THIS
INFORMATION STATEMENT IS BEING PROVIDED TO
YOU
BY THE BOARD OF DIRECTORS OF UNIQUE LOGISTICS INTERNATIONAL, INC.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED
NOT TO SEND US A PROXY
UNIQUE
LOGISTICS INTERNATIONAL, INC.
154-09
146th Ave.
Jamaica,
NY 11434
(678)
365-6004
INFORMATION
STATEMENT
(Preliminary)
November
19, 2021
NOTICE
OF STOCKHOLDER ACTION BY WRITTEN CONSENT
GENERAL
INFORMATION
This
Information Statement has been filed with the Securities and Exchange Commission (the “SEC”) and is being sent, pursuant
to Section 14C of the Exchange Act, to the holders of record as of November 17, 2021 (the “Record Date”) of Common
Stock, par value $0.001 per share (the “Common Stock”), of Unique Logistics International, Inc., a Nevada corporation
(the “Company,” “we,” “our” or “us”), to notify the Common
Stock holders of the following:
On
November 16, 2021, the Company received a written consent in lieu of a meeting by the holders of approximately 58.71% of the voting power
the Common Stock (the “Majority Stockholders”) authorizing the following actions:
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A
reverse stock split of the Company’s issued and outstanding shares of Common Stock (the “Reverse Stock Split”)
with a ratio within the range of 1-for-300 to 1-for-400 (the “Reverse Stock Split Ratio”);
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A
decrease in the number of authorized shares of Common Stock from 800,000,000 shares to 250,000,000 shares (the “Decrease
in Authorized Shares”)
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The
filing of an amendment to our Articles of Incorporation, as amended (the “Amendment”), to effect the Reverse Stock Split
and the Decrease in Authorized Shares. A copy of the amendment is attached as Appendix A to this Information Statement; and
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Amendment
to the Unique 2020 Equity and Incentive Plan (the “2020 Plan”) to set the number of shares of the Company’s Common
Stock available for issuance under the 2020 Plan to 1,500,000 shares effective upon the Reverse Stock Split (the “2020
Plan Amendment”).
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On
November 16, 2021, the Board approved, and recommended for approval to the Majority Stockholders, the Reverse Stock Split, the Decrease
in Authorized Shares and the 2020 Plan Amendment.
On
November 16, 2021, the Majority Stockholders approved the Reverse Stock Split, the Decrease in Authorized Shares and the 2020 Plan Amendment
by written consent in lieu of a meeting in accordance with the Nevada Revised Statutes (“NRS”). Accordingly, your
consent is not required and is not being solicited.
We
will commence mailing the notice to the holders of Common Stock on or about November 19, 2021.
PLEASE
NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY STATEMENT, BUT RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM YOU OF CERTAIN
ACTIONS TAKEN BY THE MAJORITY STOCKHOLDERS.
The
entire cost of furnishing this Information Statement will be borne by the Company. We will 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.
The
following table sets forth the name of the Majority Stockholders, the number of shares of Common Stock held by the Majority Stockholders,
the total number of votes that the Majority Stockholders voted in favor of the Reverse Stock Split and the 2020 Plan Amendment and the
percentage of the issued and outstanding voting equity of the Company that voted in favor thereof.
Name
of Majority Stockholders
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Number
of
Shares of
Common
Stock held
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Number
of Votes
held by Majority
Stockholders
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Number
of Votes
that Voted in favor
of the Action
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Percentage
of the
Voting Equity that
Voted in favor
of the Action
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Sunandan
Ray
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322,086,324
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322,086,324
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322,086,324
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49.11
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%
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3a
Capital Establishment
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63,000,000
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63,000,000
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63,000,000
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9.60
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%
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Total
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385,086,324
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385,086,324
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385,086,324
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58.71
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%
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ACTIONS
TO BE TAKEN
This
Information Statement contains a brief summary of the material aspects of the actions approved by the Board and the Majority Stockholders.
The
Reverse Stock Split and the Decrease in Authorized Shares will become effective on the date that we file an amendment (the “Amendment”)
to the Company’s Articles of Incorporation, as amended, with the Secretary of State of the State of Nevada. Such filing can occur
no earlier than twenty (20) calendar days after the mailing of this Information statement. The 2020 Plan Amendment will be effective
upon the effectiveness of the Reverse Stock Split and the Decrease in Authorized Shares.
Notwithstanding
the foregoing, we must first notify the Financial Industry Regulatory Authority (“FINRA”) of the intended Reverse
Stock Split by filing an Issuer Company Related Action Notification Form no later than ten (10) days prior to the anticipated record
date of such action.
REVERSE
STOCK SPLIT
General
Our
Board and Majority Stockholders have approved the Reverse Stock Split in order to provide for meeting minimum Nasdaq requirements for
listing (such as a minimum stock price of $4.00, and the Board and our Majority Stockholders have determined that it is in the best interests
of our stockholders in general to provide our Board with the flexibility to effect the Reverse Split in a ratio within the range of 1-for-300
to 1-for-400 (the “Reverse Stock Split Ratio”).
The
Reverse Stock Split, as approved by our stockholders, will become effective upon the filing of the Amendment with the Secretary of State
of the State of Nevada, or at the later time set forth in the Amendment, subject to the approval of FINRA. The filing may occur any time
after 20 days from the date of completion of mailing of this Information Statement to our stockholders of record as of November 17, 2021.
The exact timing of the Amendment will be determined by our Board based on its evaluation as to if and when such action will be the most
advantageous to the Company and our stockholders. In addition, our Board reserves the right, notwithstanding stockholder approval and
without further action by the stockholders, to abandon the Amendment and the Reverse Stock Split if, at any time prior to the effectiveness
of the filing of the Amendment with the Secretary of State of the State of Nevada, our Board, in its sole discretion, determines that
it is no longer in our best interest and the best interests of our stockholders to proceed.
We
do not have any current plans, arrangements or understandings relating to the issuance of any additional shares of authorized Common
Stock that will become available following the Reverse Stock Split other than (i) approximately 75,000- 150,000 options to employees
(ii) upon exercise of our currently outstanding options and warrants, (iii) upon conversion of our currently outstanding convertible
debt and (iv) a contemplated primary offering of our equity securities in connection with the potential up-listing of the Common Stock
to the Nasdaq Stock Market (the “Nasdaq”).
The
proposed form of amendment to our Articles of Incorporation, as amended, to effect the Reverse Stock Split is attached as Appendix A
to this Information Statement. Any amendment to our Articles of Incorporation, as amended, to effect the Reverse Stock Split will include
the Reverse Stock Split Ratio fixed by our Board, within the range approved by our stockholders.
Reasons
for Proposed Amendment
The
Board believes that listing our Common Stock on Nasdaq will increase the liquidity of our Common Stock by providing us with a market
for the Common Stock that is more accessible than if our Common Stock were to continue to trade on the OTC maintained by the OTC Markets
Group, Inc. Such alternative markets are generally considered to be less efficient than, and not as broad as, the Nasdaq. Among other
factors, trading on the Nasdaq may increase liquidity and potentially minimize the spread between the “bid” and “asked”
prices quoted by market makers. Further, such a listing may enhance our access to capital, increase our flexibility in responding to
anticipated capital requirements and facilitate the use of our Common Stock in any strategic or financing transactions that we may undertake.
We believe that prospective investors will view an investment in the Company more favorably if our shares qualify for listing on the
Nasdaq as compared with the OTC markets. The Board has also determined that the consummation of the Reverse Stock Split may be necessary
to achieve compliance with the listing requirements of Nasdaq.
The
Board also believes that the current low per share market price of our Common Stock has a negative effect on the marketability of our
existing shares. The Board believes there are several reasons for this effect. First, certain institutional investors have internal policies
preventing the purchase of low-priced stocks. Second, a variety of policies and practices of broker-dealers discourage individual brokers
within those firms from dealing in low-priced stocks. Third, because the brokers’ commissions on low-priced stocks generally represent
a higher percentage of the stock price than commissions on higher priced stocks, the current share price of our Common Stock can result
in individual stockholders paying transaction costs (commissions, markups or markdowns) that are a higher percentage of their total share
value than would be the case if the share price of the Common Stock were substantially higher. This factor is also believed to limit
the willingness of some institutions to purchase the Common Stock. The Board anticipates that a Reverse Stock Split will result in a
higher bid price for our Common Stock, which may help to alleviate some of these problems.
We
expect that a Reverse Stock Split of our Common Stock will increase the market price of the Common Stock so that we are able to obtain
compliance with the initial listing minimum bid price listing standard of Nasdaq. However, the effect of a Reverse Stock Split on the
market price of the Common Stock cannot be predicted with any certainty, and the history of similar stock split combinations for companies
in like circumstances is varied. It is possible that the per share price of the Common Stock after the Reverse Stock Split will not rise
in proportion to the reduction in the number of shares of the Common Stock outstanding resulting from the Reverse Stock Split, effectively
reducing our market capitalization, and there can be no assurance that the market price per post-reverse split share will either exceed
or remain in excess of the prescribed initial listing minimum bid price for a sustained period of time. The market price of our Common
Stock may vary based on other factors that are unrelated to the number of shares outstanding, including our future performance.
If
the Reverse Stock Split successfully increases the per share price of our Common Stock, as to which no assurance can be given, the Board
believes this increase will aid us in obtaining listing on Nasdaq and may facilitate future financings and enhance our ability to attract,
retain, and motivate employees and other service providers.
PLEASE
NOTE THAT UNLESS SPECIFICALLY INDICATED TO THE CONTRARY, THE DATA CONTAINED IN THIS INFORMATION STATEMENT, INCLUDING BUT NOT LIMITED
TO SHARE NUMBERS, CONVERSION PRICES AND EXERCISE PRICES OF OPTIONS AND WARRANTS, DOES NOT REFLECT THE IMPACT OF THE REVERSE STOCK SPLIT
THAT MAY BE EFFECTUATED.
Implementation
and Effects of the Reverse Stock Split
If
the Board elects to implement the Reverse Stock Split, which the Board may choose not to do at its discretion, the Reverse Stock Split
would have the following effects:
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the
number of shares of the Common Stock owned by each Stockholder will automatically be reduced proportionately based on the reverse
stock split ratio determined by the Board;
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the
number of shares of the Common Stock issued and outstanding will be reduced proportionately;
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proportionate
adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options
and warrants entitling the holders thereof to purchase shares of the Common Stock, which will result in approximately the same aggregate
price being required to be paid for such options or warrants upon exercise of such options or warrants immediately preceding the
reverse stock split; and
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a
proportionate adjustment will be made to the per share conversion price under the terms of the Company’s outstanding convertible
promissory notes.
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The
table set forth below illustrates the Company’s capitalization subsequent to the Reverse Stock Split in varying ratios with the
ratio of 1-for-400 being the maximum ratio which may be effectuated by the Board. This model is based on the total number of shares issued
and outstanding as of the Record Date and gives effect to the Reverse Stock Split and the Decrease in Authorized Shares, as well as shares
of Common Stock issued and outstanding and issuable upon the conversion/exercise of promissory notes, options and warrants.
Reverse
Stock Split Ratio
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Shares
of Common
Stock issued and
outstanding following
the Reverse Stock Split
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Shares
of Common Stock issued and
outstanding and issuable upon the
conversion/exercise of promissory
notes, options and warrants
following the Reverse Stock Split
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Shares
of Common
Stock available for
future issuance
following the Reverse
Stock Split(1)
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1:300
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2,185,937
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33,959,984
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216,040,016
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1:350
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1,873,660
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29,108,558
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220,891,442
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1:400
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1,639,453
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25,469,988
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224,530,012
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(1)
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Assumes
the Decrease in Authorized Shares is approved and based on 250,000,000 shares of authorized
Common Stock.
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The
Board may decide not to proceed with the Reverse Stock Split for various reasons including general stock market/business conditions.
The
Reverse Stock Split will not affect the rights of Stockholders or any Stockholder’s proportionate equity interest in the Company,
subject to the treatment of fractional shares. At this time the Company has no plans to issue such additional shares of its capital stock,
other than (i) as required for existing and additional financings, and (ii) as compensation and incentives to employees and directors
under the Company’s existing stock incentive plans and other arrangements that may be undertaken.
The
future issuance of such authorized shares may have the effect of diluting the Company’s earnings per share and book value per share,
as well as the stock ownership and voting rights of the current Stockholders. The effective increase in the number of authorized but
unissued shares of the Common Stock may be construed as having an anti-takeover effect by permitting the issuance of shares to purchasers
who might oppose a hostile takeover bid or oppose any efforts to amend or repeal certain provisions of the Company’s Articles of
Incorporation or Bylaws.
Fractional
Shares
No
scrip or fractional share certificates will be issued in connection with the Reverse Stock Split. In lieu of issuing fractional shares,
stockholders who otherwise would be entitled to receive fractional shares because they hold a number of shares not evenly divisible by
the ratio of the Reverse Stock Split will automatically be entitled to receive an additional fraction of a share of Common Stock to round
up to the next whole share.
Risks
Associated with the Reverse Stock Split
There
are risks associated with the Reverse Stock Split, including that the Reverse Stock Split may not result in a sustained increase in the
per share price of our Common Stock. There is no assurance that:
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the
market price per share of the Common Stock after the Reverse Stock Split will rise in proportion to the reduction in the number of
shares of the Common Stock outstanding before the Reverse Stock Split;
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the
Reverse Stock Split will result in a per share price that will attract brokers and investors who do not trade in lower priced stocks;
or
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the
Reverse Stock Split will result in a per share price that will increase our ability to attract and retain employees and other service
providers.
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Stockholders
should note that the effect of the Reverse Stock Split, if any, upon the market price for the Common Stock cannot be accurately predicted.
In particular, we cannot assure you that prices for shares of the Common Stock after the Reverse Stock Split will be two (2) to four
(4) times, as applicable, the prices for shares of the Common Stock immediately prior to the Reverse Stock Split. Furthermore, even if
the market price of the Common Stock does rise following the Reverse Stock Split, we cannot assure you that the market price of the Common
Stock immediately after the proposed Reverse Stock Split will be maintained for any period of time. Even if an increased per-share price
can be maintained, the Reverse Stock Split may not achieve the desired results that have been outlined above. Moreover, because some
investors may view the Reverse Stock Split negatively, we cannot assure you that the Reverse Stock Split will not adversely impact the
market price of the Common Stock.
The
market price of the Common Stock will also be based on our performance and other factors, some of which are unrelated to the Reverse
Stock Split or the number of shares outstanding. If the Reverse Stock Split is effected and the market price of the Common Stock declines,
the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur
in the absence of a Reverse Stock Split. The total market capitalization of the Common Stock after implementation of the Reverse Stock
Split when and if implemented may also be lower than the total market capitalization before the Reverse Stock Split. Furthermore, the
liquidity of the Common Stock could be adversely affected by the reduced number of shares that would be outstanding after the Reverse
Stock Split.
While
we anticipate that the Reverse Stock Split will be sufficient to obtain our listing on Nasdaq, it is possible that, even if the
Reverse Stock Split results in a bid price for the Common Stock that exceeds the required price per share another reverse split may be
necessary in the future and we may not be able to continue to satisfy the other criteria for continued listing of the Common Stock on
Nasdaq.
Authorized
Shares
As
of the Record Date, there were 800,000,000 shares of authorized Common Stock and 5,000,000 shares of authorized preferred stock. As of
the Record Date, there were 655,781,078 shares of voting securities issued and outstanding.
As
a result of the Reverse Stock Split, the number of shares remaining available for future issuance under the Company’s authorized
pool of Common Stock would increase. As a result of the Decrease in Authorized we will have 250,000,000 shares of Common Stock authorized.
In addition, the Company will continue to have 5,000,000 authorized but unissued shares of preferred stock.
These
authorized but unissued shares would be available for issuance from time to time for corporate purposes such as raising additional capital,
acquisitions of businesses or assets and sales of stock or securities convertible into Common Stock. The Company believes that the availability
of the authorized but unissued shares will provide it with the flexibility to meet business needs as they arise, to take advantage of
favorable opportunities and to respond to a changing corporate environment. If the Company issues additional shares, the ownership interests
of holders of the Common Stock may be diluted. Also, if the Company issues shares of its preferred stock, the issued shares may have
rights, preferences and privileges senior to those of the Common Stock.
No
Dissenters’ Rights
Under
the NRS, the Stockholders are not entitled to dissenters’ rights with respect to the Reverse Stock Split, and the Company will
not independently provide Stockholders with any such right.
Anti-Takeover
Effects of the Reverse Stock Split
A
possible effect of the Reverse Stock Split may be to discourage a merger, tender offer or proxy contest, or the assumption of control
by a holder of a large block of the Company’s voting securities and the removal of incumbent management. The Board could use the
additional shares of Common Stock available for issuance to resist or frustrate a third-party take-over effort favored by a majority
of the independent stockholders that would provide an above market premium by issuing additional shares of our Common Stock.
The
Reverse Stock Split is not the result of the Board’s knowledge of an effort to accumulate any of the Company’s securities
or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise. Nor is the Reverse Stock Split a plan
by the Board to adopt a series of amendments to the Articles of Incorporation or our Bylaws to institute an anti-takeover provision.
We do not have any plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover
consequences.
Although
the Reverse Stock Split is not being undertaken by the Board to institute an anti-takeover provision, in the future the Board could,
subject to its fiduciary duties and applicable law, use the unissued shares of Common Stock to frustrate persons seeking to take over
or otherwise gain control of the Company by, for example, privately placing shares with purchasers who might side with the Board in opposing
a hostile takeover bid. Shares of Common Stock could also be issued to a holder that would thereafter have sufficient voting power to
assure that any proposal to amend or repeal the Company’s Bylaws or certain provisions of the Articles of Incorporation would not
receive the requisite vote. Such uses of the Common Stock could render more difficult, or discourage, an attempt to acquire control of
the Company, if such transactions were opposed by the Board. However, it is also possible that an indirect result of the anti-takeover
effect of the Reverse Stock Split could be that our stockholders will be denied the opportunity to obtain any advantages of a hostile
takeover, including, but not limited to, receiving a premium to the then current market price of the Common Stock, if the same was so
offered by a party attempting a hostile takeover of the Company.
Determination
of Ratio
The
ratio of the Reverse Stock Split, if implemented, will be a ratio within the range of 1-for-300 to 1-for-400 (the “Reverse Stock
Split Ratio”).
Our
Board would carry out a Reverse Stock Split only upon its determination that a Reverse Stock Split would be in the best interests of
our stockholders at that time. In determining the ratio, the Board considered, among other things:
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the
historical and projected performance of our Common Stock;
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the
potential devaluation of the Company’s market capitalization as a result of the Reverse Stock Split;
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prevailing
market conditions;
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general
economic and other related conditions prevailing in our industry and in the marketplace;
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the
projected impact of the selected Reverse Stock Split Ratio on trading liquidity in our Common Stock and our ability to list our Common
Stock on Nasdaq;
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our
capitalization (including the number of shares of our Common Stock issued and outstanding); and
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the
prevailing trading price for our Common Stock and the volume level thereof.
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Beneficial
Holders of Common Stock
Upon
the implementation of the Reverse Stock Split, we intend to treat shares held by stockholders through a bank, broker or other nominee
in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers or other nominees will be instructed
to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.” However, these
banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. Stockholders
who hold shares of our Common Stock with a bank, broker or other nominee and who have any questions in this regard are encouraged to
contact their banks, brokers or other nominees.
Registered
“Book-Entry” Holders of Common Stock
Certain
of the registered holders of our Common Stock may hold some or all of their shares electronically in book-entry form with our transfer
agent. These stockholders do not have stock certificates evidencing their ownership of our Common Stock. They are, however, provided
with statements reflecting the number of shares registered in their accounts. Stockholders who hold shares electronically in book-entry
form with our transfer agent will not need to take action to receive evidence of their shares of Common Stock subsequent to the Reverse
Stock Split.
Holders
of Certificated Shares of Common Stock
Stockholders
holding shares of our Common Stock in certificated form will be sent a transmittal letter by our transfer agent after the effective time
of the Reverse Stock Split. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its
certificate(s) representing shares of our Common Stock (the “Old Certificates”) to our transfer agent in exchange
for certificates representing the appropriate number of shares of post-Reverse Stock Split Common Stock (the “New Certificates”).
No New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with a properly
completed and executed letter of transmittal, to our transfer agent. Stockholders will then receive a New Certificate(s) representing
the number of shares of our Common Stock to which they are entitled as a result of the Reverse Stock Split. Any Old Certificates submitted
for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates.
If an Old Certificate has a restrictive legend on its reverse side, the New Certificate will be issued with the same restrictive legend
on its reverse side.
Regardless
of how stockholders hold our Common Stock (i.e., in book-entry or certificated form), stockholders will not have to pay any service charges
to us or our transfer agent in connection with the reverse stock split.
Accounting
Matters
The
proposed amendment to our Articles of Incorporation, as amended, will not affect the par value of our Common Stock. As a result, at the
effective time of the Reverse Stock Split, the stated capital on our balance sheet attributable to our Common Stock will be reduced in
the same proportion as the Reverse Stock Split Ratio, and the additional paid-in capital account will be credited with the amount by
which the stated capital is reduced. The per share net income or loss and net book value of our Common Stock will be reclassified for
prior periods to conform to the post-Reverse Stock Split presentation.
Federal
Income Tax Consequences of the Reverse Stock Split
The
following is a summary of certain material United States federal income tax consequences of the Reverse Stock Split. It does not purport
to be a complete discussion of all of the possible United States federal income tax consequences of the Reverse Stock Split and is included
for general information only. Further, it does not address any state, local or foreign income or other tax consequences. This discussion
does not address the tax consequences to holders that are subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident alien individuals, broker-dealers and tax-exempt entities.
The discussion is based on the provisions of the United States federal income tax law as of the date hereof, which is subject to change
retroactively as well as prospectively. This summary also assumes that the shares of Common Stock held by our Stockholders before the
Reverse Stock Split were, and the shares of Common Stock held after the Reverse Stock Split will be, held as “capital assets,”
as defined in the Internal Revenue Code of 1986, as amended (i.e., generally, property held for investment). The tax treatment of a Stockholder
may vary depending upon the particular facts and circumstances of such Stockholder. Each stockholder is urged to consult with such Stockholder’s
own tax advisor with respect to the tax consequences of the Reverse Stock Split.
No
gain or loss will be recognized by a Stockholder upon such Stockholder’s exchange of shares held before the Reverse Stock Split
for shares after the Reverse Stock Split. The aggregate tax basis of the shares of the Common Stock received in the Reverse Stock Split
(including any fraction of a share deemed to have been received) will be the same as the Stockholder’s aggregate tax basis in the
shares of our Common Stock exchanged therefor. The Stockholder’s holding period for the shares of our Common Stock after the Reverse
Stock Split will include the period during which the Stockholder held the shares of our Common Stock surrendered in the Reverse Stock
Split.
This
summary of certain material United States federal income tax consequence of the Reverse Stock Split is not binding on the Internal Revenue
Service, the Company or the courts. Accordingly, each Stockholder should consult with his or her own tax advisor with respect to all
of the potential tax consequences to him or her of the Reverse Stock Split.
Tax
Consequences of the Reverse Stock Split Generally
A
reverse split should constitute a “recapitalization” for U.S. federal income tax purposes. As a result, a U.S. Holder generally
should not recognize gain or loss upon the reverse split, except with respect to cash received in lieu of a fractional share of our Common
Stock. A U.S. Holder’s aggregate tax basis in the shares of our Common Stock received pursuant to the reverse split
should equal the aggregate tax basis of the shares of our Common Stock surrendered (excluding any portion of such basis that is
allocated to any fractional share of our Common Stock), and such U.S. Holder’s holding period in the shares of our Common
Stock received should include the holding period in the shares of our Common Stock surrendered. Treasury Regulations provide
detailed rules for allocating the tax basis and holding period of the shares of our Common Stock surrendered to the shares of
our Common Stock received pursuant to the reverse split. Holders of shares of our Common Stock acquired on different dates
and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
Information
Reporting and Backup Withholding. A U.S. Holder (other than corporations and certain other exempt recipients) may be subject to information
reporting and backup withholding when such holder receives cash in lieu of a fractional share of our Common Stock pursuant to
the reverse split. A U.S. Holder will be subject to backup withholding if such holder is not otherwise exempt and such holder does not
provide its taxpayer identification number in the manner required or otherwise fails to comply with applicable backup withholding tax
rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed
as a credit against the U.S. Holder’s federal income tax liability, if any, provided the required information is timely furnished
to the IRS. U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and
the procedures for obtaining such an exemption.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
DECREASE
IN AUTHORIZED SHARES
The
Company’s Amended and Restated Articles of Incorporation authorizes the issuance of 800,000,000 shares of Common Stock, par value
of $0.001 per share, and 5,000,000 shares of preferred stock, par value of $0.001 per share. On November 16, 2021, the Board and the
Majority Stockholders approved a decrease in the authorized shares of common stock from 800,000,000 shares to 250,000,000 shares.
The
Board plans to file the Decrease in Authorized Shares with the Secretary of State of Nevada. The Decrease in Authorized Shares will become
effective on the date of filing. There is no change with respect to the number of authorized preferred shares.
Purposes
of the Decrease in Authorized Shares
The
principal purpose of the Decrease in Authorized Shares is to more closely align our capital structure. With the Reverse Stock Split at
a range of 1-for-300 to 1-for-400 shares, the Reverse Stock Split will create a sharp reduction in the number of outstanding
shares of Common Stock and would, with no further action by us, result in a significant disparity in the ratio of our outstanding to
authorized shares of Common Stock. By implementing the Decrease in Authorized Shares simultaneously with the Reverse Stock Split, we
will still have a sufficient number of authorized shares of both common stock and preferred stock that will afford us maximum flexibility
to issue shares of either class in the future while allowing us to have a proportionate capital structure.
Further,
each year, we are required to make franchise tax payments to the State of Nevada in an amount determined, in part, by the total number
of shares of stock we are authorized to issue. Therefore, the amount of this tax will be decreased if we reduce the number of authorized
shares of our Common Stock (unless before and after such reduction, we are subject to the maximum tax amount).
Effect
of the Decrease in Authorized Shares
Once
we file the amendment for the decrease in authorized shares of Common Stock, it will have the immediate effect of reducing the total
amount of authorized Common Stock. Unlike the Reverse Stock Split, it will have no impact on the number of shares you own.
No
Dissenters’ Rights
Under
the Nevada Revised Statutes, the Company’s Stockholders are not entitled to dissenters’ rights with respect to the decrease
in authorized shares, and the Company will not independently provide Stockholders with any such right.
AMENDMENT
TO THE UNIQUE 2020 EQUITY AND INCENTIVE PLAN
Our
Board and Majority Stockholders have approved the 2020 Plan Amendment Plan to set the number of shares of the Company’s Common
Stock available for issuance under the 2020 Plan to 1,500,000 shares effective upon the Reverse Stock Split.
The
2020 Plan is our only ongoing plan providing stock-based awards to employees and non-employee directors. In addition to stock-based compensation,
the Plan also authorizes the issuance of awards payable in cash. Our ability to provide long-term incentives in the form of equity compensation
aligns management’s interests with the interests of our stockholders and fosters an ownership mentality that drives optimal decision-making
for the long-term health and profitability of our Company. Equally important, equity compensation is critical to our continuing ability
to attract, retain and motivate qualified corporate executives and retain management. Our ability to grant equity compensation has been
important to our past success, and we expect it to be crucial to achieving our long-term growth.
Currently,
the 2020 Plan provides for the issuance of up to 40,000,000 shares of Common Stock through the grant of non-qualified options (the “Non-qualified
Options”), incentive options (the “Incentive Options” and together with the Non-qualified Options, the “Options”)
and restricted stock (the “Restricted Stock”) to directors, officers, consultants, attorneys, advisors and employees.
There
are currently no options outstanding under the 2020 Plan.
As
a result of the planned Reverse Stock Split, the number of shares of Common Stock approved for issuance pursuant to the 2020 Plan shall
decrease to 114,285. The Board believes that such number of shares available for issuance pursuant to the 2020 Plan is not sufficient
in view of our compensation structure and strategy. The Board believes that setting the number of shares available for issuance under
the 2020 Plan at 1,500,000 shares, effective upon the Reverse Stock Split, is consistent with the Company’s compensation philosophy
(and with responsible compensation policies generally) and will preserve the Company’s ability to attract and retain capable officers,
employees, directors and consultants.
Summary
of 2020 Plan, as Proposed to be Amended
The
following is a summary of the material terms and conditions of the 2020 Plan, as proposed to be amended, and is qualified in its entirety
by the provisions contained in the 2020 Plan, as amended (the “Amended 2020 Plan”), a copy of which is attached to this Proxy
Statement as Appendix B:
Plan
Highlights
The
essential features of our 2020 Plan are outlined below. The following description is not complete and is qualified by reference to the
full text of our 2020 Plan, which is appended to this Information Statement as Appendix B.
Options
are subject to the following conditions:
|
(i)
|
The
Committee (as defined below) determines the exercise price of Incentive Options at the time the Incentive Options are granted. The
assigned exercise price must be no less than 100% of the Fair Market Value (as defined in the 2020 Plan) of the Common Stock on the
Grant Day (as defined in the 2020 Plan). In the event that the recipient is a Ten Percent Owner (as defined in the 2020 Plan), the
exercise price must be no less than 110% of the Fair Market Value of the Company on the Grant Day.
|
|
|
|
|
(ii)
|
The
exercise price of each Non-qualified Option will be at least 100% of the Fair Market Value of such share of the Common Stock on the
date the Non-qualified Option is granted.
|
|
|
|
|
(iii)
|
The
Committee fixes the term of Options, provided that Options may not be exercisable more than ten years from the date the Option
is granted, and provided further that Incentive Options granted to a Ten Percent Owner may not be exercisable more than five
years from the date the Incentive Option is granted.
|
|
|
|
|
(iv)
|
Stock
Options shall become exercisable and/or vested at such time or times, whether or not in installments, as shall be determined by the
Committee at or after the Grant Date. The Award Agreement may permit a grantee to exercise all or a portion of a Stock Option immediately
at grant; provided that the Shares issued upon such exercise shall be subject to restrictions and a vesting schedule identical to
the vesting schedule of the related Stock Option, such Shares shall be deemed to be Restricted Stock for purposes of the Plan, and
the optionee may be required to enter into an additional or new Award Agreement as a condition to exercise of such Stock Option.
An optionee shall have the rights of a stockholder only as to Shares acquired upon the exercise of a Stock Option and not as to unexercised
Stock Options. An optionee shall not be deemed to have acquired any Shares unless and until a Stock Option shall have been exercised
pursuant to the terms of the Award Agreement and this Plan and the optionee’s name has been entered on the books of the Company
as a stockholder.
|
|
|
|
|
(v)
|
Options
are not transferable except to a recipient’s family members or partnerships in which such family members are the only partners
and Options are exercisable only by the Options’ recipient, except upon the recipient’s death.
|
|
|
|
|
(vi)
|
Incentive
Options may not be issued in an amount or manner where the amount of Incentive Options exercisable in one year entitles the holder
to Common Stock of the Company with an aggregate Fair Market value of greater than $100,000.
|
Awards
of Restricted Stock are subject to the following conditions:
|
(i)
|
The
Committee grants Restricted Stock Options and determines the restrictions on each Restricted Stock Award (as defined in the 2020
Plan). Upon the grant of a Restricted Stock Award and the payment of any applicable purchase price, grantee is considered the record
owner of the Restricted Stock and entitled to vote the Restricted Stock if such Restricted Stock is entitled to voting rights.
|
|
|
|
|
(ii)
|
Restricted
Stock may not be delivered to the grantee until the Restricted Stock has vested.
|
|
|
|
|
(iii)
|
Restricted
Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as provided in the 2020 Plan
or in the Award Agreement (as defined in the 2020 Plan).
|
Upon
a Termination Event (as defined in the 2020 Plan), the Company or its assigns shall have the right and option to repurchase from a Holder
of Shares (as defined in the 2020 Plan) received pursuant to a Restricted Stock Award any Shares that are still subject to a risk of
forfeiture as of the Termination Event (as defined in the 2020 Plan).
Purpose
The
objective of the 2020 Plan is to encourage and enable the officers, employees, directors, consultants and other key persons of the Company
and its subsidiaries, upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business,
to acquire a proprietary interest in the Company.
Grants
The
2020 Plan permits the granting of incentive stock options, nonqualified stock options, stock awards, restricted stock units, stock appreciation
rights (“SARs”) and other equity-based awards (collectively, “grants”). Although all employees and all of the
employees of our subsidiaries are eligible to receive grants under our 2020 Plan, the grant to any particular employee is subject to
the discretion of the Compensation Committee of the Board, comprised of not less than two directors (such body that administers the 2020
Plan, the “Committee”).
The
maximum number of Shares reserved and available for issuance under the Plan shall be 1,500,000 Shares, subject to adjustment. If a grant
expires or terminates for any reason before it is fully vested or exercised, or if any grant is forfeited, we may again make the number
of shares subject to that grant that the participant has not purchased or that has not vested subject to another grant under the 2020
Plan.
We
have made and will make appropriate adjustments to outstanding grants and to the number or kind of shares subject to the 2020 Plan in
the event of a stock split, reverse stock split, stock dividend, share combination or reclassification and certain other types of corporate
transactions, including a merger or a sale of all or substantially all of our assets.
All
grants will be determined by the Compensation Committee or a committee of the Board (the “Committee”) and at this time, no
grants have been determined or awarded.
Administration
The
2020 Plan shall be administered by the Compensation Committee of the Board, comprised of not less than three directors or the Board in
the absence of a Compensation Committee of the Board. All references herein to the “Committee” shall be deemed to refer to
the group then responsible for administration of the Plan at the relevant time (i.e., either the Board or a committee or committees of
the Board, as applicable).
The
Committee shall have the authority and power:
|
(i)
|
to
select the individuals to whom Awards may from time to time be granted;
|
|
|
|
|
(ii)
|
to
determine the time or times of grant, and the amount, if any, of Incentive Stock Options, Non-Qualified Stock Options, SARs, Restricted
Stock Awards, Unrestricted Stock Awards, Restricted Stock Units, or any combination of the foregoing, granted to any one or more
grantees;
|
|
|
|
|
(iii)
|
to
determine the number and types of Shares to be covered by any Award and, subject to the provisions of the 2020 Plan, the price, exercise
price, conversion ratio or other price relating thereto;
|
|
|
|
|
(iv)
|
to
determine and, subject to the 2020 Plan, to modify from time to time the terms and conditions, including restrictions, not inconsistent
with the terms of the 2020 Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to
approve the form of Award Agreements;
|
|
|
|
|
(v)
|
to
accelerate at any time the exercisability or vesting of all or any portion of any Award;
|
|
|
|
|
(vi)
|
to
impose any limitations on Awards, including limitations on transfers, repurchase provisions and the like, and to exercise repurchase
rights or obligations;
|
|
|
|
|
(vii)
|
subject
to any restrictions imposed under the 2020 Plan or by Section 409A, to extend at any time the period in which Stock Options may be
exercised; and
|
|
|
|
|
(viii)
|
at
any time to adopt, alter and repeal such rules, guidelines and practices for administration of the 2020 Plan and for its own acts
and proceedings as it shall deem advisable; to interpret the terms and provisions of the 2020 Plan and any Award (including Award
Agreements); to make all determinations it deems advisable for the administration of the 2020 Plan; to decide all disputes arising
in connection with the 2020 Plan; and to otherwise supervise the administration of the 2020 Plan.
|
All
decisions and interpretations of the Committee shall be binding on all persons, including the Company and all Holders.
Grant
Instruments
All
grants will be subject to the terms and conditions set forth in our 2020 Plan and to such other terms and conditions consistent with
our 2020 Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument
or an amendment to the grant instrument. All grants will be made conditional upon the acknowledgement of the grantee in writing or by
acceptance of the grant, that all decisions and determinations of the Committee will be final and binding on the grantee, his or her
beneficiaries and any other person having or claiming an interest under such grant.
Terms
and Conditions of Grants
The
grant instrument will state the number of shares subject to the grant and the other terms and conditions of the grant, consistent with
the requirements of our 2020 Plan. The purchase price per share subject to an option (or the exercise price per share in the case of
a SAR) must equal at least the fair market value of a share of the Common Stock on the date of grant. The exercise price per share for
the Shares covered by a Stock Option shall be determined by the Committee at the time of grant but shall not be less than 100% of the
Fair Market Value on the Grant Date. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the exercise price
per share for the Shares covered by such Incentive Stock Option shall not be less than 110% of the Fair Market Value on the Grant Date.
Under
the 2020 Plan, the term “Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined
in good faith by the Committee based on the reasonable application of a reasonable valuation method that is consistent with Section 409A
of the Code. If the Stock is admitted to trade on a national securities exchange, the determination shall be made by reference to the
closing price reported on such exchange. If there is no closing price for such date, the determination shall be made by reference to
the last date preceding such date for which there is a closing price. If the date for which Fair Market Value is determined is the first
day when trading prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be the “Price
to the Public” (or equivalent).
“Ten
Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more than 10 percent of the combined voting power of all classes of stock of the Company or any parent of the Company or any Subsidiary.
Transferability
Restricted
Stock, Stock Options, SARs and, prior to exercise, the Shares issuable upon exercise of such Stock Option, shall not be transferable
by the optionee otherwise than by will, or by the laws of descent and distribution, and all Stock Options shall be exercisable, during
the optionee’s lifetime, only by the optionee, or by the optionee’s legal representative or guardian in the event of the
optionee’s incapacity. Notwithstanding the foregoing, the Committee, in its sole discretion, may provide in the Award Agreement
regarding a given Stock Option or Restricted Stock award that the optionee may transfer by gift, without consideration for the transfer,
his or her Non-Qualified Stock Options to his or her family members (as defined in Rule 701 of the Securities Act), to trusts for the
benefit of such family members, or to partnerships in which such family members are the only partners (to the extent such trusts or partnerships
are considered “family members” for purposes of Rule 701 of the Securities Act), provided that the transferee agrees in writing
with the Company to be bound by all of the terms and conditions of this 2020 Plan and the applicable Award Agreement, including the execution
of a stock power upon the issuance of Shares. Stock Options, SARs and the Shares issuable upon exercise of such Stock Options, shall
be restricted as to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position”
(as defined in the Exchange Act) or any “call equivalent position” (as defined in the Exchange Act) prior to exercise.
Amendment
and Termination
The
Board may, at any time, amend or discontinue the 2020 Plan and the Committee may, at any time, amend or cancel any outstanding Award
for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under
any outstanding Award without the consent of the holder of the Award. The Committee may exercise its discretion to reduce the exercise
price of outstanding Stock Options or effect repricing through cancellation of outstanding Stock Options and by granting such holders
new Awards in replacement of the cancelled Stock Options. To the extent determined by the Committee to be required either by the Code
to ensure that Incentive Stock Options granted under the 2020 Plan are qualified under Section 422 of the Code or otherwise, 2020 Plan
amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. The Board reserves
the right to amend the 2020 Plan and/or the terms of any outstanding Stock Options to the extent reasonably necessary to comply with
the requirements of the exemption pursuant to Rule 12h-1 of the Exchange Act.
Federal
Income Tax Consequences
The
following summary is intended only as a general guide as to the United States federal income tax consequences under current law of participation
in our 2020 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences
based on particular circumstances.
Stock
option grants under the 2020 Plan are intended either to qualify as incentive stock options under Internal Revenue Code of 1986, as amended
(“IRC”) §422 or to be non-qualified stock options governed by IRC §§ 83 and 423, depending on how same are
granted. Generally, no federal income tax is payable by a participant upon the grant of an incentive stock option and no deduction is
allowed to be taken by the Company. The grant of a non-qualified stock option does result in the recognition of taxable income when the
option is granted. Under current tax laws, if a participant exercises a non-qualified stock option, he or she will have taxable income
equal to the difference between the market price of the stock on the exercise date and the stock option grant price. The Company will
be entitled to a corresponding deduction on its income tax return. A participant will have no taxable income upon exercising an incentive
stock option if the shares received are held for the applicable holding period (except that alternative minimum tax may apply), and the
Company will receive no deduction when an incentive stock option is exercised. The Company may be entitled to a deduction in the case
of a disposition of shares acquired under an incentive stock option that occurs before the applicable holding period has been satisfied.
Restricted
stock and restricted stock units are also governed by IRC §83. Generally, the award of such restricted rights do not give rise to
taxable income so long as same are subject to a substantial risk of forfeiture (i.e., becomes vested or transferable). Restricted stock
generally becomes taxable when it is no longer subject to a “substantial risk of forfeiture.” Restricted stock units become
taxable when settled. When taxable to the participant, income tax is paid on the value of the stock or units at ordinary rates. The Company
will generally be entitled to a corresponding deduction on its income tax return in the year of income recognition by the grantee. Any
additional gain on shares received are then taxed at capital gains rates when the shares are sold.
The
grant of a stock appreciation right will not result in income for the participant or in a tax deduction for the Company. Upon the settlement
of such a right, the participant will recognize ordinary income equal to the aggregate value of the payment received, and the Company
generally will be entitled to a tax deduction in the same amount.
The
foregoing is only a summary of the effect of federal income taxation on the participant and the Company under the 2020 Plan. It does
not purport to be complete and does not discuss the tax consequences arising in the context of a participant’s death or the income
tax laws of any municipality, state or foreign country in which the participant’s income may be taxable.
Tax
Withholding
Each
grantee shall, no later than the date as of which the value of an Award or of any Shares or other amounts received thereunder first becomes
includable in the gross income of the grantee for income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such
income. The Company and any Subsidiary shall, to the extent permitted by law, have the right to deduct any such taxes from any payment
of any kind otherwise due to the grantee. The Company’s obligation to deliver stock certificates (or evidence of book entry) to
any grantee is subject to and conditioned on any such tax withholding obligations being satisfied by the grantee.
The
Company’s minimum required tax withholding obligation may be satisfied, in whole or in part, by the Company withholding from Shares
to be issued pursuant to an Award a number of Shares having an aggregate Fair Market Value (as of the date the withholding is effected)
that would satisfy the minimum withholding amount due.
No
Dissenters’ Rights
Under
the NRS, the Stockholders are not entitled to dissenters’ rights with respect to the 2020 Plan, and the Company will not independently
provide Stockholders with any such right.
ACTIONS
TO BE TAKEN
This
Information Statement contains a brief summary of the material aspects of the actions approved by the Board and the Majority Stockholders.
The
Reverse Stock Split and Decrease in Authorized Shares will become effective on the date that we file an amendment to the Articles of
Incorporation of the Company (the “Amendment”) with the Secretary of State of the State of Nevada. Such filing can
occur no earlier than twenty (20) calendar days after the mailing of this information statement to stockholders.
Notwithstanding
the foregoing, we must first notify FINRA of the intended Reverse Stock Split by filing the Issuer Company Related Action Notification
Form no later than ten (10) days prior to the anticipated record date of such action. Our failure to provide such notice may constitute
fraud under Section 10 of the Exchange Act.
INTEREST
OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
Except
in their capacity as stockholders (which interest does not differ from that of the other Common Stockholders), none of our officers,
directors or any of their respective affiliates has any interest in the Reverse Stock Split.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following sets forth information as of November 17, 2021, regarding the number of shares of our Common Stock beneficially owned
by (i) each person that we know beneficially owns more than 5% of our outstanding Common Stock, (ii) each of our directors and
named executive officer and (iii) all of our directors and named executive officer as a group.
Beneficial
ownership and percentage ownership are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally
includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares
that an individual or entity has the right to acquire beneficial ownership of within 60 days of November 17, 2021, through the exercise
of any option, warrant or similar right (such instruments being deemed to be “presently exercisable”). In computing the number
of shares beneficially owned by a person and the percentage ownership of that person, shares of our Common Stock that could be
issued upon the exercise of presently exercisable options and warrants are considered to be outstanding. These shares, however, are not
considered outstanding as of November 17, 2021 when computing the percentage ownership of each other person.
To
our knowledge, except as indicated in the footnotes to the following table, and subject to state community property laws where applicable,
all beneficial owners named in the following table have sole voting and investment power with respect to all shares shown as beneficially
owned by them. Percentage of ownership is based on 655,781,078 shares of Common Stock outstanding as of November 17, 2021.
Unless
otherwise stated, the business address of each of our directors and executive officers listed in the table is 154-09 146th Ave, Jamaica,
NY 11434.
Name
and Address of Beneficial Owner(1)
|
|
Outstanding
Common Stock
|
|
|
Percentage
of Ownership of Common Stock (2)
|
|
5%
Beneficial Shareholders
|
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
Great
Eagle Freight Limited (3)
|
|
|
-
|
|
|
|
24.6
|
%
|
3a
Capital Establishment (4)
|
|
|
79,920,000
|
(5)
|
|
|
9.9
|
%
|
Trillium
Partners LP (6)
|
|
|
79,920,000
|
(5)
|
|
|
9.9
|
%
|
5%
Beneficial Shareholders as a Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors
|
|
|
|
|
|
|
|
|
Sunandan
Ray (7)
|
|
|
322,086,324
|
|
|
|
49.1
|
%
|
David
Briones (8)
|
|
|
-
|
|
|
|
25.3
|
%
|
Patrick
Lee (9)
|
|
|
-
|
|
|
|
*
|
%
|
Eli
Kay
|
|
|
-
|
|
|
|
*
|
%
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group (4 persons)
|
|
|
|
|
|
|
74.4
|
%
|
*Denotes
less than 1%
|
(1)
|
Beneficial
ownership is determined in accordance with Rule 13D-3(a) of the Exchange Act and generally
includes voting or investment power with respect to securities.
|
|
(2)
|
The
percentages in the table have been calculated based on treating as outstanding for a particular
person, all shares of our Common Stock outstanding on that date and all shares of
our Common Stock issuable to that holder in the event of exercise of outstanding options,
warrants, rights or conversion privileges owned by that person at that date which are exercisable
within 60 days of that date. Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of our Common Stock owned
by them, except to the extent that power may be shared with a spouse.
|
|
(3)
|
Great
Freight Limited beneficially owns 0 shares of the Company’s Common Stock. In
addition, Great Freight Limited beneficially owns 153,062 shares of Series B Preferred Stock
owned by Great Eagle Freight Limited which convert at a rate of 6,546.47 shares of Common
Stock for every 1 share of Series B Preferred Stock. The Company is limited to 800,000,000
authorized shares of Common Stock. The Beneficial ownership percentage only considers
the common shares that can be converted up to the authorized number of common shares. Mr.
Richard Chi Tak Lee has sole voting and dispositive power over the shares of Common Stock
held by Great Freight Limited.
|
|
(4)
|
The
shares in the table have been listed in accordance with 13-G filings made by the individual
investors.
|
|
(5)
|
Mr.
Nicola Feuerstein has sole voting and dispositive power over the shares of Common Stock
held by 3a Capital Establishment. The Beneficial ownership percentage only considers
the shares of Common Stock that can be converted up to a maximum of 9.99% of the issued and
outstanding shares of Common Stock.
|
|
(6)
|
Mr.
Stephen M. Hicks has sole voting and dispositive power over the shares of common stock held
by Trillium Partners LP. The Beneficial ownership percentage only considers the shares of
Common Stock that can be converted up to a maximum of 9.99% of the issued and outstanding
shares of Common Stock.
|
|
(7)
|
Mr.
Sunandan Ray owns 322,086,324 shares of the Company’s Common Stock. In addition,
Mr. Ray owns 667,738 shares of Series B Preferred Stock which convert at a rate of 6,546.47
shares of Common Stock for every 1 share of Series B Preferred Stock. The Company
is limited to 800,000,000 authorized shares of Common Stock. The Beneficial ownership
percentage only considers the common shares that can be converted up to the authorized number
of common shares.
|
|
(8)
|
Mr.
David Briones owns 0 shares of the Company’s Common Stock. In addition, Mr.
Briones owns 20,000 shares of Series A Preferred Stock which convert at a rate of 6,546.47
shares of Common Stock for every 1 share of Series A Preferred Stock. The Company
is limited to 800,000,000 authorized shares of Common Stock. The Beneficial ownership
percentage only considers the common shares that can be converted up to the authorized number
of common shares.
|
|
(9)
|
Mr.
Patrick Lee beneficially owns 0 shares of the Company’s Common Stock. In addition,
Mr. Lee beneficially owns 6% of the 153,062 shares of Series B Preferred Stock owned by Great
Eagle Freight Limited which convert at a rate of 6,546.47 shares of Common Stock for
every 1 share of Series B Preferred Stock. The Company is limited to 800,000,000 authorized
shares of Common Stock. The Beneficial ownership percentage only considers the common
shares that can be converted up to the authorized number of common shares.
|
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS 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 Unique Logistics International,
Inc., 154-09 146th Ave, Jamaica, NY 11434, Attn: CFO.
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 mail notification to, or call the Company at,
its 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.
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This
Information Statement may contain “forward-looking statements” made under the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995. The statements include, but are not limited to, statements concerning the effects of
the Reverse Stock Split, the possible application for listing or actual listing of our Common Stock on Nasdaq, or another national securities
exchange, and statements using terminology such as “expects,” “should,” “would,” “could,”
“intends,” “plans,” “anticipates,” “believes,” “projects” and “potential.”
Such statements reflect the current view of the Company with respect to future events and are subject to certain risks, uncertainties
and assumptions. Known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those
contemplated by the statements.
In
evaluating these statements, you should specifically consider various factors that may cause our actual results to differ materially
from any forward-looking statements. You should carefully review the risks listed, as well as any cautionary language, in this Information
Statement and the risk factors detailed under “Risk Factors” in the documents incorporated by reference in this Information
Statement, which provide examples of risks, uncertainties and events that may cause our actual results to differ materially from any
expectations we describe in our forward-looking statements. There may be other risks that we have not described that may adversely affect
our business and financial condition. We disclaim any obligation to update or revise any of the forward-looking statements contained
in this Information Statement. We caution you not to rely upon any forward-looking statement as representing our views as of any date
after the date of this Information Statement. You should carefully review the information and risk factors set forth in other reports
and documents that we file from time to time with the SEC.
ADDITIONAL
INFORMATION
We
are subject to the disclosure requirements of the Exchange Act, and in accordance therewith, file reports, information statements and
other information, including annual and quarterly reports on Form 10-K and 10-Q, respectively, with the SEC. Reports and other information
filed by the Company can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Washington,
DC 20549. In addition, the SEC maintains a web site on the Internet (http://www.sec.gov) that contains reports, information statements
and other information regarding issuers that file electronically with the SEC through the Electronic Data Gathering, Analysis and Retrieval
System.
A
copy of any public filing is also available, at no cost, by writing to Unique Logistics International, Inc., 154-09 146th Ave, Jamaica,
NY 11434, Attn: CFO. Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes
to the extent that a statement contained in this Information Statement (or in any other document that is subsequently filed with the
SEC and incorporated by reference) modifies or is contrary to such previous statement. Any statement so modified or superseded will not
be deemed a part of this Information Statement except as so modified or superseded.
This
Information Statement is provided to the holders of Common Stock of the Company only for information purposes in connection with the
Action, pursuant to and in accordance with Rule 14c-2 of the Exchange Act. Please carefully read this Information Statement.
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By
Order of the Board of Directors
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November
19, 2021
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/s/
Sunandan Ray
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Sunandan
Ray
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Chief
Executive Officer
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APPENDIX
A
(The
following is the text of the First Amendment to the 2020 Plan. This text is followed by the current text of the 2020 Plan that has been
updated only to set the number of shares available for issuance pursuant to the 2020 Plan at 1,500,000
(without
giving effect to the proposed amendment.)
FIRST
AMENDMENT TO
UNIQUE
LOGISTICS INTERNATIONAL, INC.
2020
EQUITY AND INCENTIVE PLAN
WHEREAS,
Unique Logistics International, Inc. (formerly Innocap, Inc. the “Company”) desires to amend the Unique Logistics
International, Inc. 2020 Equity and Incentive Plan to set the number of shares authorized for issuance under the Plan at 1,500,000 shares
of common stock, $0.001 par value per share, of the Company (the “Common Stock”) (the “Plan Amendment”);
and
WHEREAS,
on November 16, 2021, the Board approved the Plan Amendment, and recommended the Plan Amendment for approval to the Majority Stockholders;
and
WHEREAS,
on November 16, 2021, the Company received a written consent in lieu of a meeting by the Majority Stockholders authorizing the Plan Amendment.
NOW,
THEREFORE, in accordance with Section 13 of the Plan, the Plan is hereby amended as follows:
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1.
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Section
3 of the Plan is hereby amended by deleting paragraph 3(a) thereof in its entirety and substituting the following in lieu thereof:
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“(a)
Stock Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 1,500,000 Shares (the
“Share Reserve”), subject to adjustment as provided in Section 3(b). If a Stock Award or any portion thereof (i) expires
or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the
Participant receives cash rather than stock), the Shares subject to such Stock Award, to the extent of any such expiration, termination
or settlement, will again be available for issuance under the Plan. If any shares of Stock issued pursuant to a Stock Award are forfeited
back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant,
then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Any shares reacquired
by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for the exercise or purchase price
of a Stock Award will again become available for issuance under the Plan. For purposes of this limitation, the Shares underlying any
Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) shall be added back to the Shares available for issuance under the Plan. Subject to such overall
limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 200,000 Shares may
be issued pursuant to Incentive Stock Options. The value of any Shares granted to a non-employee director of the Company, solely for
services as a director, when added to any annual cash payments or awards, shall not exceed an aggregate value of two hundred thousand
dollars ($200,000) in any calendar year.
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2.
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The
Plan Amendment shall be effective upon the effective date of the Reverse Stock Split.
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3.
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Except
herein provided, the Plan is hereby ratified, confirmed and approved in all respects.
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UNIQUE
LOGISTICS INTERNATIONAL, INC.
2020
EQUITY AND INCENTIVE PLAN
SECTION
1. GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The
name of the plan is the UNIQUE LOGISTICS INTERNATIONAL, INC. 2020 EQUITY AND INCENTIVE PLAN (the “Plan”). The purpose of
the Plan is to encourage, retain and enable the officers, employees, directors, Consultants and other key persons of UNIQUE LOGISTICS
INTERNATIONAL, INC., a Nevada corporation (including any successor entity, the “Company”) and its Subsidiaries, upon whose
judgment, initiative and efforts the Company largely depends for the successful conduct of its business, to acquire a proprietary interest
in the Company.
The
following terms shall be defined as set forth below:
“Affiliate”
of any Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under
common control with the first mentioned Person. A Person shall be deemed to control another Person if such first Person possesses directly
or indirectly the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership
of voting securities, by contract or otherwise.
“Award”
or “Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights (“SAR”), Restricted Stock Awards (including preferred
stock), Unrestricted Stock Awards, Restricted Stock Units or any combination of the foregoing.
“Award
Agreement” means a written or electronic agreement setting forth the terms and provisions applicable to an Award granted under
the Plan. Each Award Agreement may contain terms and conditions in addition to those set forth in the Plan; provided, however, in the
event of any conflict in the terms of the Plan and the Award Agreement, the terms of the Plan shall govern.
“Board”
means the Board of Directors of the Company.
“Cause”
shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not contain a definition
of “Cause,” it shall mean (i) the grantee’s dishonest statements or acts with respect to the Company or any Affiliate
of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity does business;
(ii) the grantee’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii)
the grantee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction of the Company which failure
continues, in the reasonable judgment of the Company, after written notice given to the grantee by the Company; (iv) the grantee’s
gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company; or (v) the grantee’s
material violation of any provision of any agreement(s) between the grantee and the Company relating to noncompetition, nonsolicitation,
nondisclosure and/or assignment of inventions.
“Chief
Executive Officer” means the Chief Executive Officer of the Company or, if there is no Chief Executive Officer, then the President
of the Company.
“Code”
means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
“Committee”
means the Committee of the Board referred to in Section 2.
“Consultant”
means any entity or natural person that provides bona fide services to the Company (including a Subsidiary), and such services are
not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities.
“Disability”
means such condition which renders a Person (A) unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expect to last for a continuous period of not less than
12 months, (B) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than
3 months under an accident and health plan covering employees of the Company, (C) determined to be totally disabled by the Social Security
Administration, or (D) determined to be disabled under a disability insurance program which provides for a definition of disability that
meets the requirements of this section.
“Effective
Date” means the date on which the Plan is adopted as set forth in this Plan.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Fair
Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Committee
based on the reasonable application of a reasonable valuation method that is consistent with Section 409A of the Code. If the Stock is
admitted to trade on a national securities exchange, the determination shall be made by reference to the closing price reported on such
exchange. If there is no closing price for such date, the determination shall be made by reference to the last date preceding such date
for which there is a closing price. If the date for which Fair Market Value is determined is the first day when trading prices for the
Stock are reported on a national securities exchange, the Fair Market Value shall be the “Price to the Public” (or equivalent).
“Good
Reason” shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not contain
a definition of “Good Reason,” it shall mean (i) a material diminution in the grantee’s base salary except for across-the-board
salary reductions similarly affecting all or substantially all similarly situated employees of the Company or (ii) a change of more than
100 miles in the geographic location at which the grantee provides services to the Company, so long as the grantee provides at least
90 days’ notice to the Company following the initial occurrence of any such event and the Company fails to cure such event within
30 days thereafter.
“Grant
Date” means the date that the Committee designates in its approval of an Award in accordance with applicable law as the date
on which the Award is granted, which date may not precede the date of such Committee approval.
“Holder”
means, with respect to an Award or any Shares, the Person holding such Award or Shares, including the initial recipient of the Award
or any Permitted Transferee.
“Incentive
Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section
422 of the Code.
“Non-Qualified
Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option”
or “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.
“Permitted
Transferees” shall mean any of the following to whom a Holder may transfer Shares hereunder (as set forth in Section 10(a)(ii)(A)):
the Holder’s child, stepchild, grandchild, parent, step-parent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the
Holder’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial
interest, a foundation in which these persons control the management of assets, and any other entity in which these persons own more
than fifty percent of the voting interests; provided, however, that any such trust does not require or permit distribution of any Shares
during the term of the Award Agreement unless subject to its terms. Upon the death of the Holder, the term Permitted Transferees shall
also include such deceased Holder’s estate, executors, administrators, personal representatives, heirs, legatees and distributees,
as the case may be.
“Person”
shall mean any individual, corporation, partnership (limited or general), limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or any similar entity.
“Restricted
Stock Award” means Awards granted pursuant to Section 7 and “Restricted Stock” means Shares issued pursuant to
such Awards.
“Restricted
Stock Unit” means an Award of phantom stock units to a grantee, which may be settled in cash or Shares as determined by the
Committee, pursuant to Section 9.
“Sale
Event” means the consummation of i) a change in the ownership of the Company, ii) a change in effective control of the Company,
or iii) a change in the ownership of a substantial portion of the assets of the Company. The occurrence of a Sale Event shall be acknowledged
by the plan administrator or board of directors, by strictly applying these provisions without any discretion to deviate from the objective
application of the definitions provided herein. ; provided, however, that any capital raising event, or a merger effected solely to change
the Company’s domicile shall not constitute a “Sale Event.”
Except
as otherwise provided herein, a change in the ownership of the Company occurs on the date that any one person, or more than one person
acting as a group acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more
than 50 percent of the total fair market value or total voting power of the stock of the Company. However, if any one person, or more
than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of
the stock of the Company the acquisition of additional stock by the same person or persons is not considered to cause a change in the
ownership of the Company (or to cause a change in the effective control of the Company). An increase in the percentage of stock owned
by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock for purposes of this section. This section applies only when there is a transfer
of stock of the Company (or issuance of stock) which remains outstanding after the transaction.
A
change in the effective control of the Company occurs only on either of the following dates: (1) The date any one person, or more than
one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of stock of the Company possessing 30 percent or more of the total voting power of the stock of the
Company; (2) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date
of the appointment or election.
A
change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one
person acting as a group acquires (or has acquired during the 12- month period ending on the date of the most recent acquisition by such
person or persons) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross
fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, gross fair
market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets.
“Section
409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Service
Relationship” means any relationship as a full-time employee, part-time employee, director or other key person (including Consultants)
of the Company or any Subsidiary or any successor entity (e.g., a Service Relationship shall be deemed to continue without interruption
in the event an individual’s status changes from full-time employee to part-time employee or Consultant).
“Shares”
means shares of Stock.
“Stock”
means the Common Stock, par value $0.001 per share, of the Company.
“Stock
Appreciation Right” or “SAR” means any right to receive from the Company upon exercise by an optionee or settlement,
in cash, Shares, or a combination thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise or settlement
over (ii) the exercise price of the right on the date of grant, or if granted in connection with an Option, on the date of grant of the
Option.
“Subsidiary”
means any corporation or other entity (other than the Company) in which the Company has more than a 50 percent interest, either directly
or indirectly.
“Ten
Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent of the Company or any Subsidiary.
“Termination
Event” means the termination of the Award recipient’s Service Relationship with the Company and its Subsidiaries for
any reason whatsoever, regardless of the circumstances thereof, and including, without limitation, upon death, disability, retirement,
discharge or resignation for any reason, whether voluntarily or involuntarily. The following shall not constitute a Termination Event:
(i) a transfer to the service of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another
Subsidiary or (ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Committee,
if the individual’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which
the leave of absence was granted or if the Committee otherwise so provides in writing.
“Unrestricted
Stock Award” means any Award granted pursuant to Section 8 and “Unrestricted Stock” means Shares issued pursuant
to such Awards.
SECTION
2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
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(a)
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Administration
of Plan. The Plan shall be administered by the Compensation Committee of the Board, comprised
of not less than three directors or the Board of Directors in the absence of a Compensation
Committee of the Board. All references herein to the “Committee” shall be deemed
to refer to the group then responsible for administration of the Plan at the relevant time
(i.e., either the Board of Directors or a committee or committees of the Board, as applicable).
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(b)
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Powers
of Committee. The Committee shall have the power and authority to grant Awards consistent
with the terms of the Plan, including the power and authority:
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(i)
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to
select the individuals to whom Awards may from time to time be granted;
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(ii)
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to
determine the time or times of grant, and the amount, if any, of Incentive Stock Options,
Non-Qualified Stock Options, SARs, Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, or any combination of the foregoing, granted to any one or more grantees;
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(iii)
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to
determine the number and types of Shares to be covered by any Award and, subject to the provisions
of the Plan, the price, exercise price, conversion ratio or other price relating thereto;
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(iv)
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to
determine and, subject to Section 13, to modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any Award, which
terms and conditions may differ among individual Awards and grantees, and to approve the
form of Award Agreements;
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(v)
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to
accelerate at any time the exercisability or vesting of all or any portion of any Award;
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(vi)
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to
impose any limitations on Awards, including limitations on transfers, repurchase provisions
and the like, and to exercise repurchase rights or obligations;
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(vii)
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subject
to Section 5(a)(ii) and any restrictions imposed by Section 409A, to extend at any time the
period in which Stock Options may be exercised; and
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(viii)
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at
any time to adopt, alter and repeal such rules, guidelines and practices for administration
of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret
the terms and provisions of the Plan and any Award (including Award Agreements); to make
all determinations it deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the administration of the
Plan.
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All
decisions and interpretations of the Committee shall be binding on all persons, including the Company and all Holders.
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(c)
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Award
Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the
terms, conditions and limitations for each Award.
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(d)
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Indemnification.
Neither the Board nor the Committee, nor any member of either or any delegate thereof, shall
be liable for any act, omission, interpretation, construction or determination made in good
faith in connection with the Plan, and the members of the Board and the Committee (and any
delegate thereof) shall be entitled in all cases to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without limitation,
reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted
by law and/or under the Company’s governing documents, including its certificate of
incorporation or bylaws, or any directors’ and officers’ liability insurance
coverage which may be in effect from time to time and/or any indemnification agreement between
such individual and the Company.
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(e)
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Foreign
Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to
comply with the laws in other countries in which the Company and any Subsidiary operate or
have employees or other individuals eligible for Awards, the Committee, in its sole discretion,
shall have the power and authority to: (i) determine which Subsidiaries, if any, shall be
covered by the Plan; (ii) determine which individuals, if any, outside the United States
are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award
granted to individuals outside the United States to comply with applicable foreign laws;
(iv) establish subplans and modify exercise procedures and other terms and procedures, to
the extent the Committee determines such actions to be necessary or advisable (and such subplans
and/or modifications shall be attached to the Plan as appendices); provided, however, that
no such subplans and/or modifications shall increase the share limitation contained in Section
3(a) hereof; and (v) take any action, before or after an Award is made, that the Committee
determines to be necessary or advisable to obtain approval or comply with any local governmental
regulatory exemptions or approvals.
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SECTION
3. STOCK ISSUABLE UNDER THE PLAN; MERGERS AND OTHER TRANSACTIONS; SUBSTITUTION
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(a)
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Stock
Issuable. The maximum number of Shares reserved and available for issuance under the Plan
shall be 1,500,000 Shares (the “Share Reserve”), subject to adjustment as provided
in Section 3(b). If a Stock Award or any portion thereof (i) expires or otherwise terminates
without all of the shares covered by such Stock Award having been issued or (ii) is settled
in cash (i.e., the Participant receives cash rather than stock), the Shares subject to such
Stock Award, to the extent of any such expiration, termination or settlement, will again
be available for issuance under the Plan. If any shares of Stock issued pursuant to a Stock
Award are forfeited back to or repurchased by the Company because of the failure to meet
a contingency or condition required to vest such shares in the Participant, then the shares
that are forfeited or repurchased will revert to and again become available for issuance
under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations
on a Stock Award or as consideration for the exercise or purchase price of a Stock Award
will again become available for issuance under the Plan. For purposes of this limitation,
the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company
prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other
than by exercise) shall be added back to the Shares available for issuance under the Plan.
Subject to such overall limitations, Shares may be issued up to such maximum number pursuant
to any type or types of Award, and no more than 200,000 Shares may be issued pursuant to
Incentive Stock Options. The value of any Shares granted to a non-employee director of the
Company, solely for services as a director, when added to any annual cash payments or awards,
shall not exceed an aggregate value of two hundred thousand dollars ($200,000) in any calendar
year.
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(b)
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Changes
in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar change
in the Company’s capital stock, the outstanding Shares are increased or decreased or
are exchanged for a different number or kind of shares or other securities of the Company,
or additional Shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such Shares or other securities, in each
case, without the receipt of consideration by the Company, or, if, as a result of any merger
or consolidation, or sale of all or substantially all of the assets of the Company, the outstanding
Shares are converted into or exchanged for other securities of the Company or any successor
entity (or a parent or subsidiary thereof), the Committee shall make an appropriate and proportionate
adjustment in (i) the maximum number of Shares reserved for issuance under the Plan, (ii)
the number and kind of Shares or other securities subject to any then outstanding Awards
under the Plan, (iii) the repurchase price, if any, per Share subject to each outstanding
Award, and (iv) the exercise price for each Share subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied
by the number of Stock Options) as to which such Stock Options remain exercisable. The Committee
shall in any event make such adjustments as may be required by the laws of Nevada and the
rules and regulations promulgated thereunder. The adjustment by the Committee shall be final,
binding and conclusive. No fractional Shares shall be issued under the Plan resulting from
any such adjustment, but the Committee in its discretion may make a cash payment in lieu
of fractional shares.
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(A)
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In
the case of and subject to the consummation of a Sale Event, the Plan and all outstanding
Options and SARs issued hereunder shall become one hundred percent (100%) vested upon the
effective time of any such Sale Event. New stock options or other awards of the successor
entity or parent thereof shall be substituted therefor, with an equitable or proportionate
adjustment as to the number and kind of shares and, if appropriate, the per share exercise
prices, as such parties shall agree (after taking into account any acceleration hereunder
and/or pursuant to the terms of any Award Agreement).
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(B)
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In
the event of the termination of the Plan and all outstanding Options and SARs issued hereunder
pursuant to Section 3(c), each Holder of Options shall be permitted, within a period of time
prior to the consummation of the Sale Event as specified by the Committee, to exercise all
such Options or SARs which are then exercisable or will become exercisable as of the effective
time of the Sale Event; provided, however, that the exercise of Options not exercisable prior
to the Sale Event shall be subject to the consummation of the Sale Event.
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(C)
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Notwithstanding
anything to the contrary in Section 3(c)(i)(A), in the event of a Sale Event, the Company
shall have the right, but not the obligation, to make or provide for a cash payment to the
Holders of Options, without any consent of the Holders, in exchange for the cancellation
thereof, in an amount equal to the difference between (A) the value as determined by the
Committee of the consideration payable per share of Stock pursuant to the Sale Event (the
“Sale Price”) times the number of Shares subject to outstanding Options being
cancelled (to the extent then vested and exercisable, including by reason of acceleration
in connection with such Sale Event, at prices not in excess of the Sale Price) and (B) the
aggregate exercise price of all such outstanding vested and exercisable Options.
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(ii)
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Restricted
Stock and Restricted Stock Unit Awards.
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(A)
|
In
the case of and subject to the consummation of a Sale Event, all unvested Restricted Stock
and unvested Restricted Stock Unit Awards issued hereunder shall become one hundred percent
(100%) vested, with an equitable or proportionate adjustment as to the number and kind of
shares subject to such awards as such parties shall agree (after taking into account any
acceleration hereunder and/or pursuant to the terms of any Award Agreement).
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(B)
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Such
Restricted Stock shall be repurchased from the Holder thereof at the then Fair Market Value
of such shares, (subject to adjustment as provided in Section 3(b)) for such Shares.
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(C)
|
Notwithstanding
anything to the contrary in Section 3(c)(ii)(A), in the event of a Sale Event, the Company
shall have the right, but not the obligation, to make or provide for a cash payment to the
Holders of Restricted Stock or Restricted Stock Unit Awards, without consent of the Holders,
in exchange for the cancellation thereof, in an amount equal to the Sale Price times the
number of Shares subject to such Awards, to be paid at the time of such Sale Event or upon
the later vesting of such Awards.
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SECTION
4. ELIGIBILITY
Grantees
under the Plan will be such full or part-time officers and other employees, directors, Consultants and key persons of the Company and
any Subsidiary who are selected from time to time by the Committee in its sole discretion; provided, however, that Awards shall be granted
only to those individuals described in Rule 701(c) of the Securities Act.
SECTION
5. STOCK OPTIONS
Upon
the grant of a Stock Option, the Company and the grantee shall enter into an Award Agreement. The terms and conditions of each such Award
Agreement shall be determined by the Committee, and such terms and conditions may differ among individual Awards and grantees.
Stock
Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f)
of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.
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(a)
|
Terms
of Stock Options. The Committee in its discretion may grant Stock Options to those individuals
who meet the eligibility requirements of Section 4. Stock Options shall be subject to the
following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
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(i)
|
Exercise
Price. The exercise price per share for the Shares covered by a Stock Option shall be determined
by the Committee at the time of grant but shall not be less than 100 percent of the Fair
Market Value on the Grant Date. In the case of an Incentive Stock Option that is granted
to a Ten Percent Owner, the exercise price per share for the Shares covered by such Incentive
Stock Option shall not be less than 110 percent of the Fair Market Value on the Grant Date.
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(ii)
|
Option
Term. The term of each Stock Option shall be fixed by the Committee, but no Stock Option
shall be exercisable more than ten years from the Grant Date. In the case of an Incentive
Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall
be no more than five years from the Grant Date.
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|
(iii)
|
Exercisability;
Rights of a Stockholder. Stock Options shall become exercisable and/or vested at such time
or times, whether or not in installments, as shall be determined by the Committee at or after
the Grant Date. The Award Agreement may permit a grantee to exercise all or a portion of
a Stock Option immediately at grant; provided that the Shares issued upon such exercise shall
be subject to restrictions and a vesting schedule identical to the vesting schedule of the
related Stock Option, such Shares shall be deemed to be Restricted Stock for purposes of
the Plan, and the optionee may be required to enter into an additional or new Award Agreement
as a condition to exercise of such Stock Option. An optionee shall have the rights of a stockholder
only as to Shares acquired upon the exercise of a Stock Option and not as to unexercised
Stock Options. An optionee shall not be deemed to have acquired any Shares unless and until
a Stock Option shall have been exercised pursuant to the terms of the Award Agreement and
this Plan and the optionee’s name has been entered on the books of the Company as a
stockholder.
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(iv)
|
Method
of Exercise. Stock Options may be exercised by an optionee in whole or in part, by the optionee
giving written or electronic notice of exercise to the Company, specifying the number of
Shares to be purchased. Payment of the purchase price may be made by one or more of the following
methods (or any combination thereof) to the extent provided in the Award Agreement:
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(A)
|
In
cash, by certified or bank check, by wire transfer of immediately available funds, or other
instrument acceptable to the Committee;
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(B)
|
If
permitted by the Committee, by the optionee delivering to the Company a promissory note,
if the Board has expressly authorized the loan of funds to the optionee for the purpose of
enabling or assisting the optionee to effect the exercise of his or her Stock Option; provided,
that at least so much of the exercise price as represents the par value of the Stock shall
be paid in cash if required by state law;
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(C)
|
If
permitted by the Committee, through the delivery (or attestation to the ownership) of Shares
that have been purchased by the optionee on the open market or that are beneficially owned
by the optionee and are not then subject to restrictions under any Company plan. To the extent
required to avoid variable accounting treatment under applicable accounting rules, such surrendered
Shares if originally purchased from the Company shall have been owned by the optionee for
at least six months. Such surrendered Shares shall be valued at Fair Market Value on the
exercise date;
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(D)
|
If
permitted by the Committee and by the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company for the purchase price;
provided that in the event the optionee chooses to pay the purchase price as so provided,
the optionee and the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Committee shall prescribe as a condition of such
payment procedure; or
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(E)
|
If
permitted by the Committee, and only with respect to Stock Options that are not Incentive
Stock Options, by a “net exercise” arrangement pursuant to which the Company
will reduce the number of Shares issuable upon exercise by the largest whole number of Shares
with a Fair Market Value that does not exceed the aggregate exercise price.
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Payment
instruments will be received subject to collection. No certificates for Shares so purchased will be issued to the optionee or, with respect
to uncertificated Stock, no transfer to the optionee on the records of the Company will take place, until the Company has completed all
steps it has deemed necessary to satisfy legal requirements relating to the issuance and sale of the Shares, which steps may include,
without limitation, (i) receipt of a representation from the optionee at the time of exercise of the Option that the optionee is purchasing
the Shares for the optionee’s own account and not with a view to any sale or distribution of the Shares or other representations
relating to compliance with applicable law governing the issuance of securities, (ii) the legending of the certificate (or notation on
any book entry) representing the Shares to evidence the foregoing restrictions, and (iii) obtaining from optionee payment or provision
for all withholding taxes due as a result of the exercise of the Option. The delivery of certificates representing the shares of Stock
(or the transfer to the optionee on the records of the Company with respect to uncertificated Stock) to be purchased pursuant to the
exercise of a Stock Option will be contingent upon (A) receipt from the optionee (or a purchaser acting in his or her stead in accordance
with the provisions of the Stock Option) by the Company of the full purchase price for such Shares and the fulfillment of any other requirements
contained in the Award Agreement or applicable provisions of laws and (B) if required by the Company, the optionee shall have entered
into any stockholders agreements or other agreements with the Company and/or certain other of the Company’s stockholders relating
to the Stock. In the event an optionee chooses to pay the purchase price by previously-owned Shares through the attestation method, the
number of Shares transferred to the optionee upon the exercise of the Stock Option shall be net of the number of Shares attested to by
the Optionee.
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(b)
|
Annual
Limit on Incentive Stock Options. To the extent required for “incentive stock option”
treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of
the Grant Date) of the Shares with respect to which Incentive Stock Options granted under
the Plan and any other plan of the Company or its parent and any Subsidiary that become exercisable
for the first time by an optionee during any calendar year shall not exceed $100,000 or such
other limit as may be in effect from time to time under Section 422 of the Code. To the extent
that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.
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|
(c)
|
Termination.
Any portion of a Stock Option that is not vested and exercisable on the date of termination
of an optionee’s Service Relationship shall immediately expire and be null and void.
Once any portion of the Stock Option becomes vested and exercisable, the optionee’s
right to exercise such portion of the Stock Option (or the optionee’s representatives
and legatees as applicable) in the event of a termination of the optionee’s Service
Relationship shall continue until the earliest of: (i) the date which is: (A) 12 months following
the date on which the optionee’s Service Relationship terminates due to death or Disability
(or such longer period of time as determined by the Committee and set forth in the applicable
Award Agreement), or (B) three months following the date on which the optionee’s Service
Relationship terminates if the termination is due to any reason other than death or Disability
(or such longer period of time as determined by the Committee and set forth in the applicable
Award Agreement), or (ii) the Expiration Date set forth in the Award Agreement; provided
that notwithstanding the foregoing, an Award Agreement may provide that if the optionee’s
Service Relationship is terminated for Cause, the Stock Option shall terminate immediately
and be null and void upon the date of the optionee’s termination and shall not thereafter
be exercisable.
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SECTION
6. STOCK APPRECIATION RIGHTS
The
Committee is authorized to grant SARs to optionees with the following terms and conditions and with such additional terms and conditions,
in either case not inconsistent with the provisions of the Plan, as the Committee shall determine –
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(a)
|
SARs
may be granted under the Plan to optionees either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to specific Option granted under Section 5.
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|
(b)
|
The
exercise price per Share under a SAR shall be determined by the Committee, provided, however,
that except in the case of a substitute Award, such exercise price shall not be less than
the fair market value of a Share on the date of grant of such SAR.
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|
(c)
|
The
term of each SAR shall be fixed by the Committee but shall not exceed 10 years from the date
of grant of such SAR.
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|
(d)
|
The
Committee shall determine the time or times at which a SAR may be exercised or settled in
whole or in part. Unless otherwise determined by the Committee or unless otherwise set forth
in an Award Agreement, the provisions set forth in Section 5 above with respect to exercise
of an Award following termination of service shall apply to any SAR. The Committee may specify
in an Award Agreement that an “in-the-money” SAR shall be automatically exercised
on its expiration date.
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SECTION
7. RESTRICTED STOCK AWARDS
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(a)
|
Nature
of Restricted Stock Awards. The Committee may, in its sole discretion, grant (or sell at
par value or such other purchase price determined by the Committee) to an eligible individual
under Section 4 hereof a Restricted Stock Award under the Plan. The Committee shall determine
the restrictions and conditions applicable to each Restricted Stock Award at the time of
grant. Conditions may be based on the type of stock upon which restrictions are placed, continuing
employment (or other Service Relationship), achievement of pre-established performance goals
and objectives and/or such other criteria as the Committee may determine. Upon the grant
of a Restricted Stock Award, the Company and the grantee shall enter into an Award Agreement.
The terms and conditions of each such Award Agreement shall be determined by the Committee,
and such terms and conditions may differ among individual Awards and grantees.
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|
(b)
|
Rights
as a Stockholder. Upon the grant of the Restricted Stock Award and payment of any applicable
purchase price, a grantee of Restricted Stock shall be considered the record owner of and
shall be entitled to vote the Restricted Stock if, and to the extent, such Shares are entitled
to voting rights, subject to such conditions contained in the Award Agreement. The grantee
shall be entitled to receive all dividends and any other distributions declared on the Shares;
provided, however, that the Company is under no duty to declare any such dividends or to
make any such distribution. Unless the Committee shall otherwise determine, certificates
evidencing the Restricted Stock shall remain in the possession of the Company until such
Restricted Stock is vested as provided in subsection (d) below of this Section, and the grantee
shall be required, as a condition of the grant, to deliver to the Company a stock power endorsed
in blank and such other instruments of transfer as the Committee may prescribe.
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|
(c)
|
Restrictions.
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered
or disposed of except as specifically provided herein or in the Award Agreement. Except as
may otherwise be provided by the Committee either in the Award Agreement or, subject to Section
13 below, in writing after the Award Agreement is issued, if a grantee’s Service Relationship
with the Company and any Subsidiary terminates, the Company or its assigns shall have the
right, as may be specified in the relevant instrument, to repurchase some or all of the Shares
subject to the Award at such purchase price as is set forth in the Award Agreement.
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|
(d)
|
Vesting
of Restricted Stock. The Committee at the time of grant shall specify in the Award Agreement
the date or dates and/or the attainment of pre-established performance goals, objectives
and other conditions on which the substantial risk of forfeiture imposed shall lapse and
the Restricted Stock shall become vested, subject to such further rights of the Company or
its assigns as may be specified in the Award Agreement.
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SECTION
8. UNRESTRICTED STOCK AWARDS
The
Committee may, in its sole discretion, grant (or sell at par value or such other purchase price determined by the Committee) to an eligible
person under Section 4 hereof an Unrestricted Stock Award under the Plan. Unrestricted Stock Awards may be granted in respect of past
services or other valid consideration, or in lieu of cash compensation due to such grantee.
SECTION
9. RESTRICTED STOCK UNITS
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(a)
|
Nature
of Restricted Stock Units. The Committee may, in its sole discretion, grant to an eligible
person under Section 4 hereof Restricted Stock Units under the Plan. The Committee shall
determine the restrictions and conditions applicable to each Restricted Stock Unit at the
time of grant. Vesting conditions may be based on continuing employment (or other Service
Relationship), achievement of pre-established performance goals and objectives which may
be based on targets for revenue, revenue growth, EBITDA, net income, earnings per share and/or
other such criteria as the Committee may determine. Upon the grant of Restricted Stock Units,
the grantee and the Company shall enter into an Award Agreement. The terms and conditions
of each such Award Agreement shall be determined by the Committee and may differ among individual
Awards and grantees. On or promptly following the vesting date or dates applicable to any
Restricted Stock Unit, but in no event later than March 15 of the year following the year
in which such vesting occurs, such Restricted Stock Unit(s) shall be settled in the form
of cash or shares of Stock, as specified in the Award Agreement. Restricted Stock Units may
not be sold, assigned, transferred, pledged, or otherwise encumbered or disposed of.
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|
(b)
|
Rights
as a Stockholder. A grantee shall have the rights of a stockholder only as to Shares, if
any, acquired upon settlement of Restricted Stock Units. A grantee shall not be deemed to
have acquired any such Shares unless and until the Restricted Stock Units shall have been
settled in Shares pursuant to the terms of the Plan and the Award Agreement, the Company
shall have issued and delivered a certificate representing the Shares to the grantee (or
transferred on the records of the Company with respect to uncertificated stock), and the
grantee’s name has been entered in the books of the Company as a stockholder.
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|
(c)
|
Termination.
Except as may otherwise be provided by the Committee either in the Award Agreement or in
writing after the Award Agreement is issued, a grantee’s right in all Restricted Stock
Units that have not vested shall automatically terminate upon the grantee’s cessation
of Service Relationship with the Company and any Subsidiary for any reason.
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SECTION
10. TRANSFER RESTRICTIONS; COMPANY RIGHT OF FIRST REFUSAL; COMPANY REPURCHASE RIGHTS
|
(a)
|
Restrictions
on Transfer.
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|
(i)
|
Non-Transferability
of Certain Awards. Restricted Stock awards granted under Section 7, Stock Options, SARs and,
prior to exercise, the Shares issuable upon exercise of such Stock Option, shall not be transferable
by the optionee otherwise than by will, or by the laws of descent and distribution, and all
Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee,
or by the optionee’s legal representative or guardian in the event of the optionee’s
incapacity. Notwithstanding the foregoing, the Committee, in its sole discretion, may provide
in the Award Agreement regarding a given Stock Option or Restricted Stock award that the
optionee may transfer by gift, without consideration for the transfer, his or her Non-Qualified
Stock Options to his or her family members (as defined in Rule 701 of the Securities Act),
to trusts for the benefit of such family members, or to partnerships in which such family
members are the only partners (to the extent such trusts or partnerships are considered “family
members” for purposes of Rule 701 of the Securities Act), provided that the transferee
agrees in writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Award Agreement, including the execution of a stock power upon the
issuance of Shares. Stock Options, SARs and the Shares issuable upon exercise of such Stock
Options, shall be restricted as to any pledge, hypothecation, or other transfer, including
any short position, any “put equivalent position” (as defined in the Exchange
Act) or any “call equivalent position” (as defined in the Exchange Act) prior
to exercise.
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|
(ii)
|
Shares.
No Shares shall be sold, assigned, transferred, pledged, hypothecated, given away or in any
other manner disposed of or encumbered, whether voluntarily or by operation of law, unless
(i) the transfer is in compliance with the terms of the applicable Award Agreement, all applicable
securities laws (including, without limitation, the Securities Act), and with the terms and
conditions of this Section 10, (ii) the transfer does not cause the Company to become subject
to the reporting requirements of the Exchange Act, and the transferee consents in writing
to be bound by the provisions of the Plan and the Award Agreement, including this Section
10. In connection with any proposed transfer, the Committee may require the transferor to
provide at the transferor’s own expense an opinion of counsel to the transferor, satisfactory
to the Committee, that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Securities Act). Any attempted transfer
of Shares not in accordance with the terms and conditions of this Section 10 shall be null
and void, and the Company shall not reflect on its records any change in record ownership
of any Shares as a result of any such transfer, shall otherwise refuse to recognize any such
transfer and shall not in any way give effect to any such transfer of Shares. The Company
shall be entitled to seek protective orders, injunctive relief and other remedies available
at law or in equity including, without limitation, seeking specific performance or the rescission
of any transfer not made in strict compliance with the provisions of this Section 10. Subject
to the foregoing general provisions, and unless otherwise provided in the applicable Award
Agreement, Shares may be transferred pursuant to the following specific terms and conditions
(provided that with respect to any transfer of Restricted Stock, all vesting and forfeiture
provisions shall continue to apply with respect to the original recipient):
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|
(A)
|
Transfers
to Permitted Transferees. The Holder may transfer any or all of the Shares to one or more
Permitted Transferees; provided, however, that following such transfer, such Shares shall
continue to be subject to the terms of this Plan (including this Section 10) and such Permitted
Transferee(s) shall, as a condition to any such transfer, deliver a written acknowledgment
to that effect to the Company and shall deliver a stock power to the Company with respect
to the Shares. Notwithstanding the foregoing, the Holder may not transfer any of the Shares
to a Person whom the Company reasonably determines is a direct competitor or a potential
competitor of the Company or any of its Subsidiaries.
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|
(B)
|
Transfers
Upon Death. Upon the death of the Holder, any Shares then held by the Holder at the time
of such death and any Shares acquired after the Holder’s death by the Holder’s
legal representative shall be subject to the provisions of this Plan, and the Holder’s
estate, executors, administrators, personal representatives, heirs, legatees and distributees
shall be obligated to convey such Shares to the Company or its assigns under the terms contemplated
by the Plan and the Award Agreement.
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(b)
|
Right
of First Refusal. In the event that a Holder desires at any time to sell or otherwise transfer
all or any part of his or her Shares (other than shares of Restricted Stock which by their
terms are not transferrable), the Holder first shall give written notice to the Company of
the Holder’s intention to make such transfer. Such notice shall state the number of
Shares that the Holder proposes to sell (the “Offered Shares”), the price and
the terms at which the proposed sale is to be made and the name and address of the proposed
transferee. At any time within 30 days after the receipt of such notice by the Company, the
Company or its assigns may elect to purchase all or any portion of the Offered Shares at
the price and on the terms offered by the proposed transferee and specified in the notice.
The Company or its assigns shall exercise this right by mailing or delivering written notice
to the Holder within the foregoing 30-day period. If the Company or its assigns elect to
exercise its purchase rights under this Section 10(b), the closing for such purchase shall,
in any event, take place within 45 days after the receipt by the Company of the initial notice
from the Holder. In the event that the Company or its assigns do not elect to exercise such
purchase right, or in the event that the Company or its assigns do not pay the full purchase
price within such 45-day period, the Holder shall be required to pay a transaction processing
fee of $10,000 to the Company (unless waived by the Committee) and then may, within 60 days
thereafter, sell the Offered Shares to the proposed transferee and at the same price and
on the same terms as specified in the Holder’s notice. Any Shares not sold to the proposed
transferee shall remain subject to the Plan. If the Holder is a party to any stockholders
agreements or other agreements with the Company and/or certain other of the Company’s
stockholders relating to the Shares, (i) the transferring Holder shall comply with the requirements
of such stockholders agreements or other agreements relating to any proposed transfer of
the Offered Shares, and (ii) any proposed transferee that purchases Offered Shares shall
enter into such stockholders agreements or other agreements with the Company and/or certain
of the Company’s stockholders relating to the Offered Shares on the same terms and
in the same capacity as the transferring Holder.
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|
(c)
|
Company’s
Right of Repurchase.
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|
(i)
|
Right
of Repurchase for Unvested Shares Issued Upon the Exercise of an Option. Upon a Termination
Event, the Company or its assigns shall have the right and option to repurchase from a Holder
of Shares acquired upon exercise of a Stock Option which is still subject to a risk of forfeiture
as of the Termination Event. Such repurchase rights may be exercised by the Company within
the later of (A) six months following the date of such Termination Event or (B) seven months
after the acquisition of Shares upon exercise of a Stock Option. The repurchase price shall
be equal to the lower of the original per share price paid by the Holder, subject to adjustment
as provided in Section 3(b) of the Plan, or the current Fair Market Value of such Shares
as of the date the Company elects to exercise its repurchase rights.
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|
(ii)
|
Right
of Repurchase With Respect to Restricted Stock. Upon a Termination Event, the Company or
its assigns shall have the right and option to repurchase from a Holder of Shares received
pursuant to a Restricted Stock Award any Shares that are still subject to a risk of forfeiture
as of the Termination Event. Such repurchase right may be exercised by the Company within
six months following the date of such Termination Event. The repurchase price shall be the
lower of the original per share purchase price paid by the Holder, subject to adjustment
as provided in Section 3(b) of the Plan, or the current Fair Market Value of such Shares
as of the date the Company elects to exercise its repurchase rights.
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|
(iii)
|
Procedure.
Any repurchase right of the Company shall be exercised by the Company or its assigns by giving
the Holder written notice on or before the last day of the repurchase period of its intention
to exercise such repurchase right. Upon such notification, the Holder shall promptly surrender
to the Company, free and clear of any liens or encumbrances, any certificates representing
the Shares being purchased, together with a duly executed stock power for the transfer of
such Shares to the Company or the Company’s assignee or assignees. Upon the Company’s
or its assignee’s receipt of the certificates from the Holder, the Company or its assignee
or assignees shall deliver to him, her or them a check for the applicable repurchase price;
provided, however, that the Company may pay the repurchase price by offsetting and canceling
any indebtedness then owed by the Holder to the Company.
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|
(i)
|
Escrow.
In order to carry out the provisions of this Section 10 of this Plan more effectively, the
Company shall hold any Shares issued pursuant to Awards granted under the Plan in escrow
together with separate stock powers executed by the Holder in blank for transfer. The Company
shall not dispose of the Shares except as otherwise provided in this Plan. In the event of
any repurchase by the Company (or any of its assigns), the Company is hereby authorized by
the Holder, as the Holder’s attorney-in-fact, to date and complete the stock powers
necessary for the transfer of the Shares being purchased and to transfer such Shares in accordance
with the terms hereof. At such time as any Shares are no longer subject to the Company’s
repurchase and first refusal rights, the Company shall, at the written request of the Holder,
deliver to the Holder a certificate representing such Shares with the balance of the Shares
to be held in escrow pursuant to this Section.
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|
(ii)
|
Remedy.
Without limitation of any other provision of this Plan or other rights, in the event that
a Holder or any other Person is required to sell a Holder’s Shares pursuant to the
provisions of Sections 10(b) or (c) hereof and in the further event that he or she refuses
or for any reason fails to deliver to the Company or its designated purchaser of such Shares
the certificate or certificates evidencing such Shares together with a related stock power,
the Company or such designated purchaser may deposit the applicable purchase price for such
Shares with a bank designated by the Company, or with the Company’s independent public
accounting firm, as agent or trustee, or in escrow, for such Holder or other Person, to be
held by such bank or accounting firm for the benefit of and for delivery to him, her, them
or it, and/or, in its discretion, pay such purchase price by offsetting any indebtedness
then owed by such Holder as provided above. Upon any such deposit and/or offset by the Company
or its designated purchaser of such amount and upon notice to the Person who was required
to sell the Shares to be sold pursuant to the provisions of Sections 10(b) or (c), such Shares
shall at such time be deemed to have been sold, assigned, transferred and conveyed to such
purchaser, such Holder shall have no further rights thereto (other than the right to withdraw
the payment thereof held in escrow, if applicable), and the Company shall record such transfer
in its stock transfer book or in any appropriate manner.
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|
(e)
|
Lockup
Provision. If requested by the Company, a Holder shall not sell or otherwise transfer or
dispose of any Shares (including, without limitation, pursuant to Rule 144 under the Securities
Act) held by him or her for such period following the effective date of a public offering
by the Company of Shares as the Company shall specify reasonably and in good faith. If requested
by the underwriter engaged by the Company, each Holder shall execute a separate letter confirming
his or her agreement to comply with this Section.
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|
(f)
|
Adjustments
for Changes in Capital Structure. If, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar change
in the Common Stock, the outstanding Shares are increased or decreased or are exchanged for
a different number or kind of securities of the Company, the restrictions contained in this
Section 10 shall apply with equal force to additional and/or substitute securities, if any,
received by Holder in exchange for, or by virtue of his or her ownership of, Shares.
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|
(g)
|
Termination.
The terms and provisions of Section 10(b) and Section 10(c) (except for the Company’s
right to repurchase Shares still subject to a risk of forfeiture upon a Termination Event)
shall terminate upon consummation of any Sale Event, in either case as a result of which
Shares are registered under Section 12 of the Exchange Act and publicly-traded on any national
security exchange.
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SECTION
11. TAX WITHHOLDING
|
(a)
|
Payment
by Grantee. Each grantee shall, no later than the date as of which the value of an Award
or of any Shares or other amounts received thereunder first becomes includable in the gross
income of the grantee for income tax purposes, pay to the Company, or make arrangements satisfactory
to the Committee regarding payment of, any Federal, state, or local taxes of any kind required
by law to be withheld by the Company with respect to such income. The Company and any Subsidiary
shall, to the extent permitted by law, have the right to deduct any such taxes from any payment
of any kind otherwise due to the grantee. The Company’s obligation to deliver stock
certificates (or evidence of book entry) to any grantee is subject to and conditioned on
any such tax withholding obligations being satisfied by the grantee.
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|
(b)
|
Payment
in Stock. The Company’s minimum required tax withholding obligation may be satisfied,
in whole or in part, by the Company withholding from Shares to be issued pursuant to an Award
a number of Shares having an aggregate Fair Market Value (as of the date the withholding
is effected) that would satisfy the minimum withholding amount due.
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SECTION
12. SECTION 409A AWARDS
To
the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section
409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as may be specified by the Committee
from time to time. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the
meaning of Section 409A) to a grantee who is considered a “specified employee” (within the meaning of Section 409A), then
no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation
from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject
to interest, penalties and/or additional tax imposed pursuant to Section 409A. The Company makes no representation or warranty and shall
have no liability to any grantee under the Plan or any other Person with respect to any penalties or taxes under Section 409A that are,
or may be, imposed with respect to any Award. It is the intent of the Board that payments and benefits under the Plan comply with or
be exempt from Section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted
the Plan shall be interpreted to be in compliance therewith or exempt therefrom. In no event whatsoever shall the Company be liable for
any additional tax, interest or penalty that may be imposed upon a Participant by Section 409A or damages to a Participant for failing
to comply with Section 409A.
SECTION
13. AMENDMENTS AND TERMINATION
The
Board may, at any time, amend or discontinue the Plan and the Committee may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding
Award without the consent of the holder of the Award. The Committee may exercise its discretion to reduce the exercise price of outstanding
Stock Options or effect repricing through cancellation of outstanding Stock Options and by granting such holders new Awards in replacement
of the cancelled Stock Options. To the extent determined by the Committee to be required either by the Code to ensure that Incentive
Stock Options granted under the Plan are qualified under Section 422 of the Code or otherwise, Plan amendments shall be subject to approval
by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 13 shall limit the Board’s or
Committee’s authority to take any action permitted pursuant to Section 3(c). The Board reserves the right to amend the Plan and/or
the terms of any outstanding Stock Options to the extent reasonably necessary to comply with the requirements of the exemption pursuant
to Rule 12h-1 of the Exchange Act.
SECTION
14. STATUS OF PLAN
With
respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by
a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise
expressly so determine in connection with any Award.
SECTION
15. GENERAL PROVISIONS
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(a)
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No
Distribution; Compliance with Legal Requirements. The Committee may require each person acquiring
Shares pursuant to an Award to represent to and agree with the Company in writing that such
person is acquiring the Shares without a view to distribution thereof. No Shares shall be
issued pursuant to an Award until all applicable securities law and other legal and stock
exchange or similar requirements have been satisfied. The Committee may require the placing
of such stop-orders and restrictive legends on certificates for Stock and Awards, as it deems
appropriate.
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(b)
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Delivery
of Stock Certificates. Stock certificates to grantees under the Plan shall be deemed delivered
for all purposes when the Company or a stock transfer agent of the Company shall have mailed
such certificates in the United States mail, addressed to the grantee, at the grantee’s
last known address on file with the Company; provided that stock certificates to be held
in escrow pursuant to Section 10 of the Plan shall be deemed delivered when the Company shall
have recorded the issuance in its records. Uncertificated Stock shall be deemed delivered
for all purposes when the Company or a stock transfer agent of the Company shall have given
to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed
to the grantee, at the grantee’s last known address on file with the Company, notice
of issuance and recorded the issuance in its records (which may include electronic “book
entry” records).
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(c)
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No
Employment Rights. The adoption of the Plan and the grant of Awards do not confer upon any
Person any right to continued employment or Service Relationship with the Company or any
Subsidiary.
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(d)
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Trading
Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to
the Company’s insider trading policy-related restrictions, terms and conditions as
may be established by the Committee, or in accordance with policies set by the Committee,
from time to time.
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(e)
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Designation
of Beneficiary. Each grantee to whom an Award has been made under the Plan may designate
a beneficiary or beneficiaries to exercise any Award on or after the grantee’s death
or receive any payment under any Award payable on or after the grantee’s death. Any
such designation shall be on a form provided for that purpose by the Committee and shall
not be effective until received by the Committee. If no beneficiary has been designated by
a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the
beneficiary shall be the grantee’s estate.
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(f)
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Legend.
Any certificate(s) representing the Shares shall carry substantially the following legend
(and with respect to uncertificated Stock, the book entries evidencing such shares shall
contain the following notation):
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The
transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions
(including repurchase and restrictions against transfers contained in the Plan and any agreements entered into thereunder by and between
the company and the holder of this certificate (a copy of which is available at the offices of the company for examination).
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(g)
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Information
to Holders of Options. In the event the Company is relying on the exemption from the registration
requirements of Section 12(g) of the Exchange Act contained in paragraph (f)(1) of Rule 12h-1
of the Exchange Act, the Company shall provide the information described in Rule 701(e)(3),
(4) and (5) of the Securities Act to all holders of Options in accordance with the requirements
thereunder. The foregoing notwithstanding, the Company shall not be required to provide such
information unless the option holder has agreed in writing, on a form prescribed by the Company,
to keep such information confidential.
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SECTION
16. EFFECTIVE DATE OF PLAN
The
Plan shall become effective upon adoption by the Board and shall be approved by stockholders in accordance with applicable state law
and the Company’s articles of incorporation and bylaws within 12 months thereafter. If the stockholders fail to approve the Plan
within 12 months after its adoption by the Board of Directors, then any Awards granted or sold under the Plan shall be rescinded and
no additional grants or sales shall thereafter be made under the Plan. Subject to such approval by stockholders and to the requirement
that no Shares may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption
of the Plan by the Board. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the date the
Plan is adopted by the Board or the date the Plan is approved by the Company’s stockholders, whichever is earlier.
SECTION
17. GOVERNING LAW
This
Plan, all Awards and any controversy arising out of or relating to this Plan and all Awards shall be governed by and construed in accordance
with the laws of the State of Nevada as to matters within the scope thereof, without regard to conflict of law principles that would
result in the application of any law other than the law of the State of Nevada.
DATE
ADOPTED BY THE BOARD OF DIRECTORS:
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November
20, 2020
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DATE
ADOPTED BY THE SHAREHOLDERS:
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