of the Plan, any Option granted as an Incentive Stock Option pursuant to the Plan shall,
to the extent permitted by law, be construed as an “incentive stock option” within the meaning of Section 422 of the
Code. Any Award granted pursuant to the Plan is intended to comply with the requirements of Section 409A of the Code, including
any applicable regulations and guidance issued thereunder, and including transition guidance, to the extent Section 409A of the
Code is applicable thereto, and the terms of the Plan and any Award granted under the Plan shall be interpreted, operated and
administered in a manner consistent with this intention to the extent the Committee deems necessary or advisable to comply with
Section 409A of the Code and any official guidance issued thereunder. Any payment or distribution that is to be made under the
Plan (or pursuant to an Award under the Plan) to a Participant who is a “specified employee” of the Company within
the meaning of that term under Section 409A of the Code and as determined by the Committee, on account of a “separation
from service” within the meaning of that term under Section 409A of the Code, may not be made before the date which is six
months after the date of such “separation from service” unless the payment or distribution is exempt from the application
of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. Notwithstanding any other provision in
the Plan, the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not
be required, to unilaterally amend or modify the Plan and any Award granted under the Plan so that the Award qualifies for exemption
from or complies with Section 409A of the Code; provided, however, that the Committee makes no representations that Awards granted
under the Plan shall be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A
of the Code from applying to Awards granted under the Plan.
|
18.6
|
Participants
in Other Countries or Jurisdictions
|
Without
amending the Plan, the Committee may grant Awards to Eligible Persons who are foreign nationals on such terms and conditions different
from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement
of the purposes of the Plan and shall have the authority to adopt such modifications, procedures, subplans and the like as may
be necessary or desirable to comply with provisions of the laws or regulations of other countries or jurisdictions in which the
Company or any Related Company may operate or have employees to ensure the viability of the benefits from Awards granted to Participants
employed in such countries or jurisdictions, meet the requirements that permit the Plan to operate in a qualified or tax-efficient
manner, comply with applicable foreign laws or regulations and meet the objectives of the Plan.
The
Plan is intended to constitute an “unfunded” plan. Nothing contained herein shall require the Company to segregate
any monies or other property, or shares of Common Stock, or to create any trusts, or to make any special deposits for any immediate
or deferred amounts payable to any Participant, and no Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
All
obligations of the Company under the Plan with respect to Awards shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially
all the business and/or assets of the Company.
If
any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any
person, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed
or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Committee’s
determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect.
|
18.10
|
Choice
of Law and Venue
|
The
Plan, all Awards granted thereunder and all determinations made and actions taken pursuant hereto, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the State of Delaware without giving effect to principles
of conflicts of law. Participants irrevocably consent to the nonexclusive jurisdiction and venue of the state and federal courts
located in the State of New York
The
granting of Awards and the issuance of shares of Common Stock under the Plan are subject to all applicable laws, rules and regulations
and to such approvals by any governmental agencies or national securities exchanges as may be required.
Section
19. EFFECTIVE DATE
The
effective date (the “Effective Date”) is the date on which the Plan is adopted by the Board. If the stockholders of
the Company do not approve the Plan within 12 months after the Board’s adoption of the Plan, any Incentive Stock Options
granted under the Plan will be treated as Nonqualified Stock Options.
APPENDIX
A
DEFINITIONS
“Acquired
Entity” means any entity acquired by the Company or a Related Company or with which the Company or a Related Company merges
or combines.
“Award”
means any Option, Stock Appreciation Right, Stock Award, Restricted Stock, Stock Unit, Performance Share, Performance Unit, or
other incentive payable in shares of Common Stock as may be designated by the Committee from time to time.
“Board”
means the Board of Directors of the Company.
“Cause”
means, unless otherwise defined in the instrument evidencing an Award or in a written employment, services or other agreement
between the Participant and the Company or a Related Company, dishonesty, fraud, serious or willful misconduct, unauthorized use
or disclosure of confidential information or trade secrets, or conduct prohibited by law (except minor violations), in each case
as determined by the Company’s chief human resources officer or other person performing that function or, in the case of
directors and executive officers, the Committee, whose determination shall be conclusive and binding.
“Change
in Control” means, unless the Committee determines otherwise with respect to an Award at the time the Award is granted or
unless otherwise defined for purposes of an Award in a written employment, services or other agreement between the Participant
and the Company or a Related Company, the occurrence of any of the following events:
(a)
An acquisition by any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than
fifty percent (50%) of either:
(i)
the then outstanding shares of Common Stock of the Company (the “Outstanding Common Stock”) or
(ii)
the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Voting Securities”);
excluding,
however, the following:
(iii)
any acquisition directly from the Company, other than an acquisition by virtue of the exercise, exchange or conversion of any
Convertible Securities unless such securities were themselves acquired directly from the Company,
(iv)
any acquisition by the Company;
(v)
any acquisition by any Person pursuant to a transaction which complies with clauses (b)(i), (b)(ii) and (b)(iii) of the definition
of Company Transaction; or
(b)
Within any period of 24 consecutive months, a change in the composition of the Board such that the individuals who, immediately
prior to such period, constituted the Board (such Board shall be hereinafter referred to as the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, for purposes hereof, that any individual
who becomes a member of the Board during such period, whose election, or nomination for election by the Company’s stockholders,
was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of
the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board
shall not be so considered as a member of the Incumbent Board; or
(c)
A Company Transaction; or
(d)
The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, other than to an entity
pursuant to a transaction which would comply with clauses (1), (2) and (3) of the definition of “Company Transaction”,
assuming for this purpose that such transaction were a Company Transaction.
For
purposes of the definition of “Change of Control” and “Company Transaction”, a series of transactions
undertaken with a common purpose shall be treated as a single transaction that begins at the consummation of the first transaction
in the series and ends at the consummation of the last transaction in the series.
“Company
Transaction” means the consummation of
(a)
a reorganization, merger or consolidation of the Company or
(b)
the sale or other disposition of all or substantially all of the assets of the Company and its direct and indirect subsidiaries
taken as a whole, except in each case a transaction pursuant to which
(i)
all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Common
Stock and Outstanding Voting Securities immediately prior to such transaction will beneficially own, directly or indirectly, more
than sixty percent (60%) of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding
voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such
transaction (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets, either directly or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such transaction, of the Outstanding Common Stock and Outstanding Voting Securities,
as the case may be,
(ii)
no person (other than the Company) will beneficially own, directly or indirectly, more than twenty-five percent (25%) of, respectively,
the outstanding shares of common stock of the Company resulting from such transaction or the combined voting power of the outstanding
voting securities of such Company entitled to vote generally in the election of directors, except to the extent that such ownership
existed with respect to the Company prior to the transaction, and
(iii)
individuals who were members of the Board immediately prior to the approval by the stockholders of the Company of such transaction
will constitute at least a majority of the members of the board of directors of the Company resulting from such transaction.
“Convertible
Security” means any security convertible into or exchangeable for shares of Common Stock of the Company, or any option,
warrant or other right to acquire shares of Common Stock of the Company.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time.
“Committee”
has the meaning set forth in subsection 3.2.
“Common
Stock” means the common stock of the Company.
“Company”
means Cemtrex, Inc., a Delaware corporation
“Compensation
Committee” means the Compensation Committee (if any) of the Board.
“Disability”
means, unless otherwise defined by the Committee for purposes of the Plan or in the instrument evidencing an Award or in a written
employment, services or other agreement between the Participant and the Company or a Related Company, a mental or physical impairment
of the Participant that is expected to result in death or that has lasted or is expected to last for a continuous period of 12
months or more and that causes the Participant to be unable to perform his or her material duties for the Company or a Related
Company and to be engaged in any substantial gainful activity, in each case as determined by the Company’s chief human resources
officer or other person performing that function or, in the case of directors and executive officers, the Committee, whose determination
shall be conclusive and binding.
“Effective
Date” has the meaning set forth in Section 19.
“Eligible
Person” means any person eligible to receive an Award as set forth in Section 5.
“Entity”
means any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act).
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Fair
Market Value” means the closing price for the Common Stock on any given date during regular trading, or if not trading on
that date, such price on the last preceding date on which the Common Stock was traded, unless determined otherwise by the Committee
using such methods or procedures as it may establish.
“Grant
Date” means the later of:
(c)
the date on which the Committee completes the corporate action authorizing the grant of an Award or such later date specified
by the Committee and
(d)
the date on which all conditions precedent to an Award have been satisfied, provided that conditions to the exercisability or
vesting of Awards shall not defer the Grant Date.
“Incentive
Stock Option” means an Option granted with the intention that it qualify as an “incentive stock option” as that
term is defined for purposes of Section 422 of the Code or any successor provision.
“including”,
“include”, “includes” and words of similar import shall be construed broadly as if followed by the phrase
“without limitation”.
“Nonqualified
Stock Option” means an Option other than an Incentive Stock Option.
“Option”
means a right to purchase Common Stock granted under Section 7.
“Option
Expiration Date” means the last day of the maximum term of an Option.
“Outstanding
Company Common Stock” has the meaning set forth in the definition of “Change in Control.”
“Outstanding
Company Voting Securities” has the meaning set forth in the definition of “Change in Control.”
“Parent
Company” means a company or other entity which as a result of a Company Transaction owns the Company or all or substantially
all of the Company’s assets either directly or through one or more subsidiaries.
“Participant”
means any Eligible Person to whom an Award is granted.
“Performance
Award” means an Award of Performance Shares or Performance Units granted under Section 11.
“Performance
Share” means an Award of units denominated in shares of Common Stock granted under subsection 11.1.
“Performance
Unit” means an Award of units denominated in cash or property other than shares of Common Stock granted under subsection
11.2.
“Plan”
means this Cemtrex, Inc. 2020 Incentive Plan.
‘‘Related
Company” means any entity that is directly or indirectly controlled by, in control of or under common control with the Company.
“Restricted
Stock” means an Award of shares of Common Stock granted under Section 10. , the rights of ownership of which are subject
to restrictions prescribed by the Committee.
“Retirement”
means, unless otherwise defined in the instrument evidencing the Award or in a written employment, services or other agreement
between the Participant and the Company or a Related Company, retirement as defined for purposes of the Plan by the Committee
or the Company’s chief human resources officer or other person performing that function or, if not so defined, means Termination
of Service on or after the date the Participant reaches “normal retirement age” as that term is defined in Section
411(a)(8) of the Code.
“Securities
Act” means the Securities Act of 1933, as amended from time to time.
“Stock
Appreciation Right” or “SAR” means a right granted under subsection 9.1 to receive the excess of the Fair Market
Value of a specified number of shares of Common Stock over the grant price.
“Stock
Award” means an Award of shares of Common Stock granted under Section 10, the rights of ownership of which are not subject
to restrictions prescribed by the Committee.
“Stock
Unit” means an Award denominated in units of Common Stock granted under Section 10.
“Substitute
Awards” means Awards granted or shares of Common Stock issued by the Company in substitution or exchange for awards previously
granted by an Acquired Entity.
“Successor
Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Company
Transaction.
“Termination
of Service” means a termination of employment or service relationship with the Company or a Related Company for any reason,
whether voluntary or involuntary, including by reason of death, Disability or Retirement. Any question as to whether and when
there has been a Termination of Service for the purposes of an Award and the cause of such Termination of Service shall be determined
by the Company’s chief human resources officer or other person performing that function or, with respect to directors and
executive officers, by the Committee, whose determination shall be conclusive and binding. Transfer of a Participant’s employment
or service relationship between the Company and any Related Company shall not be considered a Termination of Service for purposes
of an Award. Unless the Committee determines otherwise, a Termination of Service shall be deemed to occur if the Participant’s
employment or service relationship is with an entity that has ceased to be a Related Company. A Participant’s change in
status from an employee of the Company or a Related Company to a consultant, advisor or independent contractor of the Company
or a Related Company or a change in status from a consultant, advisor or independent contractor of the Company or a Related Company
to an employee of the Company or a Related Company, shall not be considered a Termination of Service.
“Vesting
Commencement Date” means the Grant Date or such other date selected by the Committee as the date from which an Award begins
to vest.
PLAN
ADOPTION AND AMENDMENTS/ADJUSTMENTS
SUMMARY
PAGE
|
Date
of Board
Action
|
|
Action
|
|
Section/Effect
of
Amendment
|
|
Date
of Shareholder
Approval
|
|
|
|
|
|
|
|
|
|
___________,
2020
|
|
Initial
Plan Adoption
|
|
|
|
____________,
2020
|