UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. )
|
Filed
by the Registrant [X]
|
Filed
by a Party other than the Registrant [ ]
|
Check
the appropriate box:
|
[ ]
|
Preliminary
Proxy Statement
|
|
[ ]
|
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|
[X]
|
Definitive
Proxy Statement
|
|
[ ]
|
Definitive
Additional Materials
|
|
[ ]
|
Soliciting
Material Pursuant to § 240.14a-12
|
Muscle
Maker, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
|
[X]
|
No
fee required.
|
|
[ ]
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
|
(1)
|
Title
of each class of securities to which transaction applies:
|
|
|
|
|
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
|
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
|
|
|
|
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
|
|
|
|
(5)
|
Total
fee paid:
|
|
[ ]
|
Fee
paid previously with preliminary materials.
|
|
[ ]
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
|
|
|
(1)
|
Amount
Previously Paid:
|
|
|
|
|
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
|
|
|
|
|
(3)
|
Filing
Party:
|
|
|
|
|
|
|
(4)
|
Date
Filed:
|
Muscle
Maker, Inc.
308
East Renfro Street, Suite 101
Burleson,
TX 76028
September
16, 2020
Dear
Stockholders:
On
behalf of the Board of Directors, I cordially invite you to attend the 2020 annual meeting of stockholders (the “Annual
Meeting”) of Muscle Maker, Inc., which will be held on October 27, 2020, beginning at 9:30 a.m., Central Time. Due to
the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees and
stockholders, the Annual Meeting will be held in a virtual meeting format at www.virtualshareholdermeeting.com/GRIL2020.
In
accordance with the Securities and Exchange Commission rules allowing companies to furnish proxy materials to their stockholders
over the Internet, we have sent stockholders of record at the close of business on September 4, 2020 the Proxy Materials including
our Proxy Statement and Annual Report and instructions on how vote online. If you would like to receive a printed copy of our
proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting
such materials included in the notice, as well as in the attached Proxy Statement.
Attached
to this letter are a Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the business to be conducted
at the meeting.
Your
vote is important to us. Please act as soon as possible to vote your shares. It is important that your shares be represented at
the meeting whether or not you plan to attend the annual meeting. Please vote electronically over the Internet, by telephone or
if, you receive a paper copy of the proxy card by mail, by returning your signed proxy card in the envelope provided. We encourage
you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.
Thank
you for your continued support of Muscle Maker, Inc. We look forward to seeing you at the annual meeting.
To be admitted to the Annual Meeting at
https:www.virtualshareholdermeeting.com/GRIL2020 you must have your control number available and follow the instructions found
on your proxy card or voting instruction form. You may vote during the Annual Meeting but suggest you vote beforehand by following
the instructions available on the meeting website during the meeting. Please allow sufficient time before the Annual Meeting to
complete the online check-in process. Your vote is very important.
Proxy
materials or a Notice of Internet Availability of Proxy Materials (the “Notice”) are being first released or mailed
on or about September 16, 2020, to all shareholders entitled to vote at the Annual Meeting. In accordance with rules and regulations
adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials
to each record shareholder, we may furnish proxy materials by providing internet access to those documents. The Notice contains
instructions on how to access our proxy materials and vote online, or in the alternative, request a paper copy of the proxy materials
and a proxy card.
|
|
/s/
Kevin Mohan
|
|
|
Kevin
Mohan
|
|
|
Chairman
of the Board
|
Muscle
Maker, Inc.
308
East Renfro Street, Suite 101
Burleson,
TX 76028
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON OCTOBER 27, 2020
NOTICE
IS HEREBY GIVEN that the Annual Meeting of Stockholders of Muscle Maker, Inc., a California corporation, will be held on October
27, 2020, at 9:30 a.m., Central Time. This year’s annual meeting of shareholders will be held as a virtual meeting. Shareholders
attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person
meeting. You will be able to attend and participate in the annual meeting online via a live webcast by visiting www.virtualshareholdermeeting.com/GRIL2020.
The
Annual Meeting is being held:
|
|
1.
|
to
elect the eight (8) directors named in this Proxy Statement to hold office until our 2020 Annual Meeting of Stockholders and
until his respective successor has been duly elected and qualified;
|
|
|
2.
|
to
ratify, in a non-binding vote, the appointment of Marcum LLP as our independent registered public accounting firm for 2020;
|
|
|
3.
4.
|
to
approve our 2020 Equity Incentive Plan;
to
approve an amendment of the Company’s articles of incorporation to increase the number of authorized shares of common
stock from 14,285,714 to 25,000,000; and
|
|
|
5.
|
to
transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment
thereof.
|
These
items of business are described in the Proxy Statement that follows this notice. Holders of record of our common stock as of the
close of business on September 4, 2020 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement
or adjournment thereof.
Your
vote is important. Voting your shares will ensure the presence of a quorum at the Annual Meeting and will save us the expense
of further solicitation. Please promptly vote your shares by following the instructions for voting on the Notice Regarding
the Availability of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing,
dating and returning your proxy card or by Internet or telephone voting as described on your proxy card.
All
stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge
you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials that you previously received
and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke
your proxy at any time before it is voted at the meeting.
Please
note that space limitations make it necessary to limit attendance of the Annual Meeting to our stockholders. Registration and
seating will begin at 9:30 a.m. Shares of common stock can be voted at the Annual Meeting only if the holder thereof is present
in person or by valid proxy. For admission to the Annual Meeting, each stockholder may be asked to present valid picture identification,
such as a driver’s license or passport, and proof of stock ownership as of the record date, such as the enclosed proxy card
or a brokerage statement reflecting stock ownership. Cameras, recording devices and other electronic devices will not be permitted
at the Annual Meeting. If you do not plan on attending the Annual Meeting, please vote, date and sign the enclosed proxy and return
it in the business envelope provided. Even if you do plan to attend the Annual Meeting, we recommend that you vote your shares
at your earliest convenience in order to ensure your representation at the Annual Meeting. Your vote is very important.
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
/s/
Michael Roper
|
|
|
Michael
Roper
|
|
|
Chief
Executive Officer and Secretary
|
Burleson,
Texas
September
16, 2020
This
Notice of Annual Meeting and Proxy Statement are first being distributed or made available, as the case may be, on or about September
16, 2020.
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting:
This Proxy Statement and our Annual Report are available free of charge at www.proxyvote.com.
TABLE
OF CONTENTS
Muscle
Maker, Inc.
308
East Renfro Street, Suite 101
Burleson,
TX 76028
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON OCTOBER 27, 2020
This
proxy statement (the “Proxy Statement”) and our annual report for the fiscal year ended December 31, 2019 (the “Annual
Report” and, together with the Proxy Statement, the “proxy materials”) are being furnished by and on behalf
of the board of directors (the “Board” or the “Board of Directors”) of Muscle Maker, Inc. (the “Company,”
“Muscle Maker,” “we,” “us,” or “our”), in connection with our 2019 annual meeting
of stockholders (the “Annual Meeting”).
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
When
and where will the Annual Meeting be held?
The
Annual Meeting will be held on October 27, 2020 at 9:30 a.m., Central Time. This year’s annual meeting of shareholders
will be held as a virtual meeting. Shareholders attending the virtual meeting will be afforded the same rights and opportunities
to participate as they would at an in-person meeting. You will be able to attend and participate in the annual meeting online
via a live webcast by visiting www.virtualshareholdermeeting.com/GRIL2020. In addition to voting by submitting your proxy prior
to the annual meeting, you also will be able to vote your shares electronically during the annual meeting.
Notice
of Internet Availability (Notice and Access)
Instead
of mailing a printed copy of our proxy materials to each shareholder, we are furnishing proxy materials via the Internet. This
reduces both the costs and the environmental impact of sending our proxy materials to our shareholders. If you received a “Notice
of Internet Availability,” you will not receive a printed copy of the proxy materials unless you specifically request a
printed copy. The Notice of Internet Availability will instruct you how to access and review all of the important information
contained in the proxy materials. The Notice of Internet Availability also instructs you how to submit your proxy on the Internet
and how to vote by telephone.
If
you would like to receive a printed or emailed copy of our proxy materials, you should follow the instructions for requesting
such materials included in the Notice of Internet Availability. In addition, if you received paper copies of our proxy materials
and wish to receive all future proxy materials, proxy cards and annual reports electronically, please follow the electronic delivery
instructions on www.proxyvote.com. We encourage shareholders to take advantage of the availability of the proxy materials on the
Internet to help reduce the cost and environmental impact of our annual shareholder meetings.
The
Notice of Internet Availability is first being sent to shareholders on or about September 16, 2020. Also on or about September
16, 2020, we will first make available to our shareholders this Proxy Statement and the form of proxy relating to the 2020 Annual
Meeting filed with the SEC on September 16, 2020.
What
are the purposes of the Annual Meeting?
The
purpose of the Annual Meeting is to vote on the following items described in this Proxy Statement:
|
|
●
|
Proposal
No. 1: Election of the director nominees listed in this Proxy Statement.
|
|
|
●
|
Proposal
No. 2: Ratification of the appointment of MARCUM USA, LLP as our independent registered public accounting firm for 2020.
|
|
|
●
|
Proposal
No. 3: Adoption of our 2020 Equity Incentive Plan.
|
|
|
●
|
Proposal
No. 4: Increase in authorized shares of common stock.
|
Are
there any matters to be voted on at the Annual Meeting that are not included in this Proxy Statement?
At
the date this Proxy Statement was filed with the SEC, we did not know of any matters to be properly presented at the Annual Meeting
other than those referred to in this Proxy Statement. If other matters are properly presented at the meeting or any adjournment
or postponement thereof for consideration, and you are a stockholder of record and have submitted a proxy card, the persons named
in your proxy card will have the discretion to vote on those matters for you.
What
is included in these materials?
These
materials include:
|
|
●
|
this
Proxy Statement for the Annual Meeting;
|
|
|
|
|
|
|
●
|
the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019; and
|
|
|
|
|
|
|
●
|
if
you requested printed versions of these materials by mail, these materials also include the proxy card or vote instructions
for the Annual Meeting.
|
What
does it mean if I receive more than one set of proxy materials?
It
means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of
your shares. To ensure that all of your shares are voted, for each set of proxy materials, please submit your proxy by phone,
via the Internet, or, if you received printed copies of the proxy materials, by signing, dating and returning the enclosed proxy
card in the enclosed envelope.
Who
is entitled to vote at the Annual Meeting?
Holders
of record of shares of our common stock as of the close of business on September 4, 2020 (the “Record Date”) will
be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement or adjournment thereof. At the close
of business on the record date, there were 7,827,432 shares of our common stock issued and outstanding and entitled to vote. Each
share of our common stock is entitled to one vote on any matter presented to stockholders at the Annual Meeting. You will need
to obtain your own Internet access if you choose to attend the Annual Meeting online and/or vote over the Internet.
Only
record holders and beneficial owners of our common stock, or their duly authorized proxies, may attend the Annual Meeting. If
your shares of common stock are held in street name, you will need to bring a copy of a brokerage statement or other documentation
reflecting your stock ownership as of the Record Date.
What
is the difference between being a “record holder” and holding shares in “street name”?
A
record holder (also called a “registered holder”) holds shares in his or her name. Shares held in “street name”
means that shares are held in the name of a bank, broker or other nominee on the holder’s behalf.
What
do I do if my shares are held in “street name”?
If
your shares are held in a brokerage account or by a bank or other holder of record, you are considered the “beneficial owner”
of shares held in “street name.” The proxy materials, if you elected to receive a hard copy, has been forwarded to
you by your broker, bank or other nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial
owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by following their
instructions for voting. Please refer to information from your bank, broker or other nominee on how to submit your voting instructions.
How
many shares must be present to hold the Annual Meeting?
A
quorum must be present at the Annual Meeting for any business to be conducted. The holders of a majority in voting power of our
capital stock issued and outstanding and entitled to vote, present in person, or by remote communication, or represented by proxy
constitutes a quorum. If you sign and return your paper proxy card or authorize a proxy to vote electronically or telephonically,
your shares will be counted to determine whether we have a quorum even if you abstain or fail to vote as indicated in the proxy
materials.
Broker
non-votes will also be considered present for the purpose of determining whether there is a quorum for the Annual Meeting.
What
are “broker non-votes”?
A
“broker non-vote” occurs when shares held by a broker in “street name” for a beneficial owner are not
voted with respect to a proposal because (1) the broker has not received voting instructions from the stockholder who beneficially
owns the shares and (2) the broker lacks the authority to vote the shares at their discretion.
Under
current New York Stock Exchange (“NYSE”) interpretations that govern broker non-votes, Proposal No. 1 for the election
of directors is considered a non-discretionary matter, and a broker will lack the authority to vote uninstructed shares at their
discretion on such proposal. Proposals No. 2 AND 4 are considered a discretionary matter, and a broker will be permitted to exercise
its discretion to vote uninstructed shares on the proposal.
What
if a quorum is not present at the Annual Meeting?
If
a quorum is not present or represented at the scheduled time of the Annual Meeting, (i) the chairperson of the Annual Meeting
or (ii) a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present electronically or represented
by proxy, may adjourn the Annual Meeting until a quorum is present or represented.
How
do I vote my shares without attending the Annual Meeting?
We
recommend that stockholders vote by proxy even if they plan to attend the Annual Meeting and vote electronically. If you are a
stockholder of record, there are three ways to vote by proxy:
|
|
●
|
by
Telephone—You can vote by telephone by calling 1-800-690-6903 following the instructions on the proxy card;
|
|
|
●
|
by
Internet-You can vote over the Internet at www.proxyvote.com and follow the instructions set forth on the internet site or
scan the QR code with your smartphone. Have your proxy card available when you access the web page;
|
|
|
●
|
by
Mail-You can vote by mail by signing, dating and mailing the proxy card, which you may
have received by mail; or
|
|
|
●
|
Online
at the Meeting. You can vote at the meeting at www.virtualshareholdermeeting.com/GRIL2020.
|
Internet
voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Central Time, on October
26, 2020.
If
your shares are held in the name of a bank, broker or other holder of record, you will receive instructions on how to vote from
the bank, broker or holder of record. You must follow the instructions of such bank, broker or holder of record in order for your
shares to be voted.
How
can I attend and vote at the Annual Meeting?
The
Annual Meeting will be held at October 27, 2020. If you were a stockholder as of the Record Date, or you hold a valid proxy for
the Annual Meeting, you can vote at the Annual Meeting.
How
does the Board recommend that I vote?
The
Board recommends that you vote:
|
|
●
|
FOR
the nominees to the Board set forth in this Proxy Statement.
|
|
|
●
|
FOR
the ratification of the appointment of MARCUM USA, LLP as our independent registered public accounting firm for 2020.
|
|
|
●
|
FOR
the approval of our 2020 Equity Incentive Plan.
|
|
|
●
|
FOR
the increase in our authorized shares of common stock.
|
How
many votes are required to approve each proposal?
The
table below summarizes the proposals that will be voted on, the vote required to approve each item and how votes are counted:
|
Proposal
|
|
Votes
Required
|
|
Voting
Options
|
|
Impact
of “Withhold” or “Abstain” Votes
|
|
Broker
Discretionary Voting Allowed
|
|
Proposal
No. 1: Election of Directors
|
|
The
plurality of the votes cast. This means that the one nominee receiving the highest number of affirmative “FOR”
votes will be elected as Class I directors.
|
|
“FOR
THE NOMINEE” “WITHHOLD AUTHORITY FOR THE NOMINEE”
|
|
None(1)
|
|
No(3)
|
|
|
|
|
|
|
|
|
|
|
|
Proposal
No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm
|
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Annual Meeting by the holders entitled to vote thereon.
|
|
“FOR”
“AGAINST” “ABSTAIN”
|
|
None(2)
|
|
Yes(4)
|
|
|
|
|
|
|
|
|
|
|
|
Proposal
No. 3: Adoption of 2020 Equity Incentive Plan
|
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Annual Meeting by the holders entitled to vote thereon.
|
|
“FOR”
“AGAINST” “ABSTAIN”
|
|
None(2)
|
|
No(3)
|
|
Proposal
No. 4: Increase in the authorized shares of common stock.
|
|
The
affirmative vote of the holders of a majority of the total number of shares issued and outstanding as of the Record Date.
|
|
“FOR”
“AGAINST” “ABSTAIN”
|
|
(5)
|
|
Yes
(4)
|
|
(1)
|
Votes
that are “withheld” will have the same effect as an abstention and will not count as a vote “FOR”
or “AGAINST” a director, because directors are elected by plurality voting.
|
|
(2)
|
A
vote marked as an “Abstention” is not considered a vote cast and will, therefore, not affect the outcome of this
proposal.
|
|
(3)
|
As
this proposal is not considered a discretionary matter, brokers lack authority to exercise their discretion to vote uninstructed
shares on this proposal.
|
|
(4)
(5)
|
As
this proposal is considered a discretionary matter, brokers are permitted to exercise
their discretion to vote uninstructed shares on this proposal.
A
“Withhold” or “ABSTAIN” vote will have the effect of a vote “AGAINST” Proposal 4 —
the Increase Authorized Shares Proposal.
|
What
if I do not specify how my shares are to be voted?
If
you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the
recommendations of the Board. The Board’s recommendations are set forth above, as well as with the description of each proposal
in this Proxy Statement.
Who
will count the votes?
Representatives
of Computershare, Inc. (“Computershare”) will tabulate the votes, and a representative of Computershare will act as
inspector of election.
Can
I revoke or change my vote after I submit my proxy?
Yes.
Whether you have voted by Internet, telephone or mail, if you are a stockholder of record, you may change your vote and revoke
your proxy by:
|
|
●
|
sending
a written statement to that effect to the attention of our Secretary at our corporate offices, provided such statement is
received no later than October 26, 2020;
|
|
|
●
|
by
telephone by dialing 1-800-690-6903 using a touchtone telephone and following the recorded instructions
|
|
|
●
|
voting
again by Internet at a later time before the closing of those voting facilities at 11:59 p.m., Central time, on October 26,
2020;
|
|
|
●
|
submitting
a properly signed proxy card with a later date that is received no later than October 26, 2020; or
|
|
|
●
|
attending
the Annual Meeting, revoke your proxy and voting again.
|
If
you hold shares in street name, you may submit new voting instructions by contacting your bank, broker or other nominee. You may
also change your vote or revoke your proxy at the Annual Meeting if you obtain a signed proxy from the record holder (broker,
bank or other nominee) giving you the right to vote the shares.
Your
most recent proxy card or telephone or Internet proxy is the one that is counted. Your attendance at the Annual Meeting by itself
will not revoke your proxy unless you give written notice of revocation to the Company before your proxy is voted or you vote
at the Annual Meeting.
Who
will pay for the cost of this proxy solicitation?
We
will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees (for no additional
compensation) in person or by telephone, electronic transmission and facsimile transmission. Brokers and other nominees will be
requested to solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses.
How
can I Find out the Results of the Voting at the Annual Meeting?
Preliminary
voting results will be announced at the Annual Meeting. In addition, final voting results will be disclosed in a Current Report
on Form 8-K that we expect to file with the Securities and Exchange Commission (“SEC”) within four business days after
the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K with the SEC within four business
days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after
the final results are known to us, file an additional Form 8-K to publish the final results.
PROPOSAL
NO. 1 ELECTION OF DIRECTORS
Board
Size and Structure
Our
board of directors currently consists of eight (8) directors. We have nominated the below eight (8) directors to serve for the
following year. Our articles of incorporation, as amended, provides that the number of directors on our board of directors shall
be fixed exclusively by resolution adopted by our board of directors.
When
considering whether directors have the experience, qualifications, attributes or skills, taken as a whole, to enable our board
of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors
focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’
individual biographies set forth below . We believe that our directors provide an appropriate mix of experience and skills relevant
to the size and nature of our business.
Nominees
for Director
Each
person nominated for election has agreed to serve if elected, and management has no reason to believe that any nominee will be
unable to serve. If, however, prior to the Annual Meeting, the Board of Directors should learn that any nominee will be unable
to serve for any reason, the proxies that otherwise would have been voted for this nominee will be voted for a substitute nominee
as selected by the Board. Alternatively, the proxies, at the Board’s discretion, may be voted for that fewer number of nominees
as results from the inability of any nominee to serve. The Board has no reason to believe that any of the nominees will be unable
to serve.
Information
About Board Nominees
The
following pages contain certain biographical information as of September 10, 2019 for each nominee for director, including all
positions he holds, his principal occupation and business experience for the past five years, and the names of other publicly-held
companies of which the director or nominee currently serves as a director or has served as a director during the past five years.
Kevin
Mohan. Mr. Mohan has served as Chairman of the Board and a director of Muscle Maker, Inc since April 16, 2018. From April
16, 2018 through May 1, 2018, he also served as the Interim President of the Company. He has also served as the Chief Investment
Officer since September 17, 2018. From June 2012 through March 2017, Mr. Mohan served as the VP of Capital Markets for American
Restaurant Holdings, Inc., a company focused on acquiring and expanding fast casual restaurant brands.
Based
on his experience we have deemed Mr. Mohan fit to serve on the Board and as Chairman of the Board.
A.B.
Southall III. Mr. Southall has served as director of Muscle Maker, Inc since February 2017. He has over 35 years of experience
managing construction and land developing businesses. Since 1997 he has been the President of a Custom Home Building Company,
in addition to 20 years as President of a 189 boat slip marina complex. His involvement in the marina business led him to co-founding
a local Waterway Association, where he has been on the board since its inception. He has diversely invested across multiple sectors
including private placements, oil & gas, real estate, restaurant businesses and commodities. Mr. Southall is an advocate of
a healthy approach to the food industry and the restaurant business.
Based
on his vast business and financial experience with real estate and restaurants, we have deemed Mr. Southall fit to serve on the
Board.
Paul
L. Menchik. Mr. Menchik has served as director of Muscle Maker, Inc since February 2017. Since 1986, Mr. Menchik has been
Professor of Economics at Michigan State University where he has been Department chairperson and Director of Graduate Programs.
He has served as Senior Economist for Economic Policy for the White House Office of Management and Budget (where among other matters
he worked on Social Security solvency issues) and served as Visiting Scholar at the Tax Analysis Division of the Congressional
Budget Office. Menchik has also been on the faculty of Rutgers University and the University of Wisconsin, and has served as visiting
faculty at University of Pennsylvania, London School of Economics, University College London, and Victoria University in Wellington
New Zealand. Over the years he has advised three state governments and five US government agencies. He holds a Ph.D. from the
Wharton School of Finance and Commerce at the University of Pennsylvania. He has over 40 publications including a book on household
and family economics, made over 85 paper presentations at other universities and conferences around the world and has refereed
for over 20 academic journals and is currently a member of the editorial board for the Journal of Income Distribution. He is a
member of Who’s Who in Economics and Who’s Who in America. Based on his education and extensive experience in economic
and financial matters, we have deemed Mr. Menchik fit to serve on the Board.
Peter
Petrosian. Mr. Petrosian has served as director of Muscle Maker, Inc since May 2018. Mr. Petrosian is a senior level food
service executive with diversified leadership experience in casual dining, contract management, quick service and quick casual
segments with a background in growth and turnaround situations, demonstrated expertise in operations, mergers and acquisitions,
profit improvement, strategic planning and business development. Since 2005 to the present, Mr. Petrosian owned and operated PSP
Management Consulting providing interim executive support in areas of organizational development, business, franchise and operational
planning and valuation assistance to private equity firms in the restaurant industry. From November 2013 to January 2017, Mr.
Petrosian served as the Chief Development Officer of Franchise Sports Concepts, LLC, a franchisor of Beef ‘O’ Brady’s
and the Brass Tap. From 2007 to 2013, Mr. Petrosian was the Chief Operating Officer of Steak-Out Franchising, Inc., a franchisor
of a char-broiled steak and full meal delivery concept. Prior to 2007, Mr. Petrosian held various positions with McAlister’s
Corporation, AFC Enterprises (Church’s Chicken), Service America Corporation (wholly owned subsidiary of GE Capital) and
Marriott Corporation. Based on his experience with various restaurant concepts and senior executive level positions, we have deemed
Mr. Petrosian fit to serve on the Board.
Jeff
Carl. Since 2017, Mr. Carl has served as Executive Director of Nice & Company, an ad agency with a focus on print,
TV, digital, experiential and mobile, and as an independent consultant to the restaurant industry. From 2013 to 2017, Mr. Carl
served as the Chief Marketing Officer for Taco Bueno Restaurants and from 2009 to 2013 as the Chief Marketing Officer of Tavistock
Restaurants LLC. Mr. Carl received a BA from Wake Forest University in 1977 and a MBA from University of North Carolina Chapel
Hill in 1979. Based on his experience within the restaurant industry and due to the fact that he has held senior level executive
positions with a focus on advertising and marketing, we have deemed Mr. Carl a fit to serve on the Board.
Stephen
A. Spanos. Mr. Spanos has served as director of Muscle Maker, Inc. since February 2020. Since 2013, Mr. Spanos has provided
financial and accounting consulting services for both privately held and public companies. From 2009 to 2013, Mr. Spanos served
as the Chief Financial Officer of Orion Seafood International, Inc., a marketer of frozen lobster products, and as the Controller
of Reef Point Systems, a provider of security solutions for converged wireless and wireline networks in the United States, from
2005 to 2013. Mr. Spanos served as an audit manager for BDO USA, LLP and as an auditor for Ernst & Young. Mr. Spanos received
his MBA and BS in Business Administration, Accounting and Financing in 1995 and 1985, respectively, from Boston University. Based
on his education and extensive experience in financial and accounting matters, we have deemed that Mr. Spanos is fit to serve
on the Board.
Major
General (ret) Malcolm Frost. Maj. Gen (Ret) Frost has 31 years of military experience providing large-scale strategic
and operational leadership and oversight in the Indo-Asia-Pacific, Middle East, Europe, and the United States for the United States
Army - successfully leading the evolution of soldier training programs in peace and war from platoon through 2-star command level.
Maj. Gen. (Ret) Frost has been deployed to combat several times in a variety of leadership and command positions. Since 2019,
Maj. Gen. (Ret) Frost served as Executive Consultant for Fortune 500 and larger corporations through Malcolm Frost and Associates
LLC. From 2015 through 2019, Maj. Gen. (Ret) Frost served as the Commanding General for the US Army Training and Doctrine Command
located at Fort Eustis, Virginia and as the Chief of Public Affairs for the US Army Headquarters based in Washington, DC. Maj.
Gen. (Ret) Frost also served as the Deputy Commanding General for Support for the US Army, Deputy Director of Operations for the
US Department of Defense and the Director of Operations for the US Army Pacific Headquarters. He deployed to Bosnia-Hercegovina
as a company commander in 1995 and deployed twice to Iraq as commander of an 800 person Cavalry Squadron operating in Tal Afar
during the Surge in 2006-7, and as commander of a 5K person Stryker Brigade Combat Team operating in Diyala, Salah ad Din, and
Kirkuk provinces in 2010-11. Additionally, he deployed as Director of Operations of a 4,000 person airborne brigade task force
in Afghanistan in 2002-3. In addition to a Bachelor of Science Degree in Human Resources Management from the United States Military
Academy at West Point, Maj. Gen. (Ret) Frost holds advanced degrees from Webster University and the U.S. Army War College in Human
Resources Development and National Security Strategy, respectively. He is the recipient of the Distinguished Service Medal x2,
Defense Superior Service Medal, Legion of Merit x3, Bronze Star Medal x3, Air Medal, Army Commendation Medal x6 including one
for Valor, Combat Infantryman Badge, Master Parachutist Badge and Ranger Tab. He is a Certified Project Director and is the recipient
of the U.S. Department of State Meritorious Honor Award for reconstruction, civic and humanitarian achievements while serving
in Iraq. Based on his vast business and financial experience with the military as well as his business experience, we have deemed
Maj. Gen (Ret) Frost a fit to serve on the Board.
Philip
Balatsos. Since 2016, Mr. Balatsos has worked in the restaurant and hospitality industries. In 2018, Mr. Balatsos founded
and has served as the owner operator of LAPH Hospitality which operates a café/catering business and also serves as a consultant
providing financial, purchasing and usage analysis as well as rollout services pertaining to ordering, invoicing and inventorying
systems. From 2016 through 2018, Mr. Balatsos held various positions with Barteca Restaurant Group including Assistant General
Manager and Purchasing Manager. Prior to 2016, Mr. Balatsos held various position on Wall Street for 16 years including Vice President,
Foreign Exchange Sales/Trading for Credit Suisse, Director, Foreign Exchange Hedge Fund Sales for Barclays Capital and Financial
Advisor for Stifel Nicolaus & Co. Mr. Balatsos graduated from Skidmore College in 1999 with a Bachelor of Science in Business
Administration and from Institute of Culinary Education in 2016.
Information
Concerning the Board and Corporate Governance
Meetings
of the Board of Directors
The
board of directors met 15 times during the fiscal year ended December 31, 2019. The audit committee met four times, the compensation
committee acted by unanimous written consent seven times and the nominating and corporate governance committee met seven times.
Each member of the board of directors, attended at least 75% of the aggregate number of meetings of our board of directors. We
encourage all of our directors and nominees for director to attend our annual meeting of stockholders; however, attendance is
not mandatory.
Board
Leadership Structure and Board’s Role in Risk Oversight
Kevin
Mohan is the Chairman of the Board. The Chairman has authority, among other things, to preside over Board meetings and set the
agenda for Board meetings. Accordingly, the Chairman has substantial ability to shape the work of our Board. We currently believe
that separation of the roles of Chairman and Chief Executive Officer ensures appropriate oversight by the Board of our business
and affairs. However, no single leadership model is right for all companies and at all times. The Board recognizes that depending
on the circumstances, other leadership models, such as the appointment of a lead independent director, might be appropriate. Accordingly,
the Board may periodically review its leadership structure. In addition, following the qualification of the offering, the Board
will hold executive sessions in which only independent directors are present.
Our
Board is generally responsible for the oversight of corporate risk in its review and deliberations relating to our activities.
Our principal source of risk falls into two categories, financial and product commercialization. The audit committee oversees
management of financial risks; our Board regularly reviews information regarding our cash position, liquidity and operations,
as well as the risks associated with each. The Board regularly reviews plans, results and potential risks related to our system-wide
restaurant growth, brand awareness and menu offerings. Our Compensation Committee is expected to oversee risk management as it
relates to our compensation plans, policies and practices for all employees including executives and directors, particularly whether
our compensation programs may create incentives for our employees to take excessive or inappropriate risks which could have a
material adverse effect on the Company.
Role
of Board in Risk Oversight Process
Risk
assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management
to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management
discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review
sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management
reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular
business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks.
Our
board of directors does not have a standing risk management committee, but rather administers this oversight function directly
through our board of directors as a whole, as well as through various standing committees of our board of directors that address
risks inherent in their respective areas of oversight. While our board of directors is responsible for monitoring and assessing
strategic risk exposure, our audit committee is responsible for overseeing our major financial risk exposures and the steps our
management has taken to monitor and control these exposures. The audit committee also monitors compliance with legal and regulatory
requirements and considers and approves or disapproves any related person transactions. Our nominating and governance committee
monitors the effectiveness of our corporate governance policies. Our compensation committee assesses and monitors whether any
of our compensation policies and programs has the potential to encourage excessive risk-taking.
Independence
of Board of Directors and its Committees
We
intend to apply to list our common stock on the on NASDAQ capital market. Under the rules of NASDAQ, “independent”
directors must make up a majority of a listed company’s board of directors. In addition, applicable NASDAQ rules require
that, subject to specified exceptions, each member of a listed company’s audit and compensation committees be independent
within the meaning of the applicable NASDAQ rules. Audit committee members must also satisfy the independence criteria set forth
in Rule 10A-3 under the Exchange Act.
Our
board of directors currently consists of eight (8) members. Our board of directors has determined that A.B. Southall III, Paul
L. Menchik, General (ret) Malcolm Frost, Peter S. Petrosian, Jeff Carl, Stephen Spanos and Philip Balatsos, qualify as independent
directors in accordance with the Nasdaq Capital Market (“Nasdaq”) listing requirements. Kevin Mohan is not considered
independent. Nasdaq’s independence definition includes a series of objective tests, such as that the director is not, and
has not been for at least three (3) years, one of our employees and that neither the director nor any of his or her family members
has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our board of directors has
made a subjective determination as to each independent director that no relationships exist that, in the opinion of our board
of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In
making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard
to each director’s business and personal activities and relationships as they may relate to us and our management. There
are no family relationships among any of our directors or executive officers.
As
required under Nasdaq rules and regulations, our independent directors meet in regularly scheduled executive sessions at which
only independent directors are present.
Committees
of the Board of Directors
The
Board of Directors has established an audit committee (the “Audit Committee”), a Compensation Committee (the “Compensation
Committee”) and a Nominating and Corporate Governance Committee (“Governance Committee”). The composition and
function of each committee are described below.
Audit
Committee
The
Audit Committee has three members, including Messrs. Spanos, John Marques and Petrosian. Mr. Spanos serves as the chairman of
the Audit Committee and satisfies the definition of “audit committee financial expert”.
Our
audit committee is authorized to:
|
|
●
|
approve
and retain the independent auditors to conduct the annual audit of our financial statements;
|
|
|
|
|
|
|
●
|
review
the proposed scope and results of the audit;
|
|
|
|
|
|
|
●
|
review
and pre-approve audit and non-audit fees and services;
|
|
|
|
|
|
|
●
|
review
accounting and financial controls with the independent auditors and our financial and accounting staff;
|
|
|
|
|
|
|
●
|
review
and approve transactions between us and our directors, officers and affiliates;
|
|
|
|
|
|
|
●
|
recognize
and prevent prohibited non-audit services; and
|
|
|
|
|
|
|
●
|
establish
procedures for complaints received by us regarding accounting matters; oversee internal audit functions, if any.
|
Compensation
Committee
The
Compensation Committee has two members, including Messrs. Carl and Southall III. Mr. Carl serves as the chairman of the Compensation
Committee.
Our
Compensation Committee is authorized to:
|
|
●
|
review
and determine the compensation arrangements for management;
|
|
|
|
|
|
|
●
|
establish
and review general compensation policies with the objective to attract and retain superior talent, to reward individual performance
and to achieve our financial goals;
|
|
|
●
|
administer
our stock incentive and purchase plans;
|
|
|
|
|
|
|
●
|
oversee
the evaluation of the Board of Directors and management; and
|
|
|
|
|
|
|
●
|
review
the independence of any compensation advisers.
|
Nominating
and Corporate Governance Committee
The
Governance Committee has three members, including Messrs. Menchik, Southall III and Carl. Mr. Menchik serves as the chairman of
the Governance Committee.
The
functions of our Governance Committee, among other things, include:
|
|
●
|
identifying
individuals qualified to become board members and recommending director;
|
|
|
|
|
|
|
●
|
nominees
and board members for committee membership;
|
|
|
|
|
|
|
●
|
developing
and recommending to our board corporate governance guidelines;
|
|
|
|
|
|
|
●
|
review
and determine the compensation arrangements for directors; and
|
|
|
|
|
|
|
●
|
overseeing
the evaluation of our board of directors and its committees and management.
|
Our
goal is to assemble a Board that brings together a variety of skills derived from high quality business and professional experience.
Compensation
Committee Interlocks and Insider Participation
None
of the members of our Compensation Committee, at any time, has been one of our officers or employees. None of our executive officers
currently serves, or in the past year has served, as a member of the Board of Directors or Compensation Committee of any entity
that has one or more executive officers on our Board of Directors or Compensation Committee. For a description of transactions
between us and members of our Compensation Committee and affiliates of such members, please see “Certain Relationships and
Related Party Transactions”.
Stockholder
Communications with the Board of Directors
The
board of directors will consider any written or electronic communication from our stockholders to the board, a committee of the
board or any individual director. Any stockholder who wishes to communicate to the board of directors, a committee of the board
or any individual director should submit written or electronic communications to our Secretary at our principal executive offices,
which shall include contact information for such stockholder. All communications from stockholders received shall be forwarded
by our Secretary to the board of directors, a committee of the board or an individual director, as appropriate, on a periodic
basis, but in any event no later than the board of director’s next scheduled meeting. The board of directors, a committee
of the board, or individual directors, as appropriate, will consider and review carefully any communications from stockholders
forwarded by our Secretary.
Material
Changes to Nominee Recommendation Procedures
There
have been no material changes to the procedures by which stockholders may recommend nominees to our board in 2019.
Family
Relationships
There
are no family relationships among any of our directors or executive officers.
Code
of Ethics and Code of Conduct
We
have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our
principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions. A copy of the code is posted on our website, www.musclemakergrill.com/contact/investor-relations. In addition,
we post on our website all disclosures that are required by law or the Nasdaq rules concerning any amendments to, or waivers from,
any provision of the code.
Board
Recommendation
The
Board of Directors unanimously recommends a vote FOR the election of the nominees set forth above to hold office until
the 2021 Annual Meeting and until their respective successors have been duly elected and qualified.
PROPOSAL
NO. 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
The
Board has appointed Marcum LLP (“Marcum”) to serve as our independent registered public accounting firm for the year
ending December 31, 2020. Marcum has provided services in connection with the audit of our financial statements since 2017.
The
Audit Committee and the board are requesting, as a matter of policy, that stockholders ratify the selection of Marcum. The Audit
Committee and the board are not required to take any action as a result of the outcome of the vote on this proposal. Even if the
appointment is ratified, the Board may, in its discretion, appoint a different independent registered public accounting firm at
any time during the year if they determine that such a change would be in our best interests and our stockholders. If the appointment
is not ratified, the Board will consider its options.
A
representative of Marcum is expected to be present via telephone conference at the Annual Meeting. He or she will have the opportunity
to make a statement if desired and is expected to be available to respond to appropriate questions.
Principal
Accountant Fees and Services
Marcum
LLP has served as our independent registered public accountants for the years ended December 31, 2019 and 2018.
The
following is a summary of the fees billed or expected to be billed to us by Marcum LLP, our independent registered public accountants,
for professional services rendered with respect to the fiscal years ended December 31, 2019 and 2018:
|
|
|
2019
|
|
|
2018
|
|
|
Audit fees (1)
|
|
$
|
238,075
|
|
|
$
|
142,695
|
|
|
Audit-related fees (2)
|
|
|
-
|
|
|
|
-
|
|
|
Tax fees (3)
|
|
|
-
|
|
|
|
-
|
|
|
All other fees
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
$
|
238,075
|
|
|
$
|
142,695
|
|
|
(1)
|
Audit
Fees consist of fees billed and expected to be billed for services rendered for the audit of our consolidated financial statements
for the fiscal years ended December 31, 2019 and 2018 and in connection with the filing of Forms 1-A.
|
|
(2)
|
Audit-Related
Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit
of our financial statements and are not reported under “Audit Fees.”
|
|
(3)
|
Tax
Fees consist of fees billed for professional services related to preparation of our U.S. federal and state income tax returns
and tax advice.
|
|
(4)
|
All
Other Fees consist of fees billed for products and services provided by our independent registered public accountants, other
than those disclosed above.
|
The
Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent registered public
accountants and approves in advance any services to be performed by the independent registered public accountants, whether audit-related
or not. The Audit Committee reviews each proposed engagement to determine whether the provision of services is compatible with
maintaining the independence of the independent registered public accountants. The fees shown above were pre-approved either by
our Board or our Audit Committee.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
Consistent
with SEC policies and guidelines regarding audit independence, the Audit Committee is responsible for the pre-approval of all
audit and permissible non-audit services provided by our independent registered public accounting firm on a case-by-case basis.
Our Audit Committee has established a policy regarding approval of all audit and permissible non-audit services provided by our
principal accountants. No non-audit services were performed by our independent registered public accounting firm during the years
ended December 31, 2019 and 2018. Our Audit Committee pre-approves these services by category and service. Our Audit Committee
has pre- approved all of the services provided by MARCUM.
Board
Recommendation
The
Board of Directors unanimously recommends a vote FOR the ratification of the appointment of Marcum, LLP as our independent
registered public accounting firm for 2020.
Audit
Committee Report
The
following Audit Committee Report shall not be deemed to be “soliciting material,” deemed “filed” with
the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of
1933, as amended, or the Exchange Act that might incorporate by reference future filings, including this Proxy Statement, in whole
or in part, the following Audit Committee Report shall not be incorporated by reference into any such filings.
The
audit committee operates pursuant to a charter which is reviewed annually by the audit committee. Additionally, a brief description
of the primary responsibilities of the audit committee is included in this Proxy Statement under the discussion of “Information
about the Board and Corporate Governance- Committees of the Board of Directors-Audit Committee.”
In
the performance of its oversight function, the audit committee reviewed and discussed with management and Marcum, LLP, as the
Company’s independent registered public accounting firm, the Company’s audited financial statements for the fiscal
year ended December 31, 2019. The audit committee also discussed with the Company’s independent registered public accounting
firm the matters required to be discussed by applicable standards of the Public Company Accounting Oversight Board (the “PCAOB”).
In addition, the audit committee received and reviewed the written disclosures and the letters from the Company’s independent
registered public accounting firm required by applicable requirements of the PCAOB, regarding such independent registered public
accounting firm’s communications with the audit committee concerning independence, and discussed with the Company’s
independent registered public accounting firm their independence from the Company.
Based
upon the review and discussions described in the preceding paragraph, the audit committee recommended to the Board that the Company’s
audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with
the SEC.
Submitted
by the Audit Committee of the Company’s Board of Directors:
Stephen
Spanos (Chair)
John
Marques
Peter
S. Petrosian
PROPOSAL
2
APPROVAL
OF THE 2020 EQUITY INCENTIVE PLAN
We
are asking our stockholders to approve our 2020 Equity Incentive Plan (the “Plan”) at the annual meeting. On August
27, 2020, our Compensation Committee approved the Plan, subject to stockholder approval.
If
approved by stockholders, the Plan will supplement all of our outstanding equity incentive plans. To date, we have issued an aggregate
of 188,524 shares of common stock to our management team and Board of Directors under the 2019 Equity Incentive Plan. Specifically,
the Plan will supplement our 2019 Equity Incentive Plan. We refer to 2019 Equity Incentive Plan as the 2019 Plan.
When
our stockholders approve the Plan, we will be able to issue approximately an additional 1,750,000 shares above the number of shares
already subject to outstanding equity awards to employees. Upon adoption of the 2020 Plan, we will no longer issue grants under
the 2019 Plan but the existing grants to our management team and Board of Directors will continue to remain outstanding.
The
purpose of the Plan is to attract and retain key personnel and to provide a means for directors, officers, managers, employees,
consultants and advisors to acquire and maintain an interest in the Company, which interest may be measured by reference to the
value of its common stock.
Grants
of stock options to our named executive officers and our directors are made from our 2019 Plan. In 2029, the 2019 Plan will expire
and we will not be able to issue equity to our named executive officers or our directors unless our stockholders approve a new
stock plan. While we could increase cash compensation if we are unable to grant equity incentives, we anticipate that we will
have difficulty attracting, retaining, and motivating our named executive officers and our directors if we are unable to make
equity grants to them. Stock options are a more effective executive compensation vehicle than cash at a growth-oriented, entrepreneurial
company because they deliver high potential value with a smaller impact on current income and cash flow. Therefore, we are asking
our stockholders to approve the Plan.
If
approved by the Company’s stockholders, the Plan will be effective as of the date the stockholders approved the Plan. Capitalized
terms used but not defined in this proposal shall have the meaning ascribed to them in the Plan document. The following description
is qualified in its entirety by reference to the Plan document, a copy of which is attached as Appendix D.
Administration
The
Company’s Board of Directors or a committee appointed by the Board (the “Committee”) will administer the Plan.
The Committee will have the authority, without limitation (i) to designate Participants to receive Awards, (ii) determine the
types of Awards to be granted to Participants, (iii) determine the number of shares of common stock to be covered by Awards, (iv)
determine the terms and conditions of any Awards granted under the Plan, (v) determine to what extent and under what circumstances
Awards may be settled in cash, shares of common stock, other securities, other Awards or other property, or canceled, forfeited
or suspended, (vi) determine whether, to what extent, and under what circumstances the delivery of cash, Common Stock, other securities,
other Awards or other property and other amounts payable with respect to an Award shall be made; (vii) interpret, administer,
reconcile any inconsistency in, settle any controversy regarding, correct any defect in and/or complete any omission in this Plan
and any instrument or agreement relating to, or Award granted under, this Plan; (viii) establish, amend, suspend, or waive any
rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of this Plan;
(ix) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards; (x) reprice existing Awards
with shareholder approval or to grant Awards in connection with or in consideration of the cancellation of an outstanding Award
with a higher price; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable
for the administration of this Plan. The Committee will have full discretion to administer and interpret the Plan and to adopt
such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times
at which the awards may be exercised and whether and under what circumstances an award may be exercised.
Eligibility
Employees,
directors, officers, advisors and consultants of the Company or its affiliates are eligible to participate in the Plan and are
referred to as “Participants”. The Committee has the sole and complete authority to determine who will be granted
an Award under the Plan, however, it may delegate such authority to one or more officers of the Company under the circumstances
set forth in the Plan.
Number
of Shares Authorized
Up
to approximately 1,750,000 shares of common stock may be issued pursuant to awards granted under the Plan.
If
an Award is forfeited, canceled, or if any Option terminates, expires or lapses without being exercised, the Common Stock subject
to such Award will again be made available for future grant. However, shares that are used to pay the exercise price of an Option
or that are withheld to satisfy the Participant’s tax withholding obligation will not be available for re-grant under the
Plan.
If
there is any change in the Company’s corporate capitalization or structure, the Committee in its sole discretion may make
substitutions or adjustments to the number of shares of common stock reserved for issuance under the Plan, the number of shares
covered by Awards then outstanding under the Plan, the limitations on Awards under the Plan, the exercise price of outstanding
Options and such other equitable substitution or adjustments as it may determine appropriate.
The
Plan will have a term of ten years and no further Awards may be granted under the Plan after that date.
Awards
Available for Grant
The
Committee may grant Awards of Non-Qualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, Restricted Stock Units, Stock Bonus Awards, Performance Compensation Awards (including cash bonus awards) or any combination
of the foregoing. Notwithstanding, the Committee may not grant to any one person in any one calendar year Awards (i) for more
than 50% of the Available Shares in the aggregate or (ii) payable in cash in an amount exceeding $10,000,000 in the aggregate.
Options
The
Committee will be authorized to grant Options to purchase Common Stock that are either “qualified,” meaning they are
intended to satisfy the requirements of Code Section 422 for Incentive Stock Options, or “non-qualified,” meaning
they are not intended to satisfy the requirements of Section 422 of the Code. Options granted under the Plan will be subject to
the terms and conditions established by the Committee. Under the terms of the Plan, unless the Committee determines otherwise
in the case of an Option substituted for another Option in connection with a corporate transaction, the exercise price of the
Options will not be less than the fair market value (as determined under the Plan) of the shares of common stock on the date of
grant. Options granted under the Plan will be subject to such terms, including the exercise price and the conditions and timing
of exercise, as may be determined by the Committee and specified in the applicable award agreement. The maximum term of an Option
granted under the Plan will be ten years from the date of grant (or five years in the case of an Incentive Stock Option granted
to a 10% stockholder). Payment in respect of the exercise of an Option may be made in cash or by check, by surrender of unrestricted
shares of Common Stock (at their fair market value on the date of exercise) that have been held by the participant for any period
deemed necessary by the Company’s accountants to avoid an additional compensation charge or have been purchased on the open
market, or the Committee may, in its discretion and to the extent permitted by law, allow such payment to be made through a broker-assisted
cashless exercise mechanism, a net exercise method, or by such other method as the Committee may determine to be appropriate.
Stock
Appreciation Rights
The
Committee will be authorized to award Stock Appreciation Rights (or SARs) under the Plan. SARs will be subject to such terms and
conditions as established by the Committee. A SAR is a contractual right that allows a participant to receive, either in the form
of cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period
of time. A SAR granted under the Plan may be granted in tandem with an option and SARs may also be awarded to a participant independent
of the grant of an Option. SARs granted in connection with an Option shall be subject to terms similar to the Option which corresponds
to such SARs. SARs shall be subject to terms established by the Committee and reflected in the award agreement.
Restricted
Stock
The
Committee will be authorized to award Restricted Stock under the Plan. Unless otherwise provided by the Committee and specified
in an award agreement, restrictions on Restricted Stock will lapse after three years of service with the Company. The Committee
will determine the terms of such Restricted Stock awards. Restricted Stock are shares of common stock that generally are non-transferable
and subject to other restrictions determined by the Committee for a specified period. Unless the Committee determines otherwise
or specifies otherwise in an award agreement, if the participant terminates employment or services during the restricted period,
then any unvested restricted stock will be forfeited.
Restricted
Stock Unit Awards
The
Committee will be authorized to award Restricted Stock Unit awards. Unless otherwise provided by the Committee and specified in
an award agreement, Restricted Stock Units will vest after three years of service with the Company. The Committee will determine
the terms of such Restricted Stock Units. Unless the Committee determines otherwise or specifies otherwise in an award agreement,
if the participant terminates employment or services during the period of time over which all or a portion of the units are to
be earned, then any unvested units will be forfeited. At the election of the Committee, the participant will receive a number
of shares of common stock equal to the number of units earned or an amount in cash equal to the fair market value of that number
of shares at the expiration of the period over which the units are to be earned or at a later date selected by the Committee.
Stock
Bonus Awards
The
Committee will be authorized to grant Awards of unrestricted shares of common stock or other Awards denominated in shares of common
stock, either alone or in tandem with other Awards, under such terms and conditions as the Committee may determine.
Performance
Compensation Awards
The
Committee will be authorized to grant any Award under the Plan in the form of a Performance Compensation Award exempt from the
requirements of Section 162(m) of the Code by conditioning the vesting of the Award on the attainment of specific performance
criteria of the Company and/or one or more Affiliates, divisions or operational units, or any combination thereof, as determined
by the Committee. The Committee will select the performance criteria based on one or more of the following factors: (i) revenue;
(ii) sales; (iii) profit (net profit, gross profit, operating profit, economic profit, profit margins or other corporate profit
measures); (iv) earnings (EBIT, EBITDA, earnings per share, or other corporate profit measures); (v) net income (before or after
taxes, operating income or other income measures); (vi) cash (cash flow, cash generation or other cash measures); (vii) stock
price or performance; (viii) total stockholder return (stock price appreciation plus reinvested dividends divided by beginning
share price); (ix) economic value added; (x) return measures (including, but not limited to, return on assets, capital, equity,
investments or sales, and cash flow return on assets, capital, equity, or sales); (xi) market share; (xii) improvements in capital
structure; (xiii) expenses (expense management, expense ratio, expense efficiency ratios or other expense measures); (xiv) business
expansion or consolidation (acquisitions and divestitures); (xv) internal rate of return or increase in net present value; (xvi)
working capital targets relating to inventory and/or accounts receivable; (xvii) inventory management; (xviii) service or product
delivery or quality; (xix) customer satisfaction; (xx) employee retention; (xxi) safety standards; (xxii) productivity measures;
(xxiii) cost reduction measures; and/or (xxiv) strategic plan development and implementation.
Transferability
Each
Award may be exercised during the Participant’s lifetime only by the Participant or, if permissible under applicable law,
by the Participant’s guardian or legal representative and may not be otherwise transferred or encumbered by a Participant
other than by will or by the laws of descent and distribution. The Committee, however, may permit Awards (other than Incentive
Stock Options) to be transferred to family members, a trust for the benefit of such family members, a partnership or limited liability
company whose partners or stockholders are the Participant and his or her family members or anyone else approved by it.
Amendment
The
Plan will have a term of ten years. The Company’s board of directors may amend, suspend or terminate the Plan at any time;
however, shareholder approval to amend the Plan may be necessary if the law or SEC so requires. No amendment, suspension or termination
will materially and adversely affect the rights of any Participant or recipient of any Award without the consent of the Participant
or recipient.
Change
in Control
Except
to the extent otherwise provided in an Award or required by applicable law, in the event of a Change in Control, upon the occurrence
of a Change in Control, the Committee is authorized, but not obligated, to make any of the following adjustments (or any combination
thereof) in the terms and conditions of outstanding Awards: (a) continuation or assumption of outstanding Awards by the surviving
company; (b) substitution by the surviving company of equity, equity-based and/or cash awards with substantially the same terms
for outstanding Awards; (c) accelerated exercisability, vesting and/or lapse of restrictions under outstanding Awards immediately
prior to the occurrence of the Change in Control; (d) upon written notice, provide that any outstanding Awards must be exercised,
to the extent then exercisable, during a reasonable period determined by the Committee and at the end of such period, any unexercised
Awards will terminate; and (e) cancellation of all or any portion of outstanding Awards for fair value (in the form of cash, shares
or other property) and which value may be zero.
U.S.
Federal Income Tax Consequences
The
following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of Awards
under the Plan and the disposition of shares acquired pursuant to the exercise of such Awards. This summary is intended to reflect
the current provisions of the Code and the regulations thereunder. However, this summary is not intended to be a complete statement
of applicable law, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income
tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular
circumstances of such participant.
Options
There
are a number of requirements that must be met for a particular Option to be treated as an Incentive Stock Option. One such requirement
is that Common Stock acquired through the exercise of an Incentive Stock Option cannot be disposed of before the later of (i)
two years from the date of grant of the Option, or (ii) one year from the date of its exercise. Holders of Incentive Stock Options
will generally incur no federal income tax liability at the time of grant or upon exercise of those Options. However, the spread
at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability
for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before the later of two years
following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount
realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding
periods are satisfied, no deduction will be allowed to the Company for federal income tax purposes in connection with the grant
or exercise of the Incentive Stock Option. If, within two years following the date of grant or within one year following the date
of exercise, the holder of shares acquired through the exercise of an Incentive Stock Option disposes of those shares, the Participant
will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price
and the lesser of the Fair Market Value of the share on the date of exercise or the amount realized on the subsequent disposition
of the shares, and that amount will generally be deductible by the Company for federal income tax purposes, subject to the possible
limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those
Sections. Finally, if an otherwise Incentive Stock Option becomes first exercisable in any one year for shares having an aggregate
value in excess of $100,000 (based on the date of grant value), the portion of the Incentive Stock Option in respect of those
excess shares will be treated as a non-qualified stock option for federal income tax purposes.
No
income will be realized by a Participant upon grant of a Non-Qualified Stock Option. Upon the exercise of a Non-Qualified Stock
Option, the Participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the Fair Market
Value of the underlying exercised shares over the Option Exercise Price paid at the time of exercise. Such income will be subject
to income tax withholdings, and the Participant will be required to pay to the Company the amount of any required withholding
taxes in respect to such income.
The
Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under
Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted
Stock
A
Participant will not be subject to tax upon the grant of an Award of Restricted Stock unless the Participant otherwise elects
to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an Award of Restricted Stock becomes transferable
or is no longer subject to a substantial risk of forfeiture, the Participant will recognize ordinary compensation income equal
to the difference between the Fair Market Value of the shares on that date over the amount the Participant paid for such shares,
if any. Such income will be subject to income tax withholdings, and the Participant will be required to pay to the Company the
amount of any required withholding taxes in respect to such income. If the Participant made an election under Section 83(b) of
the Code, the Participant will recognize ordinary compensation income at the time of grant equal to the difference between the
Fair Market Value of the shares on the date of grant over the amount the Participant paid for such shares, if any, and any subsequent
appreciation in the value of the shares will be treated as a capital gain upon sale of the shares. Special rules apply to the
receipt and disposition of Restricted Shares received by officers and directors who are subject to Section 16(b) of the Securities
Exchange Act of 1934 (the “Exchange Act”). The Company will be able to deduct, at the same time as it is recognized
by the Participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction
may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted
Stock Units
A
Participant will not be subject to tax upon the grant of a Restricted Stock Unit Award. Rather, upon the delivery of shares or
cash pursuant to a Restricted Stock Unit Award, the Participant will recognize ordinary compensation income equal to the Fair
Market Value of the number of shares (or the amount of cash) the Participant actually receives with respect to the Award. Such
income will be subject to income tax withholdings, and the Participant will be required to pay to the Company the amount of any
required withholding taxes in respect to such income. The Company will be able to deduct the amount of taxable compensation recognized
by the Participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the
Code for compensation paid to certain executives designated in those Sections.
SARs
No
income will be realized by a Participant upon grant of an SAR. Upon the exercise of an SAR, the Participant will recognize ordinary
compensation income in an amount equal to the Fair Market Value of the payment received in respect of the SAR. Such income will
be subject to income tax withholdings, and the Participant will be required to pay to the Company the amount of any required withholding
taxes in respect to such income. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but
such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated
in those Sections.
Stock
Bonus Awards
A
Participant will recognize ordinary compensation income equal to the difference between the Fair Market Value of the shares on
the date the shares of common stock subject to the Award are transferred to the Participant over the amount the Participant paid
for such shares, if any, and any subsequent appreciation in the value of the shares will be treated as a capital gain upon sale
of the shares. The Company will be able to deduct, at the same time as it is recognized by the Participant, the amount of taxable
compensation to the Participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and
162(m) of the Code for compensation paid to certain executives designated in those Sections.
Section
162(m)
In
general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation
in excess of $1,000,000 per year per person paid to its principal executive officer and the three other officers (other than the
principal executive officer and principal financial officer) whose compensation is disclosed in its proxy statement/prospectus
as a result of their total compensation, subject to certain exceptions. The Plan is intended to satisfy an exception with respect
to grants of Options to covered employees. In addition, the Plan is designed to permit certain Awards of Restricted Stock, Restricted
Stock Units, cash bonus awards and other Awards to be awarded as performance compensation awards intended to qualify under the
“performance-based compensation” exception to Section 162(m) of the Code.
New
Plan Benefits
Future
grants under the Plan will be made at the discretion of the Committee and, accordingly, are not yet determinable. In addition,
the value of the Awards granted under the Plan will depend on a number of factors, including the Fair Market Value of the shares
of common stock on future dates, the exercise decisions made by the Participants and/or the extent to which any applicable performance
goals necessary for vesting or payment are achieved. Consequently, it is not possible to determine the benefits that might be
received by Participants receiving discretionary grants under, or having their annual bonus paid pursuant to, the Plan.
Interests
of Directors or Officers
The
Company’s directors may grant Awards under the Plan to themselves as well as to the Company’s officers and other employees,
consultants and advisors.
Board
Recommendation
The
Board of Directors unanimously recommends a vote FOR the adoption of the 2020 Equity Incentive Plan.
PROPOSAL
NO. 4
APPROVAL
OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE SHARES OF COMMON STOCK AUTHORIZED FROM 14,285,714 TO 25,000,000
At
the Annual Meeting, the Company’s stockholders are being asked to approve an amendment of the Company’s articles of
incorporation to increase the number of authorized shares of common stock from 14,285,714 to 25,000,000. The following is a summary
of the proposal.
Description
of the Amendment
Recently,
our Board of Directors approved an amendment to Article 4 of our Articles of Incorporation, subject to stockholder approval, to
increase the number of shares of common stock authorized for issuance under the Articles of Incorporation from 14,285,714 to 25,000,000
shares. The proposed amendment is as follows:
Resolutions
Amending Articles of Incorporation
RESOLVED,
that the Corporation is hereby authorized to amend Article IV of the Corporation’s Articles of Incorporation by deleting
such Article IV in full and replacing it with the following:
“ARTICLE
3
ARTICLE
3 – AUTHORIZED STOCK
The
aggregate number of shares which the Corporation shall have the authority to issue is 25,000,000 shares of Common Stock, $0.0001
par value per share. All Common Stock of the Corporation shall be of the same class and shall have the same rights and preferences.
The Corporation shall be of the same class and shall have the same rights and preferences.”
FURTHER
RESOLVED, that the appropriate executive officers of the Corporation are hereby authorized and directed to (i) execute Articles
of Amendment attesting to the adoption of the foregoing resolution adopting the amendment, (ii) cause such Articles of Amendment
to be filed in the office of the Secretary of State for the State of Nevada, and (iii) pay any fees and take any other action
necessary to effect the Articles of Amendment and the foregoing resolution.
The
Company shall have the right to make any additional changes to the proposed amendment as required by the Nevada Secretary of State
to complete the purpose of such filing.
If
the Amendment to the Articles of Incorporation is approved by a majority of the voting capital stock, it will become effective
upon its filing with the Nevada Secretary of State of the State. The Company expects to file the Amendment to the Articles of
Incorporation with the Nevada Secretary of State promptly after its approval by stockholders.
Purpose
of the Amendment
Since
inception, we have incurred losses. To fund operations, we may need to rely on additional financings from the sale of our securities.
In addition, we have rewarded employees, directors and consultants with stock option grants. We intend in the future to continue
this process.
As
of September 1, 2020, we have 7,795,322 shares of Common Stock issued and outstanding.
In addition, we have 4,821 shares of common stock reserved for issuance under stock options and 2,478,973 shares of common stock
reserved for issuance under common stock purchase warrants.
The
Company has no current plan, commitment, arrangement, understanding or agreement regarding the issuance of the additional shares
of Common Stock that will result from the Company’s adoption of the proposed amendment. In addition to the outstanding and
reserved shares described above, we may issue additional shares of Common Stock and/or securities convertible or exercisable into
Common Stock, which are necessary to finance our continuing operations. If the Board of Directors elects to issue additional shares
of Common Stock, such issuance could have a dilutive effect on the earnings per share, voting power and holdings of current stockholders.
Our current amount of authorized and unissued shares of Common Stock is not sufficient for both (i) our current and future financing
needs and (ii) our commitments under outstanding options, warrants and convertible notes. Thus, we need to increase the shares
of Common Stock authorized by our articles of incorporation.
Other
Potential Effects of the Amendment
Upon
filing the Amendment to our Articles of Incorporation, the Board may cause the issuance of additional shares of common stock without
further vote of our stockholders, except as provided under applicable Nevada law or any national securities exchange on which
shares of our common stock are then listed or traded. In addition, if the Board of Directors elects to issue additional shares
of common stock, such issuance could have a dilutive effect on the earnings per share, voting power and holdings of current stockholders.
Required
Vote
Approval
of the amendment to the Certificate of Incorporation to increase the shares of common stock authorized requires the receipt of
the affirmative vote of a majority of the total possible votes represented by the Company’s common stock outstanding as
of the record date.
THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AMENDMENT TO OUR ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK FROM 14,285,714 SHARES TO 25,000,000 SHARES.
EXECUTIVE
OFFICERS
The
table below identifies and sets forth certain biographical and other information regarding our executive officers as of September
10, 2019. There are no family relationships among any of our executive officers or directors.
|
Name
|
|
Age
|
|
Position(s)
|
|
Kevin
Mohan
|
|
46
|
|
Chief
Investment Officer and Chairman of the Board
|
|
Michael
J. Roper
|
|
55
|
|
Chief
Executive Officer and Secretary
|
|
Kenneth
Miller
|
|
50
|
|
Chief
Operating Officer
|
|
Ferdinand
Groenewald
|
|
36
|
|
Chief
Financial Officer
|
|
Aimee
Infante
|
|
34
|
|
Chief
Marketing Officer
|
See
page 9 of this Proxy Statement for Kevin Mohan’s biography.
Michael
J. Roper. Mr. Roper has served as Chief Executive Officer, of Muscle Maker, Inc since May 1, 2018. Mr. Roper has unique
experience ranging from owning and operating several franchise locations through the corporate executive levels. From May 2015
through October 2017, Mr. Roper served as Chief Executive Officer of Taco Bueno where he was responsible for defining strategy
and providing leadership to 162 company owned and operated locations along with 23 franchised locations. From March 2014 through
May 2015, Mr. Roper served as the Chief Operating Officer of Taco Bueno and from July 2013 through March 2014 as the Chief Development
and Technology Officer of Taco Bueno. Prior to joining Taco Bueno, Mr. Roper was a franchise owner and operator of a IMS Barter
franchise and held several roles with Quiznos Sub from 2000 to 2012 starting as a franchise owner and culminating in his appointment
as the Chief Operating Officer/Executive Vice President of Operations in 2009. Mr. Roper received a Bachelor of Science in Business
and General Management from Northern Illinois University.
Based
on his education and extensive experience in the restaurant/franchise industry, we have deemed Mr. Roper fit to serve as our principal
executive officer.
Kenneth
Miller. Mr. Miller has served as Chief Operating Officer of Muscle Maker, Inc since September 26, 2018. Mr. Miller has
served in the restaurant business for an extensive portion of his career. Prior to joining the Company as Chief Operating Officer
on September 26, 2018, Mr. Miller served as the Senior Vice President of Operations for Dickey’s BBQ Restaurant from April
2018 through September 2018 and in various capacities with Taco Bueno Restaurants, LP from October 2013 through April 2018 culminating
in the position of Senior Vice President of Operations. Mr. Miller received a Bachelor of Arts in Business/Exercise Science from
Tabor College in 1991.
Based
on his education and extensive experience in the restaurant/franchise industry, we have deemed Mr. Miller fit to serve as our
Chief Operating Officer.
Ferdinand
Groenewald. Mr. Groenewald has served as the Chief Financial Officer of Muscle Maker, Inc. since September 2018. Mr. Groenewald
had previously served as the Vice President of Finance, Principal Financial Officer and Principal Accounting Officer of the Company,
Muscle Maker Development, LLC and Muscle Maker Corp., LLC from January 25, 2018 through May 29, 2018. In addition, Mr. Groenewald
has served as our controller from October 2017 through May 29, 2018. Mr. Groenewald is a certified public accountant with significant
experience in finance and accounting. From February 2017 to October 2017, Mr. Groenewald served as Senior Financial Accounting
Consultant at Pharos Advisors, Inc. serving a broad range of industries. From November 2013 to February 2017, he served as a Senior
Staff Accountant at Financial Consulting Strategies, LLC where he provided a broad range of accounting, financial reporting, and
pre-auditing services to various industries. From August 2015 to December 2015, Mr. Groenewald served as a Financial Reporting
Analyst at Valley National Bank. Mr. Groenewald holds a Bachelor of Science in accounting from the University of South Africa.
Based
on his education and extensive experience in the financial and accounting industries, we have deemed Mr. Groenewald fit to serve
as our Chief Financial Officer.
Aimee
Infante. Ms. Infante has served as the Chief Marketing Officer of Muscle Maker, Inc. since May 6, 2019. Ms. Infante had
previously served as the Vice President of Marketing of each of Muscle Maker Development, LLC and Muscle Maker Corp., LLC since
August 25, 2017 and September 15, 2017, respectively. From June 6, 2017 to September 15, 2017, she was the Vice President of Marketing
of Muscle Maker Brands Conversion, Inc. From February 2016 through June 5, 2017, she served as the Vice President of Marketing
of Muscle Maker Brands, LLC, which converted into Muscle Maker Brands Conversion, Inc. on June 6, 2017. From January 2015 through
January 2016, Ms. Infante served as our Director of Marketing of Muscle Maker Brands. Ms. Infante was Director of Marketing of
Muscle Maker Franchising from October 2014 to January 2015. Ms. Infante was employed by Qdoba Mexican Grill in Denver, Colorado
from November 2010 to April 2014, serving as Regional Marketing Specialist from November 2010 to October 2012 and Marketing Manager
from October 2012 to April 2014.
Based
on her education and extensive experience in marketing, specifically the restaurant industries, we have deemed Ms. Infante fit
to serve as our Chief Marketing Officer.
EXECUTIVE
COMPENSATION
The
following Summary Compensation Table sets forth all compensation earned in all capacities during the fiscal years ended December
31, 2019 and 2018 by (i) our principal executive officer, (ii) our two most highly compensated executive officers, other than
our principal executive officer, who were serving as executive officers as of December 31, 2019 and whose total compensation for
the 2019 fiscal year, as determined by Regulation S-K, Item 402, exceeded $100,000, (iii) a person who would have been included
as one of our two most highly compensated executive officers, other than our principal executive officer, but for the fact that
he was not serving as one of our executive officers as of December 31, 2019 (the individuals falling within categories (i), (ii)
and (iii) are collectively referred to as the “Named Executive Officers”):
Summary
Compensation Table
|
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Award
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
|
|
|
All
Other Compensation
|
|
|
Total
|
|
|
Michael
J. Roper
|
|
2019
|
|
$
|
271,946
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
271,946
|
|
|
Chief
Executive Officer of Muscle Maker, Inc.
|
|
2018
|
|
$
|
144,231
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
144,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferdinand
Groenewald
|
|
2019
|
|
$
|
151,749
|
|
|
$
|
10,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
161,749
|
|
|
Chief
Financial Officer of Muscle Maker, Inc.
|
|
2018
|
|
$
|
106,463
|
|
|
$
|
5,000
|
|
|
$
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
111,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
Miller
|
|
2019
|
|
$
|
202,298
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
202,298
|
|
|
Chief
Operating Officer of Muscle Maker, Inc.
|
|
2018
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
|
|
Employment
Agreements
Michael
Roper
On
October 26, 2018, we entered into an Employment Agreement with Michael Roper, which replaced his employment agreement from May
2018. Pursuant to the Employment Agreement, Mr. Roper will continue to be employed as our Chief Executive Officer for a period
of two years unless earlier terminated pursuant to the terms of the agreement. The Employment Agreement will be automatically
extended upon our listing on a national exchange and raising $3 million (the “IPO”). During the term of the Employment
Agreement, Mr. Roper will be entitled to a base salary at the annualized rate of $250,000, which was increased to $350,000 upon
completion of the IPO. Mr. Roper will be eligible for a discretionary performance bonus to be paid in cash or equity, provided,
however, no cash bonus will be paid until the closing of the IPO. Mr. Roper was paid $100,000 bonus upon closing of the IPO. Mr.
Roper was also issued 14,285 shares of our common stock upon the closing of the IPO. In addition, pursuant to board approval on
June 29, 2019, Mr. Roper was issued 35,714 shares of our restricted common stock awards upon closing of the IPO. In addition,
Mr. Roper will receive 14,285 restricted common stock awards upon the one- and two-year anniversaries of his employment. Mr. Roper’s
common stock was issued on February 18, 2020 and his bonus was paid, subsequent to completing our IPO.
Ferdinand
Groenewald
On
September 26, 2018, we appointed Ferdinand Groenewald as our Chief Financial Officer and entered into an Employment Agreement
with Mr. Groenewald. Pursuant to the agreement, Mr. Groenewald will be employed as our Chief Financial Officer for a period of
two years unless earlier terminated pursuant to the terms of the agreement. During the term of the agreement, Mr. Groenewald will
be entitled to a base salary at the annualized rate of $150,000 and was paid performance cash bonuses of $10,000 upon completion
of the audit for the year ended December 31, 2017 and $25,000 and 3,571 shares of common stock upon completion of the IPO. Mr.
Groenewald’s salary increased to $175,000 upon closing of the IPO. Mr. Groenewald is also eligible to participate in employee
benefits plans as we may institute from time to time that are available for full-time employees. In addition, pursuant to board
approval, Mr. Groenewald was issued 15,714 shares of our common stock upon closing of the IPO
Kenneth
Miller
On
September 26, 2018, we appointed Kenneth Miller as our Chief Operating Officer and entered into an employment agreement with Mr.
Miller. Pursuant to the agreement, Mr. Miller will be employed as our Chief Operating Officer for a period of two years unless
earlier terminated pursuant to the terms of the agreement. During the term of the agreement, Mr. Miller will be entitled to a
base salary at the annualized rate of $200,000, which was increased to $275,000 upon closing of the IPO. Mr. Miller was issued
14,285 shares of our common stock upon closing of the IPO. In addition, Mr. Miller was paid a discretionary performance cash and
equity bonuses including cash of $50,000 and 17,857 shares of common stock upon completion of the IPO. Mr. Miller is also eligible
to participate in employee benefits plans as we may institute from time to time that are available for full-time employees.
Elements
of Compensation
Base
Salary
Messrs.
Roper, Groenewald and Miller received a fixed base salary in an amount determined in accordance with their then employment agreement
with Muscle Maker Inc., and based on a number of factors, including:
|
|
●
|
The
nature, responsibilities and duties of the officer’s position;
|
|
|
●
|
The
officer’s expertise, demonstrated leadership ability and prior performance;
|
|
|
●
|
The
officer’s salary history and total compensation, including annual cash bonuses and long-term incentive compensation;
and
|
|
|
●
|
The
competitiveness of the market for the officer’s services.
|
Bonus
In
fiscal 2018 and 2019, Mr. Groenewald received $5,000 and $10,000 respectively in cash bonus payments. The 2018 payment was provided
as an incentive towards moving his residence from New Jersey to Texas. The 2019 payment was provided upon completion of the 2018
audit as stipulated in his employment agreement.
Stock
Award
In
fiscal 2018 and 2019, we did not issue any restricted shares of our common stock to our named executive officers.
Equity
Incentive Plans
2017
Plan
Our
board of directors and shareholders approved the 2017 Stock Option and Stock Issuance Plan or the 2017 Plan on July 27, 2017 and
September 21, 2017, respectively. Upon the adoption of our 2019 Equity Incentive Plan, we will no longer issue awards under the
2017 Plan, but any existing awards granted to our management team and Board of Directors will remain outstanding under the 2017
Plan. The 2017 Plan provides incentives to eligible employees, officers, directors and consultants in the form of incentive stock
options and non-qualified stock options. We have reserved a total of 153,061 shares of common stock for issuance under the 2017
Plan. Of these shares, approximately 4,591 shares were issued to the directors (765 shares per director) under the 2017 Plan by
the Board of Directors on September 21, 2017.
The
2017 Plan administrator (which is the Board of Directors or a committee or other person(s) appointed or designated by the Board)
has the authority to administer the 2017 Plan and determine, among other things, the interpretation of any provisions of the 2017
Plan, the eligible employees who are granted options, the number of options that may be granted, vesting schedules, and option
exercise prices. Our stock options have a contractual life not to exceed ten years. We issue new shares of common stock upon exercise
of stock options.
The
options may constitute either “incentive stock options” within the meaning of Section 422 of the Internal Revenue
Code or “non-statutory stock options.” The primary difference between incentive stock options and non-statutory stock
options is that the former are not available to non-employees of the corporation. In addition, while neither is subject to tax
at the time of grant, incentive stock options are not subject to tax at the time of exercise (but could be subject to alternative
minimum tax), while upon exercise of the non-qualified options, the optionee will recognize ordinary income with respect to any
vested shares purchased under the option; such income will be in an amount equal to the excess of the value of the vested shares
on the exercise date over the exercise price paid for those shares.
2019
Plan
Our
board of directors and shareholders approved the 2019 Equity Incentive Plan or the 2019 Plan. Our shareholders approved the plan
on October 28, 2019. The 2019 Plan provides incentives to eligible employees, officers, directors and consultants in the form
of Non-Qualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock
Units, Stock Bonus Awards, Performance Compensation Awards (including cash bonus awards) or any combination of the foregoing.
We have reserved a total of 214,286 shares of common stock for issuance under the 2019 Plan. No shares have been issued under
the 2019 Plan to date.
The
administrator which is the Compensation Committee or another committee of at least two person or the Board has the authority,
without limitation (i) to designate participants to receive awards, (ii) determine the types of awards to be granted to participants,
(iii) determine the number of shares of common stock to be covered by awards, (iv) determine the terms and conditions of any awards
granted under the 2019 Plan, (v) determine to what extent and under what circumstances awards may be settled in cash, shares of
common stock, other securities, other awards or other property, or canceled, forfeited or suspended, (vi) determine whether, to
what extent, and under what circumstances the delivery of cash, common stock, other securities, other awards or other property
and other amounts payable with respect to an award shall be made; (vii) interpret, administer, reconcile any inconsistency in,
settle any controversy regarding, correct any defect in and/or complete any omission in the 2019 Plan and any instrument or agreement
relating to, or award granted under, the 2019 Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint
such agents as the administrator shall deem appropriate for the proper administration of the 2019 Plan; (ix) accelerate the vesting
or exercisability of, payment for or lapse of restrictions on, awards; (x) reprice existing awards with shareholder approval or
to grant awards in connection with or in consideration of the cancellation of an outstanding award with a higher price; and (xi)
make any other determination and take any other action that the administrator deems necessary or desirable for the administration
of the 2019 Plan. The administrator will have full discretion to administer and interpret the 2019 Plan and to adopt such rules,
regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which
the awards may be exercised and whether and under what circumstances an award may be exercised.
The
administrator will be authorized to grant options to purchase Common Stock that are either “qualified,” meaning they
satisfy the requirements of Code Section 422 for Incentive Stock Options, or “non-qualified,” meaning they do not
satisfy the requirements of Section 422 of the Code. Options granted under the 2019 Plan will be subject to the terms and conditions
established by the administrator. Under the terms of the 2019 Plan, unless the administrator determines otherwise in the case
of an option substituted for another option in connection with a corporate transaction, the exercise price of the Options will
not be less than the fair market value (as determined under the 2019 Plan) of the shares of common stock on the date of grant.
Options granted under the 2019 Plan will be subject to such terms, including the exercise price and the conditions and timing
of exercise, as may be determined by the administrator and specified in the applicable award agreement. The maximum term of an
option granted under the 2019 Plan will be ten years from the date of grant (or five years in the case of an Incentive Stock Option
granted to a 10% stockholder). Payment in respect of the exercise of an option may be made in cash or by check, by surrender of
unrestricted shares of Common Stock (at their fair market value on the date of exercise) that have been held by the participant
for any period deemed necessary by us to avoid an additional compensation charge or have been purchased on the open market, or
the administrator may, in its discretion and to the extent permitted by law, allow such payment to be made through a broker-assisted
cashless exercise mechanism, a net exercise method, or by such other method as the administrator may determine to be appropriate.
The
administrator will be authorized to award Stock Appreciation Rights (or SARs) under the 2019 Plan. SARs will be subject to such
terms and conditions as established by the administrator. A SAR is a contractual right that allows a participant to receive, either
in the form of cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain
period of time. A SAR granted under the 2019 Plan may be granted in tandem with an option and SARs may also be awarded to a participant
independent of the grant of an Option. SARs granted in connection with an Option shall be subject to terms similar to the Option
which corresponds to such SARs. SARs shall be subject to terms established by the administrator and reflected in the award agreement.
The
administrator will be authorized to award Restricted Stock under the 2019 Plan. Unless otherwise provided by the administrator
and specified in an award agreement, restrictions on Restricted Stock will lapse after three years of service with us. The administrator
will determine the terms of such Restricted Stock awards. Restricted Stock are shares of common stock that generally are non-transferable
and subject to other restrictions determined by the administrator for a specified period. Unless the administrator determines
otherwise or specifies otherwise in an award agreement, if the participant terminates employment or services during the restricted
period, then any unvested restricted stock will be forfeited.
The
administrator will be authorized to award Restricted Stock Unit awards. Unless otherwise provided by the administrator and specified
in an award agreement, Restricted Stock Units will vest after three years of service with us. The administrator will determine
the terms of such Restricted Stock Units. Unless the administrator determines otherwise or specifies otherwise in an award agreement,
if the participant terminates employment or services during the period of time over which all or a portion of the units are to
be earned, then any unvested units will be forfeited. At the election of the administrator, the participant will receive a number
of shares of common stock equal to the number of units earned or an amount in cash equal to the fair market value of that number
of shares at the expiration of the period over which the units are to be earned or at a later date selected by the administrator.
The
administrator will be authorized to grant Awards of unrestricted shares of common stock or other Awards denominated in shares
of common stock, either alone or in tandem with other Awards, under such terms and conditions as the administrator may determine.
Equity
Compensation Plan Information
The
following table provides information, as of December 31, 2019, with respect to equity securities authorized for issuance under
compensation plans:
|
Plan
Category
|
|
Number
of
Securities
to be
Issued
Upon
Exercise
of
Outstanding
Options
under
the Plan
(a)
|
|
|
Weighted-Average
Exercise
Price of
Outstanding
Options
under
The
Plan
(b)
|
|
|
Number
of
Securities
Remaining
Available
for
Future
Issuance
Under
Equity
Compensation
Plans
(excluding
securities
reflected
in
Column
(a))
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans
approved by security holders
|
|
|
0
|
|
|
$
|
-
|
|
|
|
214,286
|
|
|
Equity compensation
plans not approved by security holders
|
|
|
0
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
0
|
|
|
$
|
-
|
|
|
|
214,286
|
|
Director
Compensation
During
2018, the directors did not receive any compensation.
On
July 16, 2019, we entered into letter agreements with each of our existing non-executive directors, John Marques, Paul Menchik,
Peter Petrosian, AB Southall III and Omprakash Vajinapalli. On September 3, 2019 and February 6, 2020, we entered into a letter
agreement with Jeff Carl and Stephen Spanos, respectively, under the same terms as the letter agreements dated July 16, 2019 entered
into with each of the other Directors. Directors that also serve as executives will not be entitled to any additional compensation
for serving as our directors. The letter agreements set forth certain terms pursuant to which the directors will serve as our
directors. As directors have not received compensation for services to date, we agreed to provide equity in lieu of cash compensation
and equity compensation for services rendered during 2017, 2018 and 2019. For past director services in lieu of cash unpaid to
date: (i) directors that served as directors during the year ended December 31, 2017 will each receive shares of common stock
valued at $4,500 to be priced at the price per share of our public offering in connection with our uplisting, which we refer to
in this prospectus as the Uplisting Offering, (ii) directors that served as directors during the year ended December 31, 2018
will each receive shares of common stock valued at $9,000, which shall be prorated for a partial year of service, to be priced
at the price per share of the Uplisting Offering and (iii) directors that served as directors during the year ended December 31,
2019 through the date of the Uplisting Offering will each receive shares of common stock valued at $9,000, which shall be prorated
for a partial year of service, to be priced at the price per share of the Uplisting Offering.
The
letter agreements provide that each director will receive an annual cash fee of $9,000 as consideration for their service as a
director. In addition, each director will receive 1,428 shares of common stock per year for service as a director, 185 shares
of common stock per year for service on each committee and 142 shares of common stock per year for service as chair for such committee.
The shares of common stock for committee service will be limited to two committees.
As
directors have not received compensation for services to date, we agreed to provide equity in lieu of cash compensation and equity
compensation for services rendered during 2017, 2018 and 2019. For past director services in lieu of cash unpaid to date: (i)
directors that served as directors during the year ended December 31, 2017 will each receive shares of common stock valued at
$4,500 to be priced at the price per share of our public offering in connection with the Uplisting Offering, (ii) directors that
served as directors during the year ended December 31, 2018 will each receive shares of common stock valued at $9,000, which shall
be prorated for a partial year of service, to be priced at the price per share of the Uplisting Offering and (iii) directors that
served as directors during the year ended December 31, 2019 through the date of the Uplisting Offering will each receive shares
of common stock valued at $9,000, which shall be prorated for a partial year of service, to be priced at the price per share of
the Uplisting Offering. Following the public offering, directors will be paid cash for the balance of 2019. The directors received
their compensation in stock and cash during the second quarter of 2020.
As
further compensation for past director services, we will issue shares of common stock as follows, which shall be prorated for
a partial year: (i) directors that served as directors during the year ended December 31, 2017 will each receive 714 shares of
common stock, (ii) directors that served as directors during the year ended December 31, 2018 will each receive 1,428 shares of
common stock and (iii) directors that served as directors during the year ended December 31, 2019 will each receive 1,428 shares
of common stock.
On
September 21, 2017, Muscle Maker granted 765 shares of common stock under our Muscle Maker 2017 Stock Option and Stock Issuance
Plan to each of our six directors of Muscle Maker (4,591 shares of common stock in the aggregate) at a value of $65.31 per share.
Such share grants are subject to graduated vesting in the following installments on each of the following dates: (i) 66.666% as
of the date of grant and (ii) 8.333% as of (a) October 1, 2017, (b) November 1, 2017, (c) December 1, 2017, and (d) January 1,
2018.
Kevin
Mohan is an employee-director and does not receive compensation for serving in his role as a director.
Executive
Compensation Philosophy
Our
Board of Directors determines the compensation given to our executive officers in their sole determination. Our Board of Directors
reserves the right to pay our executives or any future executives a salary, and/or issue them shares of common stock issued in
consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual
executive officer’s performance. This package may also include long-term stock-based compensation to certain executives,
which is intended to align the performance of our executives with our long-term business strategies. Additionally, while our Board
of Directors has not granted any performance base stock options to date, the Board of Directors reserves the right to grant such
options in the future, if the Board in its sole determination believes such grants would be in the best interests of the Company.
Incentive
Bonus
The
Board of Directors may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion,
if the Board of Directors believes such bonuses are in the Company’s best interest, after analyzing our current business
objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result
of the actions and ability of such executives.
Long-Term,
Stock Based Compensation
In
order to attract, retain and motivate executive talent necessary to support the Company’s long-term business strategy we
may award our executives and any future executives with long-term, stock-based compensation in the future, at the sole discretion
of our Board of Directors.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the beneficial ownership of our common stock as of September 1, 2020 by:
|
|
●
|
each
person, or group of affiliated persons, whom we know to beneficially own more than 5% of our common stock;
|
|
|
●
|
each
of our named executive officers;
|
|
|
●
|
each
of our executive officers;
|
|
|
●
|
each
of our directors; and
|
|
|
●
|
all
of our executive officers and directors as a group.
|
The
percentage ownership information shown in the column labeled “Percentage of Shares Outstanding” as of September 1,
2020 is based upon 7,795,322 shares of common stock outstanding.
We
have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. These rules generally
attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect
to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options
or warrants or upon conversion of a security that are either exercisable or convertible on or before a date that is 60 days after
September 1, 2020. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants
for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose
of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this
table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable
community property laws.
Except
as otherwise noted below, the address for persons listed in the table is c/o Muscle Maker, Inc., 308 East Renfro Street, Suite
101, Burleson, Texas 76028.
|
Name
of Beneficial Owner
|
|
Shares
Beneficially
Owned (1)
|
|
|
Percentage
of Shares Outstanding (1)
|
|
|
Principal
Stockholders
|
|
|
|
|
|
|
|
|
|
Catalytic Holdings 1 LLC
(10)
|
|
|
2,574,746
|
|
|
|
29.70
|
%
|
|
Thoroughbred Diagnostics, LLC (10)
|
|
|
1,800,000
|
|
|
|
21.44
|
%
|
|
Greentree Financial Group, Inc (12)
|
|
|
420,000
|
|
|
|
5.39
|
%
|
|
Named
Executive Officers and Directors
|
|
|
|
|
|
|
|
|
|
Kevin Mohan (3)
|
|
|
82,966
|
|
|
|
1.06
|
%
|
|
Michael J. Roper
|
|
|
-
|
|
|
|
*
|
|
|
Ferdinand Groenewald
|
|
|
-
|
|
|
|
*
|
|
|
Kenneth Miller
|
|
|
-
|
|
|
|
*
|
|
|
Noel De Winter (4)
|
|
|
15,579
|
|
|
|
|
|
|
Stephen Spanos (11)
|
|
|
1,721
|
|
|
|
*
|
|
|
A.B. Southall, III (5)
|
|
|
122,673
|
|
|
|
1.57
|
%
|
|
Paul L. Menchik (6)
|
|
|
57,913
|
|
|
|
*
|
|
|
John Marques (2)
|
|
|
223,501
|
|
|
|
2.85
|
%
|
|
Peter S. Petrosian (7)
|
|
|
6,489
|
|
|
|
*
|
|
|
Omprakash Vajinapalli (8)
|
|
|
28,413
|
|
|
|
*
|
|
|
Jeff Carl (9)
|
|
|
2,182
|
|
|
|
*
|
|
|
All current executive officers and directors
as a group (13 persons)
|
|
|
542,968
|
|
|
|
6.97
|
%
|
|
*
|
Indicates
beneficial ownership of less than 1%.
|
|
(1)
|
Beneficial
ownership as reported in the above table has been determined in accordance with Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended, and is not necessarily indicative of beneficial ownership for any other purpose. The number
of shares of common stock shown as beneficially owned includes shares of common stock issuable upon (i) the exercise of stock
options that will become exercisable within sixty (60) days of September 1, 2020, (ii) the conversion of the convertible promissory
notes into shares of our common stock, and (iii) the exercise of warrants that will become exercisable within sixty (60) days
of September 1, 2020. Shares of common stock issuable pursuant to the foregoing methods are deemed outstanding for purposes
of calculating the percentage of beneficial ownership of the person or entity holding such securities. Accordingly, the total
percentages of beneficial ownership are in excess of one hundred percent (100%).
|
|
|
|
|
(2)
|
John
Marques beneficially owns (i) indirectly 167,454 shares of Common Stock of Muscle Maker through Membership, LLC, (ii) directly
20,233 shares of Common Stock of Muscle Maker of which 35,714 are subject to presently exercisable purchase warrants issued
to John Marques. John Marques is the sole member and manager of Membership, LLC. As such, Mr. Marques may be deemed to have
voting and dispositive power of all securities beneficially owned by Membership, LLC reported herein.
|
|
|
|
|
(3)
|
Kevin
Mohan beneficially owns (i) indirectly 5,574 shares of Common Stock of Muscle Maker through various family members that reside
in the same household as Kevin Mohan and (ii) directly 66,678 shares of common stock of Muscle Maker of which 10,714 are subject
to presently exercisable purchase warrants issued to Kevin Mohan.
|
|
|
|
|
(4)
|
Intentionally
left blank.
|
|
|
|
|
(5)
|
A.B.
Southall III beneficially owns (i) directly 79,212 shares of Common Stock of Muscle Maker, and (ii) directly 43,461 shares
of Common Stock of Muscle Maker subject to presently exercisable purchase warrants issued to A.B. Southall.
|
|
(6)
|
Paul
L. Menchik beneficially owns (i) directly 47,913 shares of Common Stock of Muscle Maker, and (ii) directly 10,000 shares of
Common Stock of Muscle Maker subject to presently exercisable purchase warrants issued to Paul L. Menchik.
|
|
|
|
|
(7)
|
Peter
S. Petrosian beneficially owns directly 6,489 shares of Common Stock of Muscle Maker issued for services rendered as a board
of director.
|
|
|
|
|
(8)
|
Omprakash
Vajinapalli beneficially owns (i) directly 18,673 shares of Common Stock of Muscle Maker and (ii) indirectly 9,740 shares
of Common Stock of Muscle Maker through a family member that reside in the same household as Omprakash Vajinapalli.
|
|
|
|
|
(9)
|
Mr.
Carl beneficially owns directly 2,182 shares of Common Stock of Muscle Maker.
|
|
|
|
|
(10)
|
Catalytic
Holdings, LLC beneficially owns (i) 1,701,500 shares of Common Stock of Muscle Maker (ii) 873,246 shares of Common Stock of
Muscle Maker which are subject to presently exercisable purchase warrants. The natural person with voting and investment control
for Catalytic Holdings, LLC is Dmitriy Shapiro. Thoroughbred Diagnostics, LLC beneficially owns (i) 1,200,000 shares of Common
Stock of Muscle Maker (ii) 600,000 shares of Common Stock of Muscle Maker which are subject to presently exercisable purchase
warrants. The natural person with voting and investment control for Thoroughbred Diagnostics, LLC is Joey Giamichael.
|
|
|
|
|
(11)
|
Stephen
Spanos beneficially owns directly 1,721 shares of common stock of the Company for serving as a director.
|
|
|
|
|
(12)
|
Greentree
Financial Group Inc beneficial owns directly 420,000 shares of Common Stock of Muscle Maker. Robert C. Cottone, the Vice-President
of Greentree Financial Group Inc., has voting and dispositive power over the shares of common stock held by Greentree Financial
Group Inc. This information is based solely on Schedule 13G filed by Greentree Financial Group, Inc. with the SEC on April
15, 2020.
|
CERTAIN
TRANSACTIONS WITH RELATED PERSONS
Other
than compensation agreements and other arrangements which are described as required under “Executive Compensation”
and the transactions described below, since January 1, 2019, there has not been, and there is not currently proposed, any transaction
or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed the
lesser of $120,000 or the average of our total assets at year end for the last two completed fiscal years and in which any director,
executive officer, holder of 5% or more of any class of our capital stock, or any member of their immediate family had or will
have a direct or indirect material interest. Our audit committee is responsible for approving all future transactions between
us and our officers, directors and principal stockholders and their affiliates.
Policies
and Procedures for Related Party Transactions
Pursuant
to the written charter of our Audit Committee, the Audit Committee will be responsible for reviewing and approving, prior to our
entry into any such transaction, all related party transactions and potential conflict of interest situations involving:
|
|
●
|
any
of our directors, director nominees or executive officers;
|
|
|
●
|
any
beneficial owner of more than 5% of our outstanding stock; and
|
|
|
●
|
any
immediate family member of any of the foregoing.
|
Our
Audit Committee will review any financial transaction, arrangement or relationship that:
|
|
●
|
involves
or will involve, directly or indirectly, any related party identified above and is in an amount greater than $0;
|
|
|
●
|
would
cast doubt on the independence of a director;
|
|
|
●
|
would
present the appearance of a conflict of interest between us and the related party; or
|
|
|
●
|
is
otherwise prohibited by law, rule or regulation.
|
The
Audit Committee will review each such transaction, arrangement or relationship to determine whether a related party has, has had
or expects to have a direct or indirect material interest. Following its review, the Audit Committee will take such action as
it deems necessary and appropriate under the circumstances, including approving, disapproving, ratifying, canceling or recommending
to management how to proceed if it determines a related party has a direct or indirect material interest in a transaction, arrangement
or relationship with us. Any member of the Audit Committee who is a related party with respect to a transaction under review will
not be permitted to participate in the discussions or evaluations of the transaction; however, the Audit Committee member will
provide all material information concerning the transaction to the Audit Committee. The Audit Committee will report its action
with respect to any related party transaction to the board of directors.
Transactions
with American Restaurants, LLC or American Restaurant Holdings, Inc.
On
January 23, 2015, in connection with the acquisition of Muscle Maker Brands, we issued two promissory notes payable in the amount
of $400,000 (“MM Note”) and $204,000 (“MMB Note”), respectively. MM Note includes interest imputed at
the rate of 0.41% per annum and is payable in three installments with the final installment due eighteen months after the closing
date of the Acquisition of Muscle Maker Brands. MMB Note was secured by the assets of Colonia, bore no stated interest and was
due on March 9, 2015.
On
January 23, 2015, Muscle Maker issued 4,339,285 shares of Common Stock to American Restaurant Holdings in exchange for cash of
$3,645,000 and an obligation to repay an aggregate of $604,000 of principal due under MM Note and MMB Note.
On
March 9, 2015, the American Restaurant Holdings repaid MMB Note in full. On July 21, 2015, January 23, 2016 and July 23, 2016,
installments of $100,000, $150,000 and $150,000 were repaid on the balance of MM Note by the American Restaurant Holdings. As
of July 23, 2016, there is no balance outstanding related to MM Note.
On
December 31, 2015, we issued a promissory note in the amount of $1,082,620 to American Restaurant (the “2015 ARH Note”).
The note bore note stated interest or maturity date and was convertible into shares of Common Stock of Muscle Maker at a conversion
price of $4.67 per share. On March 14, 2017, American Restaurant Holdings elected to convert the 2015 ARH Note in the principal
amount of $1,082,620 into 231,990 shares of Common Stock of Muscle Maker at a conversion price of $4.67 per share.
During
the period from January 1 through December 15, 2016, we received $2,621,842 of advances from the American Restaurant Holdings.
The payable due to the American Restaurant Holdings as a result of these advances was exchanged for a convertible promissory note
in the amount of $2,621,842 (the “2016 ARH Note”). The 2016 ARH Note had no stated interest rate or maturity date
and was convertible into shares of the Common Stock of Muscle Maker at a conversion price of $3.73 per share at a time to be determined
by the lender. The 2016 American Restaurant Holdings Note included a three-year warrant for the purchase of 245,797 shares of
our common stock at an exercise price of $9.33 per share. On March 14, 2017, the American Restaurant Holdings elected to convert
the 2016 ARH Note into 702,279 shares of Common Stock of Muscle Maker.
On
February 15, 2017, the Company issued a promissory note in the amount of $980,949 (the “First 2017 ARH Note”) and
on March 15, 2017, MMI issued a promissory note in the amount of $338,834 (the “Second 2017 ARH Note”), both to ARH.
The First 2017 ARH Note and the Second 2017 ARH Note bear no stated interest rate or maturity date and are convertible into 262,753
and 72,606 shares of the Company’s common stock at a conversion price of $3.73 per share and $4.67 per share, respectively,
at a time to be determined by the Former Parent. On March 14, 2017, the American Restaurant Holdings elected to convert the First
2017 ARH Note into 262,753 shares of our common stock.
The
First 2017 ARH Note and the Second 2017 ARH note include a three-year warrant for the purchase of 91,963 and 15,793 shares, respectively,
of Muscle Maker common stock at an exercise price of $9.33 per share. The warrants issued in connection with the First 2017 ARH
Note and the Second 2017 ARH note had a grant date value of $122,820 and $23,120, respectively. Muscle Maker allocated the proceeds
to the First 2017 ARH Note and the Second 2017 ARH and related warrants based on the relative fair values at the time of issuance,
resulting in an effective conversion price of $3.27 and $4.35 per share, respectively. The fair value of Muscle Maker common stock
on the dates the notes were issued was $7.15 per share, creating an intrinsic value of $3.88 and $2.80 per share, respectively.
The
2015 ARH Note, 2016 ARH Note, First 2017 ARH Note, Second 2017 ARH Note and Third 2017 ARH Note are together, the “ARH Notes”.
On
March 14, 2017, American Restaurant Holdings elected to convert aggregate principal of $4,685,411 under the 2015 ARH Note, the
2016 ARH Note and the First 2017 ARH Note into an aggregate 1,197,022 shares of Muscle Makers common stock.
On
July 18, 2017, we issued a convertible promissory note (the “Third 2017 ARH Note”) to American Restaurant Holdings
in exchange for cash proceeds of $336,932. The Third 2017 ARH Note has no stated interest rate or maturity date and is convertible
into shares of the Company’s common stock at a conversion price of $7.47 per share at a time to be determined by the lender.
The Third 2017 ARH Note includes a three-year warrant for the purchase of 15,793 shares of the Company’s common stock at
an exercise price of $9.33 per share.
On
September 19, 2017, American Restaurant Holdings elected to convert aggregate principal of $675,766 under the Second 2017 ARH
Note and the Third 2017 Note into an aggregate 117,731 shares of Muscle Makers common stock.
On
April 6, 2018, we issued a $475,000 convertible promissory note (the “2018 ARH Note”) to American Restaurant Holdings.
The 2018 ARH Note has no stated interest rate or maturity date and is convertible into shares of Muscle Makers common stock at
a conversion price of $0.50 per share at a time to be determined by the lender.
On
April 11, 2018, American Restaurant Holdings elected to partially convert the 2018 ARHI Note for the principal of $392,542 into
785,084 shares of the Company’s common stock.
Transactions
with Officers, Directors and Executives of Muscle Maker
On
September 21, 2017, we granted 765 shares of common stock under our Muscle Maker 2017 Stock Option and Stock Issuance Plan to
each of our six directors of Muscle Maker (4,591 shares of common stock in the aggregate) at a value of $65.31 per share. Such
share grants are subject to graduated vesting in the following installments on each of the following dates: (i) 66.666% as of
the date of grant and (ii) 8.333% as of (a) October 1, 2017, (b) November 1, 2017, (c) December 1, 2017, and (d) January 1, 2018.
During
April 2019, we repaid other notes payable in the aggregate principal amount of $710,000, of which $435,000 belong to related parties.
In addition, we issued 84,427 of our common stock as payment for the interest incurred on the other notes payable repaid in the
aggregate amount of $590,989.
On
May 14, 2019, we issued a $91,000 promissory note to a related party. The note has a stated interest rate of 15% over the original
term of one year with monthly interest payments. The note becomes due in one year or the first day our common stock trades publicly
on an exchange.
On
September 26, 2018, we rehired Ferdinand Groenewald as our Chief Financial Officer and entered into an Employment Agreement with
Mr. Groenewald. Pursuant to the agreement, Mr. Groenewald will be employed as our Chief Financial Officer for a period of two
years unless earlier terminated pursuant to the terms of the agreement. During the term of the agreement, Mr. Groenewald will
be entitled to a base salary at the annualized rate of $150,000 and will be eligible for a discretionary performance cash bonuses
which will include $10,000 upon completion of the audit for the year ended December 31, 2017 and $25,000 and up to 1,428 shares
of common stock upon completion of a public offering of not less than $3 million together with listing on a national exchange
(the “Public Offering”), which may be increased to 3,571 shares of common stock in the event $5 million is raised.
Mr. Groenewald’s salary will increase to $175,000 upon closing of the Public Offering. Mr. Groenewald is also eligible to
participate in employee benefits plans as we may institute from time to time that are available for full-time employees. In addition,
pursuant to board approval, Mr. Groenewald was issued 15,714 shares of our common stock upon closing of the IPO. On August 11,
2020, Mr. Groenewald agreed to cancel 19,285 shares of common stock previously issued to him and waived all rights to equity compensation
provided under his employment agreement.
On
September 26, 2018, we appointed Kenneth Miller as our Chief Operating Officer and entered into an Employment Agreement with Mr.
Miller. Pursuant to the agreement, Mr. Miller will be employed as our Chief Operating Officer for a period of two years unless
earlier terminated pursuant to the terms of the agreement. During the term of the agreement, Mr. Miller will be entitled to a
base salary at the annualized rate of $200,000, which will be increased to $275,000 upon successful closing of the Public Offering.
Mr. Miller is also entitled to 14,285 shares of our common stock that will be issued upon a Public offering of at least $3,000,000.
Mr. Miller is eligible for a discretionary performance cash and equity bonuses which will include cash of $50,000. Mr. Miller
was issued 14,285 shares of our common stock upon closing of the IPO. In addition, Mr. Miller was paid a discretionary performance
cash and equity bonuses including cash of $50,000 and 17,857 shares of common stock upon completion of the IPO. Mr. Miller is
also eligible to participate in employee benefits plans as we may institute from time to time that are available for full-time
employees. On August 11, 2020, Mr. Miller agreed to cancel 32,142 shares of common stock previously issued to him and waived all
rights to equity compensation provided under his employment agreement
On
October 26, 2018, we entered into an Employment Agreement with Michael Roper, which replaced his employment agreement from May
2018. Pursuant to the Employment Agreement, Mr. Roper will continue to be employed as our Chief Executive Officer for a period
of two years unless earlier terminated pursuant to the terms of the agreement. The Employment Agreement will be automatically
extended upon listing our common stock on a national exchange and raising $3,000,000 (the “IPO”). During the term
of the Employment Agreement, Mr. Roper will be entitled to a base salary at the annualized rate of $250,000, which was increased
to $275,000 upon achieving various milestones required by the Investors that participated in the September 2018 Offering and will
be increased to $350,000 upon our completing the IPO. Mr. Roper will be eligible for a discretionary performance bonus to be paid
in cash or equity, provided, however, no cash bonus will be paid until the closing of the IPO. Mr. Roper was paid $100,000 bonus
upon closing of the IPO. Mr. Roper was also issued 14,285 shares of our common stock upon the closing of the IPO. In addition,
pursuant to board approval on June 29, 2019, Mr. Roper was issued 35,714 shares of our restricted common stock awards upon closing
of the IPO. In addition, upon the closing of the IPO Mr. Roper received 14,285 shares of common stock pursuant to his employment
agreement. Mr. Roper was issued an additional 35,714 pursuant to his employment agreement upon the closing of the IPO of at least
$5 million. Mr. Roper’s common stock was issued on February 18, 2020 and his bonus was paid, subsequent to completing our
IPO. On August 11, 2020, Mr. Roper agreed to cancel 100,000 shares of common stock previously issued to him and waived all rights
to equity compensation provided under his employment agreement.
On
October 26, 2018, we entered into an Employment Agreement with Kevin Mohan. Pursuant to the Employment Agreement, Mr. Mohan will
be engaged as our Chief Investment Officer for a period of two years unless earlier terminated pursuant to the terms of the agreement.
The Employment Agreement will be automatically extended upon the IPO. During the term of the Employment Agreement, Mr. Mohan will
be entitled to a base salary at the annualized rate of $156,000, which will be increased to $175,000 upon the IPO. Mr. Mohan will
be eligible for a discretionary performance bonus to be paid in cash following the closing of the IPO. Mr. Mohan was paid $50,000
bonus upon closing of the IPO. Mr. Mohan was also issued 28,571 shares of our common stock upon the closing of the IPO. In addition,
pursuant to board approval on June 29, 2019, Mr. Mohan was issued 35,714 shares of our restricted common stock awards upon closing
of the IPO. Mr. Mohan’s common stock was issued on February 18, 2020 and his bonus was paid, subsequent to completing our
IPO. On August 11, 2020, Mr. Mohan agreed to cancel 64,285 shares of common stock previously issued to him and waived all rights
to equity compensation provided under his employment agreement.
We
have entered into indemnification agreements with each of our directors and entered into such agreements with certain of our executive
officers. These agreements require us, among other things, to indemnify these individuals for certain expenses (including attorneys’
fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action
by or in our right, on account of any services undertaken by such person on behalf of our company or that person’s status
as a member of our Board of Directors to the maximum extent allowed under Nevada law.
STOCKHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders
who intend to have a proposal considered for inclusion in our proxy materials for presentation at our annual meeting of stockholders
to be held in 2021 (the “2021 Annual Meeting”) pursuant to Rule 14a-8 under the Exchange Act must submit the proposal
to our Secretary at our offices at 308 East Renfro Street, Suite 101, Burleson, TX 76028, in writing not later than May 19, 2021.
We
reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply
with these or other applicable requirements.
OTHER
MATTERS
We
have no knowledge of any other matters that may come before the Annual Meeting and does not intend to present any other matters.
However, if any other matters shall properly come before the Annual Meeting or any adjournment or postponement thereof, the persons
soliciting proxies will have the discretion to vote as they see fit unless directed otherwise.
We
will bear the cost of soliciting proxies in the accompanying form. In addition to the use of the mails, proxies may also be solicited
by our directors, officers or other employees, personally or by telephone, facsimile or email, none of whom will be compensated
separately for these solicitation activities.
If
you do not plan to attend the Annual Meeting, in order that your shares may be represented and in order to assure the required
quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Annual Meeting, at your request,
we will cancel your previously submitted proxy.
HOUSEHOLDING
SEC
rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with
respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed
to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies
and helps the environment by conserving natural resources. Some brokers household proxy materials, delivering a single proxy statement
or notice to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be householding materials to your address, householding will continue
until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding
and would prefer to receive a separate proxy statement or notice, or if your household is receiving multiple copies of these documents
and you wish to request that future deliveries be limited to a single copy, please notify your broker. You can also request prompt
delivery of a copy of this Proxy Statement and the Annual Report by contacting Muscle Maker, Inc., at 732-669-1200 or by email
at investorrelations@musclemakergrill.com.
2019
ANNUAL REPORT
Our
2019 Annual Report, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, is being mailed with
this Proxy Statement to those stockholders that receive this Proxy Statement in the mail. Stockholders that receive the Notice
Regarding the Availability of Proxy Materials can access our 2019 Annual Report, including our Annual Report on Form 10-K for
2019, at www.proxyvote.com.
Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2019 has also been filed with the SEC. It is available free
of charge at the SEC’s website at www.sec.gov. Upon written request by a stockholder, we will mail without charge
a copy of our Annual Report on Form 10-K, including the financial statements and financial statement schedules, but excluding
exhibits. Exhibits to the Annual Report on Form 10-K are available upon payment of a reasonable fee, which is limited to our expenses
in furnishing the requested exhibit. All requests should be directed to the Secretary, Muscle Maker, Inc., 308 East Renfro Street,
Suite 101, Burleson, TX 76028.
Your
vote is important. Please promptly vote your shares by following the instructions for voting on the Notice Regarding the Availability
of Proxy Materials or, if you received a paper or electronic copy of our proxy materials, by completing, signing, dating and returning
your proxy card or by Internet or telephone voting as described on your proxy card.
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
/s/
Michael J. Roper
|
|
|
Michael
J. Roper
|
|
|
Chief
Executive Officer and Secretary
|
Burleson,
Texas
September
16, 2020
APPENDIX
A
MUSCLE
MAKER, INC.
2020
Equity Incentive Plan
1.
Purpose. The purpose of the Muscle Maker, Inc. 2020 Equity Incentive Plan is to provide a means through which the Company
and its Affiliates may attract and retain key personnel and to provide a means whereby directors, officers, managers, employees,
consultants and advisors of the Company and its Affiliates can acquire and maintain an equity interest in the Company, or be paid
incentive compensation, which may (but need not) be measured by reference to the value of Common Shares, thereby strengthening
their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s
stockholders.
2.
Definitions. The following definitions shall be applicable throughout this Plan:
(a)
“Affiliate” means (i) any person or entity that directly or indirectly controls, is controlled by or
is under common control with the Company and/or (ii) to the extent provided by the Committee, any person or entity in which the
Company has a significant interest as determined by the Committee in its discretion. The term “control” (including,
with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any
person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise.
(b)
“Award” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option,
Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Bonus Award or Performance Compensation Award granted
under this Plan.
(c)
“Award Agreement” means an agreement made and delivered in accordance with Section 15(a) of this Plan
evidencing the grant of an Award hereunder.
(d)
“Board” means the Board of Directors of the Company.
(e)
“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions
in New York City are authorized or obligated by federal law or executive order to be closed.
(f)
“Cause” means, in the case of a particular Award, unless the applicable Award Agreement states otherwise,
(i) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service, as defined
in any employment or consulting agreement or similar document or policy between the Participant and the Company or an Affiliate
in effect at the time of such termination or (ii) in the absence of any such employment or consulting agreement, document or policy
(or the absence of any definition of “Cause” contained therein), (A) a material breach or material default (including,
without limitation, any material dereliction of duty) by Participant of any agreement between the Participant and the Company,
except for any such breach or default which is caused by the physical disability of the Participant (as determined by a neutral
physician), or a repeated failure by the Participant to follow the direction of a duly authorized representative of the Company;
(B) gross negligence, willful misfeasance or breach of fiduciary duty to the Company or Affiliate of the Company by the Participant;
(C) the commission by the Participant of an act or omission involving fraud, embezzlement, misappropriation or dishonesty in connection
with the Participant’s duties to the Company or Affiliate of the Company or that is otherwise likely to be injurious to
the business or reputation of the Company or its Affiliates; or (D) the Participant’s conviction of, indictment for, or
pleading guilty or nolo contendere to, any (x) felony or (y) other crime involving fraud or moral turpitude. Any determination
of whether Cause exists shall be made by the Committee in its sole discretion.
(g)
“Change in Control” shall, in the case of a particular Award, unless the applicable Award Agreement
states otherwise or contains a different definition of “Change in Control,” be deemed to occur upon:
(i)
A tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding
voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of
the surviving or resulting corporation or entity shall be owned in the aggregate by (A) the shareholders of the Company (as of
the time immediately prior to the commencement of such offer), or (B) any employee benefit plan of the Company or its Subsidiaries,
and their Affiliates;
(ii)
The Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or resulting corporation or entity shall be owned in the aggregate
by (A) the shareholders of the Company (as of the time immediately prior to such transaction); provided, that a merger or consolidation
of the Company with another company which is controlled by persons owning more than 50% of the outstanding voting securities of
the Company shall constitute a Change in Control unless the Committee, in its discretion, determine otherwise, or (B) any employee
benefit plan of the Company or its Subsidiaries, and their Affiliates;
(iii)
The Company shall sell substantially all of its assets to another entity that is not wholly owned by the Company, unless as a
result of such sale more than 50% of such assets shall be owned in the aggregate by (A) the shareholders of the Company (as of
the time immediately prior to such transaction), or (B) any employee benefit plan of the Company or its Subsidiaries, and their
Affiliates;
(iv)
A Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving
or resulting corporation or entity shall be owned in the aggregate by (A) the shareholders of the Company (as of the time immediately
prior to the first acquisition of such securities by such Person), or (B) any employee benefit plan of the Company or its Subsidiaries,
and their Affiliates; or
(v)
The individuals who, as of the date hereof, constitute the members of the Board (the “Current Board Members”) cease,
by reason of a financing, merger, combination, acquisition, takeover or other non-ordinary course transaction affecting the Company,
to constitute at least a majority of the members of the Board unless such change is approved by the Current Board Members.
For
purposes of this Section 2(g), ownership of voting securities shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). In addition, for such purposes, “Person” shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not
include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such
securities; or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportion
as their ownership of stock of the Company. If the timing of payments provided under an Award Agreement is based on or triggered
by a Change in Control then, to extent necessary to avoid violating Section 409A, a Change in Control must also constitute a Change
in Control Event as defined under Section 409A.
(h)
“Code” means the Internal Revenue Code of 1986, as amended, and any successor thereto. References in
this Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance issued by any
governmental authority under such section, and any amendments or successor provisions to such section, regulations or guidance.
(i)
“Committee” means a committee of at least two people as the Board may appoint to administer this Plan
or, if no such committee has been appointed by the Board, the Board. Unless altered by an action of the Board, the Committee shall
be the Compensation Committee of the Board.
(j)
“Common Shares” means the common stock, par value $0.0001 per share, of the Company (and any stock or
other securities into which such common shares may be converted or into which they may be exchanged).
(k)
“Company” means Muscle Maker Inc., a Nevada corporation, together with its successors and assigns.
(l)
“Current Board Members” has the meaning given such term in the definition of “Change in Control.”
(m)
“Date of Grant” means the date on which the granting of an Award is authorized, or such other date as
may be specified in such authorization.
(n)
“Disability” means, in the case of a particular Award, unless the applicable Award Agreement states
otherwise, (i) “Disability” as defined in any employment or consulting agreement or similar document or policy in
effect between the Participant and the Company or an Affiliate or (ii) in the absence of any such employment or consulting agreement,
document or policy (or the absence of any definition of “Disability” contained therein), the inability of the Participant
to perform the essential functions of the Participant’s job by reason of a physical or mental infirmity, for a period of
three (3) consecutive months or for an aggregate of six (6) months in any twelve (12) consecutive month period. The determination
of whether a Participant has incurred a permanent and total disability shall be made by a physician designated by the Committee,
whose determination shall be final and binding.
(o)
“Effective Date” means the date as of which this Plan is adopted by the Board, subject to Section 3
of this Plan.
(p)
“Eligible Director” means a person who is (i) a “non-employee director” within the meaning
of Rule 16b-3 under the Exchange Act, and (ii) an “outside director” within the meaning of Section 162(m) of the Code.
(q)
“Eligible Person” means any (i) individual employed by the Company or an Affiliate; provided, however,
that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such
eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director
of the Company or an Affiliate; or (iii) consultant or advisor to the Company or an Affiliate, provided that if the Securities
Act applies such persons must be eligible to be offered securities registrable on Form S-8 under the Securities Act.
(r)
“Exchange Act” has the meaning given such term in the definition of “Change in Control,”
and any reference in this Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules,
regulations or other interpretative guidance issued by any governmental authority under such section or rule, and any amendments
or successor provisions to such section, rules, regulations or guidance.
(s)
“Exercise Price” has the meaning given such term in Section 7(b) of this Plan.
(t)
“Fair Market Value”, unless otherwise provided by the Committee in accordance with all applicable laws,
rules regulations and standards, means, on a given date, (i) if the Common Shares are listed on a national securities exchange,
the closing sales price on the principal exchange of the Common Shares on such date or, in the absence of reported sales on such
date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Common Shares are
not listed on a national securities exchange, the mean between the bid and offered prices as quoted by any nationally recognized
interdealer quotation system for such date, provided that if the Common Shares are not quoted on an interdealer quotation system
or it is determined that the fair market value is not properly reflected by such quotations, Fair Market Value will be determined
by such other method as the Committee determines in good faith to be reasonable and in compliance with Section 409A.
(u)
“Immediate Family Members” shall have the meaning set forth in Section 15(b) of this Plan.
(v)
“Incentive Stock Option” means an Option that is designated by the Committee as an incentive stock option
as described in Section 422 of the Code and otherwise meets the requirements set forth in this Plan.
(w)
“Indemnifiable Person” shall have the meaning set forth in Section 4(e) of this Plan.
(x)
“Negative Discretion” shall mean the discretion authorized by this Plan to be applied by the Committee
to eliminate or reduce the size of a Performance Compensation Award consistent with Section 162(m) of the Code.
(y)
“Nonqualified Stock Option” means an Option that is not designated by the Committee as an Incentive
Stock Option.
(z)
“Option” means an Award granted under Section 7 of this Plan.
(aa)
“Option Period” has the meaning given such term in Section 7(c) of this Plan.
(bb)
“Participant” means an Eligible Person who has been selected by the Committee to participate in this
Plan and to receive an Award pursuant to Section 6 of this Plan.
(cc)
“Performance Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation
Award pursuant to Section 11 of this Plan.
(dd)
“Performance Criteria” shall mean the criterion or criteria that the Committee shall select for purposes
of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under this
Plan.
(ee)
“Performance Formula” shall mean, for a Performance Period, the one or more objective formulae applied
against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant,
whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance
Period.
(ff)
“Performance Goals” shall mean, for a Performance Period, the one or more goals established by the Committee
for the Performance Period based upon the Performance Criteria.
(gg)
“Performance Period” shall mean the one or more periods of time, as the Committee may select, over which
the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to,
and the payment of, a Performance Compensation Award.
(hh)
“Permitted Transferee” shall have the meaning set forth in Section 15(b) of this Plan.
(ii)
“Person” has the meaning given such term in the definition of “Change in Control.”
(jj)
“Plan” means this Muscle Maker, Inc. 2020 Equity Incentive Plan, as amended from time to time.
(kk)
“Retirement” means the fulfillment of each of the following conditions: (i) the Participant is in good
standing with the Company and/or an Affiliate of the Company as determined by the Committee; (ii) the voluntary termination by
a Participant of such Participant’s employment or service to the Company and/or an Affiliate and (iii) that at the time
of such voluntary termination, the sum of: (A) the Participant’s age (calculated to the nearest month, with any resulting
fraction of a year being calculated as the number of months in the year divided by 12) and (B) the Participant’s years of
employment or service with the Company (calculated to the nearest month, with any resulting fraction of a year being calculated
as the number of months in the year divided by 12) equals at least 62 (provided that, in any case, the foregoing shall only be
applicable if, at the time of such Retirement, the Participant shall be at least 55 years of age and shall have been employed
by or served with the Company for no less than five years).
(ll)
“Restricted Period” means the period of time determined by the Committee during which an Award is subject
to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether
an Award has been earned.
(mm)
“Restricted Stock Unit” means an unfunded and unsecured promise to deliver Common Shares, cash, other
securities or other property, subject to certain restrictions (including, without limitation, a requirement that the Participant
remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of this Plan.
(nn)
“Restricted Stock” means Common Shares, subject to certain specified restrictions (including, without
limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period
of time), granted under Section 9 of this Plan.
(oo)
“SAR Period” has the meaning given such term in Section 8(c) of this Plan.
(pp)
“Section 409A” means Section 409A of the Code (together with all Treasury Regulations, guidance, compliance
programs, and other interpretative authority thereunder.
(qq)
“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto. Reference
in this Plan to any section of the Securities Act shall be deemed to include any rules, regulations or other official interpretative
guidance issued by any governmental authority under such section, and any amendments or successor provisions to such section,
rules, regulations or guidance.
(rr)
“Stock Appreciation Right” or “SAR” means an Award granted under Section 8
of this Plan which meets all of the requirements of Section 1.409A-1(b)(5)(i)(B) of the Treasury Regulations.
(ss)
“Stock Bonus Award” means an Award granted under Section 10 of this Plan.
(tt)
“Strike Price” means, except as otherwise provided by the Committee in the case of Substitute Awards,
(i) in the case of a SAR granted in tandem with an Option, the Exercise Price of the related Option, or (ii) in the case of a
SAR granted independent of an Option, the Fair Market Value of Common Shares on the Date of Grant.
(uu)
“Subsidiary” means, with respect to any specified Person:
(i)
any corporation, association or other business entity of which more than 50% of the total voting power of shares of voting securities
(without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement
that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person (or a combination thereof); and
(ii)
any partnership or limited liability company (or any comparable foreign entity) (a) the sole general partner or managing member
(or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (b)
the only general partners or managing members (or functional equivalents thereof) of which are that Person or one or more Subsidiaries
of that Person (or any combination thereof).
(vv)
“Substitute Award” has the meaning given such term in Section 5(e).
(ww)
“Treasury Regulations” means any regulations, whether proposed, temporary or final, promulgated by the
U.S. Department of Treasury under the Code, and any successor provisions.
3.
Effective Date; Duration. The Plan shall be effective on ,
2020, the date on which it is approved by the stockholders of the Company, which date shall be within twelve (12) months before
or after the date of the Plan’s adoption by the Board. The expiration date of this Plan, on and after which date no Awards
may be granted hereunder, shall be ,
2030, the tenth anniversary of the date on which the Plan was approved by the stockholders of the Company; provided, however,
that such expiration shall not affect Awards then outstanding, and the terms and conditions of this Plan shall continue to apply
to such Awards.
4.
Administration.
(a)
The Committee shall administer this Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act (if the Board is not acting as the Committee under this Plan) or necessary to obtain the exception for performance-based
compensation under Section 162(m) of the Code, as applicable, it is intended that each member of the Committee shall, at the time
he takes any action with respect to an Award under this Plan, be an Eligible Director. However, the fact that a Committee member
shall fail to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that is otherwise validly
granted under this Plan. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved
in writing by a majority of the Committee shall be deemed the acts of the Committee. Whether a quorum is present shall be determined
based on the Committee’s charter as approved by the Board.
(b)
Subject to the provisions of this Plan and applicable law, the Committee shall have the sole and plenary authority, in addition
to other express powers and authorizations conferred on the Committee by this Plan and its charter, to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Common Shares to be covered
by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled
or exercised in cash, Common Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended, and
the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to
what extent, and under what circumstances the delivery of cash, Common Shares, other securities, other Awards or other property
and other amounts payable with respect to an Award shall be made; (vii) interpret, administer, reconcile any inconsistency in,
settle any controversy regarding, correct any defect in and/or complete any omission in this Plan and any instrument or agreement
relating to, or Award granted under, this Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint
such agents as the Committee shall deem appropriate for the proper administration of this Plan; (ix) accelerate the vesting or
exercisability of, payment for or lapse of restrictions on, Awards; and (x) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of this Plan.
(c)
The Committee may, by resolution, expressly delegate to a special committee, consisting of one or more directors who may but need
not be officers of the Company, the authority, within specified parameters as to the number and types of Awards, to (i) designate
officers and/or employees of the Company or any of its Affiliates to be recipients of Awards under this Plan, and (ii) to determine
the number of such Awards to be received by any such Participants; provided, however, that such delegation of duties and responsibilities
may not be made with respect to grants of Awards to persons (i) subject to Section 16 of the Exchange Act or (ii) who are, or
who are reasonably expected to be, “covered employees” for purposes of Section 162(m) of the Code. The acts of such
delegates shall be treated as acts of the Committee, and such delegates shall report regularly to the Board and the Committee
regarding the delegated duties and responsibilities and any Awards granted.
(d)
Unless otherwise expressly provided in this Plan, all designations, determinations, interpretations, and other decisions under
or with respect to this Plan or any Award or any documents evidencing Awards granted pursuant to this Plan shall be within the
sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities,
including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder
of the Company.
(e)
No member of the Board, the Committee, delegate of the Committee or any employee, advisor or agent of the Company or the Board
or the Committee (each such person, an “Indemnifiable Person”) shall be liable for any action taken
or omitted to be taken or any determination made in good faith with respect to this Plan or any Award hereunder. Each Indemnifiable
Person shall be indemnified and held harmless by the Company against and from (and the Company shall pay or reimburse on demand
for) any loss, cost, liability, or expense (including court costs and attorneys’ fees) that may be imposed upon or incurred
by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person
may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken under
this Plan or any Award Agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s
approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit
or proceeding against such Indemnifiable Person, provided, that the Company shall have the right, at its own expense, to
assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the
Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification
shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case
not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions of such Indemnifiable
Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s bad faith, fraud or willful criminal
act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of
Incorporation or Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification
to which any such Indemnifiable Person may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them
harmless.
(f)
Notwithstanding anything to the contrary contained in this Plan, the Board may, in its sole discretion, at any time and from time
to time, grant Awards and administer this Plan with respect to such Awards. In any such case, the Board shall have all the authority
granted to the Committee under this Plan.
5.
Grant of Awards; Shares Subject to this Plan; Limitations.
(a)
The Committee may, from time to time, grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock
Bonus Awards and/or Performance Compensation Awards to one or more Eligible Persons. No more than five percent (5%) of the aggregate
number of Common Shares available for issuance pursuant to Section 5(b) hereof may be granted pursuant to Awards that are eligible
to vest prior to the first anniversary of the Date of Grant. No Participant shall be eligible to receive or accrue dividends or
dividend equivalent rights with respect to the Common Shares subject to an unvested Award, including without limitation, an Award
of Stock Appreciation Rights or Restricted Stock Units.
(b)
Subject to Section 12 of this Plan, the Committee is authorized to deliver under this Plan an aggregate of 1,750,000 Common Shares.
(c)
Common Shares underlying Awards under this Plan that are forfeited, cancelled, expire unexercised, or are settled in cash shall
be available again for Awards under this Plan at the same ratio at which they were previously granted. Notwithstanding the foregoing,
the following Common Shares shall not be available again for Awards under the Plan: (i) shares tendered or held back upon the
exercise of an Option or settlement of an Award to cover the Exercise Price of an Award; (ii) shares that are used or withheld
to satisfy tax withholding obligations of the Participant; (iii) shares subject to a Stock Appreciation Right that are not issued
in connection with the stock settlement of the SAR upon exercise thereof; and (iv) shares purchased in the open market using proceeds
received upon the exercise of an Option.
(d)
Common Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury
of the Company, shares purchased on the open market or by private purchase, or any combination of the foregoing.
(e)
Subject to compliance with Section 1.409A-3(f) of the Treasury Regulations, Awards may, in the sole discretion of the Committee,
be granted under this Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired
by the Company or with which the Company combines (“Substitute Awards”). The number of Common Shares
underlying any Substitute Awards shall be counted against the aggregate number of Common Shares available for Awards under this
Plan.
(f)
Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 12), the Committee
shall not grant to any one Eligible Person in any one calendar year Awards (i) for more than 50% of the Available Shares in the
aggregate or (ii) payable in cash in an amount exceeding $10,000,000 in the aggregate.
6.
Eligibility. Participation shall be limited to Eligible Persons who have entered into an Award Agreement or who have received
written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate
in this Plan.
7.
Options.
(a)
Generally. Each Option granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic
medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)).
Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent
with this Plan as may be reflected in the applicable Award Agreement. All Options granted under this Plan shall be Nonqualified
Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option.
Notwithstanding any designation of an Option, to the extent that the aggregate Fair Market Value of Common Shares with respect
to which Options designated as Incentive Stock Options are exercisable for the first time by any Participant during any calendar
year (under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonqualified
Stock Options. Incentive Stock Options shall be granted only to Eligible Persons who are employees of the Company and its Affiliates,
and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under
the Code. No Option shall be treated as an Incentive Stock Option unless this Plan has been approved by the stockholders of the
Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code, provided that
any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such
approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In
the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to and comply with such rules as
may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion
thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion
thereof shall be regarded as a Nonqualified Stock Option appropriately granted under this Plan.
(b)
Exercise Price. The exercise price (“Exercise Price”) per Common Share for each Option
shall not be less than 100% of the Fair Market Value of such share determined as of the Date of Grant; provided, however,
that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns shares
representing more than 10% of the voting power of all classes of shares of the Company or any Affiliate, the Exercise Price per
share shall not be less than 110% of the Fair Market Value per share on the Date of Grant; and, provided further, that
notwithstanding any provision herein to the contrary, the Exercise Price shall not be less than the par value per Common Share.
(c)
Vesting and Expiration. Options shall vest and become exercisable in such manner and on such date or dates determined
by the Committee and as set forth in the applicable Award Agreement, and shall expire after such period, not to exceed ten (10)
years from the Date of Grant, as may be determined by the Committee (the “Option Period”); provided,
however, that the Option Period shall not exceed five (5) years from the Date of Grant in the case of an Incentive Stock Option
granted to a Participant who on the Date of Grant owns shares representing more than 10% of the voting power of all classes of
shares of the Company or any Affiliate; and, provided, further, that notwithstanding any vesting dates set by the Committee,
the Committee may, in its sole discretion, accelerate the exercisability of any Option, which acceleration shall not affect the
terms and conditions of such Option other than with respect to exercisability. Unless otherwise provided by the Committee in an
Award Agreement:
(i)
the unvested portion of an Option shall expire upon termination of employment or service of the Participant granted the Option,
and the vested portion of such Option shall remain exercisable for:
(A)
one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination
of Disability to be made by the Committee on a case by case basis), or, with respect to an Incentive Stock Option, three (3) months
following such termination, but not later than the expiration of the Option Period;
(B)
for directors, officers and employees of the Company only, for six (6) months following termination of employment or service by
reason of such Participant’s Retirement, or, with respect to an Incentive Stock Option, three (3) months following such
termination, but not later than the expiration of the Option Period;
(C)
ninety (90) days following termination of employment or service for any reason other than such Participant’s death, Disability
or Retirement, and other than such Participant’s termination of employment or service for Cause, but not later than the
expiration of the Option Period; and
(ii)
both the unvested and the vested portion of an Option shall immediately expire upon the termination of the Participant’s
employment or service by the Company for Cause.
Notwithstanding
the foregoing provisions of Section 7(c) and consistent with the requirements of applicable law, the Committee, in its sole discretion,
may extend the post-termination of employment period during which a Participant may exercise vested Options.
(d)
Method of Exercise and Form of Payment. No Common Shares shall be delivered pursuant to the exercise of an Option
until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an
amount equal to any federal, state, local and/or foreign income and employment taxes required to be withheld. Options that have
become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with
the terms of the Award Agreement accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash,
check (subject to collection), cash equivalent and/or vested Common Shares valued at the Fair Market Value at the time the Option
is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient
number of Common Shares in lieu of actual delivery of such shares to the Company); provided, however, that such Common
Shares are not subject to any pledge or other security interest and; (ii) by such other method as the Committee may permit in
accordance with applicable law, in its sole discretion, including without limitation: (A) in other property having a fair market
value (as determined by the Committee in its discretion) on the date of exercise equal to the Exercise Price or (B) if there is
a public market for the Common Shares at such time, by means of a broker-assisted “cashless exercise” pursuant to
which the Company is delivered a copy of irrevocable instructions to a stockbroker to sell the Common Shares otherwise deliverable
upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price or (C) by a “net
exercise” method whereby the Company withholds from the delivery of the Common Shares for which the Option was exercised
that number of Common Shares having a Fair Market Value equal to the aggregate Exercise Price for the Common Shares for which
the Option was exercised. Any fractional Common Shares shall be settled in cash.
(e)
Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive
Stock Option under this Plan shall notify the Company in writing immediately after the date he makes a disqualifying disposition
of any Common Shares acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition
(including, without limitation, any sale) of such Common Shares before the later of (A) two years after the Date of Grant of the
Incentive Stock Option or (B) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined
by the Committee and in accordance with procedures established by the Committee, retain possession of any Common Shares acquired
pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of the period described
in the preceding sentence.
(f)
Compliance with Laws, etc. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise
an Option in a manner that the Committee determines would violate the Sarbanes-Oxley Act of 2002, if applicable, or any other
applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations
of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.
8.
Stock Appreciation Rights.
(a)
Generally. Each SAR granted under this Plan shall be evidenced by an Award Agreement (whether in paper or electronic
medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)).
Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent
with this Plan as may be reflected in the applicable Award Agreement. Any Option granted under this Plan may include tandem SARs
(i.e., SARs granted in conjunction with an Award of Options under this Plan). The Committee also may award SARs to Eligible Persons
independent of any Option.
(b)
Exercise Price. The Exercise Price per Common Share for each Option granted in connection with a SAR shall not be
less than 100% of the Fair Market Value of such share determined as of the Date of Grant.
(c)
Vesting and Expiration. A SAR granted in connection with an Option shall become exercisable and shall expire according
to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall
vest and become exercisable and shall expire in such manner and on such date or dates determined by the Committee and shall expire
after such period, not to exceed ten years, as may be determined by the Committee (the “SAR Period”);
provided, however, that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion,
accelerate the exercisability of any SAR, which acceleration shall not affect the terms and conditions of such SAR other than
with respect to exercisability. Unless otherwise provided by the Committee in an Award Agreement:
(i)
the unvested portion of a SAR shall expire upon termination of employment or service of the Participant granted the SAR, and the
vested portion of such SAR shall remain exercisable for:
(A)
one year following termination of employment or service by reason of such Participant’s death or Disability (with the determination
of Disability to be made by the Committee on a case by case basis), but not later than the expiration of the SAR Period;
(B)
for directors, officers and employees of the Company only, for six (6) months following termination of employment or service by
reason of such Participant’s Retirement, but not later than the expiration of the SAR Period;
(C)
ninety (90) days following termination of employment or service for any reason other than such Participant’s death, Disability
or Retirement, and other than such Participant’s termination of employment or service for Cause, but not later than the
expiration of the SAR Period; and
(ii)
both the unvested and the vested portion of a SAR shall expire immediately upon the termination of the Participant’s employment
or service by the Company for Cause.
(d)
Method of Exercise. SARs that have become exercisable may be exercised by delivery of written or electronic notice
of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date
on which such SARs were awarded. Notwithstanding the foregoing, if on the last day of the Option Period (or in the case of a SAR
independent of an Option, the SAR Period), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the
SAR or the corresponding Option (if applicable), and neither the SAR nor the corresponding Option (if applicable) has expired,
such SAR shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate
payment therefor.
(e)
Payment. Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of Common
Shares subject to the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one Common Share
on the exercise date over the Strike Price, less an amount equal to any federal, state, local and non-U.S. income and employment
taxes required to be withheld. The Company shall pay such amount in cash, in Common Shares valued at Fair Market Value, or any
combination thereof, as determined by the Committee. Any fractional Common Share shall be settled in cash.
9.
Restricted Stock and Restricted Stock Units.
(a)
Generally. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement (whether
in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract
with the Company)). Each such grant shall be subject to the conditions set forth in this Section 9, and to such other conditions
not inconsistent with this Plan as may be reflected in the applicable Award Agreement. Restricted Stock and Restricted Stock Units
shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, for example,
that holders of Restricted Stock may not vote or receive dividends on the Restricted Stock). These restrictions may lapse separately
or in combination at such times, under such circumstances, in such installments, upon the satisfaction of Performance Goals or
otherwise, as the Committee determines at the time of the grant of an Award or thereafter. Except as otherwise provided in an
Award Agreement, a Participant shall have none of the rights of a stockholder with respect to Restricted Stock Units until such
time as Common Shares are paid in settlement of such Awards.
(b)
Restricted Accounts; Escrow or Similar Arrangement. Unless otherwise determined by the Committee, upon the grant
of Restricted Stock, a book entry in a restricted account shall be established in the Participant’s name at the Company’s
transfer agent and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than
held in such restricted account pending the release of the applicable restrictions, the Committee may require the Participant
to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii)
the appropriate share power (endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant
shall fail to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank share
power within the amount of time specified by the Committee, the Award shall be null and void ab initio. No Participant
shall have voting rights with respect to any Awards of Restricted Stock. A Participant holding Restricted Stock granted hereunder
shall not have the right to receive dividends on the Restricted Stock during the Restriction Period. To the extent shares of Restricted
Stock are forfeited, any share certificates issued to the Participant evidencing such shares shall be returned to the Company,
and all rights of the Participant to such shares and as a stockholder with respect thereto shall terminate without further obligation
on the part of the Company.
(c)
Vesting; Acceleration of Lapse of Restrictions. Unless otherwise provided by the Committee in an Award Agreement,
the unvested portion of Restricted Stock and Restricted Stock Units shall terminate and be forfeited upon the termination of employment
or service of the Participant granted the applicable Award.
(d)
Delivery of Restricted Stock and Settlement of Restricted Stock Units. (i) Upon the expiration of the Restricted
Period with respect to any shares of Restricted Stock, the restrictions set forth in the applicable Award Agreement shall be of
no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement
is used, upon such expiration, the Company shall deliver to the Participant, or his beneficiary, without charge, the share certificate
evidencing the shares of Restricted Stock that have not then been forfeited and with respect to which the Restricted Period has
expired (rounded down to the nearest full share).
(ii)
Unless otherwise provided by the Committee in an Award Agreement, upon the expiration of the Restricted Period with respect to
any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his beneficiary, without charge, one
Common Share for each such outstanding Restricted Stock Unit; provided, however, that the Committee may, in its sole discretion
and subject to the requirements of Section 409A, elect to (i) pay cash or part cash and part Common Share in lieu of delivering
only Common Shares in respect of such Restricted Stock Units or (ii) defer the delivery of Common Shares (or cash or part Common
Shares and part cash, as the case may be) beyond the expiration of the Restricted Period if such delivery would result in a violation
of applicable law until such time as is no longer the case. If a cash payment is made in lieu of delivering Common Shares, the
amount of such payment shall be equal to the Fair Market Value of the Common Shares as of the date on which the Restricted Period
lapsed with respect to such Restricted Stock Units, less an amount equal to any federal, state, local and non-U.S. income and
employment taxes required to be withheld.
10.
Stock Bonus Awards. The Committee may issue unrestricted Common Shares, or other Awards denominated in Common Shares, under
this Plan to Eligible Persons, either alone or in tandem with other awards, in such amounts as the Committee shall from time to
time in its sole discretion determine. Each Stock Bonus Award granted under this Plan shall be evidenced by an Award Agreement
(whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party
under contract with the Company)). Each Stock Bonus Award so granted shall be subject to such conditions not inconsistent with
this Plan as may be reflected in the applicable Award Agreement.
11.
Performance Compensation Awards.
(a)
Generally. The provisions of the Plan are intended to enable Options and Stock Appreciation Rights granted hereunder
to certain Eligible Persons to qualify for an exemption under Section 162(m) of the Code. The Committee shall have the authority,
at the time of grant of any Award described in Sections 7 through 10 of this Plan, to designate such Award as a Performance Compensation
Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code. The Committee shall
have the authority to make an award of a cash bonus to any Participant and designate such Award as a Performance Compensation
Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
(b)
Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance
Period, the Committee shall have sole discretion to select the length of such Performance Period, the type(s) of Performance Compensation
Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s)
of the Performance Goals(s) that is (are) to apply and the Performance Formula. Within the first 90 calendar days of a Performance
Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code, if applicable), the Committee
shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with
respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing.
(c)
Performance Criteria. The Performance Criteria that will be used to establish the Performance Goal(s) shall be based
on the attainment of specific levels of performance of the Company and/or one or more Affiliates, divisions or operational units,
or any combination of the foregoing, as determined by the Committee, which criteria may be based on one or more of the following
business criteria: (i) revenue; (ii) sales; (iii) profit (net profit, gross profit, operating profit, economic profit, profit
margins or other corporate profit measures); (iv) earnings (EBIT, EBITDA, earnings per share, or other corporate earnings measures);
(v) net income (before or after taxes, operating income or other income measures); (vi) cash (cash flow, cash generation or other
cash measures); (vii) stock price or performance; (viii) total stockholder return (stock price appreciation plus reinvested dividends
divided by beginning share price); (ix) economic value added; (x) return measures (including, but not limited to, return on assets,
capital, equity, investments or sales, and cash flow return on assets, capital, equity, or sales); (xi) market share; (xii) improvements
in capital structure; (xiii) expenses (expense management, expense ratio, expense efficiency ratios or other expense measures);
(xiv) business expansion or consolidation (acquisitions and divestitures); (xv) internal rate of return or increase in net present
value; (xvi) working capital targets relating to inventory and/or accounts receivable; (xvii) inventory management; (xviii) service
or product delivery or quality; (xix) customer satisfaction; (xx) employee retention; (xxi) safety standards; (xxii) productivity
measures; (xxiii) cost reduction measures; and/or (xxiv) strategic plan development and implementation. Any one or more of the
Performance Criteria adopted by the Committee may be used on an absolute or relative basis to measure the performance of the Company
and/or one or more Affiliates as a whole or any business unit(s) of the Company and/or one or more Affiliates or any combination
thereof, as the Committee may deem appropriate, or any of the above Performance Criteria may be compared to the performance of
a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate,
or as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any
Award based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph. To the extent
required under Section 162(m) of the Code, the Committee shall, within the first 90 calendar days of a Performance Period (or,
if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such Performance Period and thereafter promptly communicate
such Performance Criteria to the Participant.
(d)
Modification of Performance Goal(s). In the event that applicable tax and/or securities laws change to permit Committee
discretion to alter the governing Performance Criteria without obtaining stockholder approval of such alterations, the Committee
shall have sole discretion to make such alterations without obtaining stockholder approval. The Committee is authorized at any
time during the first 90 calendar days of a Performance Period (or, if longer or shorter, within the maximum period allowed under
Section 162(m) of the Code, if applicable), or at any time thereafter to the extent the exercise of such authority at such time
would not cause the Performance Compensation Awards granted to any Participant for such Performance Period to fail to qualify
as “performance-based compensation” under Section 162(m) of the Code, in its sole discretion, to adjust or modify
the calculation of a Performance Goal for such Performance Period, based on and in order to appropriately reflect the following
events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting
principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs;
(v) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement
thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the
Company’s annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific
unusual or nonrecurring events, or objectively determinable category thereof; (viii) foreign exchange gains and losses; and (ix)
a change in the Company’s fiscal year.
(e)
Payment of Performance Compensation Awards.
(i)
Condition to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must
be employed by, or in service to, the Company on the last day of a Performance Period to be eligible for payment in respect of
a Performance Compensation Award for such Performance Period.
(ii)
Limitation. A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only
to the extent that: (A) the Performance Goals for such period are achieved; and (B) all or some of the portion of such Participant’s
Performance Compensation Award has been earned for the Performance Period based on the application of the Performance Formula
to such achieved Performance Goals.
(iii)
Certification. Following the completion of a Performance Period, the Committee shall review and certify in writing
whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify
in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee
shall then determine the amount of each Participant’s Performance Compensation Award actually payable for the Performance
Period and, in so doing, may apply Negative Discretion.
(iv)
Use of Negative Discretion. In determining the actual amount of an individual Participant’s Performance Compensation
Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned
under the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such
reduction or elimination is appropriate. The Committee shall not have the discretion, except as is otherwise provided in this
Plan, to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance
Goals for such Performance Period have not been attained; or (B) increase a Performance Compensation Award above the applicable
limitations set forth in Section 5 of this Plan.
(f)
Timing of Award Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants
as soon as administratively practicable following completion of the certifications required by this Section 11, but in no event
later than two-and-one-half months following the end of the fiscal year during which the Performance Period is completed in order
to comply with the short-term deferral rules under Section 1.409A-1(b)(4) of the Treasury Regulations. Notwithstanding the foregoing,
payment of a Performance Compensation Award may be delayed, as permitted by Section 1.409A-2(b)(7)(i) of the Treasury Regulations,
to the extent that the Company reasonably anticipates that if such payment were made as scheduled, the Company’s tax deduction
with respect to such payment would not be permitted due to the application of Section 162(m) of the Code.
12.
Changes in Capital Structure and Similar Events. In the event of (a) any dividend or other distribution (whether in the
form of cash, Common Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization,
merger, amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of Common Shares or other securities
of the Company, issuance of warrants or other rights to acquire Common Shares or other securities of the Company, or other similar
corporate transaction or event (including, without limitation, a Change in Control) that affects the Common Shares, or (b) unusual
or nonrecurring events (including, without limitation, a Change in Control) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any
governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case
an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate in order to prevent dilution
or enlargement of rights, then the Committee shall make any such adjustments that are equitable, including, without limitation,
adjusting any or all of (A) the number of Common Shares or other securities of the Company (or number and kind of other securities
or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under this Plan (including,
without limitation, adjusting any or all of the limitations under Section 5 of this Plan) and (B) the terms of any outstanding
Award, including, without limitation, (1) the number of Common Shares or other securities of the Company (or number and kind of
other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the Exercise Price
or Strike Price with respect to any Award or (3) any applicable performance measures (including, without limitation, Performance
Criteria and Performance Goals). All adjustments shall be made in good faith compliance with Section 409A.
13.
Effect of Change in Control. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited under
applicable laws or by the rules and regulations of any governing governmental agencies or national securities exchanges, or unless
the Committee shall specify otherwise in the Award Agreement, the Committee is authorized (but not obligated) to make any of the
following adjustments (or any combination thereof) in the terms and conditions of outstanding Awards: (a) continuation or assumption
of such outstanding Awards under the Plan by the Company (if it is the surviving company or corporation) or by the surviving company
or corporation or its parent; (b) substitution by the surviving company or corporation or its parent of equity, equity-based and/or
cash awards with substantially the same terms for outstanding Awards (excluding the security deliverable upon settlement of the
Awards), including, in the case of Options, substitution by the surviving company or corporation or its parent of restricted stock
or other equity, which may be subject to substantially the same vesting and/or forfeiture terms as such Options, in an amount
equal to the intrinsic value of such Options; (c) accelerated exercisability, vesting and/or lapse of restrictions under outstanding
Awards immediately prior to the occurrence of such event; (d) upon written notice, provide that any outstanding Awards must be
exercised, to the extent then exercisable, during a reasonable period of time immediately prior to the scheduled consummation
of the event or such other period as determined by the Committee (contingent upon the consummation of the event), and at the end
of such period, such Awards shall terminate to the extent not so exercised within the relevant period; and (e) cancellation of
all or any portion of outstanding Awards for fair value (in the form of cash, Common Shares, other property or any combination
thereof) as determined in the sole discretion of the Committee and which value may be zero; provided, that, in the
case of Options and Stock Appreciation Rights or similar Awards, (x) such fair value may equal the excess, if any, of the value
of the consideration to be paid in the Change in Control transaction to holders of the same number of Common Shares subject to
such Awards (or, if no such consideration is paid, the Fair Market Value of the Common Shares subject to such outstanding Awards
or portion thereof being canceled) over the aggregate Exercise Price or Strike Price, as applicable, with respect to such Awards
or the portion thereof being canceled (or if no such excess, zero), and (y) to the extent that the Options, Stock Appreciation
Rights or similar Awards are not then vested, such excess may be paid in restricted stock or other equity, which may be subject
to substantially the same vesting and/or forfeiture terms as such Options, Stock Appreciation Rights or similar awards, in an
amount equal to the intrinsic value of such Options, Stock Appreciation Rights or similar Awards.
14.
Amendments and Termination.
(a)
Amendment and Termination of this Plan. The Board may amend, alter, suspend, discontinue, or terminate this Plan
or any portion thereof at any time; provided, that (i) no amendment to the definition of Eligible Person in Section 2(q),
Section 5(b), Section 11(c) or Section 14(b) (to the extent required by the proviso in such Section 14(b)) shall be made without
stockholder approval and (ii) no such amendment, alteration, suspension, discontinuation or termination shall be made without
stockholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to this Plan (including,
without limitation, as necessary to comply with any rules or requirements of any national securities exchange or inter-dealer
quotation system on which the Common Shares may be listed or quoted or to prevent the Company from being denied a tax deduction
under Section 162(m) of the Code); and, provided, further, that any such amendment, alteration, suspension, discontinuance
or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without the prior written consent of the affected Participant, holder
or beneficiary.
(b)
Amendment of Award Agreements. The Committee may, to the extent consistent with the terms of any applicable Award
Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any
Award theretofore granted or the associated Award Agreement, prospectively or retroactively; provided, however that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely
affect the rights of any Participant with respect to any Award theretofore granted shall not to that extent be effective without
the consent of the affected Participant.
(c)
Prohibition on Repricing. Subject to Section 5, the Committee shall not, without the approval of the stockholders
of the Company (i) reduce the exercise price, or cancel and reissue options so as to in effect reduce the exercise price or (ii)
change the manner of determining the exercise price so that the exercise price is less than the fair market value per share of
Common Stock.
15.
General.
(a)
Award Agreements. Each Award under this Plan shall be evidenced by an Award Agreement, which shall be delivered
to the Participant (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company
or a third party under contract with the Company)) and shall specify the terms and conditions of the Award and any rules applicable
thereto, including without limitation, the effect on such Award of the death, Disability or termination of employment or service
of a Participant, or of such other events as may be determined by the Committee. The Company’s failure to specify any term
of any Award in any particular Award Agreement shall not invalidate such term, provided such terms was duly adopted by the Board
or the Committee.
(b)
Nontransferability; Trading Restrictions.
(i)
Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under applicable
law, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and any
such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against
the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.
(ii)
Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to
be transferred by a Participant, with or without consideration, subject to such rules as the Committee may adopt consistent with
any applicable Award Agreement to preserve the purposes of this Plan, to: (A) any person who is a “family member”
of the Participant, as such term is used in the instructions to Form S-8 under the Securities Act (collectively, the “Immediate
Family Members”); (B) a trust solely for the benefit of the Participant and his or her Immediate Family Members;
or (C) a partnership or limited liability company whose only partners or stockholders are the Participant and his or her Immediate
Family Members; or (D) any other transferee as may be approved either (I) by the Board or the Committee in its sole discretion,
or (II) as provided in the applicable Award Agreement (each transferee described in clauses (A), (B), (C) and (D) above is hereinafter
referred to as a “Permitted Transferee”); provided, that the Participant gives the Committee
advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant
in writing that such a transfer would comply with the requirements of this Plan.
(iii)
The terms of any Award transferred in accordance with subparagraph (ii) above shall apply to the Permitted Transferee and any
reference in this Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee,
except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and
distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect
a registration statement on an appropriate form covering the Common Shares to be acquired pursuant to the exercise of such Option
if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or
appropriate; (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or
not such notice is or would otherwise have been required to be given to the Participant under this Plan or otherwise; and (D)
the consequences of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under
the terms of this Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including,
without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified
in this Plan and the applicable Award Agreement.
(iv)
The Committee shall have the right, either on an Award-by-Award basis or as a matter of policy for all Awards or one or more classes
of Awards, to condition the delivery of vested Common Shares received in connection with such Award on the Participant’s
agreement to such restrictions as the Committee may determine.
(c)
Tax Withholding.
(i)
A Participant shall be required to pay to the Company or any Affiliate, or the Company or any Affiliate shall have the right and
is hereby authorized to withhold, from any cash, Common Shares, other securities or other property deliverable under any Award
or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Shares, other securities or other
property) of any required withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or
under this Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all
obligations for the payment of such withholding and taxes. In addition, the Committee, in its discretion, may make arrangements
mutually agreeable with a Participant who is not an employee of the Company or an Affiliate to facilitate the payment of applicable
income and self-employment taxes.
(ii)
Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy,
in whole or in part, the foregoing withholding liability by (A) the delivery of Common Shares (which are not subject to any pledge
or other security interest) owned by the Participant having a fair market value equal to such withholding liability or (B) having
the Company withhold from the number of Common Shares otherwise issuable or deliverable pursuant to the exercise or settlement
of the Award a number of shares with a fair market value equal to such withholding liability (but no more than the minimum required
statutory withholding liability).
(d)
No Claim to Awards; No Rights to Continued Employment; Waiver. No employee of the Company or an Affiliate, or other
person, shall have any claim or right to be granted an Award under this Plan or, having been selected for the grant of an Award,
to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether
or not such Participants are similarly situated. Neither this Plan nor any action taken hereunder shall be construed as giving
any Participant any right to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as
giving any Participant any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss
a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under this Plan,
unless otherwise expressly provided in this Plan or any Award Agreement. By accepting an Award under this Plan, a Participant
shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement
related to non-continuation of the Award beyond the period provided under this Plan or any Award Agreement, notwithstanding any
provision to the contrary in any written employment contract or other agreement between the Company and its Affiliates and the
Participant, whether any such agreement is executed before, on or after the Date of Grant.
(e)
International Participants. With respect to Participants who reside or work outside of the United States of America
and who are not (and who are not expected to be) “covered employees” within the meaning of Section 162(m) of the Code,
the Committee may in its sole discretion amend the terms of this Plan or outstanding Awards (or establish a sub-plan) with respect
to such Participants in order to conform such terms with the requirements of local law or to obtain more favorable tax or other
treatment for such Participants, the Company or its Affiliates.
(f)
Designation and Change of Beneficiary. Each Participant may file with the Committee a written designation of one
or more persons as the beneficiary(ies) who shall be entitled to receive the amounts payable with respect to an Award, if any,
due under this Plan upon his or her death. A Participant may, from time to time, revoke or change his or her beneficiary designation
without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation filed with
the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective
unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior
to such receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his or her spouse
or, if the Participant is unmarried at the time of death, his or her estate. Upon the occurrence of a Participant’s divorce
(as evidenced by a final order or decree of divorce), any spousal designation previously given by such Participant shall automatically
terminate.
(g)
Termination of Employment/Service. Unless determined otherwise by the Committee at any point following such event:
(i) neither a temporary absence from employment or service due to illness, vacation or leave of absence nor a transfer from employment
or service with the Company to employment or service with an Affiliate (or vice-versa) shall be considered a termination of employment
or service with the Company or an Affiliate; and (ii) if a Participant’s employment with the Company and its Affiliates
terminates, but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity (or
vice-versa), such change in status shall not be considered a termination of employment with the Company or an Affiliate for purposes
of this Plan unless the Committee, in its discretion, determines otherwise.
(h)
No Rights as a Stockholder. Except as otherwise specifically provided in this Plan or any Award Agreement, no person
shall be entitled to the privileges of ownership in respect of Common Shares that are subject to Awards hereunder until such shares
have been issued or delivered to that person.
(i)
Government and Other Regulations.
(i)
The obligation of the Company to settle Awards in Common Shares or other consideration shall be subject to all applicable laws,
rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions
of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from
offering to sell or selling, any Common Shares pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption
therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation
to register for sale under the Securities Act any of the Common Shares to be offered or sold under this Plan. The Committee shall
have the authority to provide that all certificates for Common Shares or other securities of the Company or any Affiliate delivered
under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under
this Plan, the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the
Securities and Exchange Commission, any securities exchange or inter-dealer quotation system upon which such shares or other securities
are then listed or quoted and any other applicable federal, state, local or non-U.S. laws, and, without limiting the generality
of Section 9 of this Plan, the Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. Notwithstanding any provision in this Plan to the contrary, the Committee reserves the right to
add any additional terms or provisions to any Award granted under this Plan that it in its sole discretion deems necessary or
advisable in order that such Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award
is subject.
(ii)
The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions
and/or blockage and/or other market considerations would make the Company’s acquisition of Common Shares from the public
markets, the Company’s issuance of Common Shares to the Participant, the Participant’s acquisition of Common Shares
from the Company and/or the Participant’s sale of Common Shares to the public markets, illegal, impracticable or inadvisable.
If the Committee determines to cancel all or any portion of an Award in accordance with the foregoing, unless doing so would violate
Section 409A, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate Fair Market Value of
the Common Shares subject to such Award or portion thereof canceled (determined as of the applicable exercise date, or the date
that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price (in
the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Common Shares (in the case of
any other Award). Such amount shall be delivered to the Participant as soon as practicable following the cancellation of such
Award or portion thereof. The Committee shall have the discretion to consider and take action to mitigate the tax consequence
to the Participant in cancelling an Award in accordance with this clause.
(j)
Payments to Persons Other Than Participants. If the Committee shall find that any person to whom any amount is payable
under this Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment
due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if
the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of
such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(k)
Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options or other equity-based
awards otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.
(l)
No Trust or Fund Created. Neither this Plan nor any Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other
person or entity, on the other hand. No provision of this Plan or any Award shall require the Company, for the purpose of satisfying
any obligations under this Plan, to purchase assets or place any assets in a trust or other entity to which contributions are
made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights
under this Plan other than as general unsecured creditors of the Company, except that insofar as they may have become entitled
to payment of additional compensation by performance of services, they shall have the same rights as other employees under general
law.
(m)
Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in acting
or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance
upon any report made by the independent public accountant of the Company and/or its Affiliates and/or any other information furnished
in connection with this Plan by any agent of the Company or the Committee or the Board, other than himself.
(n)
Relationship to Other Benefits. No payment under this Plan shall be taken into account in determining any benefits
under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically
provided in such other plan.
(o)
Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of
Nevada, without giving effect to the conflict of laws provisions.
(p)
Severability. If any provision of this Plan or any Award or Award Agreement is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify this Plan or any Award
under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable
laws in the manner that most closely reflects the original intent of the Award or the Plan, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the intent of this Plan or the Award, such provision
shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of this Plan and any
such Award shall remain in full force and effect.
(q)
Obligations Binding on Successors. The obligations of the Company under this Plan shall be binding upon any successor
corporation or organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or
upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.
(r)
Code Section 162(m) Approval. If so determined by the Committee, the provisions of this Plan regarding Performance
Compensation Awards shall be disclosed and reapproved by stockholders no later than the first stockholder meeting that occurs
in the fifth year following the year in which stockholders previously approved such provisions, in each case in order for certain
Awards granted after such time to be exempt from the deduction limitations of Section 162(m) of the Code. Nothing in this clause,
however, shall affect the validity of Awards granted after such time if such stockholder approval has not been obtained.
(s)
Expenses; Gender; Titles and Headings. The expenses of administering this Plan shall be borne by the Company and
its Affiliates. Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings
of the sections in this Plan are for convenience of reference only, and in the event of any conflict, the text of this Plan, rather
than such titles or headings shall control.
(t)
Other Agreements. Notwithstanding the above, the Committee may require, as a condition to the grant of and/or the
receipt of Common Shares under an Award, that the Participant execute lock-up, stockholder or other agreements, as it may determine
in its sole and absolute discretion.
(u)
Section 409A. The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from,
the requirements of Section 409A. The Plan and all Awards granted under this Plan shall be administered, interpreted, and construed
in a manner consistent with Section 409A to the extent necessary to avoid the imposition of additional taxes under Section 409A(a)(1)(B)
of the Code. In no event shall the Company or any of its Affiliates be liable for any additional tax, interest or penalties that
may be imposed on a Participant under Section 409A or any damages for failing to comply with Section 409A. Notwithstanding any
contrary provision in the Plan or Award Agreement, any payment(s) of nonqualified deferred compensation (within the meaning of
Section 409A) that are otherwise required to be made under the Plan to a “specified employee” (within the meaning
of Section 1.409A-1(i) of the Treasury Regulations) as a result of his or her separation from service (other than a payment that
is not subject to Section 409A) shall be delayed for the first six months following such separation from service (or, if earlier,
until the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) on
the day that immediately follows the end of such six-month period or as soon as administratively practicable thereafter. Any remaining
payments of nonqualified deferred compensation shall be paid without delay and at the time or times such payments are otherwise
scheduled to be made. A termination of employment or service shall not be deemed to have occurred for purposes of any provision
of the Plan or any Award Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred
compensation under Section 409A upon or following a termination of employment or service, unless such termination is also a “separation
from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service”
would violate Section 409A. For purposes of any such provision of the Plan or any Award Agreement relating to any such payments
or benefits, references to a “termination,” “termination of employment,” “termination of service,”
or like terms shall mean “separation from service.”
(v)
Payments. Participants shall be required to pay, to the extent required by applicable law, any amounts required
to receive Common Shares under any Award made under this Plan.
Muscle Maker (NASDAQ:GRIL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Muscle Maker (NASDAQ:GRIL)
Historical Stock Chart
From Apr 2023 to Apr 2024
