UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
INFORMATION
STATEMENT
PURSUANT
TO SECTION 14(C)
OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
SCHEDULE
14C
(RULE
14C-101)
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934
Check
the appropriate box:
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Preliminary
Information Statement
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[X]
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Definitive
Information Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
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INTERNATIONAL
LAND ALLIANCE, INC.
(Name
of Registrant As Specified In Its Charter)
Payment
of Filing Fee (Check the Appropriate Box):
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[X]
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which the transaction applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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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.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
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INTERNATIONAL
LAND ALLIANCE, INC.
NOTICE
OF STOCKHOLDER ACTION BY WRITTEN CONSENT
October
13, 2020
Dear
Stockholders:
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Re:
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Action by Written Consent in Lieu of Special Meeting of Stockholders
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We
are furnishing the attached Information Statement to the holders of record on August 26, 2020 of common stock, par value $0.001
per share (the “Common Stock”), of International Land Alliance, Inc., a Wyoming corporation (the “Company,”
“we,” “us” or “our”). The purpose of the Information Statement is to notify stockholders in
accordance with Chapter 16 of the Wyoming Business Corporation Act (the “WBCA”) that, in lieu of a Special Meeting
of the Stockholders of the Company, the Board of Directors of the Company (the “Board”), have taken and approved the
following actions to:
(1)
approve an amendment to our Articles of Incorporation, (the “Articles of Incorporation”), to increase the authorized
common stock, par value $0.001, from 75,000,000 shares to 100,000,000 shares (the “Authorized Share Increase”);
and
(2)
approve the Company’s 2020 Equity Plan (the “2020 Equity Plan”) and the conditional grants made thereunder to
date.
This
notice and accompanying Information Statement shall constitute notice to you of the Voting Stockholders taking the aforementioned
corporate actions by written consent, without a meeting, pursuant to the requirements of the WBCA.
In
order to eliminate the costs and management time involved in obtaining proxies and in order to effect the above actions as early
as possible in order to accomplish the purposes of the Company as herein described, the Board consented to the utilization of,
and did in fact obtain, the written consent of the Consenting Stockholders who collectively own shares representing a majority
of our Common Stock.
The
above actions taken by the Company’s stockholders will become effective on or about November 2, 2020 and are more fully
described in the Information Statement accompanying this Notice. Under the rules of the Securities and Exchange Commission, the
above actions cannot become effective until at least 20 days after the accompanying Information Statement has been distributed
to the stockholders of the Company.
You
are urged to read this Information Statement carefully in its entirety. However, no action is required on your part in connection
with this document, including with respect to the approval of the Authorized Share Increase and the 2020 Equity Plan. No meeting
of our stockholders will be held, or proxies requested because we have received written consent to these matters from the Voting
Stockholders who hold a majority of the aggregate issued and outstanding shares of our voting stock.
The
entire cost of furnishing this Information Statement will be borne by the Company. The Company may request brokerage houses, nominees,
custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners of the Common Stock
held of record by them and will reimburse such persons for their reasonable charges and expenses in connection therewith.
WE
ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THIS
IS FOR YOUR INFORMATION ONLY. YOU DO NOT NEED TO DO ANYTHING IN RESPONSE TO THIS INFORMATION STATEMENT. THIS IS NOT A NOTICE OF
MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.
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Sincerely
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/s/
Roberto Jesus Valdes
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Name:
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Roberto
Jesus Valdes
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Title:
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Chief
Executive Officer and President
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October
13, 2020
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San
Diego, California
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INTERNATIONAL
LAND ALLIANCE, INC.
350
10th Avenue, Suite 1000
San
Diego, CA 92101
(877)
661-4811
INFORMATION
STATEMENT
We
Are Not Asking You for a Proxy and
You
Are Requested Not To Send Us a Proxy
INTRODUCTION
This
Information Statement is being furnished to the stockholders of International Land Alliance, Inc. (the “Company,”
“we,” “us,” or “our”) in connection with the actions to be taken by us as a result of written
consents in lieu of a Special Meeting of Stockholders pursuant to the WBCA .
This
Information Statement and Notice of Stockholder Action by Written Consent is being furnished by us to our stockholders of record
as of September 22, 2020 (the “Record Date”), to inform our stockholders that the Board of Directors of the Company
(the “Board”) and the holders of approximately 51.1% of our outstanding voting securities as of such date (the “Voting
Stockholders”), have taken and approved the following actions (collectively, the “Corporate Actions”) to:
(1)
approve an amendment to our Articles of Incorporation, (the “Articles of Incorporation”), to increase the authorized
common stock, par value $0.001, from 75,000,000 shares to 100,000,000 shares (the “Authorized Share Increase”);
and
(2)
approve the Company’s 2020 Equity Plan (the “2020 Equity Plan”) and the conditional grants made thereunder to
date.
This
Information Statement is being sent to you to notify you of the Corporate Actions being taken by written consent in lieu of a
meeting of our stockholders. On August 26, 2020, by unanimous written action, our Board adopted and approved the Authorized Share
Increase and the 2020 Equity Plan.
On
the Record Date, the Voting Stockholders, representing approximately 51.1 % of the voting power of our Company, adopted and approved
by written consent the Authorized Share Increase and the Company’s 2020 Equity Plan.
Chapter
16 of Article 17 of the WBCA provides that the written consent of the holders of outstanding shares of voting capital stock having
not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted can approve an action in lieu of conducting a special stockholders’
meeting convened for the specific purpose of such action. The WBCA, however, require that in the event an action is approved by
written consent, a company must provide notice of the taking of any corporate action without a meeting to all stockholders who
were entitled to vote upon the action but who have not consented to the action. Under Wyoming law, stockholders of the Company
(the “Stockholders”) are not entitled to dissenters’ rights with respect to the Authorized Share Increase or
the 2020 Equity Plan.
We
are distributing this Information Statement to our stockholders in full satisfaction of any notice requirements we may have under
the WBCA and of Regulation 14C of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).
This
Information Statement is dated as of October 13, 2020 and is first being sent to our stockholders of record on or about October
13, 2020.
On
the Record Date, there were 23,141,294 shares of our Common Stock issued and outstanding and entitled to notice of and to vote
on all matters presented to stockholders. Holders of Common Stock are entitled to one vote per share.
Pursuant
to the WBCA, at least a majority of the voting power of the Company, or at least 11,570,647 votes, were required to approve the
Corporate Actions by written consent. On the Record Date, the Voting Stockholders, as the holders of 11,838,540 votes representing
51.1% of the outstanding shares of our Voting Securities, executed written consents adopting, approving and ratifying the Corporate
Actions, thereby satisfying the requirement under the WBCA that at least a majority of the voting power vote in favor of the Corporate
Actions by written consent.
This
Information Statement and the accompanying notice constitute notice to you of action by written consent as required under the
WBCA. Because we have obtained sufficient stockholder approval of the Corporate Actions, no other consents or votes will be solicited
in connection with this Information Statement.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Under
federal securities laws, the Corporate Actions may not be completed until 20 calendar days after the date of distribution of this
Information Statement to our stockholders. Therefore, notwithstanding the execution and delivery of the written consent, the Corporate
Actions will not occur until that time has elapsed.
Dissenters’
Rights of Appraisal
Under
the WBCA, Company stockholders are not entitled to appraisal rights with respect to the Corporate Actions.
ACTION
ONE-AUTHORIZED SHARE INCREASE
Our
Board has adopted and has recommended that our stockholders adopt and approve, an amendment to our articles of incorporation,
providing for an increase in the number of our shares of Common Stock from 75,000,000 to 100,000,000. The proposed text of the
amendment to the Articles of Incorporation is attached as Exhibit A (the “Amendment”).
Purposes
of the Proposed Amendment
We
do not have any present plan, arrangement or understanding to designate and issue any of the shares of common stock that will
become available as a result of the proposed Amendment. Although, at present, our Board has no immediate plans to issue the additional
shares of common stock, it desires to have the shares available to provide additional flexibility to use our common stock for
business and financial purposes in the future. The additional 25,000,000 authorized shares of common stock would be available
for issuance for various purposes, as our Board may deem advisable, such as for future financings, to satisfy the issuance of
shares of common stock on the conversion or exercise of our options, warrants or other convertible securities, to provide equity
incentive to employees, consultants, officers and directors, to make stock-based acquisitions and for other general corporate
purposes. Furthermore, we may utilize our securities to make future acquisitions. Acquisitions can be a key component of growth
and, from time to time, consideration for acquisitions may include the issuance of common stock.
In
addition to fund-raising opportunities, we also engage in periodic discussions with potential partners, strategic investments
and acquisition candidates. If any of these discussions came to a definitive understanding, it is possible that we could use some
of the newly authorized shares in connection with one or more such transactions. We also plan to continue to issue shares of common
stock pursuant to our equity incentive plans. We currently have no agreement, commitment, or arrangement, regarding the issuance
of common stock in connection with one or more such strategic transactions subsequent to the increase in the number of authorized
shares. In addition, we do not have any agreements, commitments or arrangements regarding the issuance of common stock in connection
with a fund-raising opportunity or any other purposes not specifically set forth in this Information Statement.
The
newly authorized common stock would be available for issuance without further action by stockholders except as required by law,
our amended and restated articles of incorporation or applicable stock exchange requirements. Any such issuance could have the
effect of diluting existing stockholders. Our Articles of Incorporation do not include any preemptive or other rights of stockholders
to subscribe for any shares of common stock which may in the future be issued by us, which means that current stockholders do
not have a prior right to purchase any new issue of common stock in order to maintain their proportionate ownership of common
stock.
Rights
of Additional Authorized Shares
The
additional common stock authorized by stockholder approval of this Action One would have rights identical to the currently outstanding
shares of our common stock.
Possible
Anti-Takeover Effects of the Proposed Amendment
In
addition to the corporate purposes mentioned above, an increase in the number of authorized shares of our common stock may make
it more difficult to, or discourage an attempt to, obtain control of the Company by means of a takeover bid that the Board determines
is not in the best interest of the Company and its stockholders. However, our Board of Directors is not aware of any attempt to
take control of our company, and our Board of Directors has not presented this proposal with the intent that it be utilized as
a type of anti-takeover device.
Vote
Required
Pursuant
to the Wyoming Business Corporation Act, the approval of the above Action required a majority of the Company’s outstanding
voting capital stock. As discussed above, the Majority Stockholders have consented to this Action One.
AFTION
TWO – ADOPTION OF THE 2020 EQUITY PLAN
Approval
of 2020 Equity Plan
Our
board of directors and management believe that the effective use of stock-based long-term incentive compensation is vital to our
ability to achieve strong performance in the future. The 2020 Equity Plan will maintain and enhance the key policies and practices
adopted by our management and board of directors to align employee and stockholder interests. In addition, our future success
depends, in large part, upon our ability to maintain a competitive position in attracting, retaining and motivating key personnel.
We believe that the adoption of the 2020 Equity Plan is essential to permit our management to continue to provide long-term, equity-based
incentives to present and future employees.
The
2020 Equity Plan has been approved by the Voting Stockholders in order to ensure (i) favorable federal income tax treatment for
grants of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”),
and (ii) continued eligibility to receive a federal income tax deduction for certain compensation paid under the 2020 Equity Plan
by complying with Rule 162(m) of the Code. The Company has reserved a total of 3,000,000 shares of our authorized common stock
for issuance under the 2020 Equity Plan.
The
following is a brief summary of the 2020 Equity Plan. This summary is qualified in its entirety by reference to the text of the
2020 Equity Plan, a copy of which is attached as Exhibit B to this Information Statement.
General
The
2020 Equity Plan enables our board of directors to provide equity-based incentives through grants of awards to the Company’s
present and future employees, directors, consultants and other third-party service providers.
Shares
issued under the 2020 Equity Plan through the settlement, assumption or substitution of outstanding awards or obligations to grant
future awards as a condition of acquiring another entity will not reduce the maximum number of shares of common stock reserved
for issuance under the 2020 Equity Plan. In addition, the number of shares of common stock subject to the 2020 Equity Plan, any
number of shares subject to any numerical limit in the 2020 Equity Plan, and the number of shares and terms of any incentive award
may be adjusted in the event of any change in our outstanding common stock by reason of any stock dividend, spin-off, split-up,
stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination
or exchange of shares or similar transaction.
Administration
The
compensation committee of our board of directors (or such other committee as is designated by our board of directors, or in the
absence of any such committee, the full board of directors) (the “Committee”), will administer the 2020 Equity Plan.
Subject to the terms of the 2020 Equity Plan, the Committee will have complete authority and discretion to determine the terms
of awards under the 2020 Equity Plan.
Stock
Options
The
2020 Equity Plan authorizes the grant of Incentive Stock Options and Non-Qualified Stock Options (each an “Option”).
Options granted under the 2020 Equity Plan entitle the grantee, upon exercise, to purchase a specified number of shares of common
stock from us at a specified exercise price per share. The administrator of the 2020 Equity Plan will determine the period during
which an Option may be exercised, as well as any Option vesting schedule, except that no Option may be exercised more than 10
years after the date of grant. The exercise price for shares of common stock covered by an Option cannot be less than the fair
market value of the common stock on the date of grant. Under the 2020 Equity Plan, a participant may not surrender an Option for
the grant of a new Option with a lower exercise price or another award.
The
aggregate fair market value, determined on the date of grant, of shares for which Incentive Stock Options granted under the 2020
Equity Plan become exercisable by a participant during any calendar year shall not exceed $100,000, and any amount in excess of
$100,000 shall be treated as Non-Qualified Stock Options. If an Incentive Stock Option is granted to any employee of the Company
who owns more than 10% of the total combined voting securities of the Company, the option price of such Incentive Stock Option
shall be at least 110% of the fair market value of the common stock on the date of grant, and such Incentive Stock Option shall
not be exercisable more than five years after the date of grant.
Exercise
of Stock Options
An
Option’s exercise price may be paid in cash or by certified check at the time the Option is exercised, or, at the discretion
of the Committee, (1) a reload option whereby the exercise price is paid by exchange of other common stock with a fair market
value equal to the Option exercise price; (2) a “cashless” exchange established with a broker; (3) by reducing the
number of shares of common stock otherwise deliverable upon exercise with the fair market value equal to the aggregate Option
exercise price; or (4) any combination of the previous methods.
SARs
Concurrently
with the award of any Option, the administrator of the 2020 Equity Plan may award to the Option holder a related SAR, which permits
the Option holder to be paid the appreciation on the related Option in lieu of exercising the Option. Additionally, the administrator
may award free-standing SARs that are not affiliated with Options granted under the 2020 Equity Plan. Any SARs related to Incentive
Stock Options must be granted together with the related Option. Any SARs with respect to Non-Qualified Stock Options may be granted
together or separately from the related Option. SARs may be exercised only for such period of time as the underlying Options are
exercisable, in no event more than 10 years from the date of grant. If any SAR is exercised by the holder of the SAR, any underlying
Option shall be cancelled, and the shares of common stock underlying such Option shall no longer be available for awards under
the 2020 Equity Plan.
Restricted
Stock Awards
The
2020 Equity Plan also authorizes the grant of Restricted Stock Awards on terms and conditions established by our board of directors,
which may include performance conditions. The terms and conditions will include the designation of a restriction period during
which the shares are not transferable and are subject to forfeiture.
Change
in Control
The
administrator of the 2020 Equity Plan may make provisions in awards with respect to a change in control. Under the 2020 Equity
Plan, in the event of a change of control and absent any terms to the contrary in an award, our board of directors may take such
actions to provide for one or more of: (a) accelerating the vesting of any or all awards; (b) assuming or substituting any
or all outstanding awards; and (c) cashing out any or all outstanding awards immediately before the change in control.
Duration,
Amendment and Termination
The
administrator of the 2020 Equity Plan may suspend or terminate the 2020 Equity Plan without stockholder approval or ratification
at any time or from time to time. Unless sooner terminated, the 2020 Equity Plan will terminate on the tenth anniversary of its
effective date. The administrator may also amend the 2020 Equity Plan at any time, except that no amendment shall be effective
unless approved by our stockholders, to the extent stockholder approval is necessary to satisfy any applicable laws. No change
may be made that increases the total number of shares of common stock reserved for issuance pursuant to awards or reduces the
minimum exercise price for options or exchange of options for other awards, unless such change is authorized by our stockholders.
A termination or amendment of the 2020 Equity Plan will not, without the consent of the participant, adversely affect a participant’s
rights under a previously granted award.
Restrictions
on Transfer
Incentive
Stock Options may not be transferred or exercised by another person except by will or by the laws of descent and distribution.
Nonqualified Stock Options may, in the sole discretion of the Committee, be transferrable to certain permitted transferees as
provided in the individual award agreements.
Federal
Income Tax Information
The
following is a general summary of the current federal income tax treatment of awards, which are authorized to be granted under
the 2020 Equity Plan, based upon the current provisions of the Code and regulations promulgated thereunder. The rules governing
the tax treatment of such awards are quite technical, so the following discussion of tax consequences is necessarily general in
nature and is not complete. In addition, statutory provisions are subject to change, as are their interpretations, and their application
may vary in individual circumstances. Finally, this discussion does not address the tax consequences under applicable state and
local law.
THE
FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER
THE 2020 EQUITY PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF AN INDIVIDUAL’S DEATH
OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH ANY ELIGIBLE INDIVIDUAL MAY RESIDE.
Incentive
Stock Options
A
participant will not recognize income on the grant or exercise of an Incentive Stock Option. However, the difference between the
exercise price and the fair market value of the common stock on the date of exercise is an adjustment item for purposes of the
alternative minimum tax. If a participant does not exercise an Incentive Stock Option within certain specified periods after termination
of employment, the participant will recognize ordinary income on the exercise of an Incentive Stock Option in the same manner
as on the exercise of a Non-Qualified Stock Option, as described below. The general rule is that gain or loss from the sale or
exchange of shares of common stock acquired on the exercise of an Incentive Stock Option will be treated as capital gain or loss.
If certain holding period requirements are not satisfied, however, the participant generally will recognize ordinary income at
the time of the disposition. Gain recognized on the disposition in excess of the ordinary income resulting therefrom will be capital
gain, and any loss recognized will be a capital loss.
Non-Qualified
Stock Options
A
participant generally is not required to recognize income on the grant of a Non-Qualified Stock Option, a stock appreciation right,
restricted stock units, a performance grant, or a stock award. Instead, ordinary income generally is required to be recognized
on the date the Non-Qualified Stock Option or stock appreciation right is exercised, or in the case of restricted stock units,
performance grants, and stock awards, upon the issuance of shares and/or the payment of cash pursuant to the terms of the incentive
award. In general, the amount of ordinary income required to be recognized is (a) in the case of a Non-Qualified Stock Option,
an amount equal to the excess, if any, of the fair market value of the shares on the exercise date over the exercise price, (b)
in the case of a stock appreciation right, the amount of cash and/or the fair market value of any shares received upon exercise
plus the amount of taxes withheld from such amounts, and (c) in the case of restricted stock units, performance grants, and stock
awards, the amount of cash and/or the fair market value of any shares received in respect thereof, plus the amount of taxes withheld
from such amounts.
Gain
or Loss on Sale or Exchange of Shares
In
general, gain or loss from the sale or exchange of shares of common stock granted or awarded under the 2020 Equity Plan will be
treated as capital gain or loss, provided that the shares are held as capital assets at the time of the sale or exchange. However,
if certain holding period requirements are not satisfied at the time of a sale or exchange of shares acquired upon exercise of
an incentive stock option (a “disqualifying disposition”), a participant generally will be required to recognize ordinary
income upon such disposition.
Deductibility
by Company
The
Company generally is not allowed a deduction in connection with the grant or exercise of an Incentive Stock Option. However, if
a participant is required to recognize ordinary income as a result of a disqualifying disposition, we will be entitled to a deduction
equal to the amount of ordinary income so recognized. In general, in the case of a Non-Qualified Stock Option (including an Incentive
Stock Option that is treated as a Non-Qualified Stock Option), a stock appreciation right, restricted stock, restricted stock
units, performance grants, and stock awards, the Company will be allowed a deduction in an amount equal to the amount of ordinary
income recognized by a participant, provided that certain income tax reporting requirements are satisfied.
Performance-Based
Compensation
Subject
to certain exceptions, Section 162(m) of the Code disallows federal income tax deductions for compensation paid by a publicly
held corporation to certain executives (generally the five highest paid officers) to the extent the amount paid to an executive
exceeds $1 million for the taxable year. The 2020 Equity Plan has been designed to allow the Committee to grant stock options,
stock appreciation rights, restricted stock, restricted stock units, and performance grants that qualify under an exception to
the deduction limit of Section 162(m) for performance-based compensation.
As
of the date hereof, we have made the following conditional grant:
Name and Position
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Dollar Value
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Number of Options
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Roberto Jesus Valdes, CEO
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$
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247,500
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750,000
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(1)
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Jason Sunstein, CFO
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$
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247,500
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750,000
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(2)
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William B. Barnett, Consultant
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$
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66,000
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200,000
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(3)
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(1)
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Represents
a conditional option to purchase 750,000 of common stock on August 26, 2020. The grant requires shareholder approval. The
option has a term of five (5) years from issuance, and an exercise price of $0.33 per share. The option vests (i) one quarter
(1/4) on the effective date and (ii) three quarters (3/4) on a monthly basis over the twelve (12) month period following the
effective date.
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(2)
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Represents
a conditional option to purchase 750,000 shares of common stock on August 26, 2020. The grant requires shareholder approval.
The option has a term of five (5) years from issuance, and an exercise price of $0.33 per share. The option vests (i) one
quarter (1/4) on the effective date and (ii) three quarters (3/4) on a monthly basis over the twelve (12) month period following
the effective date
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(3)
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Represents
a conditional option to purchase 200,000 shares of common stock on August 26, 2020. The grant requires shareholder approval.
The option has a term of five (5) years from issuance, and an exercise price of $0.33 per share. The option vests (i) one
quarter (1/4) on the effective date and (ii) three quarters (3/4) on a monthly basis over the twelve (12) month period following
the effective date
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NEW
PLAN BENEFITS
The
terms and number of stock options or other awards to be granted in the future under the 2020 Equity Plan are to be determined
in the discretion of the Committee. Since no determinations regarding future awards or grants have yet been made, the benefits
or amounts that will be received by or allocated to the Company’s executive officers or other eligible employees or non-employee
directors or consultants in the future cannot be determined at this time.
Officers
and Directors
Our
Bylaws provide that the Board of Directors shall consist of no more than three (3) directors. Each director of the Company serves
until his successor is elected and qualified, subject to removal by the Company’s shareholders. Each officer holds office
for such term and exercises such powers and performs such duties as are determined by the Board of Directors.
Name
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Age
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Position
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Roberto
Jesus Valdes
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51
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President,
Principal Executive Officer and a Director
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Jason
Sunstein
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48
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Principal
Financial and Accounting Officer and a Director
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Roberto
Jesus Valdes
Mr.
Valdes has been the President of Grupo Valcas, Baja Residents Club, S.A. de, C.V. since 2004, and was the Assistant in the Grupo
Valcas Design Department from 1989 to 1991. From 1991 through 2004, Mr. Valdes was a member of the Board of Directors, DUBCSA
– Bajamar Ocean Front Resort Master Developer. During his term as a Director, he acted as Project Director for Grupo Valcas.
His projects have included:
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●
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La
Serena Condominiums, Ensenada, 1992-1994
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●
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La
Quinta Bajamar Condominiums, Ensenada, 1994-1996
|
|
●
|
Oceano
at Bajamar residential development, Ensenada, 1996-1998
|
|
●
|
Oceano
Diamante residential development, Ensenada, 2000
|
|
●
|
Costa
Bajamar condominiums, Ensenada, 2004-2005
|
Mr.
Valdes has been one of our officers and directors since October 2013.
Jason
Sunstein
Mr.
Sunstein brings finance, mergers and acquisitions and general management experience. Since 1989, he has participated in a broad
variety of both domestic and international structured investments and financings, ranging from debt and preferred stock to equity
and developmental capital across a wide variety of infrastructure and corporate financings. He has been involved in numerous start-ups,
turnarounds and public companies. Mr. Sunstein serves as on the Board of Directors of several public and private companies, as
well as the Advisory Board for the National Nutrition Reform, a non-profit company in San Diego, California. In December 2014
Mr. Sunstein filed for Chapter 7 bankruptcy and it was discharged May 2015. He attended San Diego State University where he majored
in Finance and has held NASD Series 7 (General Securities Representative) and Series 63 licenses.
Mr.
Sunstein has been one of our officers and directors since October 2013. Between February 2012 and July 2014 Mr. Sunstein was Vice
President of Earth Dragon Resources, Inc., a company involved in plasma and wound therapy. Between January 2009 and January 2012
Mr. Sunstein was Vice President of Santeon Group, Inc., a firm involved in software development.
All
of our officers, with the exception of Mr. Valdez, devote all of their time to our business. Mr. Valdes devotes approximately
140 hours each month to our business.
Term
of Office
All
officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors
have been duly elected and qualified or until removed from office in accordance with our bylaws. There are no agreements with
respect to the election of Directors. We have not compensated our Directors for service on our Board of Directors, any committee
thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion
of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors’
fees and reimburse Directors for expenses related to their activities.
None
of our officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings
or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past
five (5) years.
Board
Committees
Audit
Committee
We
do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee
at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee
or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based
on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert
under Item 401(e) of Regulation S-B is beyond its limited financial resources.
Code
of Ethics
To
date, we have not adopted a Code of Ethics applicable to our principal executive officer and principal financial officer. The
Company does not believe that a formal written code of ethics is necessary at this time. We expect that the Company will adopt
a code of ethics if and when the Board of Directors deems it is necessary.
Our
directors will serve until the next annual meeting of shareholders or until their successors are duly elected and have qualified.
Officers hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding between any person pursuant to which any director or officer
was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management
shareholders will exercise their voting rights to continue to elect directors to our board. There are also no arrangements, agreements
or understandings between non-management shareholders that may directly or indirectly participate in or influence the management
of our affairs. Our Board of Directors does not have any committees at this time.
Potential
Conflicts of Interest
Since
we do not have an audit or compensation committee comprised of independent directors or any independent directors on our board,
the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict
of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit
issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or
directors.
Director
Independence
Our
board of directors has undertaken a review of the independence of each director and considered whether any director has a material
relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities.
As a result of this review, our board of directors determined that our directors do not meet the independence requirements, according
to the applicable rules and regulations of the SEC.
Corporate
Governance
There
have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors.
In addition to having no nominating committee for that purpose, we currently have no specific audit committee and no audit committee
financial expert. Based on the fact that our current business affairs are simple, any such committees are excessive and beyond
the scope of our business and needs.
Indemnification
of Executive Officers and Directors
Section
17-16-856 of the Wyoming Business Corporation Act provides that any director or officer of a Wyoming corporation may be indemnified
against judgments, penalties, fines, settlements and reasonable expenses actually incurred by him in connection with or in defending
any action, suit or proceeding in which he is a party by reason of his position, so long as it shall be determined that he conducted
himself in good faith and that he reasonably believed that his conduct was in the corporation’s best interest and, with
respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. If a director
or officer is wholly successful, on the merits or otherwise, in connection with such proceeding, such indemnification is mandatory.
Currently
we do not maintain any directors’ and officers’ liability insurance covering our directors and officers against expenses
and liabilities arising from certain actions to which they may become subject by reason of having served in such role.
At
present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification
will be required under California law. We are not aware of any threatened litigation or preceding that might result in a claim
for such indemnification.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling
persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or
controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Executive
Compensation.
We
have not entered into employment agreements with our executive officers and their compensation is determined at the discretion
of our Board of Directors.
We
do not offer retirement benefit plans to our executive officers, nor have we entered into any contract, agreement, plan or arrangement,
whether written or unwritten, that provides for payments to a named executive officer at, or in connection with, the resignation,
retirement or other termination of a named executive officer, or a change in control of the company or a change in the named executive
officer’s responsibilities following a change in control. We do not have any standard arrangement for compensation of our
directors for any services provided as director, including services for committee participation or for special assignments.
The
Company does not have a compensation committee. Given the nature of the Company’s business, its limited stockholder base
and the current composition of management, the board of directors does not believe that the Company requires a compensation committee
at this time.
The
following table summarizes all compensation recorded by us in 2019, 2018 and 2017 for our principal executive officer, each other
executive officer serving as such whose annual compensation exceeded $100,000, and up to two additional individuals for whom disclosure
would have been made in this table but for the fact that the individual was not serving as an executive officer of our company
at December 31, 2019. The value attributable to any option awards is computed in accordance with FASB ASC Topic 718. The assumptions
made in the valuations of the option awards are included in Note 2 of the Notes to our Financial Statements appearing later in
this report.
SUMMARY
COMPENSATION TABLE
The
following table presents information concerning the compensation awarded to, earned by, or paid to the named executive officers
for services rendered for the three years ended December 31, 2019.
Name and
Principal
|
|
Year Ended
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
|
|
|
All Other Compensation
|
|
|
Total
|
|
Position
|
|
Dec.
31
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roberto Jesus
|
|
|
2019
|
|
|
|
21,000
|
|
|
|
0
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
46,000
|
|
Valdez,
|
|
|
2018
|
|
|
|
40,805
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
40,805
|
|
CEO, President, Director
|
|
|
2017
|
|
|
|
102,000
|
|
|
|
0
|
|
|
|
125,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
227,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason Sunstein,
|
|
|
2019
|
|
|
|
89,681
|
|
|
|
0
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
114,681
|
|
VP Finance, CFO
|
|
|
2018
|
|
|
|
138,079
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
138,079
|
|
Director
|
|
|
2017
|
|
|
|
139,987
|
|
|
|
0
|
|
|
|
125,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
264,987
|
|
Employment
Agreement
The
Company has no Employment Agreement with any of its officers or directors.
Stock
Option Plan –2019 Equity Incentive Plan
On
February 11, 2019, the Company’s Board of Directors approved a 2019 Equity Incentive Plan (the “2019 Plan”).
In order for the 2019 Plan to grant “qualified stock options” to employees, it required approval by the Corporation’s
shareholders within 12 months from the date of the 2019 Plan. The 2019 Plan was never approved by the shareholders. Therefore,
any options granted under the 2019 Plan prior to shareholder approval will be “non-qualified”. Pursuant to the 2019
Plan, the Company has reserved a total of 3,000,000 shares of the Company’s common stock to be available under the plan.
As of December 31, 2019, ILA had not granted any options and had granted 650,000 shares as compensation, valued at $65,000, for
the year ended December 31, 2019. On August 26, 2020 the Board of Directors terminated the 2019 Equity Incentive Plan and approved
a 2020 Equity Plan which was approved by shareholders holding a majority of the Company’s issued and outstanding common
stock.
On
August 26, 2020, the Company made the following conditional option grants, subject to shareholder approval:
Name and Position
|
|
Dollar Value
|
|
|
Number of
Options
|
|
Roberto Jesus Valdes, CEO
|
|
$
|
247,500
|
|
|
|
750,000
|
(1)
|
Jason Sunstein, CFO
|
|
$
|
247,500
|
|
|
|
750,000
|
(2)
|
William B. Barnett, Consultant
|
|
$
|
66,000
|
|
|
|
200,000
|
(3)
|
|
(1)
|
Represents
a conditional option to purchase 750,000 of common stock on August 26, 2020. The grant requires shareholder approval. The
option has a term of five (5) years from issuance, and an exercise price of $0.33 per share. The option vests (i) one quarter
(1/4) on the effective date and (ii) three quarters (3/4) on a monthly basis over the twelve (12) month period following the
effective date.
|
|
|
|
|
(2)
|
Represents
a conditional option to purchase 750,000 shares of common stock on August 26, 2020. The grant requires shareholder approval.
The option has a term of five (5) years from issuance, and an exercise price of $0.33 per share. The option vests (i) one
quarter (1/4) on the effective date and (ii) three quarters (3/4) on a monthly basis over the twelve (12) month period following
the effective date
|
|
|
|
|
(3)
|
Represents
a conditional option to purchase 200,000 shares of common stock on August 26, 2020. The grant requires shareholder approval.
The option has a term of five (5) years from issuance, and an exercise price of $0.33 per share. The option vests (i) one
quarter (1/4) on the effective date and (ii) three quarters (3/4) on a monthly basis over the twelve (12) month period following
the effective date
|
Employee
Pension, Profit Sharing or other Retirement Plans
The
Company does not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more
of such plans in the future.
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The
following tables set forth the ownership, as of the date of this filing, of our common stock by each person known by us to be
the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors
as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares,
except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.
The
percentage of shares is based on 21,434,289 shares issued and outstanding as of the Record Date.
Name
|
|
# of Shares of
Common Stock
|
|
|
Percentage
|
|
Roberto Jesus Valdes
|
|
|
4,000,000
|
|
|
|
18.6
|
%
|
Jason Sunstein *
|
|
|
3,750,000
|
|
|
|
17.5
|
%
|
JWK Family Ltd.
|
|
|
1,200,000
|
|
|
|
5.2
|
%
|
All Exec. Officers and Directors as a group (2 persons)
|
|
|
7,750,000
|
|
|
|
36.1
|
%
|
|
*
|
Jason
A. Sunstein Family Investments, LLC is the record holder of these shares. Jason Sunstein controls Jason A. Sunstein Family
Investments, LLC.
|
We
are not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities
of any class of the issuer, other than as set forth above. There are no classes of stock other than common stock issued or outstanding.
There
are no current arrangements which will result in a change in control.
Certain
Relationships and Related Transactions and Director Independence.
Related
Party Transactions
During
the year ended December 31, 2019, the Company entered into definitive Land Purchase Agreement with Valdeland, S.A. de C.V., a
Company controlled by our Chief Executive Officer, to acquire approximately one acre of land with plans and permits to build 34
units at the Bajamar Ocean Front Golf Resort located in Ensenada, Baja California.
On
June 18, 2019, Baja Residents Club SA de CV, a related party with common ownership and control by our Chief Executive Officer,
transferred title to the Company for the Oasis Park property which was part of a previously held land project consisting of 497
acres to be acquired and developed into Oasis Park resort near San Felipe, Baja.
Director
Independence
Our
Common Stock is not quoted or listed on any national exchange or interdealer quotation system with a requirement that a majority
of our board of directors be independent and therefore, the Company is not subject to any director independence requirements.
Under NASDAQ Rule 5605(a)(2)(A), a director is not considered to be independent if he or she is also an executive officer or employee
of the corporation. Under such definition our three officers and directors would not be considered an independent director.
Director
Compensation
No
compensation was paid or accrued by us to our directors for the year ended December 31, 2018.
ANNUAL
REPORT ON FORM 10-K AND ADDITIONAL INFORMATION
Information
Available
The
Company is subject to the information and reporting requirements of the Exchange Act and in accordance with the Exchange Act,
the Company files periodic reports, documents and other information with the SEC relating to its business, financial statements
and other matters, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, and any reports
prior to or subsequent to that date.
Our
website address is www.blackridgeoil.com. We make available on this website, free of charge, our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports after we electronically file those
materials with, or furnish those materials to, the SEC.
The
Company’s filings with the SEC are also available to the public from the SEC’s website, http://www.sec.gov.
Delivery
of Documents to Security Holders Sharing an Address
If
hard copies of the materials are requested, we will send only one Information Statement and other corporate mailings to stockholders
who share a single address unless we received contrary instructions from any stockholder at that address. This practice, known
as “householding,” is designed to reduce our printing and postage costs. However, the Company will deliver promptly
upon written or oral request a separate copy of the Information Statement to a stockholder at a shared address to which a single
copy of the Information Statement was delivered. You may make such a written or oral request by (a) sending a written notification
stating (i) your name, (ii) your shared address and (iii) the address to which the Company should direct the additional copy of
the Information Statement, to the Company at 350 10th Avenue, Suite 1000, San Diego, CA 92101.
If
multiple stockholders sharing an address have received one copy of this Information Statement or any other corporate mailing and
would prefer the Company to mail each stockholder a separate copy of future mailings, you may send notification to or call the
Company’s principal executive offices. Additionally, if current stockholders with a shared address received multiple copies
of this Information Statement or other corporate mailings and would prefer the Company to mail one copy of future mailings to
stockholders at the shared address, notification of such request may also be made by mail or telephone to the Company’s
principal executive offices.
By Order of the Board of Directors
|
|
|
|
|
|
/s/
Roberto Jesus Valdes
|
|
Name:
|
Roberto Jesus
Valdes
|
|
Title:
|
Chief Executive
Officer and President
|
|
October
13, 2020
|
|
San
Diego, California
|
|
EXHIBIT
A
CERTIFICATE
OF AMENDMENT TO THE
ARTICLES
OF INCORPORATION OF
INTERNATIONAL
LAND ALLIANCE, INC.
The
undersigned, for the purposes of amending the Articles of Incorporation of International Land Alliance, Inc. (the “Corporation”),
a corporation organized and existing under and by virtue of the Wyoming Business Corporation Act (the “WBCA”), does
hereby certify that:
FIRST:
That the Board of Directors of the Corporation (the “Board”) adopted a resolution proposing and declaring advisable
the following amendment to the Articles of Incorporation of the Corporation to increase the authorized common stock, par value
$0.001 from 75,000,000 shares to 100,000,000 shares (the “Common Stock”).
SECOND:
That in lieu of a meeting and vote of the stockholders of the Corporation, stockholders holding a majority of the Company’s
issued and outstanding common stock have given written consent approving the foregoing Amendment to the Articles of Incorporation
in accordance with the provisions of the WBCA, and written notice of the adoption of the amendments shall be given to every stockholder
entitled to such notice.
FOURTH:
That the aforesaid amendments were duly adopted in accordance with the applicable provisions of the NRS.
FIFTH:
The aforesaid amendment shall be effective as of 9:00 A.M. Pacific Standard time on the date of the filing of this Certificate
of Amendment to the Articles of Incorporation with the office of the Secretary of State of the State of Nevada.
IN
WITNESS WHEREOF, the Corporation has caused this Amendment to the Articles of Incorporation of the Corporation to be duly executed
by the undersigned this ____ day of ___________, 2020.
|
INTERNATIONAL
LAND ALLIANCE, INC.
|
|
|
|
|
By:
|
|
|
Name:
|
Roberto
Jesus Valdes
|
|
Title:
|
CEO
and President
|
Exhibit
B
2020
STOCK INCENTIVE PLAN
INTERNATIONAL
LAND ALLIANCE, INC.
(AS
ADOPTED ON August 26, 2020)
1.
Purpose. The purpose of the 2020 Stock Incentive Plan (the “Plan”) of International Land Alliance, Inc. (the
“Company”) is to increase stockholder value and to advance the interests of the Company by furnishing a variety of
economic incentives (“Incentives”) designed to attract, retain and motivate employees, certain key consultants and
directors of the Company. Incentives may consist of opportunities to purchase or receive shares of Common Stock, $.001 par value,
of the Company (“Common Stock”) on terms determined under this Plan. The Plan was adopted by the Board on August 26,
2020, and as approved by the Shareholders on August 26, 2020.
2.
Administration. The Plan shall be administered by the Board of Directors or by a stock option or compensation committee
(the “Committee”) of the Board of Directors of the Company. The Committee shall consist of not less than two directors
of the Company and shall be appointed from time to time by the board of directors of the Company. Each member of the Committee
shall be (i) a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 (including
the regulations promulgated thereunder, the “1934 Act”) (a “Non-Employee Director”), and (ii) shall be
an “outside director” within the meaning of Section 162(m) under the Internal Revenue Code of 1986, as amended (the
“Code”) and the regulations promulgated thereunder. The Committee shall have complete authority to award Incentives
under the Plan, to interpret the Plan, and to make any other determination which it believes necessary and advisable for the proper
administration of the Plan. The Committee’s decisions and matters relating to the Plan shall be final and conclusive on
the Company and its participants. If at any time there is no stock option or compensation committee, the term “Committee”,
as used in the Plan, shall refer to the Board of Directors.
3.
Eligible Participants. Officers of the Company, employees of the Company or its subsidiaries, members of the Board of Directors,
and consultants or other independent contractors who provide services to the Company or its subsidiaries shall be eligible to
receive Incentives under the Plan when designated by the Committee. Participants may be designated individually or by groups or
categories (for example, by pay grade) as the Committee deems appropriate. Participation by officers of the Company or its subsidiaries
and any performance objectives relating to such officers must be approved by the Committee. Participation by others and any performance
objectives relating to others may be approved by groups or categories (for example, by pay grade) and authority to designate participants
who are not officers and to set or modify such targets may be delegated. Participation is entirely at the discretion of the Committee
and is not automatically continued after an initial period of participation.
4.
Types of Incentives. Incentives under the Plan may be granted in any one or a combination of the following forms: (a) incentive
stock options and non-statutory stock options (Section 6); (b) stock appreciation rights (“SARs”) (Section 7); (c)
stock awards (Section 8); (d) restricted stock (Section 8); and (e) performance shares (Section 9).
5.
Shares Subject to the Plan.
5.1
Number of Shares. Subject to adjustment as provided in Section 10.6, the number of shares of Common Stock which may be
issued under the Plan shall not exceed 3,000,000 shares of Common Stock. Shares of Common Stock that are issued under the Plan
or are subject to outstanding Incentives will be applied to reduce the maximum number of shares of Common Stock remaining available
for issuance under the Plan. Shares of Common Stock subject to a participant’s exercise of either an option or a SAR, but
not both (a “tandem SAR”), shall be counted only once.
5.2
Cancellation. To the extent that cash in lieu of shares of Common Stock is delivered upon the exercise of a SAR pursuant
to Section 7.4, the Company shall be deemed, for purposes of applying the limitation on the number of shares, to have issued the
greater of the number of shares of Common Stock which it was entitled to issue upon such exercise or on the exercise of any related
option. In the event that a stock option or SAR granted hereunder expires or is terminated or canceled unexercised as to any shares
of Common Stock, such shares may again be issued under the Plan either pursuant to stock options, SARs or otherwise. In the event
that shares of Common Stock are issued as restricted stock or pursuant to a stock award and thereafter are forfeited or reacquired
by the Company pursuant to rights reserved upon issuance thereof, such forfeited and reacquired shares may again be issued under
the Plan, either as restricted stock, pursuant to stock awards or otherwise.
5.3
Type of Common Stock. Common Stock issued under the Plan in connection with stock options, SARs, performance shares, restricted
stock or stock awards, may be authorized and unissued shares or treasury stock, as designated by the Committee.
6.
Stock Options. A stock option is a right to purchase shares of Common Stock from the Company at a specified price. Each
stock option granted by the Committee under this Plan shall be subject to the following terms and conditions:
6.1
Price. The option price per share shall be determined by the Committee, subject to adjustment under Section 10.6, and shall
never be less than the greater of (1) the Fair Market Value on the date of grant of the option or (2) the par value of the Common
Stock. Other than in connection with a change in the Company’s capitalization (as described in Section 10.6), a Stock Option
may not be re-priced without Shareholder approval (including canceling previously awarded Stock Options and re-granting them with
a lower exercise price).
6.2
Number. The number of shares of Common Stock subject to the option shall be determined by the Committee, subject to adjustment
as provided in Section 10.6. In the case of a tandem SAR, the number of shares of Common Stock available upon exercise of the
participant’s stock option shall be reduced to reflect any tandem SARs already exercised by the participant.
6.3
Duration and Time for Exercise. Subject to earlier termination as provided in Section 6.5 and/or Section 10.4, the term
of each stock option shall be determined by the Committee but shall not exceed ten years from the date of grant. Each stock option
shall become exercisable at such time or times during its term as shall be determined by the Committee at the time of grant. The
Committee may accelerate the exercisability of any stock option. Subject to the foregoing and with the approval of the Committee,
all or any part of the shares of Common Stock with respect to which the right to purchase has accrued may be purchased by the
Company at the time of such accrual or at any time or times thereafter during the term of the option, provided that the purchase
price may not exceed the Fair Market Value of the shares at the time of purchase.
6.4
Manner of Exercise. General Rule. The entire Exercise Price of Shares issued under the Plan shall be payable in full by
cash or cashier’s check for an amount equal to the aggregate Exercise Price for the number of shares being purchased. Alternatively,
in the sole discretion of the Plan Administrator and upon such terms as the Plan Administrator shall approve, the Exercise Price
may be paid by:
6.4.1
Cashless Exercise. Provided the Company’s Common Stock is publicly traded, a copy of instructions to a broker directing
such broker to sell the Shares for which this option is exercised, and to remit to the Company the aggregate Exercise Price of
such option (“Cashless Exercise”);
6.4.2
Stock-For-Stock Exercise. Paying all or a portion of the Exercise Price for the number of Shares being purchased by tendering
Shares owned by the Optionee, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised (the “Purchase
Price”) or the aggregate Purchase Price of the shares with respect to which this option or portion hereof is exercised (“Stock-for-Stock
Exercise”); or
6.4.3
Attestation Exercise. By a stock for stock exercise by means of attestation whereby the Optionee identifies for delivery specific
Shares already owned by Optionee and receives a number of Shares equal to the difference between the Option Shares thereby exercised
and the identified attestation Shares (“Attestation Exercise”).
6.5
Withholding Payment. The Exercise Price shall include payment of the amount of all federal, state, local or other income,
excise or employment taxes subject to withholding (if any) by the Company or any parent or subsidiary corporation as a result
of the exercise of a Stock Option. The Optionee may pay all or a portion of the tax withholding by cash or check payable to the
Company, or, at the discretion of the Administrator, upon such terms as the Administrator shall approve, by (i) Cashless Exercise
or Attestation Exercise; (ii) Stock-for-Stock Exercise; (iii) in the case of an Option, by paying all or a portion of the tax
withholding for the number of shares being purchased by withholding shares from any transfer or payment to the Optionee (“Stock
withholding”); or (iv) a combination of one or more of the foregoing payment methods. Any shares issued pursuant to the
exercise of an Option and transferred by the Optionee to the Company for the purpose of satisfying any withholding obligation
shall not again be available for purposes of the Plan. The fair market value of the number of shares subject to Stock withholding
shall not exceed an amount equal to the applicable minimum required tax withholding rates.
6.6
Promissory Note. The Plan Administrator, in its sole discretion, upon such terms as the Plan Administrator shall approve,
may permit all or a portion of the Exercise Price of Shares issued under the Plan to be paid with a full-recourse promissory note.
However, in the event there is a stated par value of the shares and applicable law requires, the par value of the shares, if newly
issued, shall be paid in cash or cash equivalents. The Shares shall be pledged as security for payment of the principal amount
of the promissory note and interest thereon, and shall be held in the possession of the Company until the promissory note is repaid
in full. Subject to the foregoing, the Plan Administrator (at its sole discretion) shall specify the term, interest rate, amortization
requirements (if any) and other provisions of such note.
6.7
Exercise/Pledge. In the discretion of the Plan Administrator, upon such terms as the Plan Administrator shall approve,
payment may be made all or in part by the delivery (on a form prescribed by the Plan Administrator) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part
of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.
6.8 Incentive
Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to
the grant of stock options which are intended to qualify as Incentive Stock Options (as such term is defined in Section 422
of the Code):
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(a)
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Incentive
Stock Options may only be granted to employees of the Company and may not remain exercisable later than three months after
the participant’s termination of employment (or such other period of time provided in Section 422 of the Code). Notwithstanding
the foregoing, the Committee may provide that a stock option may be exercisable for a period of time longer than three months
after the participant’s termination of employment as long as it is not beyond the original term of the stock option
grant; however, any amendment to a stock option originally issued as an Incentive Stock Option to provide exercise later than
three months after the participant’s termination of employment will cause the stock option to no longer be qualified
as an Incentive Stock Option if such stock option is exercised later than three months after the participant’s termination
of employment.
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(b)
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The
aggregate Fair Market Value (determined as of the time the option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any participant during any calendar year (under all of
the Company’s plans) shall not exceed $100,000. The determination will be made by taking incentive stock options into
account in the order in which they were granted. If such excess only applies to a portion of an Incentive Stock Option, the
Committee, in its discretion, will designate which shares will be treated as shares to be acquired upon exercise of an Incentive
Stock Option.
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(c)
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Any
Incentive Stock Option certificate authorized under the Plan shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the options
as Incentive Stock Options.
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(d)
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All
Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by Board
of Directors or the date this Plan was approved by the stockholders.
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(e)
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Unless
sooner exercised, all Incentive Stock Options shall expire no later than 10 years after the date of grant.
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(f)
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The
option price for Incentive Stock Options shall be not less than the Fair Market Value of the Common Stock subject to the option
on the date of grant.
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(g)
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If
Incentive Stock Options are granted to any participant who, at the time such option is granted, would own (within the meaning
of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the
employer corporation or of its parent or subsidiary corporation, (i) the option price for such Incentive Stock Options shall
be not less than 110% of the Fair Market Value of the Common Stock subject to the option on the date of grant and (ii) such
Incentive Stock Options shall expire no later than five years after the date of grant.
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(h)
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An
Incentive Stock Option must not be transferable by the participant other than by will or the laws of descent and distribution
and must be exercisable during the individual’s lifetime only by the individual, in accordance with Treasury Regulation
1.422-2(a)(2)(v).
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7.
Stock Appreciation Rights. A SAR is a right to receive, without payment to the Company, a number of shares of Common Stock,
cash or any combination thereof, the amount of which is determined pursuant to the formula set forth in Section 7.4. A tandem
SAR may be granted (a) with respect to any nonqualified stock option granted under this Plan, concurrently with the grant of such
stock option (as to all or any portion of the shares of Common Stock subject to the nonqualified stock option), or (b) alone,
without reference to any related stock option (a non-tandem SAR). Each SAR granted by the Committee under this Plan shall be subject
to the following terms and conditions:
7.1
Number. Each SAR granted to any participant shall relate to such number of shares of Common Stock as shall be determined
by the Committee, subject to the limitations in Section 6.2 and subject to adjustment as provided in Section 10.6. In the case
of a tandem SAR granted with respect to a nonqualified stock option, the number of shares of Common Stock subject to the SAR shall
be reduced to reflect any nonqualified options already exercised by the participant. SARs shall not be granted in tandem with
Incentive Stock Options.
7.2
Duration. Subject to earlier termination as provided in Section 10.4, the term of each SAR shall be determined by the Committee
but shall not exceed ten years and one day from the date of grant. Unless otherwise provided by the Committee, each SAR shall
become exercisable at such time or times, to such extent and upon such conditions as the stock option, if any, to which it relates
is exercisable. The Committee may in its discretion accelerate the exercisability of any SAR.
7.3
Exercise. A SAR may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of
SARs which the holder wishes to exercise. Upon receipt of such written notice, the Company shall, as soon as practicable and in
any event before the fifteenth day of the third month following the end of the Company’s fiscal year, deliver to the exercising
holder certificates for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled
pursuant to Section 7.4.
7.4
Payment. Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock (which, as it pertains
to officers and directors of the Company, shall comply with all requirements of the 1934 Act), the number of shares of Common
Stock which shall be issuable upon the exercise of a SAR shall be determined by dividing:
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(a)
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the
number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of the appreciation in such shares
(for this purpose, the “appreciation” shall be the amount by which the Fair Market Value of the shares of Common
Stock subject to the SAR on the exercise date exceeds the Fair Market Value of the shares of Common Stock at the time of grant,
subject to adjustment under Section 10.6); by
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(b)
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the
Fair Market Value of a share of Common Stock on the exercise date.
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In
lieu of issuing shares of Common Stock upon the exercise of a SAR, the Committee may elect to pay the holder of the SAR cash equal
to the Fair Market Value on the exercise date of any or all of the shares which would otherwise be issuable. No fractional shares
of Common Stock shall be issued upon the exercise of a SAR; instead, the holder of the SAR shall be entitled to receive a cash
adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase
the portion necessary to make a whole share at its Fair Market Value on the date of exercise. Other than in connection with a
change in the Company’s capitalization (as described in Section 10.6), a SAR may not be re-priced without Shareholder approval
(including canceling previously awarded SARs and re-granting them at a time when the Fair Market Value of the shares of Common
Stock is lower). SARs will not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of
shares of Common Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other stock
option or SAR of the participant.
8. Stock Awards and Restricted Stock.
A stock award consists of the transfer by the Company to a participant of shares of Common Stock, without other payment therefor,
as additional compensation for services to the Company. A share of restricted stock consists of shares of Common Stock which are
sold or transferred by the Company to a participant at a price determined by the Committee (which price shall be at least equal
to the minimum price required by applicable law for the issuance of a share of Common Stock) and subject to restrictions on their
sale or other transfer by the participant. The transfer of Common Stock pursuant to stock awards and the transfer and sale of restricted
stock shall be subject to the following terms and conditions:
8.1
Number of Shares. The number of shares to be transferred or sold by the Company to a participant pursuant to a stock award
or as restricted stock shall be determined by the Committee.
8.2
Sale Price. The Committee shall determine the price, if any, at which shares of restricted stock shall be sold to a participant,
which may vary from time to time and among participants and which may be below the Fair Market Value of such shares of Common
Stock at the date of sale.
8.3
Restrictions. All shares of restricted stock transferred or sold hereunder shall be subject to such restrictions as the
Committee may determine, including, without limitation any or all of the following:
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(a)
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a
prohibition against the sale, transfer, pledge or other encumbrance of the shares of restricted stock, such prohibition to
lapse at such time or times as the Committee shall determine (whether in annual or more frequent installments, at the time
of the death, disability or retirement of the holder of such shares, or otherwise);
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(b)
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a
requirement that the holder of shares of restricted stock forfeit, or (in the case of shares sold to a participant) resell
back to the Company at his or her cost, all or a part of such shares in the event of termination of his or her employment
or consulting engagement during any period in which such shares are subject to restrictions;
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(c)
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such
other conditions or restrictions as the Committee may deem advisable.
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8.4
Escrow. In order to enforce the restrictions imposed by the Committee pursuant to Section 8.3, the participant receiving
restricted stock shall enter into an agreement with the Company setting forth the conditions of the grant. Shares of restricted
stock shall be registered in the name of the participant and deposited, together with a stock power endorsed in blank, with the
Company. Each such certificate shall bear a legend in substantially the following form:
The
transferability of this certificate and the shares of Common Stock represented by it are subject to the terms and conditions (including
conditions of forfeiture) contained in the 2020 Stock Incentive Plan, and an agreement entered into between the registered owner
and the Company. A copy of the 2020 Stock Incentive Plana and the agreement is on file in the office of the secretary of the Company.
8.5
End of Restrictions. Subject to Section 10.5, at the end of any time period during which the shares of restricted stock
are subject to forfeiture and restrictions on transfer, such shares will be delivered free of all restrictions to the participant
or to the participant’s legal representative, beneficiary or heir.
8.6
Stockholder. Subject to the terms and conditions of the Plan, each participant receiving restricted stock shall have all
the rights of a stockholder with respect to shares of stock during any period in which such shares are subject to forfeiture and
restrictions on transfer, including without limitation, the right to vote such shares. Dividends paid in cash or property other
than Common Stock with respect to shares of restricted stock shall be paid to the participant currently.
9.
Performance Shares. A performance share consists of an award which shall be paid in shares of Common Stock, as described
below. The grant of performance share shall be subject to such terms and conditions as the Committee deems appropriate, including
the following:
9.1
Performance Objectives. Each performance share will be subject to performance objectives for the Company or one of its
operating units to be achieved by the end of a specified period. The number of performance shares granted shall be determined
by the Committee and may be subject to such terms and conditions, as the Committee shall determine. If the performance objectives
are achieved, each participant will be paid in shares of Common Stock or cash. If such objectives are not met, each grant of performance
shares may provide for lesser payments in accordance with formulas established in the award.
9.2
Not Stockholder. The grant of performance shares to a participant shall not create any rights in such participant as a
stockholder of the Company, until the payment of shares of Common Stock with respect to an award.
9.3
No Adjustments. No adjustment shall be made in performance shares granted on account of cash dividends which may be paid
or other rights which may be issued to the holders of Common Stock prior to the end of any period for which performance objectives
were established.
9.4
Expiration of Performance Share. If any participant’s employment or consulting engagement with the Company is terminated
for any reason other than normal retirement, death or disability prior to the achievement of the participant’s stated performance
objectives, all the participant’s rights on the performance shares shall expire and terminate unless otherwise determined
by the Committee. In the event of termination of employment or consulting by reason of death, disability, or normal retirement,
the Committee, in its own discretion may determine what portions, if any, of the performance shares should be paid to the participant.
10.
General.
10.1
Effective Date. The Plan will become effective upon its approval by the Company’s stockholders. Unless approved within
one year after the date of the Plan’s adoption by the board of directors, the amended and restated Plan shall not be effective
for any purpose.
10.2
Duration. The Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of cash or been terminated under the terms of the Plan and all restrictions
imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed. No Incentives may be granted under
the Plan after the tenth anniversary of the date the Plan is approved by the stockholders of the Company.
10.3
Non-transferability of Incentives. No stock option, SAR, restricted stock or performance award may be transferred, pledged
or assigned by the holder thereof (except, in the event of the holder’s death, by will or the laws of descent and distribution
to the limited extent provided in the Plan or the Incentive Award), or pursuant to a qualified domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, and the Company shall not be required
to recognize any attempted assignment of such rights by any participant. Notwithstanding the preceding sentence, nonqualified
stock options may be transferred by the holder thereof to Employee’s spouse, children, grandchildren or parents (collectively,
the “Family Members”), to trusts for the benefit of Family Members, to partnerships or limited liability companies
in which Family Members are the only partners or shareholders, or to entities exempt from federal income taxation pursuant to
Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. During a participant’s lifetime, a stock option may
be exercised only by him or her, by his or her guardian or legal representative or by the transferees permitted by the preceding
sentence. Incentive Stock Options shall be subject to the further restrictions on transfer set forth in Section 6.5.
10.4
Effect of Termination or Death. In the event that a participant ceases to be an employee of or consultant to the Company
for any reason, including death or disability, any Incentives may be exercised only as their terms may permit or shall expire
at such times as may be determined by the Committee as set forth in the Plan or the Incentive Award agreement.
10.5
Additional Condition. Notwithstanding anything in this Plan to the contrary: (a) the Company may, if it shall determine
it necessary or desirable for any reason, at the time of award of any Incentive or the issuance of any shares of Common Stock
pursuant to any Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or to the receipt of
shares of Common Stock issued pursuant thereto, to deliver to the Company a written representation of present intention to acquire
the Incentive or the shares of Common Stock issued pursuant thereto for his or her own account for investment and not for distribution;
and (b) if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification
(or any updating of any such document) of any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on
any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection with the award of any Incentive, the issuance of
shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such Incentive shall not be
awarded or such shares of Common Stock shall not be issued or such restrictions shall not be removed, as the case may be, in whole
or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company.
10.6
Adjustment. In the event of any recapitalization, stock dividend, stock split, combination of shares or other change in
the Common Stock, the number of shares of Common Stock then subject to the Plan, including shares subject to restrictions, options
or achievements of performance shares, shall be adjusted in proportion to the change in outstanding shares of Common Stock. In
the event of any such adjustments, the purchase price of any option, the performance objectives of any Incentive, and the shares
of Common Stock issuable pursuant to any Incentive shall be adjusted as and to the extent appropriate, in the discretion of the
Committee, to provide participants with the same relative rights before and after such adjustment.
10.7
Incentive Plans and Agreements. Except in the case of stock awards or cash awards, the terms of each Incentive shall be
stated in a plan or agreement approved by the Committee.
10.8
Withholding.
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(a)
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The
Company shall have the right to withhold from any payments made under the Plan or to collect as a condition of payment, any
taxes required by law to be withheld. At any time when a participant is required to pay to the Company an amount required
to be withheld under applicable income tax laws in connection with a distribution of Common Stock or upon exercise of an option
or SAR, the participant may satisfy this obligation in whole or in part by electing (the “Election”) to have the
Company withhold from the distribution shares of Common Stock having a value up to the minimum amount of withholding taxes
required to be collected on the transaction. The value of the shares to be withheld shall be based on the Fair Market Value
of the Common Stock on the date that the amount of tax to be withheld shall be determined (“Tax Date”).
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(b)
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Each
Election must be made prior to the Tax Date. The Committee may disapprove of any Election, may suspend or terminate the right
to make Elections, or may provide with respect to any Incentive that the right to make Elections shall not apply to such Incentive.
An Election is irrevocable.
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10.9
No Continued Employment, Engagement or Right to Corporate Assets. No participant under the Plan shall have any right, because
of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or
her present or any other rate of compensation. Nothing contained in the Plan shall be construed as giving an employee, a consultant,
such persons’ beneficiaries or any other person any equity or interests of any kind in the assets of the Company or creating
a trust of any kind or a fiduciary relationship of any kind between the Company and any such person.
10.10
Amendment. The Board may amend or discontinue the Plan or any participant’s Incentive agreement at any time. However,
no such amendment or discontinuance shall adversely change or impair, without the consent of the recipient, an Incentive previously
granted. Further, no such amendment shall, without approval of the shareholders of the Company, (a) increase the maximum number
of shares of Common Stock which may be issued to all participants under the Plan, (b) change or expand the types of Incentives
that may be granted under the Plan, (c) change the class of persons eligible to receive Incentives under the Plan, or (d) materially
increase the benefits accruing to participants under the Plan.
10.11
Sale, Merger, Exchange or Liquidation. Unless otherwise provided in the agreement for an Incentive, in the event of an
acquisition of the Company through the sale of substantially all of the Company’s assets or through a merger, exchange,
reorganization or liquidation of the Company or a similar event as determined by the Committee (collectively a “transaction”),
the Committee shall be authorized, in its sole discretion, to take any and all action it deems equitable under the circumstances,
including but not limited to any one or more of the following:
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(i)
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providing
that the Plan and all Incentives shall terminate and the holders of (i) all outstanding vested options shall receive, in lieu
of any shares of Common Stock they would be entitled to receive under such options, such stock, securities or assets, including
cash, as would have been paid to such participants if their options had been exercised and such participant had received Common
Stock immediately prior to such transaction (with appropriate adjustment for the exercise price, if any), (ii) performance
shares and/or SARs that entitle the participant to receive Common Stock shall receive, in lieu of any shares of Common Stock
each participant was entitled to receive as of the date of the transaction pursuant to the terms of such Incentive, if any,
such stock, securities or assets, including cash, as would have been paid to such participant if such Common Stock had been
issued to and held by the participant immediately prior to such transaction, and (iii) any Incentive under this Agreement
which does not entitle the participant to receive Common Stock shall be equitably treated as determined by the Committee.
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(ii)
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providing
that participants holding outstanding vested Common Stock based Incentives shall receive, with respect to each share of Common
Stock issuable pursuant to such Incentives as of the effective date of any such transaction, at the determination of the Committee,
cash, securities or other property, or any combination thereof, in an amount equal to the excess, if any, of the Fair Market
Value of such Common Stock on a date within ten days prior to the effective date of such transaction over the option price
or other amount owed by a participant, if any, and that such Incentives shall be cancelled, including the cancellation without
consideration of all options that have an exercise price below the per share value of the consideration received by the Company
in the transaction.
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(iii)
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providing
that the Plan (or replacement plan) shall continue with respect to Incentives not cancelled or terminated as of the effective
date of such transaction and provide to participants holding such Incentives the right to earn their respective Incentives
on a substantially equivalent basis (taking into account the transaction and the number of shares or other equity issued by
such successor entity) with respect to the equity of the entity succeeding the Company by reason of such transaction.
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(iv)
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providing
that all unvested, unearned or restricted Incentives, including but not limited to restricted stock for which restrictions
have not lapsed as of the effective date of such transaction, shall be void and deemed terminated, or, in the alternative,
for the acceleration or waiver of any vesting, earning or restrictions on any Incentive.
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The
Board may restrict the rights of participants or the applicability of this Section 10.11 to the extent necessary to comply with
Section 16(b) of the Securities Exchange Act of 1934, the Internal Revenue Code or any other applicable law or regulation. The
grant of an Incentive award pursuant to the Plan shall not limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business structure or to merge, exchange or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.
10.12
Definition of Fair Market Value. For purposes of this Plan, the “Fair Market Value” of a share of Common Stock
at a specified date shall, unless otherwise expressly provided in this Plan, be the amount which the Committee or the Board of
Directors determines in good faith to be 100% of the fair market value of such a share as of the date in question; provided, however,
that notwithstanding the foregoing, if such shares are listed on a U.S. securities exchange or are quoted on the Nasdaq National
Market or Nasdaq Small-Cap Market (“Nasdaq”), then Fair Market Value shall be determined by reference to the last
sale price of a share of Common Stock on such U.S. securities exchange or Nasdaq on the applicable date. If such U.S. securities
exchange or Nasdaq is closed for trading on such date, or if the Common Stock does not trade on such date, then the last sale
price used shall be the one on the date the Common Stock last traded on such U.S. securities exchange or Nasdaq.
10.13
Change in Control.
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(a)
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Upon
a Change in Control, as defined in paragraph (b) of this Section 10.13, any stock option or restricted stock award granted
to any Participant under this Plan that would have become vested upon continued employment by the Participant shall immediately
vest in full and become exercisable, notwithstanding any provision to the contrary of such award, and notwithstanding the
discretion of the Committee pursuant to Section 10.11.
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For
purposes of this Section 10.13, “Change in Control” means:
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(i)
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The
acquisition by any person, entity or “group”, within the meaning of Section 13(d) (3) or 14(d) (2) of the Securities
Exchange Act of 1934 (the “Exchange Act”) (excluding, for this purpose, (A) the Company, (B) any employee benefit
plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company, or (C) Lyle
Berman, Bradley Berman, Bradley Berman Irrevocable Trust, Julie Berman Irrevocable Trust, Jessie Lynn Berman Irrevocable Trust,
and Amy Berman Irrevocable Trust, or any successors thereto) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 33% or more of either the then outstanding shares of common stock or the combined voting power
of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; or
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(ii)
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Individuals
who, as of August 26, 2020, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director subsequent to August 26, 2020 whose election,
or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office
is in connection with an actual or threatened election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board; or
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(iii)
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Approval
by the stockholders of the Company of (A) a reorganization, merger or consolidation, in each case, with respect to which persons
who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately
thereafter, own more than 50% of the combined voting power of the reorganized, merged or consolidated company’s then
outstanding voting securities entitled to vote generally in the election of directors of the reorganized, merged or consolidated
company, or (B) a liquidation or dissolution of the Company or (C) the sale of all or substantially all of the assets of the
Company.
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10.14
Section 409A. Notwithstanding any other provisions of the Plan or any Incentive award agreement, no Incentive shall be
granted, deferred, accelerated, extended, paid out, adjusted pursuant to Section 10.6, or otherwise modified under the Plan in
a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a participant. In the event
that it is reasonably determined by the Committee that, as a result of Section 409A of the Code, payments in respect of any Incentive
may not be made at the time contemplated by the terms of the Plan or the relevant Incentive award agreement, without causing the
participant to be subject to taxation under Section 409A of the Code, then the Company will make such payment on the first day
that would not result in the participant incurring any tax liability under Section 409A of the Code.
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