PROPOSALS
BY STOCKHOLDERS
No
stockholder entitled to vote has transmitted any proposal to be acted upon by the Company.
INTEREST
OF CERTAIN PERSONS IN MATTERS ACTED UPON
All
of our directors, officers and employees are eligible to participate in, and receive awards under the 2017 Incentive Plan.
Other
than in connection with the 2017 Incentive Plan, no director, officer, nominee for election as a director, associate of any director,
officer or nominee or any other person has any substantial interest, direct or indirect, by security holdings or otherwise, in
any of the matters described herein, other than the interests held by such persons through their respective beneficial ownership
of shares of our Common Stock set forth below under “Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.”
ACTION
ONE
ADOPTION
OF THE 2017 OMNIBUS INCENTIVE PLAN
The
Board also approved the 2017 Omnibus Incentive Plan (the “
2017 Incentive Plan
”). Stockholder approval of the
2017 Incentive Plan is required to permit the grant of incentive stock option rules under Section 422 of the Internal Revenue
Code of 1986, as amended (the “
Code
”). On November 8, 2017, the holders of our outstanding capital stock having
a majority of the voting power approved, by written consent, the 2017 Incentive Plan. (Before January 1, 2018, stockholder approval
would have also been necessary for certain awards under the 2017 Incentive Plan to qualify as “performance-based compensation”
to be exempt from the $1 million deduction limit under Section 162(m) of the Code. As a result of the Tax Cuts and Jobs Act, however,
the “performance-based compensation” exception under Section 162(m) no longer applies from and after January 1, 2018.)
The
Board believes that approval of the 2017 Incentive Plan is necessary to provide us with a sufficient number of shares to attract,
retain and motivate employees, directors and consultants and to give us the flexibility we need to make various types of grants
with respect to equity-based compensation.
The following is a summary of certain principal
features of the 2017 Incentive Plan. This summary is qualified in its entirety by reference to the complete text of the 2017 Incentive
Plan which is set forth as
Appendix A
hereto.
Purposes
The
purposes of the 2017 Incentive Plan are to enable us to attract and retain highly qualified personnel who will contribute to our
success and to provide incentives to participants in the 2017 Incentive Plan that are linked directly to increases in stockholder
value.
Shares
Available for Issuance
The
maximum number of our common shares reserved for issue under the 2017 Incentive Plan is 3,000,000 shares subject to adjustment
in the event of a change of the Company’s capitalization.
If
any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares or if shares are issued under
the 2017 Incentive Plan and thereafter are forfeited to the Company, the shares subject to such awards and the forfeited shares
will again be available for grant under the 2017 Incentive Plan. In addition, the following items will not count against the aggregate
number of shares of Common Stock available for grant under the 2017 Incentive Plan: (a) any award that is settled in cash rather
than by issuance of shares of Common Stock, (b) shares surrendered or tendered in payment of the option price or purchase price
of an award or any taxes required to be withheld in respect of an award, or (c) awards granted in assumption of or in substitution
for awards previously granted by an acquired company.
Administration
The
2017 Incentive Plan will be administered by a majority of the independent directors on our Board or a committee comprised of independent
directors delegated by our Board (the “
Administrator
”). The Administrator will have full authority to determine
the terms and conditions of awards granted under the 2017 Incentive Plan.
We have not included a table regarding Equity Compensation Plan Information for the last completed fiscal
year, per Item 201(d) of Regulation S-K, because no such equity compensation plans were in effect at the end of the last completed
fiscal year.
Eligibility
The persons eligible
to receive awards under the 2017 Incentive Plan are the officers, non-employee directors, employees, consultants, and other persons
who provide services to us or any related entity. As of the Record Date, we, together with our subsidiaries, had 4 non-employee
directors, 2 executive officers, and 242 full-time employees.
Types
of Awards
Under
the 2017 Incentive Plan, the Administrator is authorized to award:
Stock
Options and Stock Appreciation Rights.
The Administrator is authorized to grant stock options, including both incentive stock
options, which can result in potentially favorable tax treatment to the participant, and non-qualified stock options, and stock
appreciation rights (“
SARs
”) entitling the participant to receive the amount by which the fair market value
of a share of our Common Stock on the date of exercise exceeds the grant price of the SAR. The exercise price per share subject
to an option and the grant price of a SAR are determined by the Administrator, but must not be less than the fair market value
of a share of our Common Stock on the date of grant. For purposes of the 2017 Incentive Plan, the term “fair market value”
means (i) if the Common Stock is listed on a national securities exchange, the closing sale price of the Common Stock as reported
on the applicable exchange for the applicable date, or if the applicable date is not a trading day, the trading day immediately
preceding the applicable date, or (ii) if the Common Stock is not then listed on a national securities exchange, such value as
determined by the Administrator in good faith. The closing price of the Common Stock was $11.05 per share as of December 22, 2017.
The maximum term of each option or SAR, the times at which each option or SAR will be exercisable, and provisions requiring forfeiture
of unexercised options or SARs at or following termination of employment generally are fixed by the Administrator, except that
no option or SAR may have a term exceeding ten years. Methods of exercise and settlement and other terms of the SAR are determined
by the Administrator.
Restricted
Shares, Restricted Stock Units and Other Stock-Based Awards
. The Administrator may grant awards of restricted shares, which
are shares of Common Stock subject to specified restrictions, and restricted stock units, which represent the right to receive
shares of the Common Stock in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at
the Administrator’s discretion. The restrictions may be based on continuous service with the company or the attainment of
specified performance goals, as determined by the Administrator. Restricted stock units may be paid in stock or cash of equivalent
value, or a combination of stock and cash, as determined by the Administrator. The Administrator may also grant other types of
equity or equity-based awards subject to the terms of the 2017 Incentive Plan and any other terms and conditions determined by
the Administrator.
Performance
Awards
. The Administrator is authorized to grant performance awards to participants on terms and conditions established in
the 2017 Incentive Plan. Performance awards may be issued in cash, shares, other awards or other property, as determined by the
Administrator. The performance goals for performance awards shall consist of one or more business criteria and a targeted level
or levels of performance with respect to each of such criteria, as specified by the Administrator. The performance criteria shall
be based on such measure or measures of performance, which may include, but need not be limited to, the performance of the participant,
the Company, or an affiliate of the Company.
Dividend
Equivalents
. The Administrator may provide for the payment of dividends or dividend equivalents with respect to any shares
of Common Stock subject to an award under the 2017 Incentive Plan other than options and SARs, under such terms and conditions
as the Administrator may establish in accordance with the 2017 Incentive Plan. Dividends or dividend equivalents with respect
to performance-based awards are earned only to the extent that the underlying award is earned.
Other
Terms of Awards
The
Administrator will set forth the terms and conditions of awards in an award agreement, which will include treatment of the award
upon the participant’s termination of service with the Company. The 2017 Incentive Plan, however, includes certain minimum
vesting conditions for awards, including a requirement that stock-settled awards that vest based on the passage of time may vest
no more quickly than ratably over three years, and performance-vesting awards may vest no more quickly than over one year. The
2017 Incentive Plan includes certain exceptions to these minimum vesting requirements for a participant’s termination of
service due to death or disability, certain involuntary terminations or in connection with a change in control. There are also
exceptions permitted up to 4% of the share pool. In addition, for participants located in jurisdictions outside the U.S., the
Administrator may adopt such supplements to the 2017 Incentive Plan as may be necessary or appropriate to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable treatment under such laws.
Amendment
of the 2017 Incentive Plan
The
Board may, at any time, amend, suspend or terminate the 2017 Incentive Plan as to any awards that have not been made. An amendment
shall be contingent on approval of the stockholders to the extent stated by the Board, required by applicable law or required
by applicable securities exchange listing requirements. No awards shall be made after the 2017 Incentive Plan has been terminated.
The applicable terms and conditions of the 2017 Incentive Plan, and any terms and conditions applicable to awards granted prior
to the termination date shall survive the termination of the 2017 Incentive Plan and continue to apply to such awards. The 2017
Incentive Plan may not be amended, suspended or terminated without the consent of a grantee if such amendment, suspension or termination
would materially impair rights or obligations under any award that was awarded prior to the termination date. Unless earlier terminated
by the Board, the 2017 Incentive Plan will terminate on May 1, 2027. Termination of the 2017 Incentive Plan will not in any manner
impair or adversely affect any award outstanding at the time of termination.
No
Repricing
Without
stockholder approval, the Administrator is not authorized to (i) lower the exercise or grant price of a stock option or SAR after
it is granted, except in connection with certain adjustments to our corporate or capital structure permitted by the 2017 Incentive
Plan, such as stock splits, (ii) take any other action that is treated as a repricing under generally accepted accounting principles
or (iii) cancel a stock option or SAR at a time when its exercise or grant price exceeds the fair market value of the underlying
stock, in exchange for cash, another stock option or SAR, restricted shares, restricted stock units or other equity award, unless
the cancellation and exchange occur in connection with a change in capitalization or other similar change.
Adjustments
In
the event of an “equity restructuring” (within the meaning of FASB ASC Topic 718, Compensation—Stock Compensation)
that causes the per share value of the shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights
offering or recapitalization through an extraordinary dividend, the Administrator will make such adjustments as it deems equitable
and appropriate to (i) the aggregate number and kind of shares of Common Stock or other securities issued or reserved for issuance
under the 2017 Incentive Plan, (ii) the number and kind of shares of Common Stock or other securities subject to outstanding awards,
and (iii) the exercise price or grant price of outstanding options or SARs. The 2017 Incentive Plan authorizes the Administrator
to make similar equitable adjustments in case of other changes in corporate capitalization, including a merger, consolidation,
reorganization, or partial or complete liquidation of the Company.
Change
in Control
Under
the 2017 Incentive Plan, in the event of a change in control, the Administrator will determine whether and to what extent an award
will become immediately and fully vested and nonforfeitable in the event of a change in control or upon the occurrence of one
or more specified conditions following a change in control, including without limitation an involuntary termination of the participant’s
service. “Change in control” is defined under the Plan, generally requires a change of more than 50% of the ownership
of the Company and requires consummation of the applicable transaction.
Clawbacks
If
the Board determines that the Company is required to restate its financial statements due to material noncompliance with any financial
reporting requirement under the law, whether such noncompliance is the result of misconduct or other circumstances, a participant
will be required to reimburse the Company for any amounts earned or payable with respect to an award to the extent required by
and otherwise in accordance with applicable law and any Company policies adopted or implemented by the Administrator from time
to time.
Transferability
Awards
are not transferable other than by will or the laws of descent and distribution, except that in certain instances transfers may
be made to or for the benefit of designated family members of the participant for no value.
New
Plan Benefits
A
new plan benefits table for the 2017 Incentive Plan and the benefits or amounts that would have been received by or allocated
to participants for the last completed fiscal year under the 2017 Incentive Plan if the 2017 Incentive Plan was then in effect,
as described in the federal proxy rules, are not provided because all awards made under the 2017 Incentive Plan will be made at
the Administrator’s discretion, subject to the terms of the 2017 Incentive Plan. Therefore, the benefits and amounts that
will be received or allocated under the 2017 Incentive Plan are not determinable at this time. As of the date of this information
statement, no awards have been granted to our executive officers and directors under the 2017 Incentive Plan.
Federal
Income Tax Information
The
following is a brief summary of the U.S. federal income tax consequences of the 2017 Incentive Plan generally applicable to the
company and to participants in the 2017 Incentive Plan who are subject to U.S. federal taxes. The summary is based on the Code,
applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this
proxy statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general
in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S.
gift or estate tax consequences or the consequences of any state, local or foreign tax laws.
Nonqualified
Stock Options
. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock
option with an exercise price at least equal to the fair market value of our Common Stock on the date of grant and no additional
deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable
as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option
on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will
have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant
received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater
of the fair market value of the shares on the exercise date or the exercise price of the stock option.
Incentive
Stock Options
. A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a
participant exercises an incentive stock option during employment or within three months after employment ends (12 months in the
case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular
U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes
at that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares
acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the
option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain
or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock
option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these
holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the
participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market
value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount
realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s
gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.
With
respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of Common
Stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are
subject to a substantial risk of forfeiture by the participant.
Stock
Appreciation Rights
. A participant generally will not recognize taxable income upon the grant or vesting of a SAR with a grant
price at least equal to the fair market value of our Common Stock on the date of grant and no additional deferral feature. Upon
the exercise of a SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the
difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.
Restricted
Shares, Restricted Stock Units, and Performance Awards
. A participant generally will not have taxable income upon the grant
of restricted shares, restricted stock units or performance awards. Instead, the participant will recognize ordinary income at
the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus
any amount paid. For restricted shares only, a participant may instead elect to be taxed at the time of grant.
Other
Stock or Cash-Based Awards
. The U.S. federal income tax consequences of other stock or cash- based awards will depend upon
the specific terms of each award.
Tax
Consequences to the Company
. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in
the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code, including
the $1 million deduction limit under Section 162(m) of the Code (for compensation paid to certain “covered employees’).
Section
409A
. We intend that awards granted under the 2017 Incentive Plan comply with, or otherwise be exempt from, Section 409A of
the Code, but make no representation or warranty to that effect.
Tax
Withholding
. We are authorized to deduct or withhold from any award granted or payment due under the 2017 Incentive Plan,
or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take
such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We are not required
to issue any shares of Common Stock or otherwise settle an award under the 2017 Incentive Plan until all tax withholding obligations
are satisfied.
ACTION
TWO
AMENDMENT
TO THE ARTICLES OF INCORPORATION TO
INCREASE
THE NUMBER OF AUTHORIZED SHARES OF
COMMON
STOCK
The
Increase in Authorized Shares of Common Stock
The Board unanimously authorized and approved
an amendment to our Articles of Incorporation to increase the number of authorized shares of Common Stock from 8,000,000 shares
to 100,000,000 shares (the “Common Share Increase”). On November 8, 2017, the holders of our outstanding capital stock
having a majority of the voting power approved, by written consent, the amendment to our Articles of Incorporation to effect the
Common Share Increase. The Common Share Increase will become effective at such time as the Company files the applicable Certificate
of Amendment to its Articles of Incorporation, the form of which is attached hereto as
Appendix B
, with the Secretary of
State of the State of Nevada or at such later time as specified therein.
The
Purpose and Reason for the Common Share Increase
The
Board effectuated a reverse stock split of our Common Stock at a 1-for-25 ratio (the “Reverse Split”) on November
6, 2017, which increased the per share price of our Common Stock and enabled the Company to satisfy certain bid and closing price
requirements for an initial listing on the NYSE American Exchange.
As
a result of the Reverse Split, our authorized shares of our Common Stock reduced from 200,000,000 to 8,000,000 shares. The Common
Share Increase would increase the number of authorized shares from 8,000,000 to 100,000,000 shares. The Board believes that the
Common Share Increase will provide the Company with greater flexibility in raising additional capital in the future. In this regard,
the Board believes that the Common Share Increase will position the Company to take advantage of future business opportunities
that are consistent with the Company’s growth strategy, including but not limited to, potentially establishing strategic
relationships with corporate partners and engaging in possible acquisitions or financings. The Company does not currently have
plans to issue any shares of Common Stock. However, should it decide to do so, the Common Share Increase will allow the Company
to issue shares of Common Stock without the expense and delay of a special stockholders’ meeting.
Pursuant to the NRS, the Board approved the
Reverse Split and authorized the filing of a Certificate of Change to the Company’s Articles of Incorporation, a copy of
which is attached hereto as
Appendix C
. Pursuant to Section 78.207 of the NRS, stockholder approval is not required to effect
the Reverse Split if (i) both the number of authorized shares of Common Stock and the number of outstanding shares of Common Stock
are proportionally reduced as a result of the Reverse Split; (ii) the Reverse Split does not adversely affect any other class of
stock of the Company; and (iii) the Company does not pay money or issue scrip to stockholders who would otherwise be entitled to
receive a fractional share as a result of the Reverse Split.
Effect
of the Common Share Increase
Upon
consummation of the Common Share Increase, stockholder approval will not be required for us to issue any newly-authorized shares
of Common Stock. Holders of Common Stock have no preemptive rights, which means that our current stockholders do not have prior
rights to purchase any newly issued shares of Common Stock to maintain their current ownership. The issuance of additional shares
of Common Stock, without action by the stockholders, will decrease the proportionate equity ownership of our current stockholders
and, depending on the price paid for such additional shares, could result in further substantial dilution to our existing stockholders.
In
addition, the Common Share Increase could, under certain circumstances, have an anti-takeover effect, although this is not the
intention of the Company. By way of example, our management could issue additional shares to dilute the stock ownership and the
voting power of persons seeking to obtain control of the Company or shares could be issued to purchasers who would support the
Board in opposing a takeover proposal. In addition, the increase in authorized shares may have the effect of delaying or discouraging
a challenge for control or make it less likely that such a challenge, if attempted, would be successful, including challenges
that are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares
over then-current market prices or benefit in some other manner. The Board and executive officers of the Company have no knowledge
of any current effort to obtain control of the Company or to accumulate large amounts of Common Stock.
Other
than as discussed in this Information Statement, there are no provisions of our articles, bylaws, employment agreements or credit
agreements that have material anti-takeover consequences.
EFFECTIVENESS
OF ACTIONS
The
Actions will become effective at such time as the Company files the applicable Certificate of Amendment to its Articles of Incorporation
with the Secretary of State of the State of Nevada or at such later time as specified therein. The Company reserves the right,
upon notice to its stockholders, to abandon or modify the proposed Actions at any time prior to the effectiveness of the Actions.
INFORMATION
ON CONSENTING STOCKHOLDERS
As
of the Record Date, there were 5,586,336 shares of Common Stock, 500 shares of Series A Stock, 295 shares of Series A-1 Stock,
issued and outstanding. Holders of our Common Stock and our Preferred Stock are entitled to vote together as a single class in
matters subject to a vote of our stockholders. Each share of Common Stock entitles the holder thereof to one vote in matters subject
to a vote of our stockholders. Each share of Series A Stock and Series A-1 Stock entitles the holder thereof to the number of
votes equal to the number of whole shares of Common Stock into which such shares are convertible as of the Record Date. Fractional
shares are rounded down to the nearest whole number for each series of Preferred Stock. No other class of voting securities was
outstanding as of the Record date.
The
consenting stockholders are the beneficial owners of approximately 62.6% of the voting power of the Company. Pursuant to the NRS,
we have obtained the written consent of holders of outstanding stock having not less than the minimum number of votes necessary
to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and no consideration
was paid for such consent. The consenting stockholders’ names, affiliation with the Company and beneficial ownership as
of November 8, 2017 are as follows:
Name,
Address
and Affiliation
of Consenting
Stockholders (1)
|
|
Common
Stock Owned
|
|
|
Percentage
of
Common
Stock Owned
|
|
|
Percentage
of
Voting Power
Represented by
Consenting
Shares
|
|
5G
Investments, LLC (2)
|
|
|
1,138,150
|
|
|
|
20.4
|
%
|
|
|
20.2
|
%
|
Michael
Palleschi (3)
|
|
|
347,078
|
|
|
|
6.2
|
%
|
|
|
6.2
|
%
|
Brian
McMahon (4)
|
|
|
713,026
|
|
|
|
12.8
|
%
|
|
|
12.7
|
%
|
Chris
Ferguson (5)
|
|
|
269,891
|
|
|
|
4.8
|
%
|
|
|
4.8
|
%
|
Fred
Sacramone (6)
|
|
|
356,513
|
|
|
|
6.4
|
%
|
|
|
6.3
|
%
|
Lateral
JusCom Feeder, LLC (7)
|
|
|
350,538
|
|
|
|
6.3
|
%
|
|
|
6.2
|
%
|
Lateral
FTE Feeder, LLC (8)
|
|
|
350,538
|
|
|
|
6.3
|
%
|
|
|
6.2
|
%
|
Total
|
|
|
|
|
|
|
63.1
|
%
|
|
|
62.6
|
%
|
|
(1)
|
Unless
otherwise noted, the address for each consenting stockholder is 999 Vanderbilt Beach Road, Suite 601, Naples, Florida 34108.
|
|
(2)
|
5G
Investments, LLC is a stockholder of the Company as indicated above, having no other business relationships with the Company.
The control person of 5G Investments, LLC is Hugh Regan. Mr. Regan is the Executive Director of Investment Banking at Laidlaw
& Co. which previously was engaged as an investment banking firm by the Company and is a stockholder of the Company. The
address of record for 5G Investments, LLC is 546 5th Avenue, 23rd Floor, New York, New York 10036.
|
|
(3)
|
Michael
Palleschi is our Chief Executive Officer and Chairman of our Board.
|
|
(4)
|
Brian
McMahon is a Principal and co-founder of Benchmark Builders, Inc., (“BBI”) our wholly owned corporate subsidiary.
|
|
(5)
|
Chris
Ferguson is a member of our Board.
|
|
(6)
|
Fred
Sacramone is a member of our Board and serves as President of BBI, our wholly owned corporate subsidiary.
|
|
(7)
|
The
address for Lateral JusCom Feeder, LLC is 1825 S. Grant Street, Suite 210, San Mateo, CA 94402. Lateral JusCom Feeder, LLC
is our credit facility holder.
|
|
(8)
|
The
address for Lateral FTE Feeder, LLC is 1825 S. Grant Street, Suite 210, San Mateo, CA 94402.Lateral FTE Feeder, LLC is our
credit facility holder.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND
RELATED STOCKHOLDER MATTERS
The
following table sets forth, as of the Record Date, certain information concerning the beneficial ownership of the Common Stock
held by our executive officers and Directors and each person known to us to own more than 5% of our outstanding Common Stock:
Name,
Address
and Affiliation of
Beneficial
Owner (1)
|
|
Common
Stock
Beneficially
Owned
|
|
|
Percentage
of
Common Stock
Beneficially
Owned
|
|
|
Percentage
of
Company
Voting Power
|
|
Directors
and Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Palleschi,
CEO, Chairman of the Board
|
|
|
347,076
|
|
|
|
6.2
|
%
|
|
|
6.2
|
%
|
David
Lethem, CFO
|
|
|
77,506
|
|
|
|
1.4
|
%
|
|
|
1.4
|
%
|
Chris
Ferguson, Director
|
|
|
269,891
|
|
|
|
4.8
|
%
|
|
|
4.8
|
%
|
Luisa
Ingargiola, Director
|
|
|
2,200
|
|
|
|
*
|
%
|
|
|
*
|
%
|
Patrick
O’Hare, Director
|
|
|
2,000
|
|
|
|
*
|
%
|
|
|
*
|
%
|
Fred
Sacramone
|
|
|
356,513
|
|
|
|
6.4
|
%
|
|
|
6.3
|
%
|
Brad
Mitchell
|
|
|
2,400
|
|
|
|
*
|
%
|
|
|
*
|
%
|
All
Directors and Officers as a Group
|
|
|
1,095,513
|
|
|
|
19.6
|
%
|
|
|
19.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5%
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
5G
Investments, LLC (2)
|
|
|
1,138,149
|
|
|
|
20.4
|
%
|
|
|
20.2
|
%
|
Brian
McMahon (3)
|
|
|
713,025
|
|
|
|
12.8
|
%
|
|
|
12.7
|
%
|
TLP
Investments, LLC (4)
|
|
|
356,356
|
|
|
|
6.4
|
%
|
|
|
6.3
|
%
|
Lateral
Entities (5)
|
|
|
701,076
|
|
|
|
12.6
|
%
|
|
|
12.4
|
%
|
*
Less than 1%
|
(1)
|
Unless
otherwise noted, the address for each beneficial owner is 999 Vanderbilt Beach Road, Suite 601, Naples, Florida 34108.
|
|
(2)
|
The
address for Laidlaw & Co. (UK), LTD is 546 5
th
Avenue, 23
rd
Floor, New York, New York 10036.
|
|
(3)
|
Brian
McMahon is a Principal and co-founder of Benchmark Builders, Inc., (“BBI”) our wholly owned corporate subsidiary.
|
|
(4)
|
The
control person of TLP Investments, LLC is Amber Palleschi, the spouse of our Chief Executive Officer. The address of record
for Mrs. Palleschi is 1454 Palma Blanca Court, Naples, FL 34109.
|
|
(5)
|
The
Lateral Entities are comprised of Lateral JusCom Feeder, LLC, Lateral FTE Feeder, LLC, and Lateral US Credit Opportunities
Fund, L.P. The address for the Lateral Entities is 1825 S. Grant Street, Suite 210, San Mateo, CA 94402.
|
NO
DISSENTERS’ RIGHTS
Under
the NRS, stockholders are not entitled to dissenter’s rights with respect to these Actions.
ADDITIONAL
INFORMATION
The
Company’s principal executive offices are located at 999 Vanderbilt Beach Road, Suite 601, Naples, Florida 34108. The Company’s
telephone number is (877) 878-8136.
We
are subject to the information and reporting requirements of the Exchange Act, and in accordance therewith, we file reports and
other information, including annual and quarterly reports on Form 10-K and Form 10-Q, respectively, with the SEC. Reports and
other information we file with the SEC can be inspected and copied at the SEC’s Public Reference Room, located at the SEC’s
headquarters at 100 F Street NE, Washington, DC 20549. You may obtain information on the operations of the SEC’s public
reference room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of reports and other information we file with
the SEC on the SEC’s website at
www.sec.gov
.
APPENDIX
A
2017
OMNIBUS INCENTIVE PLAN
FTE
NETWORKS, INC
OMNIBUS
INCENTIVE PLAN
Article
I
PURPOSE
AND ADOPTION OF THE PLAN
1.01.
Purpose
.
The purpose of the FTE Networks, Inc., Omnibus Incentive Plan (as amended from time to time, the “
Plan
”) is
to assist in attracting and retaining highly competent employees, directors and Consultants, to act as an incentive in motivating
selected employees, directors and Consultants of the Corporation and its Affiliates to achieve long-term corporate objectives
and to enable stock-based and cash-based incentive awards to qualify as performance-based compensation for purposes of the tax
deduction limitations under Section 162(m) of the Code.
1.02.
Adoption
and Term
.
The
Plan shall be effective on May 1, 2017, subject to approval of the stockholders of the Corporation (the “
Effective Date
”).
The Plan shall remain in effect until the tenth anniversary of the Effective Date, or until terminated by action of the Board,
whichever occurs sooner.
Article
II
DEFINITIONS
For
the purpose of this Plan, capitalized terms shall have the following meanings:
2.01.
Affiliate
means
an entity in which the Corporation has a controlling interest or such entity has a controlling interest in the Corporation, in
either case directly or indirectly through one or more intermediaries; provided, however, for purposes of any grant of an Incentive
Stock Option, “Affiliate” means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary
of the Corporation, directly or indirectly. For purposes of this definition, the term “controlling interest” shall
have the meaning given such term with respect to Section 409A of the Code and Treas. Reg. Sec. 1.409A-1(b)(5)(iii)(E)(1).
2.02.
Award
means
any one or a combination of Non-Qualified Stock Options or Incentive Stock Options described in Article VI, Stock Appreciation
Rights described in Article VI, Restricted Shares and Restricted Stock Units described in Article VII, Performance Awards described
in Article VIII, other stock-based Awards described in Article IX, cash-based incentive Awards described in Article X or any other
award made under the terms of the Plan.
2.03.
Award Agreement
means
a written agreement between the Corporation and a Participant or a written acknowledgment from the Corporation to a Participant
specifically setting forth the terms and conditions of an Award granted under the Plan.
2.04.
Award Period
means,
with respect to an Award, the period of time, if any, set forth in the Award Agreement during which specified target performance
goals must be achieved or other conditions set forth in the Award Agreement must be satisfied.
2.05.
Beneficiary
means
an individual, trust or estate who or which, by a written designation of the Participant filed with the Corporation, or if no
such written designation is filed, by operation of law, succeeds to the rights and obligations of the Participant under the Plan
and the Award Agreement upon the Participant’s death.
2.06.
Board
means
the Board of Directors of the Corporation.
2.07.
Cause
unless
otherwise defined in the applicable Award Agreement, shall have the same meaning as that term is defined in a Participant’s
offer letter or other applicable employment agreement; or, if there is no such definition, “Cause” means the (a) commission
of any act of fraud, embezzlement or dishonesty by the Participant, (b) any unauthorized use or disclosure by the Participant
of confidential information or trade secrets of the Corporation (or any Affiliate), or (c) any other intentional misconduct by
such person adversely affecting the business or affairs of the Corporation (or any Affiliate) in a material manner. The foregoing
definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or
dismiss any Participant for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of
the Plan, to constitute grounds for termination for Cause.
2.08.
Change in Control
means,
and shall be deemed to have occurred upon the occurrence of, any one of the following events:
(a)
The acquisition in one or more transactions, other than from the Corporation, by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the Corporation, an Affiliate or any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or an Affiliate, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of a number of the Company’s Voting Securities in excess of 50% of the Company’s
Voting Securities;
(b)
The consummation (
i.e.
closing) of a reorganization, merger or consolidation involving the Corporation, unless, following
such reorganization, merger or consolidation, all or substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Common Stock and the Company’s Voting Securities immediately prior to such reorganization,
merger or consolidation, following such reorganization, merger or consolidation beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors or trustees, as the case may be, of the entity resulting from
such reorganization, merger or consolidation in substantially the same proportion as their ownership of the Outstanding Common
Stock and the Company’s Voting Securities immediately prior to such reorganization, merger or consolidation, as the case
may be;
(c)
The consummation (
i.e.
closing) of a sale or other disposition of all or substantially all the assets of the Corporation,
unless, following such sale or disposition, all or substantially all of the individuals and entities who were the respective beneficial
owners of the Outstanding Common Stock and the Company’s Voting Securities immediately prior to such sale or disposition,
following such sale or disposition beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the
election of directors or trustees, as the case may be, of the entity purchasing such assets in substantially the same proportion
as their ownership of the Outstanding Common Stock and the Company’s Voting Securities immediately prior to such sale or
disposition, as the case may be; or
(d)
a complete liquidation or dissolution of the Corporation.
Notwithstanding
the foregoing, with respect to any payment pursuant to a Section 409A Covered Award that is triggered upon a Change in Control,
a transaction shall not be deemed to be a Change in Control unless such transaction constitutes a “change in control event”
within the meaning of Section 409A of the Code.
2.09.
Code
means
the Internal Revenue Code of 1986, as amended. References to a section of the Code shall include that section and any comparable
section or sections of any future legislation that amends, supplements or supersedes said section.
2.10.
Committee
means
the Compensation Committee of the Board or such other committee or subcommittee of the Board appointed from time to time by the
Board, which Compensation Committee or other committee or subcommittee shall consist of two or more non-employee directors, each
of whom is intended to be (i) a “nonemployee director” as defined in Rule 16b-3; (ii) an “outside director”
as defined under Section 162(m) of the Code; (iii) an “independent director” as defined under the rules of any stock
exchange on which the Common Stock is regularly traded; and (iv) as may be applicable, “independent” as provided pursuant
to rules promulgated by the Securities and Exchange Commission under The Dodd-Frank Wall Street Reform and Consumer Protection
Act.
2.11.
Common Stock
means
the common stock of the Corporation, par value $.001 per share.
2.12.
Corporation
means
FTE Networks, Inc., a Nevada corporation, and its successors.
2.13.
Company’s Voting
Securities
means the combined voting power of all outstanding voting securities of the Corporation
entitled to vote generally in the election of directors to the Board.
2.14.
Consultant
means
any natural person who provides bona fide consulting or advisory services to the Corporation or its Affiliates pursuant to a written
agreement, which are not in connection with the offer and sale of securities in a capital-raising transaction, and do not, directly
or indirectly, promote or maintain a market for the Corporation’s or its Affiliates’ securities.
2.15.
Dividend Equivalent Account
means a bookkeeping account in accordance with
Section 11.17
and related to an Award
that is credited with the amount of any cash dividends or stock distributions that would be payable with respect to the shares
of Common Stock subject to such Awards had such shares been outstanding shares of Common Stock.
2.16.
Exchange Act
means
the Securities Exchange Act of 1934, as amended.
2.17.
Exercise Price
means,
with respect to Options, the amount established by the Committee in the Award Agreement in accordance with
Section 6.01(b)
which is required to purchase each share of Common Stock upon exercise of the Option, or with respect to a Stock Appreciation
Right, the amount established by the Committee in the Award Agreement in accordance with
Section 6.02(b)
which is to be
subtracted from the Fair Market Value on the date of exercise in order to determine the amount of the payment to be made to the
Participant.
2.18.
Fair Market Value
means,
on any date, (i) the closing sale price of a share of Common Stock as reported on an established stock exchange on which the Common
Stock is regularly traded on such date or, if there were no sales on such date, on the last date preceding such date on which
a sale was reported; or (ii) if shares of Common Stock are not listed for trading on an established stock exchange, Fair Market
Value shall be determined by the Committee in good faith and otherwise in accordance with Section 409A of the Code, and any regulations
and other guidance thereunder.
2.19.
Good Reason
unless
otherwise defined in the applicable Award Agreement, shall have the same meaning as that term is defined in a Participant’s
offer letter or other applicable employment agreement; or, if there is no such definition, “Good Reason” means the
occurrence of one of the following events to which the Participant has not consented: (a) a material reduction of the Participant’s
duties and responsibilities, (b) a material reduction in the Participant’s base level of compensation, or (c) a relocation
of the Participant’s place of employment by more than fifty (50) miles; provided the Participant gives notice of such event
to the Corporation within sixty (60) days of the initial occurrence of such event and the Corporation fails to cure such event
within thirty (30) days following such notice.
2.20.
Grant Date
means
the date designated by the Committee as the date as of which it grants an Award, which shall not be earlier than the date on which
the Committee approves the granting of such Award.
2.21.
Incentive Stock Option
means a stock option within the meaning of Section 422 of the Code.
2.22.
Involuntary Termination
means the Participant’s Termination of Service by reason of either (a) the Participant’s
involuntary dismissal or discharge by the Corporation for reasons other than Cause, or (b) the Participant’s voluntary resignation
for Good Reason.
2.23.
Merger
means
any merger, reorganization, consolidation, exchange, transfer of assets or other transaction having similar effect involving the
Corporation.
2.24.
Non-Qualified Stock Option
means a stock option which is not an Incentive Stock Option.
2.25.
Options
means
all Non-Qualified Stock Options and Incentive Stock Options granted at any time under the Plan.
2.26.
Outstanding Common Stock
means, at any time, the issued and outstanding shares of Common Stock.
2.27.
Participant
means
a person designated to receive an Award under the Plan in accordance with
Section 5.01
.
2.28.
Performance Awards
means Awards granted in accordance with
Article VIII
.
2.29.
Performance Goals
means
sales; net sales; return on sales; revenue, net revenue, gross revenue, product revenue or system-wide revenue (including growth
of same); operating income (before or after taxes); pre- or after-tax income or loss (before or after allocation of corporate
overhead and bonus); earnings or loss per share (including on a diluted or undiluted basis, before or after taxes); net income
or loss (before or after taxes); return on equity; stockholder return or total stockholder return; return on assets or net assets;
price of the shares or any other publicly-traded securities of the Corporation; market share; enterprise value; gross profits;
gross or net profit margin; gross profit growth; net operating profit (before or after taxes); operating earnings; earnings or
losses or net earnings or losses (including earnings or losses before taxes, before interest and taxes, or before interest, taxes,
depreciation and/or amortization); operating profit; economic value-added models or “value creation” or similar metrics;
comparisons with various stock market indices; reductions in costs; cash flow (including, but not limited to, operating cash flow
and free cash flow) or cash flow per share (before or after dividends); return on capital (including return on total capital or
return on invested capital); cash flow return on investment; cash flow return on capital; improvement in or attainment of expense
levels or working capital levels, including cash, inventory and accounts receivable; general and administrative expense savings;
inventory control; operating margin; gross margin; year-end cash; cash margin; debt reduction; stockholders equity; return on
stockholders’ equity; operating efficiencies; cost reduction or savings; customer satisfaction; client retention; customer
growth; employee satisfaction; productivity or productivity ratios; financial ratios, including those measuring liquidity, activity,
profitability or leverage; cost of capital or assets under management; financing and other capital raising transactions (including
sales of the Corporation’s equity or debt securities); debt level year-end cash position; book value; factoring transactions;
completion or attainment of measurable objectives with respect to research, development, manufacturing, commercialization, products
or projects, production volume levels, acquisitions and divestitures, succession and hiring projects, reorganization and other
corporate transactions, expansions of specific business operations and meeting divisional or project budgets; any one of such
Goals may be measured with respect to the Corporation or any one or more of its Subsidiaries, Affiliates or divisions and either
in absolute terms or as compared to another company or companies.
2.30.
Plan
has
the meaning given to such term in
Section 1.01
.
2.31.
Restricted Shares
means
Common Stock subject to restrictions imposed in connection with Awards granted under
Article VII
.
2.32.
Restricted Stock Unit
means a unit representing the right to receive Common Stock or the value thereof in the future
subject to restrictions imposed in connection with Awards granted under
Article VII
.
2.33.
Rule 16b-3
means
Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act, as the same may be amended
from time to time, and any successor rule.
2.34.
Section 409A Covered Award
means an Award granted under the Plan that constitutes “non-qualified deferred compensation”
pursuant to Section 409A of the Code.
2.35.
Securities Act
means
the Securities Act of 1933, as amended.
2.36.
Stock Appreciation Rights
means awards granted in accordance with
Article VI
.
2.37.
Subsidiary
means
a subsidiary corporation of the Corporation within the meaning of Section 424(f) of the Code.
2.38.
Substitute Award
means
any Award granted in assumption of or in substitution for an award of a company or business acquired by the Corporation or a Subsidiary
or with which the Corporation or a Subsidiary combines.
2.39.
Termination of Service
means the voluntary or involuntary termination of a Participant’s service as an employee,
director or Consultant with the Corporation or a Subsidiary for any reason, including death, disability, retirement or as the
result of the divestiture of the Participant’s employer or any similar transaction in which the Participant’s employer
ceases to be the Corporation or an Affiliate. Whether entering military or other government service shall constitute Termination
of Service, or whether and when a Termination of Service shall occur as a result of disability, shall be determined in each case
by the Committee in its sole discretion.
Article
III
ADMINISTRATION
3.01.
Committee
.
(a)
Duties and Authority
. The Plan shall be administered by the Committee and the Committee shall have exclusive and final
authority in each determination, interpretation or other action affecting the Plan and its Participants. The Committee shall have
the sole discretionary authority to interpret the Plan, to establish and modify administrative rules for the Plan, to impose such
conditions and restrictions on Awards as it determines appropriate, and to make all factual determinations with respect to and
take such steps in connection with the Plan and Awards granted hereunder as it may deem necessary or advisable. With regard to
any provision of the Plan or any Award Agreement that is intended to comply with Section 162(m) of the Code, any action by the
Committee shall be permitted only to the extent such action would be permitted under Section 162(m) of the Code. Solely to the
extent permitted by applicable law, the Committee may delegate such of its powers and authority under the Plan as it deems appropriate
to a subcommittee of the Committee or designated officers or employees of the Corporation. In addition, the full Board may exercise
any of the powers and authority of the Committee under the Plan. In the event of such delegation of authority or exercise of authority
by the Board, references in the Plan to the Committee shall be deemed to refer, as appropriate, to the delegate of the Committee
or the Board.
(b)
Indemnification
. Each person who is or shall have been a member of the Board or the Committee, or an officer or employee
of the Corporation to whom authority was delegated in accordance with the Plan, shall be indemnified and held harmless by the
Corporation against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such individual
in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or
she 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 him or her in settlement thereof, with the Corporation’s approval, or paid by him or her in satisfaction of any judgment
in any such action, suit, or proceeding against him or her, provided he or she shall give the Corporation an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf; provided,
however, that the foregoing indemnification shall not apply to any loss, cost, liability, or expense that is a result of his or
her own willful misconduct. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Corporation’s Articles of Incorporation or Bylaws, conferred in a separate
agreement with the Corporation, as a matter of law, or otherwise, or any power that the Corporation may have to indemnify them
or hold them harmless.
3.02.
Limitation
on Vesting for Awards
. Notwithstanding any provision of the Plan to the contrary, any stock-settled Award that vests solely
on the basis of the passage of time (e.g., not on the basis of achievement of performance goals) shall not vest more quickly than
ratably over a three (3)-year period following the Grant Date and any stock-settled Award granted that vests based solely on the
achievement of performance goals shall not vest more quickly than one year following the Grant Date, except that the Award Agreement
may reflect, or the Committee may in its discretion provide after the Grant Date for, earlier or accelerated vesting (on a full
or pro rata basis) (i) in the event of the Participant’s death, disability or Involuntary Termination, (ii) upon a Change
in Control, or (iii) in connection with establishing the terms and conditions of employment of a Participant necessary for the
recruitment of the Participant. The provisions of this
Section 3.02
shall not apply to (a) Awards granted to non-employee
directors or Consultants of the Corporation or its Affiliates, (b) Substitute Awards, or (c) Awards involving an aggregate number
of shares of Common Stock not exceeding 4% of the number of shares available for Awards under the first sentence of
Section
4.01
.
Article
IV
SHARES
4.01.
Number
of Shares Issuable
. Subject to adjustment in accordance with
Section 11.07
, the total number of shares of Common Stock
initially authorized to be issued under the Plan shall be three million (3,000,000) shares. No more than 100,000 shares of Common
Stock may be issued under the Plan pursuant to Awards of Incentive Stock Options. The shares to be offered under the Plan shall
be authorized and unissued Common Stock, or issued Common Stock that shall have been reacquired by the Corporation.
4.02.
Shares
Subject to Terminated Awards
. If any portion or all of an Award is forfeited, cancelled, exchanged, settled in cash or surrendered
or if an Award otherwise terminates or expires without a distribution of shares to the Participant, the shares of Corporation
Stock underlying such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration,
again be available for Awards under the Plan. In addition, shares of Common Stock surrendered to or withheld by the Corporation
in payment or satisfaction of the Exercise Price of an Option or Stock Appreciation Right, or tax withholding obligation with
respect to an Award, shall be available for the grant of new Awards under the Plan.
4.03.
Substitute
Awards and Shares Issuable under Acquired Corporation Plans
. Substitute Awards shall not be counted against or otherwise reduce
the number of shares available for future issuance under the Plan. In addition, if a company acquired by the Corporation or any
Subsidiary or with which the Corporation or any Subsidiary combines has shares available under a pre-existing plan approved by
stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing 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 the holders of common stock
of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares
available for future issuance under the Plan. Awards using such available shares under acquired plans shall not be made after
the date awards could have been made under the terms of the acquired plan, absent the acquisition or combination, and shall only
be made to individuals who were not eligible to participate in the Plan prior to such acquisition or combination.
4.04.
Stockholders
Agreement
. All shares of common stock to be issued under the Plan shall be subject to the applicable terms and conditions
of any stockholder’s agreement of the Corporation, as such agreement may be amended from time to time.
Article
V
PARTICIPATION
5.01.
Eligible
Participants
. Participants in the Plan shall be such employees, non-employee directors and Consultants of the Corporation
and its Subsidiaries or Affiliates as the Committee, in its sole discretion, may designate from time to time. The Committee’s
designation of a Participant in any year shall not require the Committee to designate such person to receive Awards or grants
in any other year. The designation of a Participant to receive Awards or grants under one portion of the Plan does not require
the Committee to include such Participant under other portions of the Plan. The Committee shall consider such factors as it deems
pertinent in selecting Participants and in determining the type and amount of their respective Awards.
5.02.
Performance-Based
Award Limits
. Subject to adjustment in accordance with
Section 11.07
, no Participant shall be granted stock-based Awards
in respect of more than 100,000 shares of Common Stock or cash-based Awards for more than $50,000 in any calendar year. Notwithstanding
the foregoing, the Committee may grant Awards to a Participant in excess of the preceding Award limits if the Committee expressly
determines that a particular Award shall not be designed to qualify as “performance-based compensation” for purposes
of Section 162(m) of the Code.
Article
VI
STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS
6.01.
Option
Awards
.
(a)
Grant of Options
. The Committee may grant, to such Participants as the Committee may select, Options entitling the Participant
to purchase shares of Common Stock from the Corporation in such number, at such price, and on such terms and subject to such conditions,
not inconsistent with the terms of this Plan, as may be established by the Committee. The terms of any Option granted under this
Plan shall be set forth in an Award Agreement.
(b)
Exercise Price of Options
. The Exercise Price of each share of Common Stock which may be purchased upon exercise of any
Option granted under the Plan shall not be less than 100% of the Fair Market Value of the Common Stock on the Grant Date.
(c)
Designation of Options
. The Committee shall designate, at the time of the grant of each Option, the Option as an Incentive
Stock Option or a Non-Qualified Stock Option;
provided, however,
that an Option may be designated as an Incentive Stock
Option only if the applicable Participant is an employee of the Corporation or a Subsidiary on the Grant Date.
(d)
Special Incentive Stock Option Rules
. To the extent that the aggregate Fair Market Value (determined as of the time the
Option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time
by a Participant during any calendar year (under all plans of the Corporation and its parent and subsidiary corporations) exceeds
$100,000, such Incentive Stock Options shall constitute Non-Qualified Stock Options. For purposes of this
Section 6.01(d)
,
Incentive Stock Options shall be taken into account in the order in which they were granted. If pursuant to the above, an Incentive
Stock Option is treated as an Incentive Stock Option in part and a Non-Qualified Stock Option in part, the Participant may designate
at the time of exercise which portion shall be deemed to be exercised, and in the absence of such express designation in writing,
the portion of the Option treated as an Incentive Stock Option shall be deemed to be exercised first. Further, no Incentive Stock
Option shall be granted to any person who, at the time the Option is granted, owns stock (including stock owned by application
of the constructive ownership rules in Section 424(d) of the Code) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation, unless at the time the Incentive Stock Option is granted the Exercise
Price of the Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock subject to the Incentive
Stock Option and the Incentive Stock Option, by its terms, is not exercisable for more than five years from the Grant Date.
6.02.
Stock
Appreciation Rights
.
(a)
Stock Appreciation Right Awards
. The Committee is authorized to grant to any Participant one or more Stock Appreciation
Rights. Upon exercise of a Stock Appreciation Right with respect to a share of Common Stock, the Participant shall be entitled
to receive an amount equal to the excess, if any, of (i) the Fair Market Value of a share of Common Stock on the date of exercise
over (ii) the Exercise Price of such Stock Appreciation Right established in the Award Agreement, which amount shall be payable
as provided in
Section 6.02(c)
.
(b)
Exercise Price
. The Exercise Price of any Stock Appreciation Right granted under this Plan shall be determined by the Committee,
but shall not be less than 100% of the Fair Market Value of the Common Stock on the Grant Date.
(c)
Payment of Incremental Value
. Any payment which may become due from the Corporation by reason of a Participant’s
exercise of a Stock Appreciation Right may be paid to the Participant as determined by the Committee (i) all in cash, (ii) all
in Common Stock, or (iii) in any combination of cash and Common Stock. In the event that all or a portion of the payment is made
in Common Stock, the number of shares of Common Stock delivered in satisfaction of such payment shall be determined by dividing
the amount of such payment or portion thereof by the Fair Market Value on the exercise date. No fractional share of Common Stock
shall be issued to make any payment in respect of Stock Appreciation Rights; if any fractional share would be issuable, the combination
of cash and Common Stock payable to the Participant shall be adjusted as directed by the Committee to avoid the issuance of any
fractional share
6.03.
Terms
of Stock Options and Stock Appreciation Rights
.
(a)
Conditions on Exercise
. An Award Agreement with respect to Options or Stock Appreciation Rights may contain such waiting
periods, exercise dates and restrictions on exercise (including, but not limited to, periodic installments, repurchase rights
on early exercise and automatic exercise of in-the-money Options upon expiration) as may be determined by the Committee at the
time of grant.
(b)
Duration of Options
. Options shall terminate upon the first to occur of the following events:
(i)
Expiration of the Option or Stock Appreciation Right as provided in the Award Agreement; or
(ii)
Termination of the Award in the event of a Participant’s Termination of Service as provided in the Award Agreement; or
(iii)
Ten years from the Grant Date (five years in certain cases, as described in
Section 6.01(d)
).
(c)
Extension of Exercise Time
. The Committee, in its sole discretion, shall have the right (but shall not be obligated), exercisable
on or at any time after the Grant Date, to extend the exercise period of an Option beyond the termination or expiration of the
Option under the terms of the Award Agreement;
provided,
in no event shall the exercise period be extended beyond the date
set forth in
Section 6.03(b)(iii)
or otherwise in a manner that would result in adverse tax consequences under Section
409A of the Code. If the exercise period is extended beyond ninety (90) days following any Termination of Service, an exercise
of an ISO during the extended period will be treated as the exercise of an NSO to the extent so required by applicable law or
regulation.
(d)
Rights as a Stockholder
. A Participant shall have no rights as a stockholder with respect to Common Stock covered by any
Options or Stock Appreciation Rights until such Participant shall have become the owner of record of any such shares, and no adjustment
shall be made for dividends in cash or other property or distributions or other rights with respect to any such Common Stock for
which the record date is prior to the date on which such Participant shall have become the owner of record of any such shares;
provided, however
, that Participants are entitled to share adjustments to reflect capital changes under
Section 11.07
.
6.04.
Exercise
Procedures
. Each Option or Stock Appreciation Right granted under the Plan shall be exercised prior to the close of business
on the expiration date of the Award by notice to the Corporation or by such other method as provided in the Award Agreement or
as the Committee may establish or approve from time to time. The Exercise Price of shares purchased upon exercise of an Option
granted under the Plan shall be paid in full in cash by the Participant pursuant to the Award Agreement;
provided, however
,
that the Committee may (but shall not be required to) permit payment to be made (a) by tendering (either by actual delivery or
attestation) previously acquired shares of Common Stock, (b) by a “net exercise” method under which the Corporation
reduces the number of shares of Common Stock issued upon exercise by the largest whole number of shares with a Fair Market Value
that does not exceed the aggregate Exercise Price, or (c) such other consideration as the Committee deems appropriate and in compliance
with applicable law (including payment under an arrangement constituting a brokerage transaction as permitted under the provisions
of Regulation T applicable to cashless exercises promulgated by the Federal Reserve Board, unless prohibited by Section 402 of
the Sarbanes-Oxley Act of 2002). In the event that any Common Stock shall be transferred to the Corporation to satisfy all or
any part of the Exercise Price, the part of the Exercise Price deemed to have been satisfied by such transfer of Common Stock
shall be equal to the product derived by multiplying the Fair Market Value as of the date of exercise times the number of shares
of Common Stock transferred to the Corporation. The Participant may not transfer to the Corporation in satisfaction of the Exercise
Price any fractional share of Common Stock. Any part of the Exercise Price paid in cash upon the exercise of any Option shall
be added to the general funds of the Corporation and may be used for any proper corporate purpose. Unless the Committee shall
otherwise determine, any Common Stock transferred to the Corporation as payment of all or part of the Exercise Price upon the
exercise of any Option shall be held as treasury shares.
6.05.
Change
in Control
. With respect to each Award of Options or Stock Appreciation Rights, the Committee shall determine whether and
to what extent such Award will become immediately and fully exercisable in the event of a Change in Control or upon the occurrence
of one or more specified conditions following a Change in Control, including without limitation an Involuntary Termination. Such
provisions relating to the effect of a Change in Control on an outstanding Award of Options shall be set forth in the applicable
Award Agreement.
Article
VII
RESTRICTED SHARES AND RESTRICTED STOCK UNITS
7.01.
Award
of Restricted Stock and Restricted Stock Units
. The Committee may grant to any Participant an Award of Restricted Shares consisting
of a specified number of shares of Common Stock issued to the Participant subject to such terms, conditions and forfeiture and
transfer restrictions, whether based on performance standards, periods of service, retention by the Participant of ownership of
specified shares of Common Stock or other criteria, as the Committee shall establish. The Committee may also grant Restricted
Stock Units representing the right to receive shares of Common Stock in the future subject to such terms, conditions and restrictions,
whether based on performance standards, periods of service, retention by the Participant of ownership of specified shares of Common
Stock or other criteria, as the Committee shall establish. With respect to performance-based Awards of Restricted Shares or Restricted
Stock Units that are intended to qualify as “performance-based” compensation for purposes of Section 162(m) of the
Code, performance targets will consist of specified levels of one or more of the Performance Goals. The terms of any Restricted
Share and Restricted Stock Unit Awards granted under this Plan shall be set forth in an Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with this Plan.
7.02.
Restricted
Shares
.
(a)
Issuance of Restricted Shares
. As soon as practicable after the Grant Date of a Restricted Share Award by the Committee,
the Corporation shall cause to be transferred on the books of the Corporation, or its agent, Common Stock, registered on behalf
of the Participant, evidencing the Restricted Shares covered by the Award, but subject to forfeiture to the Corporation as of
the Grant Date if an Award Agreement with respect to the Restricted Shares covered by the Award is not duly executed by the Participant
and timely returned to the Corporation. All Common Stock covered by Awards under this
Article VII
shall be subject to the
restrictions, terms and conditions contained in the Plan and the Award Agreement entered into by the Participant. Until the lapse
or release of all restrictions applicable to an Award of Restricted Shares, the share certificates representing such Restricted
Shares may be held in custody by the Corporation, its designee, or, if the certificates bear a restrictive legend, by the Participant.
Upon the lapse or release of all restrictions with respect to an Award as described in
Section 7.02(d)
, one or more share
certificates, registered in the name of the Participant, for an appropriate number of shares as provided in
Section 7.02(d)
,
free of any restrictions set forth in the Plan and the Award Agreement shall be delivered to the Participant.
(b)
Stockholder Rights
. Beginning on the Grant Date of the Restricted Share Award and subject to execution of the Award Agreement
as provided in
Section 7.02(a)
, the Participant shall become a stockholder of the Corporation with respect to all shares
subject to the Award Agreement and shall have all of the rights of a stockholder, including, but not limited to, the right to
vote such shares and the right to receive dividends;
provided, however
, that any Common Stock distributed as a dividend
or otherwise with respect to any Restricted Shares as to which the restrictions have not yet lapsed, shall be subject to the same
restrictions as such Restricted Shares and held or restricted as provided in
Section 7.02(a)
.
(c)
Restriction on Transferability
. None of the Restricted Shares may be assigned or transferred (other than by will or the
laws of descent and distribution, or to an inter vivos trust with respect to which the Participant is treated as the owner under
Sections 671 through 677 of the Code, except to the extent that Section 16 of the Exchange Act limits a Participant’s right
to make such transfers), pledged or sold prior to lapse of the restrictions applicable thereto.
(d)
Delivery of Shares upon Vesting
. Upon expiration or earlier termination of the forfeiture period without a forfeiture and
the satisfaction of or release from any other conditions prescribed by the Committee, or at such earlier time as provided under
the provisions of
Sections 3.02
and
7.04
, the restrictions applicable to the Restricted Shares shall lapse. As promptly
as administratively feasible thereafter, subject to the requirements of
Section 11.05
, the Corporation shall deliver to
the Participant or, in case of the Participant’s death, to the Participant’s Beneficiary, one or more share certificates
for the appropriate number of shares of Common Stock, free of all such restrictions, except for any restrictions that may be imposed
by law.
(e)
Forfeiture of Restricted Shares
. Subject to
Sections 3.02 and 7.04
, all Restricted Shares shall be forfeited and
returned to the Corporation and all rights of the Participant with respect to such Restricted Shares shall terminate if the Participant
incurs a Termination of Service prior to the expiration of the forfeiture period for such Restricted Shares or otherwise fails
to satisfy any and all other conditions set forth in the Award Agreement. Subject to
Section 3.02
, the Committee shall
determine the forfeiture period (which may, but need not, lapse in installments) and any other terms and conditions applicable
with respect to any Restricted Share Award.
7.03.
Restricted
Stock Units
.
(a)
Settlement of Restricted Stock Units
. Payments shall be made to Participants with respect to their Restricted Stock Units
as soon as practicable after the Committee has determined that the terms and conditions applicable to such Award have been satisfied
or at a later date if distribution has been deferred. Payments to Participants with respect to Restricted Stock Units shall be
made in the form of Common Stock, or cash or a combination of both, as the Committee may determine. The amount of any cash to
be paid in lieu of Common Stock shall be determined on the basis of the Fair Market Value of the Common Stock on the date any
such payment is processed. As to shares of Common Stock which constitute all or any part of such payment, the Committee may impose
such restrictions concerning their transferability and/or their forfeiture as may be provided in the applicable Award Agreement
or as the Committee may otherwise determine, provided such determination is made on or before the date certificates for such shares
are first delivered to the applicable Participant.
(b)
Stockholder Rights
. Until the lapse or release of all restrictions applicable to an Award of Restricted Stock Units, no
shares of Common Stock shall be issued in respect of such Awards and no Participant shall have any rights as a stockholder of
the Corporation with respect to the shares of Common Stock covered by such Award of Restricted Stock Units.
(c)
Dividend Equivalents
. For any Restricted Stock Unit granted under the Plan, the Committee shall have the discretion, upon
the Grant Date or thereafter, to establish a Dividend Equivalent Account with respect to the Restricted Stock Unit, in accordance
with
Section 11.17
.
(d)
Deferral of Payment
. If approved by the Committee and set forth in the applicable Award Agreement, a Participant may elect
to defer the amount payable with respect to the Participant’s Restricted Stock Units in accordance with such terms as may
be established by the Committee and in a manner intended to comply with, or be exempt from, Section 409A of the Code.
7.04.
Change
in Control
. With respect to each Award of Restricted Shares or Restricted Stock Units, the Committee shall determine whether
and to what extent such Award will become immediately and fully vested and nonforfeitable in the event of a Change in Control
or upon the occurrence of one or more specified conditions following a Change in Control, including without limitation an Involuntary
Termination. Such provisions relating to the effect of a Change in Control on an outstanding Award of Restricted Shares or Restricted
Stock Units shall be set forth in the applicable Award Agreement.
Article
VIII
PERFORMANCE AWARDS
8.01.
Performance
Awards
.
(a)
Award Periods and Calculations of Potential Incentive Amounts
. The Committee may grant Performance Awards to Participants.
A Performance Award shall consist of the right to receive a payment (measured by the Fair Market Value of a specified number of
shares of Common Stock, increases in such Fair Market Value during the Award Period and/or a fixed cash amount) contingent upon
the extent to which certain predetermined performance targets have been met during an Award Period. The Award Period shall be
a period of not less than one fiscal or calendar year as determined by the Committee. The Committee, in its discretion and under
such terms as it deems appropriate, may permit Participants to receive Performance Awards after an Award Period has commenced.
(b)
Performance Targets
. The performance targets may include such goals related to the performance of the Corporation or, where
relevant, any one or more of its Subsidiaries, Affiliates or divisions and/or the performance of a Participant as may be established
by the Committee in its discretion. In the case of Performance Awards that are intended to qualify as “performance-based”
compensation for purposes of Section 162(m) of the Code, the targets will be limited to specified levels of one or more of the
Performance Goals. The performance targets established by the Committee may vary for different Award Periods and need not be the
same for each Participant receiving a Performance Award in an Award Period. Except to the extent inconsistent with the performance-based
compensation exception under Section 162(m) of the Code, in the case of Performance Awards, the Committee, in its discretion,
but only under extraordinary circumstances as determined by the Committee, may change any prior determination of performance targets
for any Award Period at any time prior to the final determination of the Award when events or transactions occur to cause the
performance targets to be an inappropriate measure of achievement.
(c)
Earning Performance Awards
. The Committee, at or as soon as practicable after the Grant Date, shall prescribe a formula
to determine the percentage of the Performance Award to be earned based upon the degree of attainment of the applicable performance
targets.
(d)
Payment of Earned Performance Awards
. Subject to the requirements of
Section 11.05
, payments of earned Performance
Awards shall be made in cash or Common Stock, or a combination of cash and Common Stock, in the discretion of the Committee. The
Committee, in its sole discretion, may define, and set forth in the applicable Award Agreement, such terms and conditions with
respect to the payment of earned Performance Awards as it may deem desirable.
(e)
Dividend Equivalents
. For any Performance Award granted under the Plan, the Committee shall have the discretion, upon the
Grant Date or thereafter, to establish a Dividend Equivalent Account with respect to the Performance Award, in accordance with
Section 11.17.
(f)
Deferral of Payment
. If approved by the Committee and set forth in the applicable Award Agreement, a Participant may elect
to defer the amount payable with respect to the Participant’s Performance Award in accordance with such terms as may be
established by the Committee, subject to the requirements of Section 409A of the Code.
8.02.
Termination
of Service
. Subject to
Section 8.03
, in the event of a Participant’s Termination of Service during an Award Period,
the Participant’s Performance Awards shall be forfeited except as may otherwise be provided in the applicable Award Agreement.
8.03.
Change
in Control
. With respect to each Performance Award, the Committee shall determine whether and to what extent such Award will
become immediately and fully vested and nonforfeitable in the event of a Change in Control or upon the occurrence of one or more
specified conditions following a Change in Control, including without limitation an Involuntary Termination. Such provisions relating
to the effect of a Change in Control on an outstanding Performance Award shall be set forth in the applicable Award Agreement.
Article
IX
OTHER
STOCK-BASED AWARDS
9.01
Grant of Other Stock-Based Awards
. Other stock-based awards, consisting of Substitute Awards, stock purchase rights (with
or without loans to Participants by the Corporation containing such terms as the Committee shall determine), Awards of Common
Stock, or Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, may be granted either alone
or in addition to or in conjunction with other Awards under the Plan. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be made, the
number of shares of Common Stock to be granted pursuant to such Awards, and all other conditions of the Awards. Any such Award
shall be confirmed by an Award Agreement executed by the Committee and the Participant, which Award Agreement shall contain such
provisions as the Committee determines to be necessary or appropriate to carry out the intent of this Plan with respect to such
Award.
9.02
Terms of Other Stock-Based Awards
. In addition to the terms and conditions specified in the Award Agreement, Awards made
pursuant to this
Article IX
shall be subject to the following:
(a)
Any Common Stock subject to Awards made under this
Article IX
may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance
or deferral period lapses;
(b)
For any such Award, the Committee shall have the discretion, upon the Grant Date or thereafter, to establish a related Dividend
Equivalent Account, in accordance with
Section 11.17
; and
(c)
Subject to
Section 3.02
, the Award Agreement with respect to any Award shall contain provisions dealing with the disposition
of such Award in the event of a Termination of Service prior to the exercise, payment or other settlement of such Award, with
such provisions taking account of the specific nature and purpose of the Award.
Article
X
CASH INCENTIVE AWARDS
10.01.
Eligibility
.
Executive officers of the Corporation as determined from time to time by the Committee will be eligible to receive cash-based
incentive awards under this
Article X
. Such executive officers shall include the executive officers who are determined
from time to time by the Committee to be “covered employees” for purposes of Section 162(m) of the Code.
10.02.
Awards
.
(a)
Performance Targets
. The Committee shall establish objective performance targets based on specified levels of one or more
of the Performance Goals. Such performance targets shall be established by the Committee on a timely basis to ensure that the
targets are considered “preestablished” for purposes of Section 162(m) of the Code.
(b)
Amounts of Awards
. In conjunction with the establishment of performance targets for a fiscal year or such other performance
period established by the Committee, the Committee shall adopt an objective formula (on the basis of percentages of Participants’
salaries, shares in a bonus pool or otherwise) for computing the respective amounts payable under the Plan to Participants if
and to the extent that the performance targets are attained. Such formula shall comply with the requirements applicable to performance-based
compensation plans under Section 162(m) of the Code and, to the extent based on percentages of a bonus pool, such percentages
shall not exceed 100% in the aggregate.
(c)
Payment of Awards
. Awards will be payable to Participants in cash each year upon prior written certification by the Committee
of attainment of the specified performance targets for the preceding fiscal year or other applicable performance period.
(d)
Negative Discretion
. Notwithstanding the attainment by the Corporation of the specified performance targets, the Committee
shall have the discretion, which need not be exercised uniformly among the Participants, to reduce or eliminate the Award that
would be otherwise paid.
(e)
Guidelines
. The Committee may adopt from time to time written policies for its implementation of this
Article X
.
Such guidelines shall reflect the intention of the Corporation that all payments hereunder qualify as performance-based compensation
under Section 162(m) of the Code.
(f)
Non-Exclusive Arrangement
. The adoption and operation of this
Article X
shall not preclude the Board or the Committee
from approving other cash-based incentive compensation arrangements for the benefit of individuals who are Participants hereunder
as the Board or Committee, as the case may be, deems appropriate and in the best interests of the Corporation.
Article
XI
T
ERMS
APPLICABLE GENERALLY TO AWARDS GRANTED
UNDER
THE PLAN
11.01.
Plan
Provisions Control Award Terms
. Except as provided in
Section 11.16
, the terms of the Plan shall govern all Awards
granted under the Plan, and in no event shall the Committee have the power to grant any Award under the Plan which is contrary
to any of the provisions of the Plan. In the event any provision of any Award granted under the Plan shall conflict with any provision
in the Plan as constituted on the Grant Date of such Award, the provision in the Plan as constituted on the Grant Date of such
Award shall control. Except as provided in
Section 11.03
and
Section 11.07
, the terms of any Award granted under
the Plan may not be changed after the Grant Date of such Award so as to materially decrease the value of the Award without the
express written approval of the holder.
11.02.
Award
Agreement
. No person shall have any rights under any Award granted under the Plan unless and until the Corporation and the
Participant to whom such Award shall have been granted shall have executed and delivered an Award Agreement or received any other
Award acknowledgment authorized by the Committee expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.
11.03.
Modification
of Award After Grant
. No Award granted under the Plan to a Participant may be modified (unless such modification does not
materially decrease the value of the Award) after the Grant Date except by express written agreement between the Corporation and
the Participant, provided that any such change (a) shall not be inconsistent with the terms of the Plan, and (b) shall be approved
by the Committee.
11.04.
Limitation
on Transfer
. Except as provided in
Section 7.02(c)
in the case of Restricted Shares, a Participant’s rights and
interest under the Plan may not be assigned or transferred other than by will or the laws of descent and distribution, and during
the lifetime of a Participant, only the Participant personally (or the Participant’s personal representative) may exercise
rights under the Plan. The Participant’s Beneficiary may exercise the Participant’s rights to the extent they are
exercisable under the Plan following the death of the Participant. Notwithstanding the foregoing, to the extent permitted under
Section 16(b) of the Exchange Act with respect to Participants subject to such Section, the Committee may grant Non-Qualified
Stock Options that are transferable, without payment of consideration, to a “family member” as defined in Rule 701(c)(3)
as promulgated under the Securities Act, and the Committee may also amend outstanding Non-Qualified Stock Options to provide for
such transferability.
11.05.
Taxes
.
The Corporation shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment from the Participant
in lieu of withholding) the amount of any withholding or other tax required by law to be withheld or paid by the Corporation with
respect to any amount payable or shares issuable under such Participant’s Award, or with respect to any income recognized
upon a disqualifying disposition of shares received pursuant to the exercise of an Incentive Stock Option, and the Corporation
may defer payment or issuance of the cash or shares upon exercise or vesting of an Award unless indemnified to its satisfaction
against any liability for any such tax. The amount of such withholding or tax payment shall be determined by the Committee and
shall be payable by the Participant at such time as the Committee determines in accordance with the following rules:
(a)
The Committee may permit the Participant to elect to meet his or her withholding requirement (i) by having withheld from such
Award at the appropriate time that number of shares of Common Stock, rounded down to the next whole share, whose Fair Market Value
is equal to the amount of withholding taxes due, (ii) by direct payment to the Corporation in cash of the amount of any taxes
required to be withheld with respect to such Award or (iii) by a combination of shares and cash.
(b)
In the case of Participants who are subject to Section 16 of the Exchange Act, the Committee may impose such limitations and restrictions
as it deems necessary or appropriate with respect to the delivery or withholding of shares of Common Stock to meet tax withholding
obligations.
11.06.
Surrender
of Awards
. Any Award granted under the Plan may be surrendered to the Corporation for cancellation on such terms as the Committee
and the Award holder approve. With the consent of the Participant, the Committee may substitute a new Award under this Plan in
connection with the surrender by the Participant of an equity compensation award previously granted under this Plan or any other
plan sponsored by the Corporation;
provided, however
, that no such substitution shall be permitted without the approval
of the Corporation’s stockholders if such approval is required by the rules of any applicable stock exchange.
11.07.
Adjustments
to Reflect Capital Changes
.
(a)
Recapitalization
. In the event of any “equity restructuring” (within the meaning of FASB ASC Topic 718, Compensation—Stock
Compensation) that causes the per share value of the Shares to change, such as a stock dividend, stock split, spinoff, rights
offering or recapitalization through an extraordinary dividend, the Committee shall make such adjustments as it deems equitable
and appropriate to (i) the aggregate number and kind of shares of Common Stock or other securities issued or reserved for issuance
under the Plan, (ii) the number and kind of shares of Common Stock or other securities subject to outstanding Awards, (iii) the
Exercise Price of outstanding Options or Stock Appreciation Rights, and (iv) the annual Award limits or any other maximum limitations
prescribed by the Plan with respect to certain types of Awards or the grants to individuals of certain types of Awards. In the
event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete
liquidation of the Corporation, such equitable adjustments described in the foregoing sentence may be made as determined to be
appropriate and equitable by the Committee (or, if the Corporation is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) to prevent dilution or enlargement of the rights of Participants. No adjustment
shall be made pursuant to this
Section 11.07
in connection with the conversion of any convertible securities of the Corporation,
or in a manner that would cause an Award to be subject to adverse tax consequences under Sections 409A or 422 of the Code. The
Committee shall have the power and sole discretion to determine the amount of the adjustment to be made in each case under this
Section.
(b)
Merger
. After any Merger in which the Corporation is the surviving corporation, each Participant shall, at no additional
cost, be entitled upon any exercise of all Options or receipt of other Award to receive (subject to any required action by stockholders),
in lieu of the number of shares of Common Stock receivable or exercisable pursuant to such Award, the number and class of shares
or other securities to which such Participant would have been entitled pursuant to the terms of the Merger if, at the time of
the Merger, such Participant had been the holder of record of a number of shares equal to the number of shares receivable or exercisable
pursuant to such Award. Comparable rights shall accrue to each Participant in the event of successive Mergers of the character
described above. Notwithstanding
Section 11.15
, in the event of a Merger in which the Corporation is not the surviving
corporation, outstanding Awards shall be subject to the agreement governing the Merger, which may provide, without limitation,
for the assumption of Awards by the surviving corporation or its parent or subsidiary, for the substitution by the surviving corporation
or its parent or subsidiary of its own awards for such Awards, for accelerated vesting and accelerated expiration, or for settlement
in cash or cash equivalents. In any event, the exercise and/or vesting of any Award that was permissible solely by reason of this
Section 11.07(b)
shall be conditioned upon the consummation of the Merger.
11.08.
No
Right to Continued Service
. No person shall have any claim of right to be granted an Award under this Plan. Neither the Plan
nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the service of the Corporation
or any of its Subsidiaries.
11.09.
Awards
Not Includable for Benefit Purposes
. Payments received by a Participant pursuant to the provisions of the Plan shall not be
included in the determination of benefits under any pension, group insurance or other benefit plan applicable to the Participant
which is maintained by the Corporation or any of its Subsidiaries, except as may be provided under the terms of such plans or
determined by the Board.
11.10.
Governing
Law
. All determinations made and actions taken pursuant to the Plan shall be governed by the laws of the State of Nevada and
construed in accordance therewith.
11.11.
No
Strict Construction
. No rule of strict construction shall be implied against the Corporation, the Committee, or any other
person in the interpretation of any of the terms of the Plan, any Award granted under the Plan or any rule or procedure established
by the Committee.
11.12.
Compliance
with Rule 16b-3
. It is intended that, unless the Committee determines otherwise, Awards under the Plan be eligible for exemption
under Rule 16b-3. The Board is authorized to amend the Plan and to make any such modifications to Award Agreements to comply with
Rule 16b-3, as it may be amended from time to time, and to make any other such amendments or modifications as it deems necessary
or appropriate to better accomplish the purposes of the Plan in light of any amendments made to Rule 16b-3.
11.13.
Captions
.
The captions (
i.e.,
all Section headings) used in the Plan are for convenience only, do not constitute a part of the Plan,
and shall not be deemed to limit, characterize or affect in any way any provisions of the Plan, and all provisions of the Plan
shall be construed as if no captions have been used in the Plan.
11.14.
Severability
.
Whenever possible, each provision in the Plan and every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of the Plan or any Award at any time granted under
the Plan shall be held to be prohibited by or invalid under applicable law, then (a) such provision shall be deemed amended to
accomplish the objectives of the provision as originally written to the fullest extent permitted by law and (b) all other provisions
of the Plan and every other Award at any time granted under the Plan shall remain in full force and effect.
11.15.
Amendment
and Termination
.
(a)
Amendment
. The Board shall have complete power and authority to amend the Plan at any time;
provided, however
, that
the Board shall not, without the requisite affirmative approval of stockholders of the Corporation, make any amendment which requires
stockholder approval under the Code or under any other applicable law or rule of any stock exchange which lists Common Stock or
the Company’s Voting Securities. No termination or amendment of the Plan may, without the consent of the Participant to
whom any Award shall theretofore have been granted under the Plan, materially and adversely affect the right of such individual
under such Award.
(b)
Termination
. The Board shall have the right and the power to terminate the Plan at any time. No Award shall be granted
under the Plan after the termination of the Plan, but the termination of the Plan shall not have any other effect and any Award
outstanding at the time of the termination of the Plan may be exercised after termination of the Plan at any time prior to the
expiration date of such Award to the same extent such Award would have been exercisable had the Plan not terminated.
(c)
No Repricing Without Stockholder Approval
. Notwithstanding any provision herein to the contrary, the repricing of Options
or Stock Appreciation Rights is prohibited without prior approval of the Corporation’s stockholders. For this purpose, a
“repricing” means any of the following (or any other action that has the same effect as any of the following): (i)
changing the terms of an Option or Stock Appreciation Right to lower its Exercise Price; (ii) any other action that is treated
as a “repricing” under generally accepted accounting principles; and (iii) repurchasing for cash or canceling an Option
or Stock Appreciation Right at a time when its Exercise Price is greater than the Fair Market Value of the underlying Common Stock
in exchange for another Award, unless the cancellation and exchange occurs in connection with a change in capitalization or similar
change under
Section 11.07
above. Such cancellation and exchange as described in clause (iii) of the preceding sentence
would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally
accepted accounting principles and regardless of whether it is voluntary on the part of the Participant.
11.16.
Foreign
Qualified Awards
. Awards under the Plan may be granted to such employees of the Corporation and its Subsidiaries who are residing
in foreign jurisdictions as the Committee in its sole discretion may determine from time to time. The Committee may adopt such
supplements to the Plan as may be necessary or appropriate to comply with the applicable laws of such foreign jurisdictions and
to afford Participants favorable treatment under such laws; provided, however, that no Award shall be granted under any such supplement
with terms or conditions inconsistent with the provisions set forth in the Plan.
11.17.
Dividend
Equivalents
. For any Award granted under the Plan other than an Option or Stock Appreciation Right, the Committee shall have
the discretion, upon the Grant Date or thereafter, to establish a Dividend Equivalent Account with respect to the Award, and the
applicable Award Agreement or an amendment thereto shall confirm such establishment. If a Dividend Equivalent Account is established,
the following terms shall apply:
(a)
Terms and Conditions
. Dividend Equivalent Accounts shall be subject to such terms and conditions as the Committee shall
determine and as shall be set forth in the applicable Award Agreement. Such terms and conditions may include, without limitation,
for the Participant’s Account to be credited as of the record date of each cash dividend on the Common Stock with an amount
equal to the cash dividends which would be paid with respect to the number of shares of Common Stock then covered by the related
Award if such shares of Common Stock had been owned of record by the Participant on such record date.
(b)
Unfunded Obligation
. Dividend Equivalent Accounts shall be established and maintained only on the books and records of
the Corporation and no assets or funds of the Corporation shall be set aside, placed in trust, removed from the claims of the
Corporation’s general creditors, or otherwise made available until such amounts are actually payable as provided hereunder.
(c)
Performance Award Limitations
. Notwithstanding any other provision of this
Section 11.17
or the Plan to the contrary,
amounts credited to a Participant’s Dividend Equivalent Account with respect to any unvested portions of an Award granted
whose vesting is subject to the achievement of specified Performance Goals or other performance-based criteria shall be subject
to the same vesting or forfeiture restrictions as the shares or units underlying the Award to which such dividend equivalents
relate.
11.18.
Adjustment
of Performance Goals and Targets
. Notwithstanding any provision of the Plan to the contrary, the Committee shall have the
authority to adjust any Performance Goal, performance target or other performance-based criteria established with respect to any
Award under the Plan if circumstances occur (including, but not limited to, unusual or nonrecurring events, changes in tax laws
or accounting principles or practices or changed business or economic conditions) that cause any such Performance Goal, performance
target or performance-based criteria to be inappropriate in the judgment of the Committee;
provided
, that with respect
to any Award granted that is intended to qualify for the “performance-based compensation” exception under Section
162(m) of the Code and the regulations thereunder, any adjustment by the Committee shall be consistent with the requirements of
Section 162(m) and the regulations thereunder.
11.19.
Legality
of Issuance
. Notwithstanding any provision of this Plan or any applicable Award Agreement to the contrary, the Committee shall
have the sole discretion to impose such conditions, restrictions and limitations (including suspending exercises of Options and
the tolling of any applicable exercise period during such suspension) on the issuance of Common Stock with respect to any Award
unless and until the Committee determines that such issuance complies with (i) any applicable registration requirements under
the Securities Act (or the Committee has determined that an exemption therefrom is available), (ii) any applicable listing requirement
of any stock exchange on which the Common Stock is listed, (iii) any applicable Corporate policy or administrative rules, and
(iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.
11.20.
Restrictions
on Transfe
r. Regardless of whether the offering and sale of Common Stock under the Plan have been registered under the Securities
Act or have been registered or qualified under the securities laws of any state, the Corporation may impose restrictions upon
the sale, pledge, or other transfer of such Common Stock (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Corporation and its counsel, such restrictions are necessary or desirable to achieve compliance with
the provisions of the Securities Act, the securities laws of any state, the United States or any other applicable foreign law.
11.21.
Further
Assurances
. As a condition to receipt of any Award under the Plan, a Participant shall agree, upon demand of the Corporation,
to do all acts and execute, deliver and perform all additional documents, instruments and agreements which may be reasonably required
by the Corporation, to implement the provisions and purposes of the Plan.
11.22.
Compliance
with Section 409A
. The Plan and Awards made under the Plan are intended to comply with, or be exempt from, the requirements
of Section 409A of the Code, and the Plan and any Award Agreements shall be interpreted in a manner consistent with such intent.
In addition, and notwithstanding any provision of the Plan to the contrary, the Corporation reserves the right to amend the Plan
or any Award granted under the Plan, by action of the Committee, without the consent of any affected Participant, to the extent
deemed necessary or appropriate for purposes of maintaining compliance with Section 409A of the Code and the regulations promulgated
thereunder. All Section 409A Covered Awards shall be paid in a manner intended to comply with Section 409A of the Code. In no
event whatsoever shall the Corporation be liable for any additional tax, interest or penalties that may be imposed on a Participant
by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code or this
Section 11.22
. Notwithstanding
anything in the Plan or in an Award Agreement to the contrary, the following provisions shall apply to Section 409A Covered Awards:
(a)
A Termination of Service shall not be deemed to have occurred for purposes of any provision of a Section 409A Covered Award providing
for payment upon or following a termination of the Participant’s service unless such termination is also a “Separation
from Service” within the meaning of Section 409A of the Code and, for purposes of any such provision of Section 409A Covered
Award, references to a “termination,” “termination of employment” or like terms shall mean Separation
from Service. Notwithstanding any provision to the contrary in the Plan or Award Agreement, if the Participant is deemed on the
date of the Participant’s Termination of Service to be a “specified employee” within the meaning of that term
under Section 409A(a)(2)(B) of the Code, then with regard to any payment under a Section 409A Covered Award, to the extent required
to be delayed in compliance with Section 409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier of (i)
the expiration of the six (6)-month period measured from the date of the Participant’s Separation from Service, and (ii)
the date of the Participant’s death.
(b)
Whenever a payment under a Section 409A Covered Award specifies a payment period with reference to a number of days, the actual
date of payment within the specified period shall be within the sole discretion of the Corporation.
(c)
If under the Section 409A Covered Award an amount is to be paid in two or more installments, for purposes of Section 409A of the
Code, each installment shall be treated as a separate payment.
11.23.
Recovery
of Compensation in Connection with Financial Restatement
. Notwithstanding any other provision of this Plan or any applicable
Award Agreement to the contrary, if the Board determines that the Corporation is required to restate its financial statements
due to material noncompliance with any financial reporting requirement under the law, whether such noncompliance is the result
of misconduct or other circumstances, a Participant shall be required to reimburse the Corporation for any amounts earned or payable
with respect to an Award to the extent required by and otherwise in accordance with applicable law and any Corporation policies
adopted or implemented by the Board or Committee from time to time.
11.24.
Financial
Statements
. To the extent required by Rule 701 promulgated under the Securities Act of 1933 (as amended from time to time)
or otherwise under applicable law, the Corporation shall deliver financial statements at least annually to all persons to whom
an Award is granted pursuant to the Plan or to all persons who otherwise hold an outstanding Award under the Plan. This Section
11.24 shall not apply to key persons whose duties in connection with the Corporation and its Affiliates assure them access to
equivalent information.
APPENDIX
B
CERTIFICATE
OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
FTE
NETWORKS, INC.
FTE
Networks, Inc. (the “
Company
”), a Nevada corporation, does hereby certify:
FIRST:
That the Board of Directors (the “
Board
”) of the Company adopted the proposed amendment to the Company’s
Articles of Incorporation to increase the authorized shares of the Company’s common stock, par value $0.001, declaring said
amendment to be advisable.
The
proposed amendment reads as follows:
Article
II, paragraph A is hereby amended and restated in its entirety as follows:
A.
Classes of Stock
. The aggregate number of shares the Corporation shall have authority to issue shall be 100,000,000 shares
of Common Stock, par value $0.001 per share (“
Common Stock
”).
SECOND:
That certain of the Company’s stockholders (the “
Majority Stockholders
”) owning an aggregate of 62.6%
of the applicable voting power of the Company’s issued and outstanding stock approved the proposed amendment by giving their
written consent, subsequent to which the Company filed with the U.S. Securities and Exchange Commission and mailed to its stockholders
an information statement on Schedule 14C to inform said stockholders of the proposed amendment to be made by written consent in
lieu of a special meeting.
THIRD:
That this amendment was duly adopted in accordance with the provisions of NRS 78.320, 78.385 and 78.390.
IN
WITNESS WHEREOF,
the Company has caused this certificate to be signed this ___ day of January 2018.
|
By:
|
/s/
Michael Palleschi
|
|
Name:
|
Michael Palleschi
|
|
Title:
|
Chief Executive
Officer
|
APPENDIX
C
CERTIFICATE
OF CHANGE
TO
THE ARTICLES OF INCORPORATION
OF
FTE
NETWORKS, INC.