PROXY
STATEMENT
2020
ANNUAL MEETING OF SHAREHOLDERS
This
proxy statement is being furnished in connection with the solicitation of proxies by the Board of Trustees of Power REIT (the
“Company”, the “Trust”, “we” or “us”) to be used at the 2020 annual meeting of
holders (“shareholders”) of shares of beneficial interest, $0.001 par value (“common shares” or “common
stock”) of the Trust, to be held on Wednesday, June 24, 2020 at 10:00 A.M. local time at 301 Winding Road, Old Bethpage,
NY 11804, and at any adjournments thereof. The items of business for the annual meeting are:
|
(1)
|
to
elect the four trustees named herein to the Trust’s Board of Trustees, to serve until the next annual meeting of shareholders
and until the successors to such trustees have been duly elected and qualified;
|
|
|
|
|
(2)
|
to
ratify the appointment of MaloneBailey, LLP as the Trust’s independent registered public accounting firm
|
|
|
|
|
(3)
|
to
approve the 2020 Equity Incentive Plan; and
|
|
|
|
|
(4)
|
to
transact such other business as may properly come before the meeting.
|
This
proxy statement and the accompanying notice of annual meeting and form of proxy card are first being mailed to shareholders on
or about May 29, 2020. Our annual report on Form 10-K for the year ended December 31, 2019, which includes our consolidated financial
statements as of and for the year ended December 31, 2019, is being mailed with these materials.
The
cost of this solicitation of proxies will be borne by the Trust. Solicitations may be made by mail, telephone, facsimile or electronic
mail, and by officers of the Trust without extra compensation. The Trust will reimburse brokerage firms and other third parties
for their reasonable and customary expenses in forwarding our proxy materials to beneficial owners of our common shares.
The
Board of Trustees has fixed the close of business on May 18, 2020 as the record date (the “record date”) for the determination
of shareholders entitled to notice of and to vote at the 2020 annual meeting and any adjournments thereof. At the close of business
on the record date, there were outstanding and entitled to vote 1,912,939 of our common shares (including unvested, restricted
common shares granted pursuant to the Trust’s 2012 Equity Incentive Plan (the “Plan”) and other stock grants,
which pursuant to the terms of the grants carry voting privileges).
Quorum,
Voting Power, Effect of Abstentions, Required Votes
At
the annual meeting, the presence, in person or by proxy, of shareholders entitled to cast thirty-three and one third percent (33
1/3%) of all the votes entitled to be cast at the meeting shall constitute a quorum. Each outstanding common share shall be entitled
to one vote on each matter submitted to a vote. A vote by a majority of the shares both present, in person or by proxy, and casting
a vote shall decide a particular matter. For purposes of the foregoing, abstentions and non-votes shall not be deemed to be votes
cast, although they shall be counted for purposes of determining the existence of a quorum.
The
nominees for the Board of Trustees that receive the highest number of affirmative votes cast, up to the number of nominee slots
to be filled, shall be elected as trustees. The approval of the 2020 Equity Incentive Plan requires the affirmative vote of the
majority of the shares both present, in person or by proxy, and casting a vote. The ratification of the appointment of MaloneBailey,
LLP requires the affirmative vote of the majority of the shares both present, in person or by proxy, and casting a vote shall
decide a particular matter.
Voting
Procedures
If
you hold our common shares in your own name, as a “holder of record” or “registered” holder, you may vote
your shares by appointing proxies to vote on your behalf pursuant to your instructions, through any of the following methods:
|
●
|
using
the Internet, log on to www.proxyvote.com and follow the instructions;
|
|
|
|
|
●
|
using
any touch-tone telephone, dial 1-800-690-6903 and follow the instructions; or
|
|
|
|
|
●
|
marking,
signing, dating, and returning the white proxy card in the postage-paid mailing envelope provided.
|
If
you are a holder or record or registered shareholder and do not appoint and instruct proxies by voting over the Internet, by telephone
or by marking, signing, dating and returning the white proxy card, then you must attend the meeting in person in order to vote.
If
you do not hold our common shares in your own name, but instead hold your interest in our shares through one or more intermediaries,
such as a bank or broker (in many cases referred to as owning shares “in street name”), then you are considered a
holder of a beneficial interest in our common shares, or a “beneficial owner”, and you will be able to vote the shares
in which you hold your interest through those intermediaries. An intermediary will forward our proxy materials to you and request
your instructions as to how to vote the shares.
Broker
Non-Votes, Routine and Non-Routine Matters
If
you hold common shares through a bank or broker, the voting of the shares by the bank or broker when you do not provide voting
instructions is governed by the rules of the NYSE American. These rules allow banks and brokers to vote such shares in their discretion
on “routine” matters. On matters considered “non-routine,” banks and brokers may not vote without your
instructions. Shares that banks and brokers are not authorized to vote are referred to as “broker non-votes.”
The
ratification of MaloneBailey, LLP as the Trust’s independent registered public accounting firm is considered a routine matter,
so banks and brokers may vote your shares in regard to this proposal without your instructions. Accordingly, if you are a beneficial
owner and wish to have your vote on this proposal counted in a particular way, either “for”, “against”,
or as an abstention, then you must provide your voting instructions by Internet, telephone or white proxy card. If you do not,
your bank or broker may vote your shares in their discretion.
The
election of trustees is considered a non-routine matter, and therefore banks and brokers may not vote on your behalf in the election
of trustees without your instructions. Please note that if you want your votes in the election of trustees to be counted, you
must instruct your bank or broker how to vote your shares. If you do not provide voting instructions, no votes will be cast on
your behalf in the election of trustees.
The
approval of the Plan is considered a non-routine matter, and therefore banks and brokers may not vote on your behalf for the approval
of the Plan without your instructions. Please note that if you want your votes related to the Plan to be counted, you must instruct
your bank or broker how to vote your shares. If you do not provide voting instructions, no votes will be cast on your behalf in
the election of trustees.
Note
that, at the annual meeting, abstentions and non-votes shall not be deemed to be votes cast, although they shall be counted for
purposes of determining the existence of a quorum.
Revocability
or Change of Proxies
A
proxy may be revoked or changed at any time prior to the voting thereof, by (1) giving notice to the Secretary of the Trust in
writing c/o Power REIT, 301 Winding Road, Old Bethpage, NY 11804, (2) submitting a later-dated
proxy, subject to the voting deadlines that are described on the proxy card or voting instruction form, as applicable, (3) delivering
to the Secretary of Trust another duly executed proxy bearing a later date or (4) by
appearing at the 2020 Annual Meeting in person and voting your shares. Attendance at the meeting will not, by itself, revoke a
proxy unless you specifically so request.
Cumulative
Voting
Shareholders
of the Trust are not entitled to exercise cumulative voting rights in the election of trustees.
Notice
of Electronic Availability of Proxy Materials
As
permitted by rules of the Securities and Exchange Commission (the “SEC”), these proxy materials and our annual report
on Form 10-K for the year ended December 31, 2019 are being made available to our shareholders online, and are accessible through
www.proxyvote.com.
Trustees’
Voting Recommendations
The
Board of Trustees recommends that you vote your common shares FOR each of the Board’s four nominees that are standing for
election to the Board of Trustees (Proposal No. 1), FOR the ratification of MaloneBailey, LLP as our independent registered public
accounting firm (Proposal 2); and FOR the approval of the 2020 Equity Incentive Plan (Proposal No. 3).
Proposal
1: Election of Trustees
Our
Board of Trustees is currently comprised of five trustees, four of whom are independent under the rules of the NYSE American and
under applicable rules of the SEC: Virgil E. Wenger, William S. Susman, Patrick R. Haynes, III and Justinian R. Hobor. Mr. Hobor
has decided not to run for re-election at the 2020 Annual Meeting. Our fifth trustee, David H. Lesser, is a principal shareholder
and Chief Executive Officer and Chief Financial Officer of the Company and serves as Chairman of the Board of Trustees.
The
Board recommends to shareholders that they vote for all four of the nominees. If elected, the nominees would serve as trustees
for a one-year term until the 2021 annual meeting of shareholders and until their successors are duly elected and qualified.
The
nominees are:
Name
|
|
Age
|
|
Trustee
Since
|
|
Company
Position
|
|
|
|
|
|
|
|
David
H. Lesser
|
|
54
|
|
2009*
|
|
Chairman
of Board of Trustees
Chief
Executive Officer, Chief Financial Officer, Secretary
|
Virgil
E. Wenger
|
|
89
|
|
1991*
|
|
Trustee
Chairman
of Audit Committee
|
William
S. Susman
|
|
56
|
|
2010*
|
|
Trustee
Chairman
of Compensation Committee
Member
of Nominating Committee
|
Patrick
R. Haynes, III
|
|
36
|
|
2011*
|
|
Trustee
Chairman
of Nominating Committee
Member
of Audit Committee and Compensation Committee
|
*
The nominees have been trustees of Power REIT since December 2011 and are and have been trustees of Pittsburgh & West Virginia
Railroad, a wholly owned subsidiary of Power REIT, since the dates listed in the table above.
The
following are summaries of our nominees’ biographies and experience:
David
H. Lesser has over 35 years of experience in real estate, including substantial experience creating shareholder value in REITs.
Mr. Lesser is currently, and has been for more than the past 25 years, President of Hudson Bay Partners, LP (“HBP”),
an investment firm focused on real estate, real estate-related situations and alternative energy. Since October 2013, Mr. Lesser
has served as Chairman and CEO of Millennium Investment and Acquisition Company (ticker: MILC). Mr. Lesser is co-founder and CEO
of IntelliStay Hospitality Management, LLC which is sponsoring investments in hotels. Mr. Lesser has previously held leadership
roles with public REITs, having served as a Senior Vice President of Crescent Real Estate Equities and as a Director of Keystone
Property Trust. Prior to his time at Crescent, Mr. Lesser was a Director of Investment Banking at Merrill Lynch & Co. within
the real estate finance group.
Since
1995, Mr. Lesser has, through HBP, invested in numerous real estate and alternative energy transactions, including a reverse merger
transaction in 1997 that led to the formation of Keystone Property Trust (NYSE: KTR) (“Keystone”). Mr. Lesser, as
president of HBP, led an investor group and structured a reverse merger transaction with American Real Estate Investment Corporation
(AMEX: REA) to ultimately form Keystone. The transaction involved an investment of $30 million of cash, the merger of a property
management company and the acquisition of a family-owned portfolio of industrial properties for ownership in the REIT. In addition
to initial structuring and equity investment by HBP, Mr. Lesser served on Keystone’s board of trustees until June 2000.
Keystone was acquired by Prologis (NYSE: PLD) in 2004 for a total enterprise value of $1.4 billion, delivering a compound annual
shareholder return of 16.5% from the initial transaction.
HBP
currently owns Intelligen Power Systems, LLC (“IPS”) which is an alternative energy business focused on the manufacturing
of cogeneration equipment and the development of distributed energy related to cogeneration, wind, solar and biofuel. HBP acquired
IPS through the bankruptcy reorganization of California-based Coast Intelligen (“Coast”), which was acquired as a
portfolio company by an affiliate of Mr. Lesser’s in 2001. As a consequence of misdeeds by Coast’s former owners and
management team, which did not involve Mr. Lesser, Coast was reorganized through a Chapter 11 bankruptcy filing, the ultimate
result of which was (i) Coast winding down its operations; and (ii) IPS, which was a subsidiary of Coast, successfully emerging
from the reorganization. IPS continues to operate today with a refocused business plan providing cogeneration and other energy
solutions to owners of real estate properties.
Mr.
Lesser holds an M.B.A. from Cornell University and a B.S. in Applied Management and Economics from Cornell University.
Mr.
Lesser has been Chairman of Power REIT’s Board of Trustees, our Chief Executive Officer since December 2011, and our Chief
Financial Officer, Secretary and Treasurer since February 2014. Mr. Lesser has been a trustee of Pittsburgh & West Virginia
Railroad, a wholly owned subsidiary of Power REIT (“P&WV”), from 2009 to the present, Chairman of P&WV’s
Board of Trustees from December 2010 to the present and CEO of P&WV from February 2011 to the present.
We
believe that Mr. Lesser’s years of experience as a real estate investor, as a board director and in creating shareholder
value for REITs provide significant benefits to the Company.
Virgil
E. Wenger, CPA, is currently, and has for the past eight years been, an independent consultant who primarily works with new
startup ventures that need accounting services and financial planning assistance to determine investment and working capital needs.
He also serves as chief financial officer for two private companies: Shareholder Intelligence Services, a provider of information
to publicly traded client companies concerning shareholder ownership, broker activity and related analytics; and Econergy Corporation,
a manufacturer and marketer of proprietary air conditioning systems. Mr. Wenger was previously a partner at Ernst & Young
LLP for over 25 years. He is a graduate of the University of Kansas, with a B.S. in Business Administration, and of the Harvard
Business School Advanced Management Program.
Mr.
Wenger has been a trustee and Power REIT’s Audit Committee Chairman since December 2011 and has been a member of the Nominating
Committee since August 2012. Mr. Wenger has been a trustee of P&WV from 1991 to the present and was P&WV’s Audit
Committee Chairman from 2005 to December 2011.
We
believe that Mr. Wenger’s many years of experience at Ernst & Young LLP, significant financial expertise and leadership
as Chairman of the Audit Committee provide significant benefits to the Company.
William
S. Susman has over 25 years of investment banking experience, including significant experience in the transportation and railroad
industry. As the former head of Merrill Lynch’s Transportation and Consumer Group, Mr. Susman advised numerous railroad
clients, including Burlington Northern, CSX, Kansas City Southern, Norfolk Southern Railways, TMM and Union Pacific. Mr. Susman
is currently founder and CEO of a boutique investment advisory firm, Threadstone Advisors since 2011. Prior to founding Threadstone
Advisors, he was President of Financo, an investment bank focused on retail and consumer goods, where he worked from 2004-2011.
Mr. Susman began his investment banking career at Salomon Brothers, in their transportation group. Mr. Susman sits on the boards
of two private companies: Preferred Fragrances and Jonathan Adler Enterprises. Mr. Susman is a graduate of the University of Michigan,
with a B.S. in Business Administration and a Masters from the Kellogg Graduate School of Management at Northwestern University.
Mr.
Susman has been a trustee and Power REIT’s Compensation Committee Chairman since December 2011 and has been a member of
the Nominating Committee since August 2012. Mr. Susman has been a trustee of P&WV from May 2011 to the present and was P&WV’s
Compensation Committee Chairperson from August 2011 to December 2011.
We
believe that Mr. Susman’s understanding of business, finance and the railroad industry, acquired through over 20 years of
investment banking experience, and his leadership as Chairman of the Compensation Committee and in regard to governance matters,
provide significant benefits to the Company.
Patrick
R. Haynes, III is co-founder and Managing Principal of Jackson River Capital, LLC a holding company sponsoring investment
platforms co-founded by Mr. Haynes focused investments in hospitality and healthcare commercial real estate assets. In 2015, Mr.
Haynes co-founded IntelliStay Hospitality Management, LLC which is sponsoring investments in hotels. In 2018, Mr. Haynes co-founded
Wellness Real Estate Partners, LLC which is sponsoring investments in healthcare NNN investments. Mr. Haynes was previously employed
by Alliance Partners HSP (“Alliance”), an opportunistic real estate investment venture backed by the family offices
of Jay Shidler and Clay Hamlin and based in Philadelphia, PA. Mr. Haynes opened the New York City office for Alliance in 2014
and ran all opportunistic acquisitions for greater New York City Area. From 2010 until he joined Alliance in 2012, Mr. Haynes
worked for the Rockefeller Group Investment Management Corp. (“RGIM”). At RGIM he was responsible for the financial
analysis for RGIM’s corporate acquisitions and direct real estate investments and supported institutional fundraising and
business development. Mr. Haynes began his career at Lehman Brothers in the Real Estate Private Equity Group where he performed
financial analysis, market research and due diligence for over $2.0 billion in potential real estate acquisitions across all asset
classes nationally. Mr. Haynes also worked on the successful management buyout of Lehman’s equity funds’ advisory
business, responsible for the management of approximately $18 billion in real estate assets globally. Mr. Haynes remained with
the go forward venture created by the fund’s management, Silverpeak Real Estate Partners, until joining RGIM. Mr. Haynes
received a BA in U.S. History from Brown University.
Mr.
Haynes has been a trustee and a member of Power REIT’s Audit and Compensation Committees since December 2011 and Chairman
of the Power REIT’s Nominating Committee since August 2012. Mr. Haynes has been a trustee of P&WV from May 2011 to the
present and was a member of P&WV’s Compensation Committee from August 2011 to December 2011 and a member of P&WV’s
Audit Committee from 2010 to December 2011.
We
believe that Mr. Haynes’ experience and contacts in real estate and his experience in transaction structuring and private
equity provide significant benefits to the Company.
In
summary, the nominees have experience and skills in, and industry contacts relevant to, providing leadership to REITs, sourcing
and structuring investments and raising and investing capital. The Trust believes these skills, relevant work experiences and
contacts will significantly benefit shareholders as the Trust implements its business plan.
Family
Relationships
There
are no family relationships among any of our trustees or executive officers.
Trustee
Compensation
In
August 2012, pursuant to the 2012 Plan, each independent trustee was granted an option to acquire 2,000 of our shares at an exercise
price of $7.96. The options vested in three equal installments over three years. In May 2013, pursuant to the Plan, each Trustee
was granted 400 shares of restricted common stock vesting quarterly in equal installments commencing with the second quarter of
2013. In June 2014, pursuant to the Plan, each independent Trustee was granted 500 shares of restricted common stock vesting quarterly
in equal installments commencing with the second quarter of 2014. In September 2015, pursuant to the Plan, each independent Trustee
was granted 500 shares of restricted common stock vesting of which 75% vested during 2015 and 25% vested during the first quarter
of 2016. In May 2016, each independent Trustee who served a full year was granted 600 shares of restricted common stock of which
75% vested during 2016 and 25% vested during the first quarter of 2017 and Justinian Hobor who served for approximately three
quarters of the year was granted 450 shares with two thirds vesting during 2016 and one third vesting during the first quarter
of 2017. In 2017, each independent Trustee was granted 600 shares of restricted common stock of which 75% vested during 2017 and
25% vested during the first quarter of 2018. In 2018, each independent Trustee was granted 700 shares of restricted common stock
of which 75% vested during 2018 and 25% vested during the first quarter of 2020. In 2019, each independent Trustee was granted
700 shares of restricted common stock of which 75% vested during 2019 and 25% vested during the first quarter of 2020. Other than
the option grants and the restricted stock grants, there are currently no other compensation arrangements with any of the independent
trustees. The Trust has a policy to reimburse reasonable expenses of Trustees. During 2019 there were no such reimbursements.
Compensation
of our independent trustees for the fiscal year ending December 31, 2019, is listed in the table below.
Trustee Name
|
|
Fees Earned or Paid in Cash
|
|
|
Stock
Awards(1)
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Non-Qualified Deferred Compensation Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Virgil E. Wenger
|
|
$
|
-
|
|
|
$
|
4,060
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,060
|
|
William S. Susman
|
|
$
|
-
|
|
|
$
|
4,060
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,060
|
|
Patrick R Haynes, III
|
|
$
|
-
|
|
|
$
|
4,060
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,060
|
|
Justinian R. Hobor
|
|
$
|
-
|
|
|
$
|
4,060
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,060
|
|
|
(1)
|
For
all stock awards, the values reflect the aggregate grant date fair value computed in accordance with FASB ASC 718. For more
information on the on the stock awards granted in 2019, please refer to Note 6 (Long-Term Compensation) in our 10-K for year
ended December 31, 2019.
|
The
compensation provided to Mr. Lesser, the Chairman of the Board of Trustees and also an officer of the Trust, is detailed in the
table under “Executive Officer – Executive Officer Compensation”, below.
The
table below shows the aggregate number of option and stock awards outstanding at December 31, 2019 for each of our independent
trustees.
Trustee Name
|
|
|
Number of shares
Subject to
Outstanding Options
|
|
|
|
Number of
Unvested
Shares Subject
to
Outstanding
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
Virgil E. Wenger
|
|
|
2,000
|
|
|
|
175
|
|
William S. Susman
|
|
|
2,000
|
|
|
|
175
|
|
Patrick R Haynes, III
|
|
|
2,000
|
|
|
|
175
|
|
Justinian R. Hobor
|
|
|
0
|
|
|
|
175
|
|
THE
BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR THE
ELECTION
OF EACH OF THE FOUR NOMINEES AS TRUSTEES OF THE TRUST
ADDITIONAL
DISCLOSURE RELATING TO OUR
TRUSTEES,
EXECUTIVE OFFICER AND CORPORATE GOVERNANCE
Corporate
Governance
Overview
In
accordance with our Declaration of Trust and Bylaws, our Board of Trustees elects the Chairman of the Board and our executive
officers, and each of these positions may be held by the same or separate persons. Our corporate governance guidelines do not
include a policy on whether the role of the Chairman and Chief Executive Officer should be separate or, if not, whether a lead
independent trustee is to be elected. From February 2011, Mr. Lesser, the Chairman of our Board of Trustees, has also served as
our Chief Executive Officer. We believe that this arrangement is suitable for a company of our size. The Board of Trustees shall
review the need for any changes to these arrangements from time to time in light of the Trust’s changing business needs.
Board
of Trustees
Our
Board of Trustees takes an active role in overseeing the management of our risks. The Board regularly reviews information regarding
our liquidity, operations and investment activities, as well as the risks associated with each. The Board is responsible for overseeing
the implementation of our investment strategy, the principal goal of which is to enhance long-term shareholder value through increases
in earnings, cash flow and net asset value. Currently, each investment transaction is approved by the Board. In the future, the
Board may establish an investment committee consisting of trustees to oversee our investment activities, including the review
and approval of specific transactions.
The
Board held five scheduled meetings during 2019. On five other occasions during the year, the trustees, after conferring in writing,
adopted Board resolutions by a majority of votes via written consent. The independent trustees met in executive session during
2019; all of the independent trustees were in attendance during this session. During 2019,
each trustee attended at least 75% of the aggregate of all meetings of the Board of Directors and of all meetings of committees
of the Board on which such member served that were held during the period in which such trustee served.
Four
of our five trustees attended the 2019 annual meeting of shareholders. Our policy is to
invite and encourage each member of the Board to be present at our annual meetings of stockholders.
Board
Committees
Our
Board of Trustees has three committees: an Audit Committee, a Compensation Committee and a Nominating Committee. Each of the three
committees consists solely of independent trustees in accordance with the NYSE American Company Guide.
Audit
Committee
Our
Audit Committee has been established in accordance with section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange
Act”) and consists of two independent trustees, each of whom the Board of Trustees has determined is “financially
literate” and “independent” under the rules of the NYSE American Company Guide: Virgil E. Wenger and Patrick
R. Haynes, III. Mr. Wenger serves as chairman of the Audit Committee and the Board of Trustees has determined that Mr. Wenger
meets the definition of “audit committee financial expert,” as defined in applicable SEC rules. Pursuant to its charter,
the Audit Committee, among other purposes, serves to assist the Board of Trustees in overseeing:
|
●
|
the
integrity of our financial statements;
|
|
●
|
our
compliance with legal and regulatory requirements and ethical behavior;
|
|
●
|
the
retention of independent public auditors, including oversight of their performance, qualifications and independence, as well
as the terms of their engagement;
|
|
●
|
our
accounting and financial reporting processes, internal control systems and internal audit function, as applicable;
|
|
●
|
our
monitoring of compliance with laws and regulations and our code of business conduct and ethics; and
|
|
●
|
our
investigation of any employee misconduct or fraud.
|
During
2019, the Audit Committee on four occasions, after conferring individually or via writing, took action by written consent. The
Audit Committee’s charter is available on the Trust’s website at: www.pwreit.com.
PROPOSAL
3: APPROVAL OF THE 2020 EQUITY INCENTIVE PLAN
The
Board has approved, subject to stockholder approval, the 2020 Equity Incentive Plan which will be the successor to our 2012 Plan.
Once the 2020 Equity Incentive Plan becomes effective, no further grants will be made under the 2012.
The
principal provisions of the 2020 Equity Incentive Plan, (the “2020 Plan”), are summarized below and the 2020 Plan
is attached hereto as Appendix A. The following discussion is qualified in its entirety by reference to the 2020 Plan.
Purpose
of the 2020 Plan
The
Board of Trustees believes the 2020 Plan, including the maximum number of shares available for awards under the 2020 Plan, is
necessary to ensure that we have adequate capacity to continue to attract, reward and retain employees, non-employee directors
and consultants.
The
2020 Plan reserves a total of 239,117 shares for issuance. We believe that this number represents a reasonable amount of potential
equity dilution and allows the Trust to continue to award equity incentives, which are an important component of our overall compensation
program.
Share
Usage and Key Data
2020
Plan. In April 2020, the Board of Directors adopted, subject to stockholder approval at the 2020 Annual Meeting, the 2020
Plan. The 2020 Plan will become effective on the date the stockholders approve the 2020 Plan.
Eligibility;
Type of Awards. The 2020 Plan provides for the grant of incentive stock options, or ISOs, nonstatutory stock options,
or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based awards, and other
awards, or collectively, awards. ISOs may be granted only to our employees, including our officers, and the employees of our affiliates.
All other awards may be granted to our officers, our non-employee directors and consultants and the employees and consultants
of our affiliates.
Authorized
shares. The aggregate number of shares of our common stock that may be issued pursuant to stock awards under the 2020
Plan will not exceed 239,117 shares consisting of (A) the shares reserved and available for issuance pursuant to the grant of
new awards upon the effectiveness of the 2020 Plan, and (B) the shares subject to stock options or other awards granted under
our Predecessor Plan that on or after the 2020 Plan becomes effective, terminate or expire prior to exercise or settlement; are
not issued because the award is settled in cash; are forfeited because of the failure to vest; or are reacquired or withheld (or
not issued) to satisfy a tax withholding obligation or the purchase or exercise price, if any, as such shares become available
from time to time. Additionally, the number of shares of our common stock reserved for issuance under our 2020 Plan will automatically
increase on January 1 of each year, beginning on January 1, 2020 and ending on and including January 1, 2029, by 12.5% of the
total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares
determined by the Board of Directors. The maximum number of shares that may be issued upon the exercise of ISOs under our 2020
Plan is 239,117 shares.
Shares
issued under our 2020 Plan will be authorized but unissued or reacquired shares of our common stock. Shares subject to awards
granted under our 2020 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than
in shares, will not reduce the number of shares available for issuance under our 2020 Plan. Additionally, shares issued pursuant
to awards under our 2020 Plan that we repurchase or that are forfeited, as well as shares used to pay the exercise price of an
award or to satisfy the tax withholding obligations related to an award, will become available for future grant.
Non-employee
director limits. The maximum number of shares of our common stock subject to stock awards granted during a single fiscal
year to any non-employee director with respect to any calendar year that follows the calendar year in which such individual is
first appointed or elected to the Board, taken together with any cash fees paid to such non-employee director during the fiscal
year, shall not exceed $300,000 in total value and with respect to the calendar year in which a non-employee director is first
appointed or elected to the Board, will not exceed $1,000,000 in total value (in each case, calculating the value of any such
stock awards based on the grant date fair value of such stock awards for financial reporting purposes and excluding, for this
purpose, the value of any dividend equivalent payments paid pursuant to any stock award granted in a previous fiscal year).
Plan
administration. The Board, or a duly authorized committee of the Board, may administer our 2020 Plan. The Board has delegated
concurrent authority to administer our 2020 Plan to the Compensation Committee under the terms of the Compensation Committee’s
charter. We sometimes refer to the Board, or the applicable committee with the power to administer our equity incentive plans,
as the administrator. The administrator may also delegate to one or more of our officers the authority to (1) designate employees
(other than officers) to receive specified awards, and (2) determine the number of shares subject to such awards.
The
administrator has the authority to determine the terms of awards, including recipients, the exercise, purchase or strike price
of awards, if any, the number of shares subject to each award, the fair market value of a share of our common stock, the vesting
schedule applicable to the awards, together with any vesting acceleration, and the form of consideration, if any, payable upon
exercise or settlement of the award and the terms of the award agreements for use under our 2020 Plan.
Stock
Options. ISOs and NSOs are granted pursuant to stock option agreements adopted by the administrator. The administrator
determines the exercise price for a stock option, within the terms and conditions of the 2020 Plan, provided that the exercise
price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant.
Options granted under the 2020 Plan vest at the rate specified by the administrator. The closing price of our common stock as
reported on the NYSE American on May 15, 2020 was $19.80 per share.
The
administrator determines the term of stock options granted under the 2020 Plan, up to a maximum of ten years. Unless the terms
of an optionholder’s stock option agreement provide otherwise, if an optionholder’s service relationship with us,
or any of our affiliates, ceases for any reason other than disability, death or cause, the optionholder may generally exercise
any vested options for a period of three months following the cessation of service. The option term may be extended in the event
that either an exercise of the option or an immediate sale of shares acquired upon exercise of the option following such a termination
of service is prohibited by applicable securities laws or our insider trading policy. If an optionholder’s service relationship
with us or any of our affiliates ceases due to disability or death, or an optionholder dies within a certain period following
cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 12 months in
the event of disability and 18 months in the event of death. In the event of a termination for cause, options generally terminate
immediately upon the termination of the individual for cause. In no event may an option be exercised beyond the expiration of
its term.
Acceptable
consideration for the purchase of common stock issued upon the exercise of a stock option will be determined by the administrator
and may include (1) cash, check, bank draft or money order, (2) a broker-assisted cashless exercise, (3) the tender of shares
of our common stock previously owned by the optionholder, (4) a net exercise of the option if it is an NSO, and (5) other legal
consideration approved by the administrator.
Options
may not be transferred to third party financial institutions for value. Unless the administrator provides otherwise, options generally
are not transferable except by will, the laws of descent and distribution, or pursuant to a domestic relations order. An optionholder
may designate a beneficiary, however, who may exercise the option following the optionholder’s death.
Restricted
Stock Awards. Restricted stock awards are granted pursuant to restricted stock award agreements adopted by the
administrator. Restricted stock awards may be granted in consideration for cash, check, bank draft or money order, services rendered
to us or our affiliates, or any other form of legal consideration. Common stock acquired under a restricted stock award may, but
need not, be subject to a share repurchase option in our favor in accordance with a vesting schedule to be determined by the administrator.
A restricted stock award may be transferred only upon such terms and conditions as set by the administrator. Except as otherwise
provided in the applicable award agreement, restricted stock awards that have not vested may be forfeited or repurchased by us
upon the participant’s cessation of continuous service for any reason.
Restricted
Stock Unit Awards. Restricted stock unit awards are granted pursuant to restricted stock unit award agreements adopted
by the administrator. Restricted stock unit awards may be granted in consideration for any form of legal consideration. A restricted
stock unit award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the administrator,
or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents
may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable
award agreement, restricted stock units that have not vested will be forfeited upon the participant’s cessation of continuous
service for any reason.
Stock
Appreciation Rights. Stock appreciation rights are granted pursuant to stock appreciation right grant agreements
adopted by the administrator. The administrator determines the strike price for a stock appreciation right, which generally cannot
be less than 100% of the fair market value of our common stock on the date of grant. Upon the exercise of a stock appreciation
right, we will pay the participant an amount equal to the product of (1) the excess of the per share fair market value of our
common stock on the date of exercise over the strike price, multiplied by (2) the number of shares of common stock with respect
to which the stock appreciation right is exercised. A stock appreciation right granted under the 2020 Plan vests at the rate specified
in the stock appreciation right agreement as determined by the administrator.
The
administrator determines the term of stock appreciation rights granted under the 2020 Plan, up to a maximum of ten years. Unless
the terms of a participant’s stock appreciation right agreement provide otherwise, if a participant’s service relationship
with us or any of our affiliates ceases for any reason other than cause, disability or death, the participant may generally exercise
any vested stock appreciation right for a period of three months following the cessation of service. The stock appreciation right
term may be further extended in the event that exercise of the stock appreciation right following such a termination of service
is prohibited by applicable securities laws. If a participant’s service relationship with us, or any of our affiliates,
ceases due to disability or death, or a participant dies within a certain period following cessation of service, the participant
or a beneficiary may generally exercise any vested stock appreciation right for a period of 12 months in the event of disability
and 18 months in the event of death. In the event of a termination for cause, stock appreciation rights generally terminate immediately
upon the occurrence of the event giving rise to the termination of the individual for cause. In no event may a stock appreciation
right be exercised beyond the expiration of its term.
Performance
Awards. Our 2020 Plan permits the grant of performance-based stock and cash awards. The administrator can structure such
awards so that the stock or cash will be issued or paid pursuant to such award only following the achievement of certain pre-established
performance goals during a designated performance period. Performance awards that are settled in cash or other property are not
required to be valued in whole or in part by reference to, or otherwise based on, the common stock
The
performance goals may be based any measure of performance selected by the administrator. The administrator may establish performance
goals on a company-wide basis, with respect to one or more business units, divisions, affiliates, or business segments, and in
either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant
indices. Unless specified otherwise (i) in the award agreement at the time the award is granted or (ii) in such other document
setting forth the performance goals at the time the goals are established, the administrator will appropriately make adjustments
in the method of calculating the attainment of the performance goals as follows: (1) to exclude restructuring and/or other nonrecurring
charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles;
(4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual”
in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the
dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by us achieved performance objectives
at targeted levels during the balance of a performance period following such divestiture; (8) to exclude the effect of any change
in the outstanding shares of our common stock by reason of any stock dividend or split stock repurchase, reorganization, recapitalization,
merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to
common stockholders other than regular cash dividends; (9) to exclude the effects of stock-based compensation and the award of
bonuses under our bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are
required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset
impairment charges that are required to be recorded under generally accepted accounting principles.
Other
Awards. The administrator may grant other awards based in whole or in part by reference to our common stock. The
administrator will set the number of shares under the award and all other terms and conditions of such awards.
Changes
to Capital Structure. In the event there is a specified type of change in our capital structure, such as a stock
split, reverse stock split, or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares
reserved for issuance under the 2020 Plan; (2) the class and maximum number of shares by which the share reserve may increase
automatically each year; (3) the class and maximum number of shares that may be issued upon the exercise of incentive stock options;
and (4) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding
awards
Corporate
Transaction; Change in Control. The 2020 Plan provides that in the event of a corporate transaction, as defined in the
2020 Plan, the following provisions will apply to outstanding stock awards, unless otherwise provided in a stock award agreement
or any other written agreement between us and a participant, or unless otherwise expressly provided by the administrator at the
time of grant of a stock award:
|
●
|
Any stock awards
outstanding under the 2020 Plan may be assumed, continued or substituted for by any surviving or acquiring corporation (or
its parent company), and any reacquisition or repurchase rights held by us with respect to the stock award may be assigned
to the successor (or its parent company).
|
|
|
|
|
●
|
If the surviving
or acquiring corporation (or its parent company) does not assume, continue or substitute for such stock awards, then with
respect to any such stock awards that are held by participants whose continuous service has not terminated prior to the effective
time of the corporate transaction, or current participants, the vesting (and exercisability, if applicable) of such stock
awards will be accelerated in full to a date prior to the effective time of the corporate transaction (contingent upon the
effectiveness of the corporate transaction), and such stock awards will terminate if not exercised (if applicable) at or prior
to the effective time of the corporate transaction, and any reacquisition or repurchase rights held by us with respect to
such stock awards will lapse (contingent upon the effectiveness of the corporate transaction)
|
|
|
|
|
●
|
If the surviving
or acquiring corporation (or its parent company) does not assume, continue or substitute for such stock awards, then any such
stock awards that are held by persons other than current participants will terminate if not exercised (if applicable) prior
to the effective time of the corporate transaction, except that any reacquisition or repurchase rights held by us with respect
to such stock awards will not terminate and may continue to be exercised notwithstanding the corporate transaction.
|
|
|
|
|
●
|
In the event a stock
award will terminate if not exercised prior to the effective time of a corporate transaction, the administrator may provide,
in its sole discretion, that the holder of such stock award may not exercise such stock award but instead will receive a payment
equal in value to the excess (if any) of (i) the per share amount payable to holders of common stock in connection with the
corporate transaction, over (ii) any per share exercise price payable by such holder provided in the stock award, if applicable.
In addition, any escrow, holdback, earn out or similar provisions in the definitive agreement for the corporate transaction
may apply to such payment to the same extent and in the same manner as such provisions apply to the holders of common stock.
|
In
addition, the Board has the sole and complete discretion to determine to accelerate vesting and exercisability of all or any awards
in the event of a corporate transaction.
Under
the 2020 Plan, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets,
(2) the sale or disposition of more than 50% of our outstanding securities, (3) a merger or consolidation where we do not survive
the transaction, or (4) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding
immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
A
stock award may be subject to additional acceleration of vesting and exercisability upon or after a change in control, as defined
in the 2020 Plan, as may be provided in the stock award agreement for such stock award or in any other written agreement between
us and a participant, but in the absence of such a provision, no such acceleration will occur.
Transferability.
A participant may not transfer awards under our 2020 Plan other than by will, the laws of descent and distribution or as otherwise
provided under our 2020 Plan.
Plan
amendment or termination. The Board has the authority to amend, suspend, or terminate our 2020 Plan, provided that such
action does not materially impair the existing rights of any participant without such participant’s written consent. Certain
material amendments also require the approval of our stockholders. No ISOs may be granted after the tenth anniversary of the date
the Board adopted our 2020 Plan. No awards may be granted under our 2020 Plan while it is suspended or after it is terminated.
Material
U.S. Federal Income Tax Treatment of Options and Awards
The
following is a summary of the effect of U.S. federal income taxation on the participants in the 2020 Plan and the company. However,
it does not purport to be complete and does not describe the state, local or foreign tax considerations or the consequences for
any particular individual.
Incentive
Stock Options
An
ISO results in neither taxable income to the optionee, nor a deduction to the Company at the time it is granted or exercised.
If the optionee holds the stock received as a result of an exercise of an ISO for at least two years from the date of the grant
and one year from the date of exercise, then the gain realized on disposition of the stock is treated as a long-term capital gain.
If the shares are disposed of during this period, however (i.e., a “disqualifying disposition”), then the optionee
will include the income, as ordinary compensation for the year of the disposition, in an amount equal to the excess, if any, of
the fair market value of the shares, upon exercise of the option over the option price (or, if less, the excess of the amount
realized upon disposition over the option price). The excess, if any, of the sale price over the fair market value on the date
of exercise will be a short-term capital gain. In such case, the Company will be entitled to a deduction, in the year of such
a disposition, for the amount includible in the optionee’s income as compensation, subject to the limitations of Section
162(m) of the Code. The optionee’s tax basis in the shares acquired upon exercise of an ISO is equal to the option price
paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
Non-Qualified
Stock Options
A
NSO results in no taxable income to the optionee or deduction to the Company at the time it is granted. An optionee exercising
a NSO will, at that time, realize taxable compensation in the amount of the excess of the then market value of the shares over
the option price. Subject to the applicable provisions of the Code, including the limitations of Section 162(m), a deduction for
federal income tax purposes will be allowable to the Company in the year of exercise in an amount equal to the taxable compensation
realized by the optionee. The optionee’s tax basis in shares received upon exercise is equal to the sum of the option price
plus the amount includible in his or her income as compensation upon exercise.
Any
gain (or loss) upon subsequent disposition of the shares will be a long- or short-term gain (or loss), depending upon the holding
period of the shares.
If
a NSO is exercised by tendering previously owned shares of the company’s common stock in payment of the option price, then,
instead of the treatment described above, the following will apply: a number of new shares equal to the number of previously owned
shares tendered will be considered to have been received in a tax-free exchange; the optionee’s basis and holding period
for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee
will have compensation income equal to the fair market value on the date of exercise of the number of new shares received in excess
of such number of exchanged shares; the optionee’s basis in such excess shares will be equal to the amount of such compensation
income; and the holding period in such shares will begin on the date of exercise.
Stock
Appreciation Rights
Generally,
the recipient of a stand-alone SAR will not recognize taxable income at the time the stand-alone SAR is granted.
If
the grantee receives the appreciation inherent in the SAR (change in stock price plus dividends from grant date to settlement
date) in cash, the cash will be taxed as ordinary income to the employee at the time it is received. If the grantee receives the
appreciation inherent in the SAR in stock, the value is converted into stock which is taxable as ordinary income at the fair market
value of the stock.
In
general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of SARs. However,
upon the settlement of a SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the recipient
is required to recognize as a result of the settlement, subject to the limitations of Section 162(m) of the Code.
Restricted
Stock Awards / Performance Stock Awards
No
income will be recognized at the time of grant by the recipient of a restricted stock award or performance stock award while such
award is subject to a substantial risk of forfeiture. Generally, at the time the substantial risk of forfeiture terminates with
respect to a stock award, the then fair market value of the stock awarded will constitute ordinary income to the employee. Subject
to the applicable limitations of Section 162(m), a deduction for federal income tax purposes will be allowable to the company
in an amount equal to the compensation realized by the recipient.
Other
Awards
In
the case of an award of RSUs, performance awards, dividend equivalents or dividend equivalent units or other stock or cash awards,
the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any
shares received on the date of payment or delivery. In that taxable year, the company will receive a federal income tax deduction
in an amount equal to the ordinary income which the recipient has recognized, subject to the limitations of Section 162(m) of
the Code.
Section
162(m)
We
generally will be entitled to a tax deduction in connection with an award granted under the 2020 Plan (subject to the requirement
of reasonableness, the provisions of Section 162(m) and the satisfaction of a tax reporting obligation) in an amount equal to
the ordinary income recognized by a participant and at the time the participant recognizes such income (for example, on the exercise
of a NSO). Section 162(m) may limit the deductibility of compensation paid to our chief executive officer and to each of the three
most highly compensated executive officers other than the chief executive officer and the chief financial officer. Under Section
162(m), the annual compensation paid to any of these specified executives will be deductible by the company only to the extent
that it does not exceed $1,000,000 or an exemption from such deduction limitation is applicable and available.
The
exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable
years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million
will not be deductible unless it qualifies for transition relief applicable to certain performance-based compensation arrangements
already in place as of November 2, 2017. The administrator reserves the right to grant awards under the 2020 Plan that result
in compensation to our covered officers in excess of the $1 million Section 162(m) deduction limitation.
New
Plan Benefits
Future
benefits under the 2020 Plan are not currently determinable, except that we have adopted a non-employee director compensation
policy that provides that on the date of the annual meeting of stockholders each non-employee director will receive an option
to acquire 7,500 shares of common stock, vesting 1/12th per month with full vesting, if not fully vested at the time,
on the date of the next annual meeting of stockholders.
THE
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE 2020 PLAN
Annual
Report
On
March 30, 2019, the Trust filed with the SEC its annual report on Form 10-K for the year ended December 31, 2019 which is being
mailed with the 2020 Proxy Material. Such annual report is also available from the SEC’s website at www.sec.gov and
from our website at www.pwreit.com.
IN
CONNECTION WITH THE SOLICITATION OF PROXIES BY THE BOARD OF TRUSTEES, YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS
PROXY STATEMENT. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. YOU SHOULD NOT ASSUME
THAT THE INFORMATION IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROXY STATEMENT OR, WHERE
INFORMATION RELATES TO ANOTHER DATE SET FORTH IN THIS PROXY STATEMENT, AS OF THAT DATE.
APPENDIX
A
2020
EQUITY INCENTIVE PLAN
Adopted
by the Board of Directors: May 27, 2020
Approved
by the Stockholders: June 24, 2020
(a)
Successor to and Continuation of Prior Plan. The Plan is the successor to and continuation of the Prior Plan. As of the Effective
Date, (i) no additional awards may be granted under the Prior Plan; (ii) the Prior Plan’s Available Reserve plus any Returning
Shares will become available for issuance pursuant to Awards granted under this Plan; and (iii) all outstanding awards granted
under the Prior Plan will remain subject to the terms of the Prior Plan (except to the extent such outstanding awards result in
Returning Shares that become available for issuance pursuant to Awards granted under this Plan). All Awards granted under this
Plan will be subject to the terms of this Plan.
(b)
Plan Purpose. The Company, by means of the Plan, seeks to secure and retain the services of Employees, Directors and Consultants,
to provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate and to provide
a means by which such persons may be given an opportunity to benefit from increases in value of the Common Stock through the granting
of Awards.
(c)
Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options; (ii) Nonstatutory
Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards.
Adoption
Date. The Plan will come into existence on the Adoption Date. No Award may be granted under the Plan prior to the Adoption
Date. Any Award granted prior to the Effective Date is contingent upon timely receipt of stockholder approval to the extent required
under applicable tax, securities and regulatory rules, and satisfaction of any other compliance requirements.
2.
|
Shares
Subject to the Plan.
|
Share
Reserve. Subject to adjustment in accordance with Section 2(c) and any adjustments as necessary to implement any Capitalization
Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Awards will not exceed 239,117 shares,
which number is the sum of: (i) new shares (ii) the Prior Plan’s Available Reserve; plus (ii) the number of Returning Shares,
if any, as such shares become available from time to time.
In
addition, subject to any adjustments as necessary to implement any Capitalization Adjustments, such aggregate number of shares
of Common Stock will automatically increase on January 1 of each calendar year for a period of ten years commencing on January
1, 2021 and ending on (and including) January 1, 2030, in a number of shares of Common Stock equal to 12.5% of the total number
of shares of Capital Stock outstanding on December 31 of the preceding calendar year; provided, however that the Board may act
prior to January 1 of a given calendar year to provide that the increase for such year will be a lesser number of shares of Common
Stock.
Aggregate
Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a) and subject to any adjustments as necessary
to implement any Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant
to the exercise of Incentive Stock Options is 239,117 shares.
Share
Reserve Operation.
Limit
Applies to Common Stock Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on the number of shares of Common
Stock that may be issued pursuant to Awards and does not limit the granting of Awards, except that the Company will keep available
at all times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares pursuant to such
Awards. Shares may be issued in connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing Rule 5635(c),
NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance
will not reduce the number of shares available for issuance under the Plan.
Actions
that Do Not Constitute Issuance of Common Stock and Do Not Reduce Share Reserve. The following actions do not result in an
issuance of shares under the Plan and accordingly do not reduce the number of shares subject to the Share Reserve and available
for issuance under the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by such portion
of the Award having been issued, (2) the settlement of any portion of an Award in cash (i.e., the Participant receives
cash rather than Common Stock), (3) the withholding of shares that would otherwise be issued by the Company to satisfy the exercise,
strike or purchase price of an Award; (4) the withholding of shares that would otherwise be issued by the Company to satisfy a
tax withholding obligation in connection with an Award.
Reversion
of Previously Issued Shares of Common Stock to Share Reserve. The following shares of Common Stock previously issued pursuant
to an Award and accordingly initially deducted from the Share Reserve will be added back to the Share Reserve and again become
available for issuance under the Plan: (1) any shares that are forfeited back to or repurchased by the Company because of a failure
to meet a contingency or condition required for the vesting of such shares; (2) any shares that are reacquired by the Company
to satisfy the exercise, strike or purchase price of an Award; and (3) any shares that are reacquired by the Company to satisfy
a tax withholding obligation in connection with an Award.
Eligibility
and Limitations.
Eligible
Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are eligible to receive Awards.
Specific
Award Limitations.
Limitations
on Incentive Stock Option Recipients. Incentive Stock Options may be granted only to Employees of the Company or a “parent
corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the
Code).
Incentive
Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar
year (under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the Code) or otherwise
does not comply with the rules governing Incentive Stock Options, the Options or portions thereof that exceed such limit (according
to the order in which they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Option Agreement(s).
Limitations
on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent Stockholder may not be granted an Incentive
Stock Option unless (i) the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such
Option and (ii) the Option is not exercisable after the expiration of five years from the date of grant of such Option.
Limitations
on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs may not be granted to Employees, Directors and
Consultants who are providing Continuous Service only to any “parent” of the Company (as such term is defined in Rule
405) unless the stock underlying such Awards is treated as “service recipient stock” under Section 409A because the
Awards are granted pursuant to a corporate transaction (such as a spin off transaction) or unless such Awards otherwise comply
with the distribution requirements of Section 409A.
Aggregate
Incentive Stock Option Limit. The aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise
of Incentive Stock Options is the number of shares specified in Section 2(b).
Non-Employee
Director Compensation Limit. The aggregate value of all compensation granted or paid, as applicable, to any individual for
service as a Non-Employee Director with respect to any calendar year that follows the calendar year in which such individual is
first appointed or elected to the Board, including Awards granted and cash fees paid by the Company to such Non-Employee Director,
will not exceed $750,000 in total value, and with respect to the calendar year in which a Non-Employee Director is first appointed
or elected to the Board, will not exceed $1,500,000 in total value, in each case calculating the value of any equity awards based
on the grant date fair value of such equity awards for financial reporting purposes.
Options
and Stock Appreciation Rights.
Each
Option and SAR will have such terms and conditions as determined by the Board. Each Option will be designated in writing as an
Incentive Stock Option or Nonstatutory Stock Option at the time of grant; provided, however, that if an Option is not so
designated, then such Option will be a Nonstatutory Stock Option, and the shares purchased upon exercise of each type of Option
will be separately accounted for. Each SAR will be denominated in shares of Common Stock equivalents. The terms and conditions
of separate Options and SARs need not be identical; provided, however, that each Option Agreement and SAR Agreement will
conform (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) to the substance of each
of the following provisions:
Term.
Subject to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten
years from the date of grant of such Award or such shorter period specified in the Award Agreement.
Exercise
or Strike Price. Subject to Section 3(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or
SAR will not be less than 100% of the Fair Market Value on the date of grant of such Award. Notwithstanding the foregoing, an
Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of
such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right
pursuant to a Corporate Transaction and in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a)
of the Code.
Exercise
Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the Participant must provide notice of
exercise to the Plan Administrator in accordance with the procedures specified in the Option Agreement or otherwise provided by
the Company. The Board has the authority to grant Options that do not permit all of the following methods of payment (or otherwise
restrict the ability to use certain methods) and to grant Options that require the consent of the Company to utilize a particular
method of payment. The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by
the Board, by one or more of the following methods of payment to the extent set forth in the Option Agreement:
by
cash or check, bank draft or money order payable to the Company;
pursuant
to a “cashless exercise” program developed under Regulation T as promulgated by the Federal Reserve Board that, prior
to the issuance of the Common Stock subject to the Option, results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the exercise price to the Company from the sales proceeds;
by
delivery to the Company (either by actual delivery or attestation) of shares of Common Stock that are already owned by the Participant
free and clear of any liens, claims, encumbrances or security interests, with a Fair Market Value on the date of exercise that
does not exceed the exercise price, provided that (1) at the time of exercise the Common Stock is publicly traded, (2) any remaining
balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or other permitted form of payment,
(3) such delivery would not violate any Applicable Law or agreement restricting the redemption of the Common Stock, (4) any certificated
shares are endorsed or accompanied by an executed assignment separate from certificate, and (5) such shares have been held by
the Participant for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery;
if
the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value on
the date of exercise that does not exceed the exercise price, provided that (1) such shares used to pay the exercise price will
not be exercisable thereafter and (2) any remaining balance of the exercise price not satisfied by such net exercise is paid by
the Participant in cash or other permitted form of payment; or
in
any other form of consideration that may be acceptable to the Board and permissible under Applicable Law.
Exercise
Procedure and Payment of Appreciation Distribution for SARs. In order to exercise any SAR, the Participant must provide notice
of exercise to the Plan Administrator in accordance with the SAR Agreement. The appreciation distribution payable to a Participant
upon the exercise of a SAR will not be greater than an amount equal to the excess of (i) the aggregate Fair Market Value on the
date of exercise of a number of shares of Common Stock equal to the number of Common Stock equivalents that are vested and being
exercised under such SAR, over (ii) the strike price of such SAR. Such appreciation distribution may be paid to the Participant
in the form of Common Stock or cash (or any combination of Common Stock and cash) or in any other form of payment, as determined
by the Board and specified in the SAR Agreement.
Transferability.
Options and SARs may not be transferred to third party financial institutions for value. The Board may impose such additional
limitations on the transferability of an Option or SAR as it determines. In the absence of any such determination by the Board,
the following restrictions on the transferability of Options and SARs will apply, provided that except as explicitly provided
herein, neither an Option nor a SAR may be transferred for consideration and provided, further, that if an Option is an
Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer:
Restrictions
on Transfer. An Option or SAR will not be transferable, except by will or by the laws of descent and distribution, and will
be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Board may permit
transfer of an Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s
request, including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as determined under
Section 671 of the Code and applicable state law) while such Option or SAR is held in such trust, provided that the Participant
and the trustee enter into a transfer and other agreements required by the Company.
Domestic
Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer documentation in a format acceptable
to the Company and subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant
to a domestic relations order.
Vesting.
The Board may impose such restrictions on or conditions to the vesting and/or exercisability of an Option or SAR as determined
by the Board. Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the Company
or an Affiliate, vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service.
Termination
of Continuous Service for Cause. Except as explicitly otherwise provided in the Award Agreement or other written agreement
between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service is terminated for Cause, the
Participant’s Options and SARs will terminate and be forfeited immediately upon such termination of Continuous Service,
and the Participant will be prohibited from exercising any portion (including any vested portion) of such Awards on and after
the date of such termination of Continuous Service and the Participant will have no further right, title or interest in such forfeited
Award, the shares of Common Stock subject to the forfeited Award, or any consideration in respect of the forfeited Award.
Post-Termination
Exercise Period Following Termination of Continuous Service for Reasons Other than Cause. Subject to Section 4(i), if a Participant’s
Continuous Service terminates for any reason other than for Cause, the Participant may exercise his or her Option or SAR to the
extent vested, but only within the following period of time or, if applicable, such other period of time provided in the Award
Agreement or other written agreement between a Participant and the Company or an Affiliate; provided, however, that in
no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)):
three
months following the date of such termination if such termination is a termination without Cause (other than any termination due
to the Participant’s Disability or death);
12
months following the date of such termination if such termination is due to the Participant’s Disability;
18
months following the date of such termination if such termination is due to the Participant’s death; or
18
months following the date of the Participant’s death if such death occurs following the date of such termination but during
the period such Award is otherwise exercisable (as provided in (i) or (ii) above).
Following
the date of such termination, to the extent the Participant does not exercise such Award within the applicable Post-Termination
Exercise Period (or, if earlier, prior to the expiration of the maximum term of such Award), such unexercised portion of the Award
will terminate, and the Participant will have no further right, title or interest in terminated Award, the shares of Common Stock
subject to the terminated Award, or any consideration in respect of the terminated Award.
Restrictions
on Exercise; Extension of Exercisability. A Participant may not exercise an Option or SAR at any time that the issuance of
shares of Common Stock upon such exercise would violate Applicable Law. Except as otherwise provided in the Award Agreement or
other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service terminates
for any reason other than for Cause and, at any time during the last thirty days of the applicable Post-Termination Exercise Period:
(i) the exercise of the Participant’s Option or SAR would be prohibited solely because the issuance of shares of Common
Stock upon such exercise would violate Applicable Law, or (ii) the immediate sale of any shares of Common Stock issued upon such
exercise would violate the Company’s Trading Policy, then the applicable Post-Termination Exercise Period will be extended
to the last day of the calendar month that commences following the date the Award would otherwise expire, with an additional extension
of the exercise period to the last day of the next calendar month to apply if any of the foregoing restrictions apply at any time
during such extended exercise period, generally without limitation as to the maximum permitted number of extensions; provided,
however, that in no event may such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)).
Non-Exempt
Employees. No Option or SAR, whether or not vested, granted to an Employee who is a non-exempt employee for purposes of the
Fair Labor Standards Act of 1938, as amended, will be first exercisable for any shares of Common Stock until at least six months
following the date of grant of such Award. Notwithstanding the foregoing, in accordance with the provisions of the Worker Economic
Opportunity Act, any vested portion of such Award may be exercised earlier than six months following the date of grant of such
Award in the event of (i) such Participant’s death or Disability, (ii) a Corporate Transaction in which such Award is not
assumed, continued or substituted, (iii) a Change in Control, or (iv) such Participant’s retirement (as such term may be
defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in accordance with the
Company’s then current employment policies and guidelines). This Section 4(j) is intended to operate so that any income
derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her
regular rate of pay.
Whole
Shares. Options and SARs may be exercised only with respect to whole shares of Common Stock or their equivalents.
Awards
Other Than Options and Stock Appreciation Rights.
Restricted
Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have such terms and conditions as determined by
the Board; provided, however, that each Restricted Stock Award Agreement and RSU Award Agreement will conform (through
incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the following
provisions:
Form
of Award.
RSAs:
To the extent consistent with the Company’s Bylaws, at the Board’s election, shares of Common Stock subject to a Restricted
Stock Award may be (i) held in book entry form subject to the Company’s instructions until such shares become vested or
any other restrictions lapse, or (ii) evidenced by a certificate, which certificate will be held in such form and manner as determined
by the Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder of the
Company with respect to any shares subject to a Restricted Stock Award.
RSUs:
A RSU Award represents a Participant’s right to be issued on a future date the number of shares of Common Stock that is
equal to the number of restricted stock units subject to the RSU Award. As a holder of a RSU Award, a Participant is an unsecured
creditor of the Company with respect to the Company’s unfunded obligation, if any, to issue shares of Common Stock in settlement
of such Award and nothing contained in the Plan or any RSU Agreement, and no action taken pursuant to its provisions, will create
or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Company or an Affiliate
or any other person. A Participant will not have voting or any other rights as a stockholder of the Company with respect to any
RSU Award (unless and until shares are actually issued in settlement of a vested RSU Award).
Consideration.
RSA:
A Restricted Stock Award may be granted in consideration for (A) cash or check, bank draft or money order payable to the Company,
(B) past services to the Company or an Affiliate, or (C) any other form of consideration (including future services) as the Board
may determine and permissible under Applicable Law.
RSU:
Unless otherwise determined by the Board at the time of grant, a RSU Award will be granted in consideration for the Participant’s
services to the Company or an Affiliate, such that the Participant will not be required to make any payment to the Company (other
than such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant
to the RSU Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a
form other than the Participant’s services to the Company or an Affiliate) upon the issuance of any shares of Common Stock
in settlement of the RSU Award, such consideration may be paid in any form of consideration as the Board may determine and permissible
under Applicable Law.
Vesting.
The Board may impose such restrictions on or conditions to the vesting of a Restricted Stock Award or RSU Award as determined
by the Board and which may vary. Except as otherwise provided in the Award Agreement or other written agreement between a Participant
and the Company or an Affiliate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the Participant’s
Continuous Service.
Termination
of Continuous Service. Except as otherwise provided in the Award Agreement or other written agreement between a Participant
and the Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason, (i) the Company may receive
through a forfeiture condition or a repurchase right any or all of the shares of Common Stock held by the Participant under his
or her Restricted Stock Award that have not vested as of the date of such termination as set forth in the Restricted Stock Award
Agreement and (ii) any portion of his or her RSU Award that has not vested will be forfeited upon such termination and the Participant
will have no further right, title or interest in the RSU Award, the shares of Common Stock issuable pursuant to the RSU Award,
or any consideration in respect of the RSU Award.
Dividends
and Dividend Equivalents. Dividends or dividend equivalents may be paid or credited, as applicable, with respect to any shares
of Common Stock subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the Award Agreement).
Settlement
of RSU Awards. A RSU Award may be settled by the issuance of shares of Common Stock or cash (or any combination thereof) or
in any other form of payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the Board
may determine to impose such restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award.
Performance
Awards. With respect to any Performance Award, the length of any Performance Period, the Performance Goals to be achieved
during the Performance Period, the other terms and conditions of such Award, and the measure of whether and to what degree such
Performance Goals have been attained will be determined by the Board.
Other
Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, including the
appreciation in value thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the Fair
Market Value at the time of grant) may be granted either alone or in addition to Awards provided for under Section 0 and the preceding
provisions of this Section 0. Subject to the provisions of the Plan, the Board will have sole and complete discretion to determine
the persons to whom and the time or times at which such Other Awards will be granted, the number of shares of Common Stock (or
the cash equivalent thereof) to be granted pursuant to such Other Awards and all other terms and conditions of such Other Awards.
Adjustments
upon Changes in Common Stock; Other Corporate Events.
Capitalization
Adjustments. In the event of a Capitalization Adjustment, the Board shall appropriately and proportionately adjust: (i) the
class(es) and maximum number of shares of Common Stock subject to the Plan and the maximum number of shares by which the Share
Reserve may annually increase pursuant to Section 0, (ii) the class(es) and maximum number of shares that may be issued pursuant
to the exercise of Incentive Stock Options pursuant to Section 0, and (iii) the class(es) and number of securities and exercise
price, strike price or purchase price of Common Stock subject to outstanding Awards. The Board shall make such adjustments, and
its determination shall be final, binding and conclusive. Notwithstanding the foregoing, no fractional shares or rights for fractional
shares of Common Stock shall be created in order to implement any Capitalization Adjustment. The Board shall determine an equivalent
benefit for any fractional shares or fractional shares that might be created by the adjustments referred to in the preceding provisions
of this Section.
Dissolution
or Liquidation. Except as otherwise provided in the Award Agreement, in the event of a dissolution or liquidation of the Company,
all outstanding Awards (other than Awards consisting of vested and outstanding shares of Common Stock not subject to a forfeiture
condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such dissolution or
liquidation, and the shares of Common Stock subject to the Company’s repurchase rights or subject to a forfeiture condition
may be repurchased or reacquired by the Company notwithstanding the fact that the holder of such Award is providing Continuous
Service, provided, however, that the Board may determine to cause some or all Awards to become fully vested, exercisable
and/or no longer subject to repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before
the dissolution or liquidation is completed but contingent on its completion.
Corporate
Transaction. The following provisions will apply to Awards in the event of a Corporate Transaction unless otherwise provided
in the instrument evidencing the Award or any other written agreement between the Company or any Affiliate and the Participant
or unless otherwise expressly provided by the Board. The Board has sole and complete discretion to determine to accelerate the
vesting and exercisability of all or any Awards in the event of a Corporate Transaction.
Awards
May Be Assumed. In the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving
or acquiring corporation’s parent company) may assume or continue any or all Awards outstanding under the Plan or may substitute
similar awards for Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid
to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or repurchase rights held by
the Company in respect of Common Stock issued pursuant to Awards may be assigned by the Company to the successor of the Company
(or the successor’s parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring
corporation (or its parent) may choose to assume or continue only a portion of an Award or substitute a similar award for only
a portion of an Award, or may choose to assume or continue the Awards held by some, but not all Participants. The terms of any
assumption, continuation or substitution will be set by the Board.
Awards
Held by Current Participants. In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation
(or its parent company) does not assume or continue such outstanding Awards or substitute similar awards for such outstanding
Awards, then with respect to Awards that have not been assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to as the “Current
Participants”), the vesting of such Awards (and, with respect to Options and Stock Appreciation Rights, the time
when such Awards may be exercised) will be accelerated in full to a date prior to the effective time of such Corporate Transaction
(contingent upon the effectiveness of the Corporate Transaction) as the Board determines (or, if the Board does not determine
such a date, to the date that is five (5) days prior to the effective time of the Corporate Transaction), and such Awards will
terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition
or repurchase rights held by the Company with respect to such Awards will lapse (contingent upon the effectiveness of the Corporate
Transaction). With respect to the vesting of Performance Awards that will accelerate upon the occurrence of a Corporate Transaction
pursuant to this subsection (ii) and that have multiple vesting levels depending on the level of performance, unless otherwise
provided in the Award Agreement, the vesting of such Performance Awards will accelerate at 100% of the target level upon the occurrence
of the Corporate Transaction. With respect to the vesting of Awards that will accelerate upon the occurrence of a Corporate Transaction
pursuant to this subsection (ii) and are settled in the form of a cash payment, such cash payment will be made no later than 30
days following the occurrence of the Corporate Transaction.
Awards
Held by Persons other than Current Participants. In the event of a Corporate Transaction in which the surviving corporation
or acquiring corporation (or its parent company) does not assume or continue such outstanding Awards or substitute similar awards
for such outstanding Awards, then with respect to Awards that have not been assumed, continued or substituted and that are held
by persons other than Current Participants, such Awards will terminate if not exercised (if applicable) prior to the occurrence
of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect
to such Awards will not terminate and may continue to be exercised notwithstanding the Corporate Transaction.
Payment
for Awards in Lieu of Exercise. Notwithstanding the foregoing, in the event an Award will terminate if not exercised prior
to the effective time of a Corporate Transaction, the Board may provide, in its sole discretion, that the holder of such Award
may not exercise such Award but will receive a payment, in such form as may be determined by the Board, equal in value, at the
effective time, to the excess, if any, of (1) the value of the property the Participant would have received upon the exercise
of the Award (including, at the discretion of the Board, any unvested portion of such Award), over (2) any exercise price payable
by such holder in connection with such exercise.
Appointment
of Stockholder Representative. As a condition to the receipt of an Award under this Plan, a Participant will be deemed to
have agreed that the Award will be subject to the terms of any agreement governing a Corporate Transaction involving the Company,
including, without limitation, a provision for the appointment of a stockholder representative that is authorized to act on the
Participant’s behalf with respect to any escrow, indemnities and any contingent consideration.
(a)
No Restriction on Right to Undertake Transactions. The grant of any Award under the Plan and the issuance of shares pursuant
to any Award does not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its
business, any merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock or
of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(a)
Administration by Board. The Board will administer the Plan unless and until the Board delegates administration of the Plan
to a Committee or Committees, as provided in subsection (c) below.
(b)
Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i)
To determine from time to time (1) which of the persons eligible under the Plan will be granted Awards; (2) when and how each
Award will be granted; (3) what type or combination of types of Award will be granted; (4) the provisions of each Award granted
(which need not be identical), including the time or times when a person will be permitted to receive an issuance of Common Stock
or other payment pursuant to an Award; (5) the number of shares of Common Stock or cash equivalent with respect to which an Award
will be granted to each such person; and (6) the Fair Market Value applicable to an Award.
(ii)
To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or
in any Award Agreement, in a manner and to the extent it deems necessary or expedient to make the Plan or Award fully effective.
(iii)
To settle all controversies regarding the Plan and Awards granted under it.
(iv)
To accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will
vest, notwithstanding the provisions in the Award Agreement stating the time at which it may first be exercised or the time during
which it will vest.
(v)
To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30 days prior to the consummation
of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other
than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of Common Stock or the
share price of the Common Stock including any Corporate Transaction, for reasons of administrative convenience.
(vi)
To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not Materially Impair rights and
obligations under any Award granted while the Plan is in effect except with the written consent of the affected Participant.
(vii)
To amend the Plan in any respect the Board deems necessary or advisable; provided, however, that stockholder approval
will be required for any amendment to the extent required by Applicable Law. Except as provided above, rights under any Award
granted before amendment of the Plan will not be Materially Impaired by any amendment of the Plan unless (1) the Company requests
the consent of the affected Participant, and (2) such Participant consents in writing.
(viii)
To submit any amendment to the Plan for stockholder approval.
(ix)
To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but
not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement,
subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that, a Participant’s
rights under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests the consent of the
affected Participant, and (2) such Participant consents in writing.
(x)
Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company and that are not in conflict with the provisions of the Plan or Awards.
(xi)
To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate participation in the Plan
by, or take advantage of specific tax treatment for Awards granted to, Employees, Directors or Consultants who are foreign nationals
or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the
Plan or any Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction).
(xii)
To effect, at any time and from time to time, subject to the consent of any Participant whose Award is Materially Impaired
by such action, (1) the reduction of the exercise price (or strike price) of any outstanding Option or SAR; (2) the cancellation
of any outstanding Option or SAR and the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU
Award or Other Award, under the Plan or another equity plan of the Company, covering the same or a different number of shares
of Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the Board); or (3) any other action that is
treated as a repricing under generally accepted accounting principles.
(c)
Delegation to Committee.
(i)
General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration
of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to another Committee
or a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee may retain the authority to
concurrently administer the Plan with Committee or subcommittee to which it has delegated its authority hereunder and may, at
any time, revest in such Committee some or all of the powers previously delegated. The Board may retain the authority to concurrently
administer the Plan with any Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(ii)
Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from Section 16(b) of the Exchange
Act that is available under Rule 16b-3 of the Exchange Act, the Award will be granted by the Board or a Committee that consists
solely of two or more Non-Employee Directors, as determined under Rule 16b-3(b)(3) of the Exchange Act and thereafter any action
establishing or modifying the terms of the Award will be approved by the Board or a Committee meeting such requirements to the
extent necessary for such exemption to remain available.
(d)
Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or any Committee
in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.
(e)
Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to do one or both
of the following (i) designate Employees who are not Officers to be recipients of Options and SARs (and, to the extent permitted
by Applicable Law, other types of Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine
the number of shares of Common Stock to be subject to such Awards granted to such Employees; provided, however, that the resolutions
or charter adopted by the Board or any Committee evidencing such delegation will specify the total number of shares of Common
Stock that may be subject to the Awards granted by such Officer and that such Officer may not grant an Award to himself or herself.
Any such Awards will be granted on the applicable form of Award Agreement most recently approved for use by the Board or the Committee,
unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything to the contrary herein,
neither the Board nor any Committee may delegate to an Officer who is acting solely in the capacity of an Officer (and not also
as a Director) the authority to determine the Fair Market Value.
4.
Tax Withholding
(a)
Withholding Authorization. As a condition to acceptance of any Award under the Plan, a Participant authorizes withholding
from payroll and any other amounts payable to such Participant, and otherwise agree to make adequate provision for (including),
any sums required to satisfy any U.S. federal, state, local and/or foreign tax or social insurance contribution withholding obligations
of the Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of such Award, as applicable.
Accordingly, a Participant may not be able to exercise an Award even though the Award is vested, and the Company shall have no
obligation to issue shares of Common Stock subject to an Award, unless and until such obligations are satisfied.
(b)
Satisfaction of Withholding Obligation. To the extent permitted by the terms of an Award Agreement, the Company may, in its
sole discretion, satisfy any U.S. federal, state, local and/or foreign tax or social insurance withholding obligation relating
to an Award by any of the following means or by a combination of such means: (i) causing the Participant to tender a cash payment;
(ii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection
with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any amounts otherwise payable
to the Participant; (v) by allowing a Participant to effectuate a “cashless exercise” pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board, or (vi) by such other method as may be set forth in the Award
Agreement.
(c)
No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by Applicable Law the Company has no
duty or obligation to any Participant to advise such holder as to the time or manner of exercising such Award. Furthermore, the
Company has no duty or obligation to warn or otherwise advise such holder of a pending termination or expiration of an Award or
a possible period in which the Award may not be exercised. The Company has no duty or obligation to minimize the tax consequences
of an Award to the holder of such Award and will not be liable to any holder of an Award for any adverse tax consequences to such
holder in connection with an Award. As a condition to accepting an Award under the Plan, each Participant (i) agrees to not make
any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from
such Award or other Company compensation and (ii) acknowledges that such Participant was advised to consult with his or her own
personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either done so or knowingly
and voluntarily declined to do so. Additionally, each Participant acknowledges any Option or SAR granted under the Plan is exempt
from Section 409A only if the exercise or strike price is at least equal to the “fair market value” of the Common
Stock on the date of grant as determined by the Internal Revenue Service and there is no other impermissible deferral of compensation
associated with the Award. Additionally, as a condition to accepting an Option or SAR granted under the Plan, each Participant
agrees not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in the event that the
Internal Revenue Service asserts that such exercise price or strike price is less than the “fair market value” of
the Common Stock on the date of grant as subsequently determined by the Internal Revenue Service.
(d)
Withholding Indemnification. As a condition to accepting an Award under the Plan, in the event that the amount of the Company’s
and/or its Affiliate’s withholding obligation in connection with such Award was greater than the amount actually withheld
by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless
from any failure by the Company and/or its Affiliates to withhold the proper amount.
5.
Miscellaneous.
(a)
Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock,
including shares repurchased by the Company on the open market or otherwise.
(b)
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock pursuant to Awards will constitute
general funds of the Company.
(c)
Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the Company of an Award to any Participant
will be deemed completed as of the date of such corporate action, unless otherwise determined by the Board, regardless of when
the instrument, certificate, or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant.
In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving
the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award
Agreement or related grant documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate
records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related
grant documents.
(d)
Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a holder with respect
to, any shares of Common Stock subject to such Award unless and until (i) such Participant has satisfied all requirements for
exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the Common Stock subject to such Award is
reflected in the records of the Company.
(e)
No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other instrument executed thereunder
or in connection with any Award granted pursuant thereto will confer upon any Participant any right to continue to serve the Company
or an Affiliate in the capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate
to terminate at will and without regard to any future vesting opportunity that a Participant may have with respect to any Award
(i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant
to the terms of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant
to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign jurisdiction
in which the Company or the Affiliate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or
any other instrument executed thereunder or in connection with any Award will constitute any promise or commitment by the Company
or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term
or condition of employment or service or confer any right or benefit under the Award or the Plan unless such right or benefit
has specifically accrued under the terms of the Award Agreement and/or Plan.
(f)
Change in Time Commitment. In the event a Participant’s regular level of time commitment in the performance of his or
her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is an Employee
of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee or takes an extended
leave of absence) after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by
Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award
that is scheduled to vest or become payable after the date of such change in time commitment, and (ii) in lieu of or in combination
with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the
Participant will have no right with respect to any portion of the Award that is so reduced or extended.
(g)
Execution of Additional Documents. As a condition to accepting an Award under the Plan, the Participant agrees to execute
any additional documents or instruments necessary or desirable, as determined in the Plan Administrator’s sole discretion,
to carry out the purposes or intent of the Award, or facilitate compliance with securities and/or other regulatory requirements,
in each case at the Plan Administrator’s request.
(h)
Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written” agreement
or document will include any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website
thereto) or posted on the Company’s intranet (or other shared electronic medium controlled by the Company to which the Participant
has access). By accepting any Award the Participant consents to receive documents by electronic delivery and to participate in
the Plan through any on-line electronic system established and maintained by the Plan Administrator or another third party selected
by the Plan Administrator. The form of delivery of any Common Stock (e.g., a stock certificate or electronic entry evidencing
such shares) shall be determined by the Company.
Clawback/Recovery.
All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required
to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities
are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law
and any clawback policy that the Company otherwise adopts, to the extent applicable and permissible under Applicable Law. In addition,
the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary
or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares of Common Stock or
other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an event
giving rise to a Participant’s right to voluntary terminate employment upon a “resignation for good reason,”
or for a “constructive termination” or any similar term under any plan of or agreement with the Company.
(i)
Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless either (i) the shares
are registered under the Securities Act; or (ii) the Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act. Each Award also must comply with other Applicable Law governing the Award, and a Participant
will not receive such shares if the Company determines that such receipt would not be in material compliance with Applicable Law.
(j)
Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or the form of Award Agreement,
Awards granted under the Plan may not be transferred or assigned by the Participant. After the vested shares subject to an Award
have been issued, or in the case of Restricted Stock and similar awards, after the issued shares have vested, the holder of such
shares is free to assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any
such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable Law.
(k)
Effect on Other Employee Benefit Plans. The value of any Award granted under the Plan, as determined upon grant, vesting or
settlement, shall not be included as compensation, earnings, salaries, or other similar terms used when calculating any Participant’s
benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides.
The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee
benefit plans.
(l)
Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine that the delivery of
Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a portion of any Award may be deferred
and may also establish programs and procedures for deferral elections to be made by Participants. Deferrals will be made in accordance
with the requirements of Section 409A.
(m)
Section 409A. Unless otherwise expressly provided for in an Award Agreement, the Plan and Award Agreements will be interpreted
to the greatest extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A, and,
to the extent not so exempt, in compliance with the requirements of Section 409A. If the Board determines that any Award granted
hereunder is not exempt from and is therefore subject to Section 409A, the Award Agreement evidencing such Award will incorporate
the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the extent an
Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement.
Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if the
shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation”
under Section 409A is a “specified employee” for purposes of Section 409A, no distribution or payment of any amount
that is due because of a “separation from service” (as defined in Section 409A without regard to alternative definitions
thereunder) will be issued or paid before the date that is six months and one day following the date of such Participant’s
“separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment
can be made in a manner that complies with Section 409A, and any amounts so deferred will be paid in a lump sum on the day after
such six month period elapses, with the balance paid thereafter on the original schedule.
(n)
Choice of Law. This Plan and any controversy arising out of or relating to this
Plan shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to conflict
of law principles that would result in any application of any law other than the law of the State of Delaware.
6.
Covenants of the Company.
(a)
Compliance with Law. The Company will seek to obtain from each regulatory commission or agency, as may be deemed to be necessary,
having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock
upon exercise or vesting of the Awards; provided, however, that this undertaking will not require the Company to register
under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable
efforts and at a reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock under the Plan, the
Company will be relieved from any liability for failure to issue and sell Common Stock upon exercise or vesting of such Awards
unless and until such authority is obtained. A Participant is not eligible for the grant of an Award or the subsequent issuance
of Common Stock pursuant to the Award if such grant or issuance would be in violation of any Applicable Law.
7.
Additional Rules for Awards Subject to Section 409A.
(a)
Application. Unless the provisions of this Section of the Plan are expressly superseded by the provisions in the form of Award
Agreement, the provisions of this Section shall apply and shall supersede anything to the contrary set forth in the Award Agreement
for a Non-Exempt Award.
(b)
Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a Non-Exempt Award is subject to Section 409A
due to application of a Non-Exempt Severance Arrangement, the following provisions of this subsection (b) apply.
(i)
If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service in accordance with
the vesting schedule set forth in the Award Agreement, and does not accelerate vesting under the terms of a Non-Exempt Severance
Arrangement, in no event will the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December
31st of the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the
applicable vesting date.
(ii)
If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with the
Participant’s Separation from Service, and such vesting acceleration provisions were in effect as of the date of grant of
the Non-Exempt Award and, therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will
be earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation from Service in accordance with
the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of
the Participant’s Separation from Service. However, if at the time the shares would otherwise be issued the Participant
is subject to the distribution limitations contained in Section 409A applicable to “specified employees,” as defined
in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is six months following the date
of such Participant’s Separation from Service, or, if earlier, the date of the Participant’s death that occurs within
such six month period.
(iii)
If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance Arrangement in connection with a Participant’s
Separation from Service, and such vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt
Award and, therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting
of the Non-Exempt Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same
schedule as set forth in the Grant Notice as if they had vested in the ordinary course during the Participant’s Continuous
Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule is intended to satisfy the requirements
of payment on a specified date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4).
(c)
Treatment of Non-Exempt Awards Upon a Corporate Transaction for Employees and Consultants. The provisions of this subsection
(c) shall apply and shall supersede anything to the contrary set forth in the Plan with respect to the permitted treatment of
any Non-Exempt Award in connection with a Corporate Transaction if the Participant was either an Employee or Consultant upon the
applicable date of grant of the Non-Exempt Award.
(i)
Vested Non-Exempt Awards. The following provisions shall apply to any Vested Non-Exempt Award in connection with a Corporate
Transaction:
(1)
If the Corporate Transaction is also a Section 409A Change in Control then the Acquiring Entity may not assume, continue or
substitute the Vested Non-Exempt Award. Upon the Section 409A Change of Control the settlement of the Vested Non-Exempt Award
will automatically be accelerated and the shares will be immediately issued in respect of the Vested Non-Exempt Award. Alternatively,
the Company may instead provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares
that would otherwise be issued to the Participant upon the Section 409A Change of Control.
(2)
If the Corporate Transaction is not also a Section 409A Change of Control, then the Acquiring Entity must either assume, continue
or substitute each Vested Non-Exempt Award. The shares to be issued in respect of the Vested Non-Exempt Award shall be issued
to the Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the
Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring
Entity may instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the shares that
would otherwise be issued to the Participant on such issuance dates, with the determination of the Fair Market Value of the shares
made on the date of the Corporate Transaction.
(ii)
Unvested Non-Exempt Awards. The following provisions shall apply to any Unvested Non-Exempt Award unless otherwise determined
by the Board pursuant to subsection (e) of this Section.
(1)
In the event of a Corporate Transaction, the Acquiring Entity shall assume, continue or substitute any Unvested Non-Exempt
Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award will remain subject to the same vesting and forfeiture
restrictions that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of any Unvested
Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same schedule that the shares would have been
issued to the Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of
an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the
Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the determination
of Fair Market Value of the shares made on the date of the Corporate Transaction.
(2)
If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt Award in connection with a Corporate
Transaction, then such Award shall automatically terminate and be forfeited upon the Corporate Transaction with no consideration
payable to any Participant in respect of such forfeited Unvested Non-Exempt Award. Notwithstanding the foregoing, to the extent
permitted and in compliance with the requirements of Section 409A, the Board may in its discretion determine to elect to accelerate
the vesting and settlement of the Unvested Non-Exempt Award upon the Corporate Transaction, or instead substitute a cash payment
equal to the Fair Market Value of such shares that would otherwise be issued to the Participant, as further provided in subsection
(e)(ii) below. In the absence of such discretionary election by the Board, any Unvested Non-Exempt Award shall be forfeited without
payment of any consideration to the affected Participants if the Acquiring Entity will not assume, substitute or continue the
Unvested Non-Exempt Awards in connection with the Corporate Transaction.
(3)
The foregoing treatment shall apply with respect to all Unvested Non-Exempt Awards upon any Corporate Transaction, and regardless
of whether or not such Corporate Transaction is also a Section 409A Change of Control.
(d)
Treatment of Non-Exempt Awards Upon a Corporate Transaction for Non-Employee Directors. The following provisions of this subsection
(d) shall apply and shall supersede anything to the contrary that may be set forth in the Plan with respect to the permitted treatment
of a Non-Exempt Director Award in connection with a Corporate Transaction.
(i)
If the Corporate Transaction is also a Section 409A Change of Control then the Acquiring Entity may not assume, continue or
substitute the Non-Exempt Director Award. Upon the Section 409A Change of Control the vesting and settlement of any Non-Exempt
Director Award will automatically be accelerated and the shares will be immediately issued to the Participant in respect of the
Non-Exempt Director Award. Alternatively, the Company may provide that the Participant will instead receive a cash settlement
equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the Section 409A Change of
Control pursuant to the preceding provision.
(ii)
If the Corporate Transaction is not also a Section 409A Change of Control, then the Acquiring Entity must either assume, continue
or substitute the Non-Exempt Director Award. Unless otherwise determined by the Board, the Non-Exempt Director Award will remain
subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction.
The shares to be issued in respect of the Non-Exempt Director Award shall be issued to the Participant by the Acquiring Entity
on the same schedule that the shares would have been issued to the Participant if the Corporate Transaction had not occurred.
In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash
payment on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant
on such issuance dates, with the determination of Fair Market Value made on the date of the Corporate Transaction.
(e)
If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) shall apply and supersede anything to the
contrary that may be set forth in the Plan or the Award Agreement with respect to the permitted treatment of such Non-Exempt Award:
(i)
Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award shall not result in any acceleration
of the scheduled issuance dates for the shares in respect of the Non-Exempt Award unless earlier issuance of the shares upon the
applicable vesting dates would be in compliance with the requirements of Section 409A.
(ii)
The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent permitted and in compliance
with the requirements of Section 409A, including pursuant to any of the exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix).
(iii)
To the extent the terms of any Non-Exempt Award provide that it will be settled upon a Change in Control or Corporate Transaction,
to the extent it is required for compliance with the requirements of Section 409A, the Change in Control or Corporate Transaction
event triggering settlement must also constitute a Section 409A Change of Control. To the extent the terms of a Non-Exempt Award
provides that it will be settled upon a termination of employment or termination of Continuous Service, to the extent it is required
for compliance with the requirements of Section 409A, the termination event triggering settlement must also constitute a Separation
From Service. However, if at the time the shares would otherwise be issued to a Participant in connection with a “separation
from service” such Participant is subject to the distribution limitations contained in Section 409A applicable to “specified
employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the date that is
six months following the date of the Participant’s Separation From Service, or, if earlier, the date of the Participant’s
death that occurs within such six month period.
(iv)
The provisions in this subsection (e) for delivery of the shares in respect of the settlement of a RSU Award that is a Non-Exempt
Award are intended to comply with the requirements of Section 409A so that the delivery of the shares to the Participant in respect
of such Non-Exempt Award will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so
interpreted.
8.
Severability.
If
all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to be unlawful or invalid,
such unlawfulness or invalidity shall not invalidate any portion of the Plan or such Award Agreement not declared to be unlawful
or invalid. Any Section of the Plan or any Award Agreement (or part of such a Section) so declared to be unlawful or invalid shall,
if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid.
9.
Termination of the Plan.
The
Board may suspend or terminate the Plan at any time.
No
Incentive Stock Options may be granted after the tenth anniversary of the earlier of: (i) the Adoption Date, or (ii) the Effective
Date.
No
Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
Definitions.
As
used in the Plan, the following definitions apply to the capitalized terms indicated below:
(a)
“Acquiring Entity” means the surviving or acquiring corporation (or its parent company) in connection
with a Corporate Transaction.
(b)
Adoption Date” means the date the Plan is first approved by the Board or Compensation Committee.
(c)
“Affiliate” means, at the time of determination, any “parent” or “subsidiary”
of the Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board may determine the time or
times at which “parent” or “subsidiary” status is determined within the foregoing definition.
(d)
“Applicable Law” means shall mean any applicable securities, federal, state, foreign, material local
or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing
rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body (including under the authority of any applicable self-regulating
organization such as the Nasdaq Stock Market, New York Stock Exchange, or the Financial Industry Regulatory Authority).
(e)
“Award” means any right to receive Common Stock, cash or other property granted under the Plan (including
an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Stock Award, a RSU Award, a SAR, a Performance Award or any
Other Award).
(f)
“Award Agreement” means a written agreement between the Company and a Participant evidencing the
terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the agreement containing the
written summary of the general terms and conditions applicable to the Award and which is provided to a Participant along with
the Grant Notice.
(g)
“Board” means the Board of Directors of the Company (or its designee). Any decision or determination
made by the Board shall be a decision or determination that is made in the sole discretion of the Board (or its designee), and
such decision or determination shall be final and binding on all Participants.
(h)
“Capitalization Adjustment” means any change that is made in, or other events that occur with respect
to, the Common Stock subject to the Plan or subject to any Award after the Effective Date without the receipt of consideration
by the Company through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property
other than cash, large nonrecurring cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Statement
of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding
the foregoing, the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(i)
“Cause” has the meaning ascribed to such term in any written agreement between the Participant and
the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence
of any of the following events: (i) such Participant’s commission of any crime involving fraud, dishonesty or moral turpitude
or attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (ii) such Participant’s
intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty
owed to the Company; (iii) such Participant’s unauthorized use or disclosure of the Company’s confidential information
or trade secrets; or (iv) such Participant’s gross misconduct, conduct that constitutes gross insubordination, incompetence
or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to the business of the
Company. The determination that a termination of the Participant’s Continuous Service is either for Cause or without Cause
will be made by the Board with respect to Participants who are executive officers of the Company and by the Company’s Chief
Executive Officer with respect to Participants who are not executive officers of the Company. Any determination by the Company
that the Continuous Service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held
by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant
for any other purpose.
(j)
“Change in Control” or “Change of Control” means the occurrence, in a
single transaction or in a series of related transactions, of any one or more of the following events; provided, however, to the
extent necessary to avoid adverse personal income tax consequences to the Participant in connection with an Award, also constitutes
a Section 409A Change of Control:
(i)
any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50%
of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation
or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of the Company
by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction
or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of
equity securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition
of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition
had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated
percentage threshold, then a Change in Control shall be deemed to occur;
(ii)
there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior
thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the combined
outstanding voting power of the surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of
the combined outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar transaction,
in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately
prior to such transaction;
(iii)
the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company,
or a complete dissolution or liquidation of the Company shall otherwise occur, except for a liquidation into a parent corporation;
(iv)
there is consummated a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all
of the consolidated assets of the Company and its Subsidiaries to an Entity, more than 50% of the combined voting power of the
voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of
the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; or
(v)
individuals who, on the date the Plan is adopted by the Board, are members of the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment
or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members
of the Incumbent Board then still in office, such new member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.
Notwithstanding
the foregoing or any other provision of this Plan, (A) the term Change in Control shall not include a sale of assets, merger or
other transaction effected exclusively for the purpose of changing the domicile of the Company, and (B) the definition of Change
in Control (or any analogous term) in an individual written agreement between the Company or any Affiliate and the Participant
shall supersede the foregoing definition with respect to Awards subject to such agreement; provided, however, that if no
definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition
shall apply.
“Code”
means the Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.
“Committee”
means the Compensation Committee and any other committee of Directors to whom authority has been delegated by the Board or Compensation
Committee in accordance with the Plan.
(k)
“Common Stock” means the common stock of the Company.
(l)
“Company” means Power REIT, a Maryland real estate investment trust.
(m)
“Compensation Committee” means the Compensation Committee of the Board.
(n)
“Consultant” means any person, including an advisor, who is (i) engaged by the Company or an Affiliate
to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors
of an Affiliate and is compensated for such services. However, service solely as a Director, or payment of a fee for such service,
will not cause a Director to be considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing,
a person is treated as a Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available
to register either the offer or the sale of the Company’s securities to such person.
(o)
“Continuous Service” means that the Participant’s service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in the Entity for which the
Participant renders such service, provided that there is no interruption or termination of the Participant’s service with
the Company or an Affiliate, will not terminate a Participant’s Continuous Service; provided, however, that if the
Entity for which a Participant is rendering services ceases to qualify as an Affiliate, as determined by the Board, such Participant’s
Continuous Service will be considered to have terminated on the date such Entity ceases to qualify as an Affiliate. For example,
a change in status from an Employee of the Company to a Consultant of an Affiliate or to a Director will not constitute an interruption
of Continuous Service. To the extent permitted by law, the Board or the chief executive officer of the Company, in that party’s
sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of absence
approved by the Board or chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers
between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous
Service for purposes of vesting in an Award only to such extent as may be provided in the Company’s leave of absence policy,
in the written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law.
In addition, to the extent required for exemption from or compliance with Section 409A, the determination of whether there has
been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the
definition of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to
any alternative definition thereunder).
(p)
“Corporate Transaction” means the consummation, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i)
a sale or other disposition of all or substantially all, as determined by the Board, of the consolidated assets of the Company
and its Subsidiaries;
(ii)
a sale or other disposition of at least 50% of the outstanding securities of the Company;
(iii)
a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or
(iv)
a merger, consolidation or similar transaction following which the Company is the surviving corporation but the shares of
Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by
virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.
(q)
“Director” means a member of the Board.
(r)
“determine” or “determined” means as determined by the Board or the Committee (or its designee)
in its sole discretion.
(s)
“Disability” means, with respect to a Participant, such Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death
or which has lasted or can be expected to last for a continuous period of not less than 12 months, as provided in Section 22(e)(3)
of the Code, and will be determined by the Board on the basis of such medical evidence as the Board deems warranted under the
circumstances.
(t)
“Effective Date” means the date of the 2020 annual meeting of the Company’s stockholders,
provided this Plan is approved by the Company’s stockholders on such date.
(u)
“Employee” means any person employed by the Company or an Affiliate. However, service solely as
a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes
of the Plan.
(v)
“Employer” means the Company or the Affiliate of the Company that employs the Participant.
(w)
“Entity” means a corporation, partnership, limited liability company or other entity.
(x)
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(y)
“Exchange Act Person” means any natural person, Entity or “group” (within the meaning
of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the Company
or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an Entity Owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of
the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange
Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of the Company representing more than
50% of the combined voting power of the Company’s then outstanding securities.
(z)
“Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of
the Common Stock (as determined on a per share or aggregate basis, as applicable) determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or traded on any established market, the Fair Market Value
will be the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in the Common Stock) on the date of determination, as reported in a source the Board deems reliable.
(ii)
If there is no closing sales price for the Common Stock on the date of determination, then the Fair Market Value will be the
closing selling price on the last preceding date for which such quotation exists.
(iii)
In the absence of such markets for the Common Stock, or if otherwise determined by the Board, the Fair Market Value will be
determined by the Board in good faith and in a manner that complies with Sections 409A and 422 of the Code.
“Governmental
Body” means any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction
of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or regulatory body, or quasi-governmental
body of any nature (including any governmental division, department, administrative agency or bureau, commission, authority, instrumentality,
official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the
avoidance of doubt, any Tax authority) or other body exercising similar powers or authority; or (d) self-regulatory organization
(including the Nasdaq Stock Market, New York Stock Exchange, and the Financial Industry Regulatory Authority).
(aa)
“Grant Notice” means the notice provided to a Participant that he or she has been granted an Award under
the Plan and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of shares of
Common Stock subject to the Award or potential cash payment right, (if any), the vesting schedule for the Award (if any) and other
key terms applicable to the Award.
(bb)
“Incentive Stock Option” means an option granted pursuant to Section 0 of the Plan that is intended
to be, and qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
“Materially
Impair” means any amendment to the terms of the Award that materially adversely affects the Participant’s
rights under the Award. A Participant’s rights under an Award will not be deemed to have been Materially Impaired by any
such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair
the Participant’s rights. For example, the following types of amendments to the terms of an Award do not Materially Impair
the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number of shares subject
to an Option that may be exercised, (ii) to maintain the qualified status of the Award as an Incentive Stock Option under Section
422 of the Code; (iii) to change the terms of an Incentive Stock Option in a manner that disqualifies, impairs or otherwise affects
the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the manner of exemption
from, or to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (v) to comply with other
Applicable Laws.
(cc)
“Non-Employee Director” means a Director who either (i) is not a current employee or officer of
the Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an Affiliate for
services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would
not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-K,
and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K;
or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(dd)
“Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A, including as
the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the Participant or imposed
by the Company, (ii) the terms of any Non-Exempt Severance Agreement.
(ee)
“Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a Director but not
an Employee on the applicable grant date.
(ff)
“Non-Exempt Severance Arrangement” means a severance arrangement or other agreement between the Participant
and the Company that provides for acceleration of vesting of an Award and issuance of the shares in respect of such Award upon
the Participant’s termination of employment or separation from service (as such term is defined in Section 409A(a)(2)(A)(i)
of the Code (and without regard to any alternative definition thereunder) (“Separation from Service”))
and such severance benefit does not satisfy the requirements for an exemption from application of Section 409A provided under
Treasury Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise.
(gg)
“Nonstatutory Stock Option” means any option granted pursuant to Section 0 of the Plan that does
not qualify as an Incentive Stock Option.
(hh)
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act.
(ii)
“Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common
Stock granted pursuant to the Plan.
(jj)
“Option Agreement” means a written agreement between the Company and the Optionholder evidencing
the terms and conditions of the Option grant. The Option Agreement includes the Grant Notice for the Option and the agreement
containing the written summary of the general terms and conditions applicable to the Option and which is provided to a Participant
along with the Grant Notice. Each Option Agreement will be subject to the terms and conditions of the Plan.
(kk)
“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Option.
(ll)
“Other Award” means an award based in whole or in part by reference to the Common Stock which is
granted pursuant to the terms and conditions of Section 0.
(mm)
“Other Award Agreement” means a written agreement between the Company and a holder of an Other Award
evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subject to the terms and conditions
of the Plan.
(nn)
“Own,” “Owned,” “Owner,” “Ownership”
means that a person or Entity will be deemed to “Own,” to have “Owned,” to be the “Owner”
of, or to have acquired “Ownership” of securities if such person or Entity, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct
the voting, with respect to such securities.
(oo)
“Participant” means an Employee, Director or Consultant to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Award.
(pp)
“Performance Award” means an Award that may vest or may be exercised or a cash award that may vest
or become earned and paid contingent upon the attainment during a Performance Period of certain Performance Goals and which is
granted under the terms and conditions of Section 0 pursuant to such terms as are approved by the Board. In addition, to the extent
permitted by Applicable Law and set forth in the applicable Award Agreement, the Board may determine that cash or other property
may be used in payment of Performance Awards. Performance Awards that are settled in cash or other property are not required to
be valued in whole or in part by reference to, or otherwise based on, the Common Stock.
(qq)
“Performance Criteria” means the one or more criteria that the Board will select for purposes of
establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance
Goals may be based on any measure of performance selected by the Board.
(rr)
“Performance Goals” means, for a Performance Period, the one or more goals established by the Board
for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect
to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance
of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Board
(i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting forth the Performance Goals
at the time the Performance Goals are established, the Board will appropriately make adjustments in the method of calculating
the attainment of Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or other nonrecurring
charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles;
(4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual”
in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the
dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the Company achieved performance
objectives at targeted levels during the balance of a Performance Period following such divestiture; (8) to exclude the effect
of any change in the outstanding shares of common stock of the Company by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate
change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based
compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in connection with
potential acquisitions or divestitures that are required to expensed under generally accepted accounting principles; and (11)
to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting
principles. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon
attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for such Performance
Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement
as specified in the Award Agreement or the written terms of a Performance Cash Award.
(ss)
“Performance Period” means the period of time selected by the Board over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a Participant’s right to vesting or exercise
of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.
(tt)
“Plan” means this Power REIT 2020 Equity Incentive Plan, as amended from time to time.
(uu)
“Plan Administrator” means the person, persons, and/or third-party administrator designated by the Company
to administer the day to day operations of the Plan and the Company’s other equity incentive programs.
(vv)
“Post-Termination Exercise Period” means the period following termination of a Participant’s
Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h).
(ww)
“Prior Plan’s Available Reserve” means the number of shares available for the grant of new
awards under the Prior Plan, to the extent applicable, as of immediately prior to the Effective Date.
“Prior
Plan” means the Power REIT 2012 Equity Incentive Plan, as amended.
(xx)
“Prospectus” means the document containing the Plan information specified in Section 10(a) of the
Securities Act.
(yy)
“Restricted Stock Award” or “RSA” means an Award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 0.
(zz)
“Restricted Stock Award Agreement” means a written agreement between the Company and a holder of
a Restricted Stock Award evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award Agreement
includes the Grant Notice for the Restricted Stock Award and the agreement containing the written summary of the general terms
and conditions applicable to the Restricted Stock Award and which is provided to a Participant along with the Grant Notice. Each
Restricted Stock Award Agreement will be subject to the terms and conditions of the Plan.
(aaa)
“Returning Shares” means shares subject to outstanding stock awards granted under the Prior Plan
and that following the Effective Date: (A) are not issued because such stock award or any portion thereof expires or otherwise
terminates without all of the shares covered by such stock award having been issued; (B) are not issued because such stock award
or any portion thereof is settled in cash; (C) are forfeited back to or repurchased by the Company because of the failure to meet
a contingency or condition required for the vesting of such shares; (D) are withheld or reacquired to satisfy the exercise, strike
or purchase price; or (E) are withheld or reacquired to satisfy a tax withholding obligation.
(bbb)
“RSU Award” or “RSU” means an Award of restricted stock units representing
the right to receive an issuance of shares of Common Stock which is granted pursuant to the terms and conditions of Section 0.
(ccc)
“RSU Award Agreement” means a written agreement between the Company and a holder of a RSU Award
evidencing the terms and conditions of a RSU Award grant. The RSU Award Agreement includes the Grant Notice for the RSU Award
and the agreement containing the written summary of the general terms and conditions applicable to the RSU Award and which is
provided to a Participant along with the Grant Notice. Each RSU Award Agreement will be subject to the terms and conditions of
the Plan.
(ddd)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.
(eee)
“Rule 405” means Rule 405 promulgated under the Securities Act.
(fff)
“Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder.
(ggg)
“Section 409A Change of Control” means a change in the ownership or effective control of the Company,
or in the ownership of a substantial portion of the Company’s assets, as provided in Section 409A(a)(2)(A)(v) of the Code
and Treasury Regulations Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).
(hhh)
“Securities Act” means the Securities Act of 1933, as amended.
(iii)
“Share Reserve” means the number of shares available for issuance under the Plan as set forth in Section
2(a).
(jjj)
“Stock Appreciation Right” or “SAR” means a right to receive the appreciation
on Common Stock that is granted pursuant to the terms and conditions of Section 0.
(kkk)
“SAR Agreement” means a written agreement between the Company and a holder of a SAR evidencing the
terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice for the SAR and the agreement containing the
written summary of the general terms and conditions applicable to the SAR and which is provided to a Participant along with the
Grant Notice. Each SAR Agreement will be subject to the terms and conditions of the Plan.
(lll)
“Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the
outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective
of whether, at the time, stock of any other class or classes of such corporation will have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited
liability company or other entity in which the Company has a direct or indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than 50%.
(mmm)
“Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Affiliate.
(nnn)
“Trading Policy” means the Company’s policy permitting certain individuals to sell Company
shares only during certain “window” periods and/or otherwise restricts the ability of certain individuals to transfer
or encumber Company shares, as in effect from time to time.
(ooo)
“Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that had not vested in accordance
with its terms upon or prior to the date of any Corporate Transaction.
(ppp)
“Vested Non-Exempt Award” means the portion of any Non-Exempt Award that had vested in accordance
with its terms upon or prior to the date of a Corporate Transaction.