UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
(Rule
14c-101)
SCHEDULE
14C INFORMATION
Information
Statement Pursuant to Section 14(c) of the
Securities
Exchange Act of 1934
(Amendment
No. )
| Filed
by the Registrant ☒ |
Filed
by a Party other than the Registrant ☐ |
Check the appropriate box:
| ☒ | Preliminary Information Statement |
| ☐ | Confidential,
for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
| ☐ | Definitive Information Statement |
ISPIRE
TECHNOLOGY INC.
(Name
of Registrant As Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
| ☒ |
No fee required. |
| |
|
| ☐ |
Fee paid previously with preliminary materials. |
| |
|
| ☐ |
Fee computed on table in exhibit required by Item 25(b) of Schedule
14A (17 CFR 240.14a-101) per Item 1 of this Schedule and Exchange Act Rules 14c-5(g) and 0-11 |
ISPIRE
TECHNOLOGY INC.
19700
Magellan Drive
Los
Angeles, CA 90502
NOTICE
OF STOCKHOLDER ACTION BY WRITTEN CONSENT
We
Are Not Asking You for a Proxy and
You
Are Requested Not to Send Us a Proxy
August
[●], 2024
To
our Stockholders:
We
are furnishing the attached information statement (the “Information Statement”) to the holders of common stock, par
value $0.001 per share (the “Common Stock”), of Ispire Technology Inc., a Delaware corporation (the “Company”
“we,” “us” or “our”). This information statement is being furnished to holders
of shares of our Common Stock as of the close of business on August 9, 2024, the record date set in connection with this Information
Statement (the “Record Date”), pursuant to the General Corporation Law of the State of Delaware (the “DGCL”)
and our bylaws (the “Bylaws”).
The
purpose of the Information Statement is to notify our stockholders that, in lieu of a special meeting of the stockholders of the Company
and pursuant to the DGCL, on August 9, 2024, the board of directors of the Company (the “Board”) and Pride Worldwide
Investment Limited (a company the sole stockholder of which is Tuanfang Liu, our co-Chief Executive Officer and Chairman), the holder
of a majority of the outstanding Common Stock of the Company (such holder, the “Majority Stockholder”), adopted resolutions
by written consent to approve the Amended and Restated Ispire Technology Inc. 2022 Equity Incentive Plan (the “Plan”)
and to ratify the award of restricted stock units (the “RSU Awards”) to Michael Wang, Ted Rouhani, Jeff Doiron, Luna
Stower, Zach McMahon, Julio Beltran, Adam Rothstein, Nakisa Motamedi, Vicky Silva, Kepler Edwards, Giuseppe DeVitis, and John Monds under
the terms of the Plan.
This
notice and Information Statement shall constitute notice to you under Section 228 of the DGCL that the Plan was approved by the written
consent of the Majority Stockholder.
The
Information Statement is being provided to you for your information to comply with the requirements of Regulation 14C of the Securities
Exchange Act of 1934, as amended (“Exchange Act”). This Information Statement constitutes notice to you of the aforementioned
corporate actions to be taken without a meeting, by less than unanimous consent of our stockholders, pursuant to Section 228 of the DGCL.
You are urged to read this Information Statement carefully in its entirety for a description of the Plan adopted by the Majority Stockholder.
However, no action is required on your part in connection with this document. No meeting of our stockholders will be held
or proxies requested because we have received written consent to these matters from the Majority Stockholder who holds a majority of
the aggregate issued and outstanding shares of our Common Stock.
Under
Rule 14c-2(b) of the Exchange Act, none of the actions described in this Information Statement may be taken earlier than 20 calendar
days after we have sent or given the Information Statement to our stockholders. We intend to distribute this Notice and Information Statement
to our stockholders on or about [●], 2024.
The
Board is not soliciting your proxy in connection with the adoption of these resolutions and proxies are not requested from stockholders.
You are urged to read the Information Statement in its entirety for a description of the Plan adopted by the Majority Stockholder.
The
enclosed Information Statement will be mailed on or about [●], 2024 to stockholders of record on the Record Date.
THIS
INFORMATION STATEMENT IS SOLELY FOR THE PURPOSE OF INFORMING STOCKHOLDERS OF THE MATTERS DESCRIBED HEREIN. WE ARE NOT ASKING YOU FOR
A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. NO VOTE OR OTHER ACTION OF THE COMPANY’S STOCKHOLDERS IS REQUIRED IN CONNECTION
WITH THIS INFORMATION STATEMENT. PLEASE NOTE THAT THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS MEETING WILL
BE HELD TO CONSIDER THE MATTERS DESCRIBED HEREIN.
| By Order of
the Board of Directors |
|
| |
|
|
| By: |
/s/
|
|
| Name: |
Michael Wang |
|
| Title: |
Co-Chief Executive Officer |
|
| Date: |
August [●], 2024 |
|
ISPIRE
TECHNOLOGY INC.
19700
Magellan Drive
Los
Angeles, CA 90502
INFORMATION
STATEMENT PURSUANT TO SECTION 14(C)
OF
THE SECURITIES EXCHANGE ACT OF 1934
The
purpose of this information statement (the “Information Statement”) is to notify our stockholders that on August 9,
2024, the board of directors (the “Board”) and the holder of a majority of the outstanding common stock, par value
$0.0001 per share (the “Common Stock”) of Ispire Technology Inc., a Delaware corporation (the “Company”
“we,” “us” or “our”) (the “Majority Stockholder”) adopted
resolutions by written consent, to approve the Ispire Technology Inc. 2022 Equity Incentive Plan (the “Plan”) and
to ratify the RSU Awards to Michael Wang, Ted Rouhani, Jeff Doiron, Luna Stower, Zach McMahon, Julio Beltran, Adam Rothstein, Nakisa
Motamedi, Vicky Silva, Kepler Edwards, Giuseppe DeVitis, and John Monds under the terms of the Plan.
The ability to proceed without a special meeting of
the stockholders to approve, adopt and/or ratify this corporate action is authorized by Section 228 of the DGCL which provides that, unless
otherwise provided in our Certificate of Incorporation and Bylaws, action required or permitted to be taken at a meeting of our stockholders
may be taken without a meeting if a written consent that sets forth the action so taken is signed by stockholders holding at least a majority
of the voting power of the Company, except that if a different proportion of voting power is required for such an action at a meeting,
then that proportion of written consents is required. Such consent shall have the same force and effect as a majority vote of the stockholders
and may be stated as such in any document. Our Certificate of Incorporation and Bylaws do not contain any provisions contrary to the provisions
of Section 228 of the DGCL. Thus, to eliminate the costs to us and management time involved in holding a special meeting, and in order
to take the Corporate Action as described in this Information Statement, the Majority Stockholder, as the holder of record of approximately
58.7% of the outstanding shares of Common Stock, executed and delivered a written consent to us.
On
August 9, 2024, the Company’s Board adopted the Plan, subject to stockholder approval. Pride Worldwide Investment Limited, the
Majority Stockholder (the sole stockholder of which is Tuanfang Liu, our co-Chief Executive Officer and Chairman) is the holder of 33,250,000
shares of Common Stock. The voting power owned by the Majority Stockholder represented approximately 58.7% of the total voting power
of all issued and outstanding shares. As a result, the Majority Stockholder held the authority to approve the Plan and to ratify the
RSU Awards and on 9, 2024, such Majority Stockholder approved the Plan and ratified the RSU Awards.
The
enclosed Information Statement is being furnished to holders of shares of our Common Stock as of the close of business on August 9, 2024,
the record date set in connection with this Information Statement (the “Record Date”), pursuant to the General Corporation
Law of the State of Delaware (the “DGCL”) and our bylaws (the “Bylaws”). As of the Record Date,
our authorized capitalization consisted of 140,000,000 shares of Common Stock, of which on 56,641,041 shares of Common Stock are issued
and outstanding, and 10,000,000 shares of preferred stock, none of which shares of preferred stock are issued and outstanding. The required
vote to approve the Plan and to ratify the RSU Awards was a majority of the issued and outstanding shares of Common Stock.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
We
are not seeking written consent from any other stockholder, and the other stockholders will not be given an opportunity to vote with
respect to the foregoing action. All necessary corporate approvals have been obtained. This Information Statement is furnished solely
for the purposes of advising stockholders of the action taken by the Majority Stockholder and giving stockholders notice of such actions
taken in full satisfaction of any notice requirements we may have under the DGCL and of Regulation 14C of the Exchange Act.
Under
federal securities laws, the Plan may not be adopted until 20 calendar days after the date of distribution of this Information Statement
to our stockholders. Therefore, notwithstanding the execution and delivery of the written consent, the adoption of the Plan will not
occur until that time has elapsed.
Under
the DGCL, Company stockholders are not entitled to appraisal rights with respect to approval of the Plan.
AMENDED
AND RESTATED
ISPIRE
TECHNOLOGY INC. 2022
EQUITY
INCENTIVE PLAN
The
following is a summary of the material features of the Amended and Restated Ispire Technology Inc. 2022 Equity Incentive Plan (the “Amended
and Restated Plan”).
Eligibility
The
Administrator may grant awards to any director, employee or consultant of the Company or its subsidiaries. Only employees are eligible
to receive incentive stock options.
Administration
The
Amended and Restated Plan will be administered by the Board of Directors (the “Board”) or one more committees or subcommittees
of the Board, which will be comprised, unless otherwise determined by the Board, solely of not less than two members who will be non-employee
directors (a “Committee”), or any officer that has been delegated administrative authority pursuant to the Amended and Restated
Plan for the duration such delegation is in effect (collectively, the “Administrator”). The Administrator, which initially
will be the Board with respect to awards to non-employee directors and the Compensation Committee of our Board with respect to other
participants. The Administrator will have the authority to make all determinations and interpretations under, prescribe all forms for
use with, and adopt rules for the administration of the Amended and Restated Plan, subject to the Amended and Restated Plan’s express
terms and conditions. The Administrator will also set the terms and conditions of all awards under the Amended and Restated Plan, including
any vesting and vesting acceleration conditions.
Share
Reserve
The
maximum aggregate number of shares that may be issued under the Amended and Restated Plan is the sum of (A) 9,724,741, plus (B) an
increase commencing on January 1, 2025 and continuing annually on each anniversary thereof through and including January 1, 2034,
equal to the lesser of (i) 5% of the Shares outstanding on the last day of the immediately preceding calendar year and (ii) such
smaller number of Shares as determined by the Board or the Committee.
15,000,000
shares of our common stock may be issued upon the exercise of incentive stock options.
Shares
issuable under the Amended and Restated Plan may be authorized, but unissued, or reacquired shares. Shares underlying any awards under
the Amended and Restated Plant that are settled in cash, forfeited, canceled, repurchased, held back upon exercise of an option or settlement
of an award to cover the exercise price or tax withholding satisfied without the issuance of stock or otherwise terminated (other than
by exercise) will be added back to the shares available for issuance under the Amended and Restated Plan, although shares shall not again
become available for issuance as incentive stock options. Additionally, shares issued as “substitute awards” (as defined
in the Amended and Restated Plan) will not count against the Amended and Restated Plan’s share limit, except substitute awards
that are incentive stock options will count against the incentive stock option limit.
The
share reserve described herein may be subject to certain adjustments in the event of certain changes in the capitalization of the Company
(see Equitable Adjustments below).
Annual
Limitation on Awards to Non-Employee Directors
The
Amended and Restated Plan contains a limitation whereby the value of all awards under the Amended and Restated Plan and all other cash
compensation paid by the Company to any non-employee director may not exceed $750,000 for the first calendar year a non-employee director
is initially appointed to the Board, and $500,000 in any other calendar year.
Types
of Awards
The
Amended and Restated Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units,
performance awards, dividend equivalent awards, and other stock- or cash-based awards (collectively, “awards”).
Stock
Options. The Amended and Restated Plan permits the granting of both options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and options that do not so qualify. Options granted
under the Amended and Restated Plan will be nonqualified options if they fail to qualify as incentive stock options or exceed the annual
limit on incentive stock options. Incentive stock options may only be granted to employees of the Company and its subsidiaries. Nonqualified
options may be granted to any persons eligible to receive awards under the Amended and Restated Plan.
The
exercise price of each option will be determined by the Administrator, but such exercise price may not be less than 100% of the fair
market value of one share of Company common stock on the date of grant or, in the case of an incentive stock option granted to a 10%
or greater stockholder, 110% of such share’s fair market value. The term of each option will be set by the Administrator and may
not exceed ten (10) years from the date of grant (or five (5) years for an incentive stock option granted to a 10% or greater stockholder).
The Administrator will determine at what time or times each option may be exercised, including the ability to accelerate the vesting
of such options.
Stock
Appreciation Rights. The Administrator may award stock appreciation rights subject to such conditions and restrictions as it may
determine. Stock appreciation rights entitle the recipient to shares of Company common stock or cash, equal to the value of the appreciation
in the Company’s stock price over the exercise price, as set by the Administrator and which will be at least equal to the fair
market value of a share of Company common stock on the grant date. The term of each stock appreciation right will be set by the Administrator
and may not exceed ten years from the date of grant. The Administrator will determine at what time or times each stock appreciation right
may be exercised, including the ability to accelerate the vesting of such stock appreciation rights.
Restricted
Stock. A restricted stock award is an award of shares of Company common stock that vests in accordance with the terms and conditions
established by the Administrator. The Administrator will determine the persons to whom grants of restricted stock awards are made, the
number of restricted shares to be awarded, the price (if any) to be paid for the restricted shares, the time or times within which awards
of restricted stock may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions
of restricted stock awards. Unless otherwise provided in the applicable award agreement, a participant generally will have the rights
and privileges of a stockholder as to such restricted shares, including without limitation the right to vote such restricted shares and
the right to receive cash dividends, if applicable.
Restricted
Stock Units. Restricted stock units are the right to receive shares of Company common stock at a future date in accordance with the
terms of such grant upon the attainment of certain conditions specified by the Administrator. Restrictions or conditions could include,
but are not limited to, the attainment of performance goals, continuous service with the Company or its subsidiaries, the passage of
time or other restrictions or conditions. The Administrator determines the persons to whom grants of restricted stock units are made,
the number of restricted stock units to be awarded, the time or times within which awards of restricted stock units may be subject to
forfeiture, the vesting schedule, and rights to acceleration thereof, and all other terms and conditions of the restricted stock unit
awards. The value of the restricted stock units may be paid in shares of Company common stock, cash, other securities, other property,
or a combination of the foregoing, as determined by the Administrator.
The
holders of restricted stock units will have no voting rights. Prior to settlement or forfeiture, restricted stock units awarded under
the Amended and Restated Plan may, at the Administrator’s discretion, provide for a right to dividend equivalents.
Performance
Awards. The Administrator has the authority to grant stock options, stock appreciation rights, restricted stock, or restricted stock
units as a performance award, which means that such awards vest at least in part upon the attainment of one or more specified performance
criteria. For each performance period, the Administrator will have the sole authority to select the length of such performance period,
the types of performance awards to be granted, the performance criteria that will be used to establish the performance goals, and the
level(s) of performance which shall result in a performance award being earned. At any time, the Administrator may adjust or modify the
calculation of a performance goal for a performance period to appropriately reflect any circumstance or event that occurs during a performance
period and that in the Administrator’s sole discretion, warrants adjustment or modification. Depending on the type of performance
award granted, the previously discussed terms and conditions will also apply to a performance award.
Performance
criteria for a performance award may be based on the attainment of specific levels of performance of the Company (and/or one or more
subsidiaries, divisions, business segments or operational units, or any combination of the foregoing) and may include, without limitation,
any of the following: (i) net earnings or net income (before or after taxes); (ii) basic or diluted earnings per share (before or after
taxes); (iii) revenue or revenue growth (measured on a net or gross basis); (iv) gross profit or gross profit growth; (v) operating profit
(before or after taxes); (vi) return measures (including, but not limited to, return on assets, capital, invested capital, equity, or
sales); (vii) cash flow (including, but not limited to, operating cash flow, free cash flow, net cash provided by operations and cash
flow return on capital); (viii) financing and other capital raising transactions (including, but not limited to, sales of the Company’s
equity or debt securities); (ix) earnings before or after taxes, interest, depreciation and/or amortization; (x) gross or operating margins;
(xi) productivity ratios; (xii) share price (including, but not limited to, growth measures and total shareholder return); (xiii) expense
targets; (xiv) margins; (xv) productivity and operating efficiencies; (xvi) customer satisfaction; (xvii) customer growth; (xviii) working
capital targets; (xix) measures of economic value added; (xx) inventory control; (xxi) enterprise value; (xxii) sales; (xxiii) debt levels
and net debt; (xxiv) combined ratio; (xxv) timely launch of new facilities; (xxvi) client retention; (xxvii) employee retention; (xxviii)
timely completion of new product rollouts; (xxix) cost targets; (xxx) reductions and savings; (xxxi) productivity and efficiencies; (xxxii)
strategic partnerships or transactions; and (xxxiii) personal targets, goals or completion of projects. Any one or more of the performance
criteria may be used on an absolute or relative basis to measure the performance of the Company and/or one or more subsidiaries as a
whole or any business unit(s) of the Company and/or one or more subsidiaries or any combination thereof, or any of the above performance
criteria may be compared to the performance of a selected group of comparison or peer companies, or a published or special index that
the Administrator deems appropriate, or as compared to various stock market indices.
Dividend
Equivalents. An award of dividend equivalents entitles the holder to be credited with an amount equal to all dividends paid on one
share of Company common stock while the holder’s tandem award is outstanding. Dividend equivalents may be paid currently or credited
to an account for the participant, settled in cash or shares of Company common stock, and subject to the same restriction on transferability
and forfeitability as the award with respect to which the dividend equivalents are granted.
Other
Stock- or Cash-Based Awards. Other stock-based awards may be granted either alone, in addition to, or in tandem with, other awards
granted under the Amended and Restated Plan and/or cash awards made outside of the Amended and Restated Plan. The Administrator shall
have authority to determine the service providers to whom and the time or times at which other stock-based awards shall be made, the
amount of such other stock-based awards, and all other conditions of the other stock-based awards including any dividend and/or voting
rights. The Administrator may grant cash awards in such amounts and subject to such performance or other vesting criteria and terms and
conditions as the Administrator may determine.
Repricing
Notwithstanding
anything to the contrary in the Amended and Restated Plan, unless a repricing is approved by shareholders, in no case may the Administrator
(i) amend an outstanding option or stock appreciation right to reduce the exercise price of the award, (ii) cancel, exchange, or surrender
an outstanding option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (iii)
cancel, exchange, or surrender an outstanding option or stock appreciation right in exchange for an option or stock appreciation right
with an exercise price that is less than the exercise price of the original award.
Equitable
Adjustments
In
the event of a merger, consolidation, recapitalization, stock split, reverse stock split, reorganization, split-up, spin-off, combination,
repurchase or other change in corporate structure affecting shares of Company common stock, the Administrator will adjust (i) the number
and class of shares which may be delivered under the Amended and Restated Plan (or number and kind of other securities or other property);
(ii) the number, class and price (including the exercise or strike price of options and stock appreciation rights) of shares subject
to outstanding awards, (iii) any applicable performance criteria, performance period, and other terms and conditions of outstanding performance
awards, and (iv) the Amended and Restated Plan’s numerical limits.
Change
in Control
In
the event of any proposed change in control (as defined in the Amended and Restated Plan), the Administrator will take any action as
it deems appropriate, which action may include, without limitation, the following: (i) the continuation of any award, if the Company
is the surviving corporation; (ii) the assumption of any award by the surviving corporation or its parent or subsidiary; (iii) the substitution
by the surviving corporation or its parent or subsidiary of equivalent awards; (iv) accelerated vesting of the award, with all performance
objectives and other vesting criteria deemed achieved at targeted levels, and a limited period during which to exercise the award prior
to closing of the change in control, or (v) settlement of any award for the change in control price (less, to the extent applicable,
the per share exercise price). Unless determined otherwise by the Administrator, in the event that the successor corporation refuses
to assume or substitute for the award, a participant shall fully vest in and have the right to exercise the award as to all shares of
Company common stock, including those that would not otherwise be vested or exercisable, all applicable restrictions will lapse, and
all performance objectives and other vesting criteria will be deemed achieved at targeted levels.
Term
The
Amended and Restated Plan will become effective when approved by our shareholders, and, unless terminated earlier, the Amended and Restated
Plan will continue in effect for a term of ten (10) years.
Amendment
and Termination
Our
Board may amend, alter, suspend or terminate the Amended and Restated Plan at any time. No amendment or termination of the Amended and
Restated Plan will materially impair the rights of any participant, unless mutually agreed otherwise between the participant and the
Company. Approval of the stockholders shall be required for any amendment, where required by applicable law, as well as (i) to increase
the number of shares available for issuance under the Amended and Restated Plan and (ii) to change the persons or class of persons eligible
to receive awards under the Amended and Restated Plan.
Recoupment
Policy
All
awards granted under the Amended and Restated Plan, all amounts paid under the Amended and Restated Plan, and all shares of common stock
issued under the Amended and Restated Plan shall be subject to reduction, recoupment, clawback, or recovery by the Company in accordance
with applicable laws and with Company policy.
Plan
Benefits
Awards
under the Plan are subject to the discretion of the Committee and, except as noted below, no determinations have been made by the Committee
as to any awards that may be granted in the future pursuant to the Plan. Therefore, it is not possible to determine the benefits that
will be received in the future by participants in the Plan.
The following RSU and Restricted Stock grants were
approved under the 2022 Plan to the individuals and groups noted below for the year ended June 30, 2024:
| Name and Position/Group |
|
Number of
RSUs and Restricted Stock |
|
| Michael Wang, Co-CEO |
|
|
282,787 |
|
| Tirdad Rouhani, President |
|
|
134.837 |
|
| Steven Przybyla, CLO |
|
|
- |
|
| James McCormick, CFO |
|
|
- |
|
| Executive Officer Group (4 persons) |
|
|
417,624 |
|
| Non-Employee Director Group |
|
|
16,285 |
|
| Non-Executive Officer Employee Group |
|
|
150,014 |
|
| Non-Employee Contractor Group |
|
|
261,931 |
|
The
following NQO grants were approved under the 2022 Plan to the individuals and groups noted below:
| Name and Position/Group | |
Number of
NQOs | |
| Michael Wang, Co-CEO | |
| 1,000,000 | |
| Tirdad Rouhani, President | |
| 300,000 | |
| Steven Przybyla, CLO | |
| 100,000 | |
| James McCormick, CFO | |
| 200,000 | |
| Executive Officer Group (4 persons) | |
| 1,600,000 | |
| Non-Employee Director Group | |
| - | |
| Non-Executive Officer Employee Group | |
| 1,655,000 | |
CERTAIN
UNITED STATES FEDERAL INCOME TAX EFFECTS
The
following discussion of certain relevant United States federal income tax effects applicable to certain awards granted under the Plan
is a summary only, and reference is made to the United States Internal Revenue Code for a complete statement of all relevant federal
tax provisions (including to any rules which may limit Company’s deductions described below). It is recommended that participants
consult with a personal tax advisor before accepting any award under the Plan.
Circular
230. To ensure compliance with United States Treasury Department regulations, we advise each participant that, unless otherwise expressly
indicated, any federal tax advice contained in this Prospectus was not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding tax-related penalties under the United States Internal Revenue Code or applicable state or local tax law provisions or
(ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
Options
Non-Qualified
Stock Options
A
participant who has been granted a non-qualified stock option will not recognize taxable income upon the grant of a non-qualified stock
option. Rather, at the time of exercise of such non-qualified stock option, the participant will recognize ordinary income for income
tax purposes in an amount equal to the excess of the fair market value of the share of Common Stock purchased over the exercise price.
The Company generally will be entitled to a tax deduction at such time and in the same amount that the participant recognizes ordinary
income. If shares of Common Stock acquired upon exercise of a non-qualified stock option are later sold or exchanged, then the difference
between the amount received upon such sale or exchange and the fair market value of such shares of Common Stock on the date of such exercise
will generally be taxable as long-term or short-term capital gain or loss (if the shares of Common Stock are a capital asset of the participant)
depending upon the length of time such shares were held by the participant.
Incentive
Stock Options
A
participant who has been granted an incentive stock option (an “ISO”) will not realize taxable income at the time of grant,
and the Company will not be entitled to a tax deduction at that time. The exercise of an ISO will not result in taxable income to the
participant provided that the participant was, without a break in service, an employee of the Company or a subsidiary during the period
beginning on the date of the grant of the option and ending on the date three (3) months prior to the date of exercise (one (1) year
prior to the date of exercise if the participant is disabled). The excess of the fair market value of the share of Common Stock at the
time of the exercise of an ISO over the exercise price is included in calculating the participant’s alternative minimum taxable
income for the tax year in which the ISO is exercised unless the participant disposes of the shares of Common Stock in the year of exercise.
If the participant does not sell or otherwise dispose of the shares of Common Stock within two (2) years from the date of the grant of
the ISO or within one (1) year after the transfer of such shares of Common Stock to the participant, then, upon disposition of such shares
of Common Stock, any amount realized in excess of the exercise price will be taxed to the participant as capital gain and the Company
will not be entitled to a corresponding tax deduction. The participant will generally recognize a capital loss to the extent that the
amount realized is less than the exercise price. If the foregoing holding period requirements are not met, the participant will generally
realize ordinary income at the time of the disposition of the shares of Common Stock in an amount equal to the lesser of (i) the excess
of the fair market value of the shares of Common Stock on the date of exercise over the exercise price or (ii) the excess, if any, of
the amount realized upon disposition of the shares of Common Stock over the exercise price, and the Company will be entitled to a corresponding
tax deduction. Any amount realized in excess of the value of the shares of Common Stock on the date of exercise will be capital gain.
If the amount realized is less than the exercise price, the participant will not recognize ordinary income, and the participant will
generally recognize a capital loss equal to the excess of the exercise price over the amount realized upon the disposition of the shares
of Common Stock.
Stock
Appreciation Rights
A
participant who is granted a stock appreciation right (an “SAR”) generally will not recognize ordinary income upon receipt
of the SAR. Rather, at the time of exercise of such SAR, the participant will recognize ordinary income for income tax purposes in an
amount equal to the value of any cash received and the fair market value on the date of exercise of any share of Common Stock received.
The Company generally will be entitled to a tax deduction at such time and in the same amount, if any, that the participant recognizes
as ordinary income. The participant’s tax basis in any share of Common Stock received upon exercise of an SAR will be the fair
market value of the shares of Common Stock on the date of exercise, and if the shares of Common Stock are later sold or exchanged, then
the difference between the amount received upon such sale or exchange and the fair market value of such shares of Common Stock on the
date of exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares of Common Stock are a capital
asset of the participant) depending upon the length of time such shares of Common Stock were held by the participant.
Restricted
Stock
A
participant generally will not be taxed upon the grant of restricted stock, but rather will recognize ordinary income in an amount equal
to the fair market value of the stock at the earlier of the time the stock becomes transferable or is no longer subject to a substantial
risk of forfeiture (within the meaning of the Internal Revenue Code). The Company generally will be entitled to a tax deduction at the
time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s
tax basis in the stock will equal the fair market value of the stock at the time the restrictions lapse, and the participant’s
holding period for capital gains purposes will begin at that time. Any cash dividends paid on the stock before the restrictions lapse
will be taxable to the participant as additional compensation (and not as dividend income), unless the individual has made an election
under Section 83(b) of the Internal Revenue Code. Under Section 83(b) of the Internal Revenue Code, a participant may elect to recognize
ordinary income at the time the restricted stock is awarded in an amount equal to its fair market value at that time, notwithstanding
the fact that such stock is subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional
taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the
stock equal to its fair market value on the date of their award, and the participant’s holding period for capital gains purposes
will begin at that time.
Restricted
Stock Units
In
general, the grant of restricted stock units (“RSUs”) will not result in income for the participant or in a tax deduction
for the Company. Upon the settlement of such an award in cash or shares of Common Stock, the participant will recognize ordinary income
equal to the aggregate value of the payment received, and the Company generally will be entitled to a tax deduction at the same time
and in the same amount.
Other
Awards
With
respect to other stock-based awards, generally when the participant receives payment in respect of the award, the amount of cash and/or
the fair market value of any share of Common Stock or other property received will be ordinary income to the participant, and the Company
generally will be entitled to a tax deduction at the same time and in the same amount.
The
comments set forth in the above paragraphs are only a summary of certain of the United States federal income tax consequences relating
to U.S. residents under the Plan. No consideration has been given to the effects of foreign, state, local and other laws (tax or other)
on the Plan or on a participant, which laws will vary depending upon the particular jurisdiction or jurisdictions involved. In particular,
participants who are stationed outside the United States may be subject to foreign taxes as a result of the Plan. BECAUSE OF THE COMPLEXITIES
INVOLVED IN THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS TO SPECIFIC CIRCUMSTANCES, AND THE UNCERTAINTIES AS TO POSSIBLE
FUTURE CHANGES IN THE TAX LAWS, IT IS STRONGLY URGED THAT EACH PARTICIPANT CONSULT A TAX ADVISOR WITH RESPECT TO THE PARTICIPANT’S
OWN SITUATION.
EXECUTIVE
COMPENSATION
Set
forth below is certain information regarding the historical compensation of our named executive officers during the year ended June 30,
2024. The named executive officers for the year ended June 30, 2024 consisted of the principal executive officer and our two most highly
compensated executive officers other than our principal executive officer who were serving as executive officers as of June 30, 2024
(our “named executive officers”).
Summary
Compensation Table
The
following table shows information regarding the compensation of the named executive officers during the fiscal years ended June 30, 2024
and 2023.
| Summary Compensation Table5 |
Name and Principal | |
Fiscal Year Ending, | | |
Salary | | |
Bonus | | |
Stock Awards | | |
Option Awards | | |
Non-Equity Incentive Plan Compensation | | |
Non-Qualified Deferred Compensation Earnings | | |
All Other Compensation | | |
Totals | |
| Position | |
June 30 | | |
($) | | |
($) | | |
($)(4) | | |
($)(4) | | |
($) | | |
($) | | |
($) | | |
($) | |
Tuanfang
Liu, Co-CEO(1)(2) | |
| 2024 | | |
| 245,568 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 245,568 | |
| | |
| 2023 | | |
| 206,720 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 206,720 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Michael Wang, co-CEO(2) | |
| 2024 | | |
| 350,000 | | |
| — | | |
| 2,760,001 | | |
| 5,537,903 | | |
| — | | |
| — | | |
| — | | |
| 8,647,904 | |
| | |
| 2023 | | |
| 393,447 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 393,447 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Tirdad
Rouhani, President(3) | |
| 2024 | | |
| 297,500 | | |
| 300,000 | | |
| 1,124,509 | | |
| 1,661,371 | | |
| — | | |
| — | | |
| — | | |
| 3,383,380 | |
| | |
| 2023 | | |
| 233,493 | | |
| 25,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 258,493 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Steven Przybyla, Chief Legal Officer and Secretary | |
| 2024 | | |
| 216,039 | | |
| 40,000 | | |
| — | | |
| 553,790 | | |
| — | | |
| — | | |
| — | | |
| 809,829 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Daniel Machock (CFO) | |
| 2024 | | |
| 234,936 | | |
| 20,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 254,936 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| James McCormick (CFO | |
| 2024 | | |
| 32,500 | | |
| — | | |
| — | | |
| 819,029 | | |
| — | | |
| — | | |
| — | | |
| 851,529 | |
| (1) |
Mr.
Liu’s compensation is paid in Hong Kong dollars, which are converted into U.S. dollars at the average exchange rates during
the period, which was 7.8367 Hong Kong dollars to $1.00 for the year ended June 30, 2023 and 7.8186 Hong Kong dollars to $1.00 for
the year ended June 30, 2024. |
| (2) |
Mr. Liu and Mr. Wang are currently co-chief executive
officers. |
| (3) |
Mr. Rouhani was appointed as President on May 20, 2024. |
| |
|
| (4) |
Amounts reflect the full grant-date fair value of RSUs
and stock options granted during our most recently completed fiscal year computed in accordance with ASC Topic 718, rather than the
amounts paid to or realized by the named individual. |
| |
|
| (5) |
Grants
represent a one-time grant recognition of the executive’s efforts from 2020 through the Company’s initial public offering
and is not necessarily reflective of the company’s compensation program going forward. |
Employment
Agreements
Tuanfang
Liu
On
January 31, 2023, the Company entered into an employment agreement with Mr. Liu, our co-chief executive officer. The employment agreement
with Mr. Liu has a term of five years and continues on year-to-year basis unless terminated by either The Company or Mr. Liu on notice
given not later than 60 days prior to the expiration of the initial five-year term or any one-year extension. Mr. Liu receives compensation
from the Company at the annual rate of 1,920,000 Hong Kong dollars. Any increase in his annual compensation and any bonus compensation
are subject to the discretion of the Compensation Committee and Mr. Liu is also eligible for such options or other equity-based compensation,
if any, as may be determined by the Compensation Committee. Mr. Liu will perform his services at such location as he may determine, and
we anticipate that he will perform his services in the PRC. The agreement acknowledges that Mr. Liu is also chairman, chief executive
officer and a director of Aspire Global and the chief executive officer and 95% owner of Shenzhen Yi Jia. The agreement has customary
non-competition and non-solicitation provisions. Mr. Liu has agreed that we have title to all rights to any intellectual property rights
which may be developed by Mr. Liu that relate to cannabis or cannabis related vaping or other products during the term of the employment
agreement and he will execute such documents as may be necessary to effect our ownership of such intellectual property, including, but
not limited to assignment of patents and trademarks. With respect to any intellectual property relating to tobacco vaping and other nicotine
products, we shall have an exclusive license in the territory, which is worldwide except for the PRC and Russia, with respect to such
intellectual property. We acknowledge the Mr. Liu is also employed as chief executive officer of Aspire Global and Shenzhen Yi Jia. Both
Aspire Global and Shenzhen Yi Jia agreed to the provisions of Mr. Liu’s employment agreement relating to intellectual property
developed by Mr. Liu. Although Mr. Liu does not receive any compensation from Aspire Global or Shenzhen Yi Jia, for his services as its
chief executive officer of Aspire Global, as the 95% owner of Shenzhen Yi Jia, he receives dividends from Shenzhen Yi Jia.
Michael
Wang
On
January 31, 2023, the Company entered into an employment agreement with Mr. Wang, our co-chief executive officer who formerly was our
chief executive officer. The employment agreement with Mr. Wang has a term of three years and continues on a quarter-to-quarter basis
unless terminated by either the Company or Mr. Wang on notice given not later than 30 days prior to the expiration of the initial three-year
term or any quarterly extension. Mr. Wang receives annual compensation at the rate of $393,447. Any increase in his annual compensation
and any bonus compensation are subject to the discretion of the Compensation Committee and Mr. Wang is also eligible for such options
or other equity-based compensation, if any, as may be determined by the Compensation Committee. The agreement has customary assignment
of invention provisions. In connection with our organization, we issued to Peak Group LLC, a limited liability company owned by Mr. Wang
a 2% interest in Aspire Global for services rendered which, when our common stock was issued to the holders of the Aspire Global capital
stock, resulted in the issuance to Mr. Wang of 1,000,000 shares of common stock, which were valued at $473,235. The issuance of these
shares is treated as compensation for services rendered by Mr. Wang to Aspire Global, the then parent of Aspire North America and Aspire
Science, as its chief financial officer.
Tirdad
Rouhani
On
June 25, 2024, the Company entered into an executive employment agreement with Mr. Rouhani, the Company’s President. The employment
agreement with Mr. Rouhani has a three-year term and continues on a year-to-year basis unless terminated by either the Company or Mr.
Rouhani on written notice given not later than 180 days prior to the expiration of the initial term or any one-year extension. Mr. Rouhani
will receive an annual base salary of $410,000, which may be increased from time to time, but not decreased, during the term of the Rouhani
Agreement. Mr. Rouhani is eligible for an annual discretionary bonus with a bonus target of 50% of his annual base salary, subject to
the discretion of the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Mr.
Rouhani is eligible for any fringe benefits offered by the company on the same terms and conditions as other executives, including group
health benefits and a 401k retirement plan. In the event Mr. Rouhani is terminated without Cause or resigns for Good Reason, Mr. Rouhani
is entitled to severance in the amount of twelve months’ then-applicable base salary and immediate accelerated vesting of 50% of
any unvested Equity Grants (as that term is defined in the Company’s 2020 Equity Incentive Plan (the “Plan”)) that
Mr. Rouhani has received under the Plan, regardless of the terms of the Plan or any award agreement. The Rouhani Agreement contains customary
assignment of invention and confidentiality provisions.
Steven
Przybyla
On
June 25, 2024, the Company entered into an executive employment agreement with Mr. Steven Przybyla, the Company’s Chief Legal Officer
and Secretary (the “Przybyla Agreement”). Mr. Przybyla’s employment with the Company is at will and may be terminated
by either Mr. Przybyla or the Company at any time, for any reason, or no reason. Mr. Przybyla will receive an annual base salary of $400,000,
which may be increased from time to time, but not decreased, during the term of his employment. Mr. Przybyla is eligible for an annual
discretionary bonus with a bonus target of 50% of his annual base salary, subject to the discretion of the Compensation Committee. Mr.
Przybyla is eligible for any fringe benefits offered by the company on the same terms and conditions as other executives, including group
health benefits and a 401k retirement plan. The Company has agreed to bear the costs associated with Mr. Przybyla’s maintenance
of his professional licenses. In the event Mr. Przybyla is terminated without Cause or resigns for Good Reason, Mr. Przybyla is entitled
to severance in the amount of twelve months’ then-applicable base salary and immediate accelerated vesting of 50% of any unvested
Equity Grants (as that term is defined in the Plan) that Mr. Przybyla has received under the Plan, regardless of the terms of the Plan
or any award agreement. The Przybyla Agreement contains customary assignment of invention and confidentiality provisions.
Employee
Benefit Plans
2022
Equity Incentive Plan
In
October 2022, our directors and stockholders approved the 2022 Equity Incentive Plan (the “Plan”) pursuant to which up to
15,000,000 shares of common stock may be issued pursuant to options or restricted stock grants. The Plan is administered by the Board
of Directors. Awards under the Plan may be granted to officers, directors, employees and those consultants who qualify as a consultant
or advisor under the instructions to Form S-8. The Compensation Committee has broad discretion in making awards; provided that any options
shall be exercisable at the fair market value on the date of grant.
Outstanding
Equity Awards
The
following table summarizes information about all outstanding unvested equity awards held by our named executives as of June 30, 2024
Outstanding
Awards at June 30, 2024
| | |
| | |
RSUs | | |
Non-qualified stock options | |
| Name | |
Grant Date | | |
Number of Unvested Shares or
Units
(#) | | |
Market Value of Shares that Have Not Vested
($) | | |
Number of Unvested Shares or
Units
(#) | | |
Market Value of Unvested Shares or Units
($) | |
| Tuanfang Liu | |
- | | |
| - | | |
| - | | |
| - | | |
| - | |
| Michael Wang | |
9/4/2023 | | |
| 282,787 | | |
$ | 2,760,001 | | |
| 1,000,000 | | |
$ | 5,537,904 | |
| Tirdad Rouhani | |
9/4/2023 | | |
| 84,837 | | |
$ | 828,009 | | |
| 300,000 | | |
$ | 1,661,371 | |
| Steven Pryzbyla | |
9/4/2023 | | |
| - | | |
$ | - | | |
| 100,000 | | |
$ | 553,790 | |
| James McCormick | |
5/17/2024 | | |
| - | | |
$ | - | | |
| 200,000 | | |
$ | 819,029 | |
| |
| | |
Option Awards | |
| Stock Awards | |
| Name |
| Grant Date | |
Number of Securities Underlying Unexercised Options (#) Exercisable (2) | |
| Number of Securities Underlying Unexercised Options (#)
Unexercsiable | | |
| Equity Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options (#) | | |
| Option Exercise Price ($) | | |
Option Expiration Date | |
| Number of Shares or Units of Stock that Have Not Vested
(#) | | |
| Market Value of Shares or Units of Stock that Have Not
Vested ($)(1) | | |
| Equity Incentive Plan Awards: Number of Unearned Shares,
Units or Other Rights that Have Not Vested (#) | | |
| Equity Incentive Plan Awards: Market or Payout Value
of Unearned Shares, Units or Other Rights that Have Not Vested ($)(1) | |
| Tuanfang Liu |
| | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
| Michael Wang |
| 9/4/2023(3) | |
| |
| 1,000,000 | | |
| | | |
| 9.76 | | |
09/04/2033 | |
| 282,787 | | |
| 2,262,296 | | |
| | | |
| - | |
| Tirdad Rouhani |
| 9/4/2023(4) | |
| |
| 300,000 | | |
| | | |
| 9.76 | | |
09/04/2033 | |
| 84,837 | | |
| 678,696 | | |
| | | |
| - | |
| Steven Pryzbyla |
| 9/4/2023(5) | |
| |
| 100,000 | | |
| | | |
| 9.76 | | |
09/04/2033 | |
| - | | |
| | | |
| | | |
| | |
| James McCormick |
| 5/17/2024(6) | |
| |
| 200,000 | | |
| | | |
| 7.19 | | |
05/17/2034 | |
| - | | |
| | | |
| | | |
| | |
| 1. | Amounts
are calculated based on multiplying the number of shares shown in the table by the per share
closing price of our common stock on the last trading day of our last completed fiscal year,
which was $8.00. |
| 2. | The
options shown in this column were fully vested as of the end of the most recently completed
fiscal year. |
| 3. | The
options will vest over a four-year period with twenty-five percent (25%) of the Shares subject
to the stock option vesting on the one (1) year anniversary of September 4th,
2023, and then an additional an additional 1/36th of the remaining unvested Shares subject
to the stock option shall vest thereafter on the first day of each calendar month, subject
to the executive’s continued service. |
| 4. | The
options will vest over a four-year period with twenty-five percent (25%) of the Shares subject
to the stock option vesting on the one (1) year anniversary of September 4th,
2023, and then an additional an additional 1/36th of the remaining unvested Shares subject
to the stock option shall vest thereafter on the first day of each calendar month, subject
to the executive’s continued service. |
| 5. | The
options will vest over a four-year period with twenty-five percent (25%) of the Shares subject
to the stock option vesting on the one (1) year anniversary of September 4th,
2023, and then an additional an additional 1/36th of the remaining unvested Shares subject
to the stock option shall vest thereafter on the first day of each calendar month, subject
to the executive’s continued service. |
| 6. | The
options will vest over a four-year period with twenty-five percent (25%) of the Shares subject
to the stock option vesting on the one (1) year anniversary of May 17, 2024 and then an additional
an additional 1/36th of the remaining unvested Shares subject to the stock option shall vest
thereafter on the first day of each calendar month, subject to the executive’s continued
service. |
| 7. | Grants
represent a one-time grant recognition of the executive’s efforts from 2020 through
the Company’s initial public offering and is not necessarily reflective of the company’s
compensation program going forward. |
Clawback
All
cash and equity awards granted under the Plan will be subject to all applicable laws regarding the recovery of erroneously awarded compensation,
any implementing rules and regulations under such laws, any policies we adopted to implement such requirements and any other compensation
recovery policies as we may adopt from time to time.
Limitation
of Liability and Indemnification Matters
Our
certificate of incorporation limits the liability of our directors for monetary damages for breach of their fiduciary duties, except
for liability that cannot be eliminated under the DGCL. Consequently, our directors will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except liability for any of the following:
| |
● |
any breach of their duty of loyalty to us or our stockholders; |
| |
|
|
| |
● |
acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; |
| |
|
|
| |
● |
unlawful payments of dividends or unlawful stock repurchases
or redemptions as provided in Section 174 of the DGCL; or |
| |
|
|
| |
● |
any transaction from which the director derived an
improper personal benefit. |
Our
certificate of incorporation and bylaws also provide that we will indemnify our directors and executive officers and may indemnify our
other officers and employees and other agents to the fullest extent permitted by law. Our bylaws also permit us to secure insurance on
behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in this capacity, regardless
of whether our bylaws would permit indemnification. We have obtained directors’ and officers’ liability insurance.
The
above description of the Indemnification provisions of our bylaws and is qualified in its entirety by reference to these documents, each
of which is filed as an exhibit to this annual report.
The
limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation
against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment
may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification
provisions.
Insofar
as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us pursuant
to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and may be unenforceable. There is no pending litigation or proceeding naming any of our directors or officers
as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification
by any director or officer.
Director
Compensation
The
following table2 shows the compensation paid to our directors who are not Named Executive Officers during the year ended
June 30, 2024.
| Name | |
Fees
Earned
or Paid
in Cash
($) | | |
Stock
Awards
($) (3) | | |
Option
Awards
($) | | |
Nonequity
incentive
plan
compensation
($) | | |
Nonqualified
deferred
compensation
earnings
($) | | |
All other
compensation
($) | | |
Total
($) | |
| Jiangyan Zhu(1) | |
$ | 92,088 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 92,088 | |
| Christopher Robert Burch | |
| 48,000 | | |
| 36,000 | | |
| | | |
| | | |
| | | |
| | | |
| 84,000 | |
| Brent Cox | |
| 60,000 | | |
| 60,000 | | |
| | | |
| | | |
| | | |
| | | |
| 120,000 | |
| John Fargis | |
| 36,000 | | |
| 48,000 | | |
| | | |
| | | |
| | | |
| | | |
| 84,000 | |
| Joel Paritz(2) | |
| - | | |
| 15,000 | | |
| | | |
| | | |
| | | |
| | | |
| 15,000 | |
| (1) |
Ms. Zhu’s compensation is paid in Hong Kong dollars,
which are converted into U.S. dollars at the average exchange rates during the period, which was 7.8186 Hong Kong dollars to $1.00
for the year ended June 30, 2024. |
| (2) |
Mr.
Paritz resigned as a director on July 1, 2023.
|
| (3) |
A
of June 30, 2024:
● Mr.
Burch has received 5,425 shares of stock awards
● Mr.
Cox has received 6,141 shares of stock awards
● Mr.
Fargis has received 4,912 shares of stock awards
● Mr.
Paritz has received 1,601 shares of stock awards
● Ms.
Zhu has received 0 shares of stock awards
● Mr.
Liu has received 0 shares of stock awards |
We
have an agreement with Ms. Zhu pursuant to which we pay her annual compensation of 720,000 Hong Kong dollars. Ms. Zhu is also a director
of Aspire Global, and she does not receive compensation from Aspire Global.
On
August 3, 2023, the board of directors (i) authorized the issuance of a total of 4,483 shares of common stock to Brent Cox, John Fargis
and Joel Paritz who were our independent directors on the date of our initial public offering as described below, and (ii) adopted the
non-employee director compensation policy. Pursuant to the non-employee director compensation policy:
| |
● |
Each outside director (a director who is not also serving
as an employee of us or any of our subsidiaries) shall receive an annual cash retainer of $48,000 for his or her service on the Board,
and each outside director who serves as chair of the Audit Committee will be paid an additional annual cash retainer of $12,000.
The payment is made in four equal quarterly installments. The retainer is pro rated if the outside director is not an outside director
for the entire quarter. |
| |
● |
Each outside director automatically will be granted
fully vested shares of the common stock equal in value to such outside director’s retainer for the calendar quarter. The number
of shares granted shall be equal to: (A) the retainer earned by the outside director for such calendar quarter, divided by (B) the
volume-weighted average price, generally known as VWAP, of our common stock on the principal trading market on which our common stock
trades during each trading day of the preceding calendar quarter, rounded down to the nearest whole share. To be eligible for a quarterly
share grant an outside director must be serving as an outside director on the last day of the calendar quarter. The shares shall
be granted pursuant to our 2022 Equity Incentive Plan or any successor plan. The compensation policy is effective commencing
with the quarter beginning July 1, 2023. In August 2023, we issued, pursuant to the Plan, 1,601 shares of common stock to
each of Brent Cox, a director, and Joel Paritz, a former director, and 1,281 shares of common stock to John Fargis, a director, for
service as a director and, in the case of Mr. Cox and Mr. Paritz, for service as audit committee chair. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As
of the Record Date, the Company had 56,641,041 shares of Common Stock issued
and outstanding. Holders of Common Stock are entitled to one vote per share. The following table sets forth information with respect
to the beneficial ownership of the Company’s Common Stock on the Record Date:
| ● | each
person, or group of affiliated persons, who is the beneficial owner of more than 5% of the outstanding common stock of the Company; |
| ● | each
executive officer and director of the Company; and |
| ● | all
of the Company’s executive officers and directors as a group. |
Beneficial
ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if
he, she or it possesses sole or shared voting or investment power of that security, including securities that are exercisable or convertible,
as the case may be, within 60 days of August 16, 2024. Shares of common stock issuable pursuant to such securities are deemed outstanding
for computing the percentage of the person holding such securities and the percentage of any group of which the person is a member but
are not deemed outstanding for computing the percentage of any other person. Except as indicated by the footnotes below, the combined
Company believes, based on the information furnished to it, that the persons named in the table below have sole voting and investment
power with respect to all shares of common stock shown that they beneficially own, subject to community property laws where applicable.
The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Section 13(d) and
13(g) of the Securities Act.
The
percentage of shares beneficially owned is based on 56,641,041 shares of Company Common Stock outstanding as of August 16, 2024.
Unless
otherwise noted below, the address of the persons listed on the table is c/o Ispire Technology Inc., 19700 Magellan Dr., Los Angeles,
CA 90502.
Beneficial
ownership representing less than 1% is denoted with an asterisk (*).
| | |
Beneficial Ownership | |
| Name of Beneficial Owner(1) | |
Shares | | |
% | |
| Greater than 5% Stockholders:(2)(3)(4) | |
| | |
| |
| Tuanfang Liu and Jiangyan Zhu(2)(3)(4) | |
| 35,750,000 | | |
| 63.1 | % |
| Pride Worldwide Investment Limited(2)(3) | |
| 33,250,000 | | |
| 58.7 | % |
| | |
| | | |
| | |
| Current Executive Officers and Directors: | |
| | | |
| | |
| Michael Wang | |
| 1,425,644 | | |
| 2.5 | % |
| Tirdad Rouhani | |
| 134,837 | | |
| * | |
| Steven Przybyla | |
| 0 | | |
| * | |
| David Hessler | |
| 0 | | |
| * | |
| James Patrick McCormick | |
| 0 | | |
| * | |
| Christopher Robert Burch | |
| 5,425 | | |
| * | |
| Brent Cox | |
| 10,814 | | |
| * | |
| John Fargis | |
| 10,366 | | |
| * | |
| All current executive officers and directors as a group (ten individuals) | |
| 37,337,086 | | |
| 65.9 | % |
| (1) | The
percentage of ownership is based on 56,641,041 shares of common stock outstanding
on August 16, 2024. |
| (2) | The
business address of Pride Worldwide Investment Limited is 14 Jian’an Road, Tangwei Fuyong Town, Bao’an District, Shenzhen,
Guangdong Province, China. |
| (3) | The
shares beneficially owned by Tuanfang Liu, our co-chief executive officer, are held by Pride Worldwide Investment Limited. Mr. Liu is
the sole stockholder and holds the voting and dispositive power over the common stock held by such entity. Mr. Liu disclaims beneficial
interest in shares beneficially owned by his wife, Jiangyan Zhu. |
| (4) | The
shares beneficially owned Jiangyan Zhu, our director and spouse of Tuanfang Liu, are held by Honor Epic International Limited. Ms. Zhu
is the sole stockholder and holds the voting and dispositive power over the common stock held by such entity. Ms. Zhu disclaims beneficial
interest in shares beneficially owned by her husband. |
| (5) | The
shares beneficially owned by Michael Wang are held by Peak Group LLC. Mr. Wang has sole voting and dispositive powers over
the shares of common stock owned by Peak Group LLC. |
| * | Represents
beneficial ownership of less than 1%. |
ADDITIONAL
INFORMATION
No
Appraisal Rights
Neither
Delaware law, including the DGCL, nor our Certificate of Incorporation provide for dissenter’s rights of appraisal, and the Company
will not independently provide our stockholders with any such rights, in connection with the adoption of the Plan discussed in this Information
Statement.
Costs
of the Information Statement
We
are mailing this Information Statement and will bear the costs associated therewith. We are not making any solicitations. We will request
brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners
of our Common Stock held of record by them, and will reimburse such persons for their reasonable charges and expenses in connection therewith.
Householding
Matters
If
you and one or more stockholders share the same address, it is possible that only one Information Statement was delivered to your address.
Any registered stockholder who wishes to receive a separate copy of the Information Statement at the same address now or in the future
may mail a request to receive separate copies to the Company at 19700 Magellan Dr., Los Angeles, CA 90502, or call the Company at (310)
742-9975, and the Company will promptly deliver the Information Statement to you upon your request. Stockholders who received multiple
copies of this Information Statement at a shared address and who wish to receive a single copy may direct their request to the same address
or phone number.
Where
You Can Find More Information
We
are subject to the information and reporting requirements of the Exchange Act and we file annual, quarterly and current reports, proxy
statements and other information with the SEC. Our SEC filings are available to the public on the SEC’s website at www.SEC.gov.
The information on the SEC’s website is not part of this information statement.
FORWARD-LOOKING
STATEMENTS
This
Information Statement may contain certain “forward-looking” statements as such term is defined by the SEC in its rules, regulations
and releases, which represent our expectations or beliefs, including but not limited to, statements concerning our operations, economic
performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any
statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting
the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,”
“intend,” “could,” “estimate,” “might,” or “continue” or the negative or
other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature,
involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending
on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth,
volatility of stock prices and any other factors discussed in this and other of our filings with the SEC.
| By Order of
the Board of Directors |
|
| |
|
|
| By: |
/s/
|
|
| Name: |
Michael Wang |
|
| Title: |
Co-Chief Executive Officer |
|
| Date: |
August [●], 2024 |
|
Appendix
A
AMENDED
AND RESTATED
ISPIRE
TECHNOLOGY INC.
2022
EQUITY INCENTIVE PLAN
The
Plan’s purpose is to attract, retain, and motivate persons who make important contributions to the Company by providing these individuals
with the opportunity to acquire Shares. Additionally, the Plan is intended to align the interests of these individuals to those of the
Company’s other shareholders.
| 2.1. | Administrator
means the Board or a Committee to the extent the Board’s powers and authorities
under the Plan have been delegated to a Committee. “Administrator” also includes
any officer that has been delegated authority pursuant to Section 4.2 for such time as such
delegation is in effect. |
| 2.2. | Affiliate
means (i) any person or entity that directly or indirectly controls, is controlled
by or is under common control with the Company and/or (ii) to the extent provided by the
Board or a Committee, any person or entity in which the Company has a significant interest
as determined by the Board or a Committee in its discretion. The term “control”
(including, with correlative meaning, the terms “controlled by” and “under
common control with”), as applied to any person or entity, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies
of such person or entity, whether through the ownership of voting or other securities, by
contract or otherwise. |
| 2.3. | Applicable
Law means any applicable law, including without limitation: (i) provisions of the
Code, the Securities Act, the Exchange Act and any rules or regulations thereunder, (ii)
corporate, securities, tax or other laws, statutes, rules, requirements, or regulations,
whether federal, state, local, or foreign, and (iii) rules of any securities exchange or
automated quotation system on which the Shares are listed, quoted, or traded. |
| 2.4. | Award
means an Option award, Stock Appreciation Right award, Restricted Stock award, Restricted
Stock Unit award, Performance Award, Dividend Equivalents award, or Other Stock or Cash Based
Award granted to a Participant under the Plan. |
| 2.5. | Award
Agreement means an agreement (written or electronic) made and delivered in accordance
with Section 12.3 of this Plan evidencing the grant of an Award hereunder. |
| 2.6. | Board
means the Board of Directors of the Company. |
| 2.7. | Cause
means, in the case of a particular Award, unless the applicable Award Agreement states
otherwise, (i) the Company or an Affiliate having “cause” to terminate a Participant’s
employment or service, as defined in any employment or consulting agreement or similar document
or policy between the Participant and the Company or an Affiliate in effect at the time of
such termination or (ii) in the absence of any such employment or consulting agreement, document
or policy (or the absence of any definition of “Cause” contained therein), (A)
a continuing material breach or material default (including, without limitation, any material
dereliction of duty) by Participant of any agreement between the Participant and the Company,
except for any such breach or default which is caused by the Participant’s Disability,
or a continuing failure by the Participant to follow the direction of a duly authorized representative
of the Company; (B) gross negligence, willful misfeasance or breach of fiduciary duty to
the Company or Affiliate by the Participant; (C) the commission by the Participant of an
act of fraud, embezzlement or any felony or other crime of dishonesty in connection with
the Participant’s duties to the Company or Affiliate; or (D) the Participant’s
conviction of, or plea of nolo contendere to, a felony or any other crime that would
materially and adversely affect: (i) the business reputation of the Company or Affiliate
or (ii) the performance of the Participant’s duties to the Company or an Affiliate.
Any determination of whether Cause exists shall be made by the Administrator in its sole
discretion. |
| 2.8. | Change
in Control shall, in the case of a particular Award, unless the applicable Award
Agreement provides otherwise or contains a different definition of “Change in Control”
be deemed to occur upon: |
| 2.8.1. | A
tender offer (or series of related offers) which is made and consummated for the ownership
of 50% or more of the outstanding voting securities of the Company, unless as a result of
such tender offer more than 50% of the outstanding voting securities of the surviving or
resulting corporation or entity are owned in the aggregate by (A) the shareholders of the
Company (as of the time immediately prior to the commencement of such offer), or (B) any
employee benefit plan of the Company or its Subsidiaries, and their Affiliates; |
| 2.8.2. | The
consummation of the Company’s merger or consolidation with another corporation, unless
as a result of such merger or consolidation, more than 50% of the outstanding voting securities
of the surviving or resulting corporation or entity shall be owned in the aggregate by (A)
the shareholders of the Company (as of the time immediately prior to such transaction); provided,
that a merger or consolidation of the Company with another company which is controlled by
persons owning more than 50% of the outstanding voting securities of the Company shall constitute
a Change in Control unless the Administrator, in its discretion, determine otherwise, or
(B) any employee benefit plan of the Company or its Subsidiaries, and their Affiliates; |
| 2.8.3. | The
consummation of the Company’s sale of substantially all of its assets to another entity
that is not wholly owned by the Company, unless as a result of such sale more than 50% of
such assets shall be owned in the aggregate by (A) the shareholders of the Company (as of
the time immediately prior to such transaction), or (B) any employee benefit plan of the
Company or its Subsidiaries, and their Affiliates; |
| 2.8.4. | The
consummation of a transaction, or series of transactions, in which a Person acquires 50%
or more of the outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding
voting securities of the surviving or resulting corporation or entity shall be owned in the
aggregate by (A) the shareholders of the Company (as of the time immediately prior to the
first acquisition of such securities by such Person), or (B) any employee benefit plan of
the Company or its Subsidiaries, and their Affiliates; or |
| 2.8.5. | The
Incumbent Directors cease to constitute a majority of the Board for any reason. |
For
purposes of this Section 2.8, ownership of voting securities shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(1)(i) (as in effect on the date hereof) under the Exchange Act.
Notwithstanding
the foregoing, if a Change in Control constitutes a payment event with respect to any Award or portion thereof that provides for the
deferral of compensation that is subject to Section 409A, then to the extent required to avoid the imposition of additional taxes under
Section 409A, the transaction or event described above in this Section 2.8 with respect to such Award or portion thereof shall only constitute
a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control
event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).
The
Administrator shall have the authority, in its sole discretion, to determine whether a Change in Control has occurred, the effective
date of such Change in Control, and any incidental matters relating thereto; provided that any exercise of authority in conjunction with
a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5)
shall be consistent with such regulation.
| 2.9. | Clawback
Policies means any policy of the Company regarding the reduction, recoupment, clawback
or recovery of compensation, as such policies may be amended from time to time. “Clawback
Policies” includes the Company’s policies to comply with the Dodd-Frank Wall
Street Reform and Consumer Protection Act, the Sarbanes-Oxley Act, or other Applicable Law,
as well as any implementing regulations and/or listing standards. |
| 2.10. | Code
means the Internal Revenue Code of 1986, as amended, and any successor thereto. References
in this Plan to any section of the Code shall be deemed to include any regulations or other
interpretative guidance issued by any governmental authority under such section, and any
amendments or successor provisions to such section, regulations or guidance. |
| 2.11. | Committee
means one or more committees or subcommittees of the Board, which shall be comprised,
unless otherwise determined by the Board, solely of not less than two members who shall be
(i) Non-Employee Directors, and (ii) “Non-Employee Directors” within the meaning
of Rule 16b-3. |
| 2.12. | Common
Stock means the common stock, par value $0.0001 per share, of the Company (and any
stock or other securities into which such common shares may be converted or into which they
may be exchanged). |
| 2.13. | Company
means Ispire Technology Inc., a Delaware corporation. |
| 2.14. | Consultant
means any person, including any adviser, engaged by the Company or a Subsidiary to
render services to such entity if the consultant or adviser: (i) renders bona fide services
to the Company or a Subsidiary, (ii) renders services not in connection with the offer or
sale of securities in a capital-raising transaction and does not directly or indirectly promote
or maintain a market for the Company’s securities, and (iii) who qualifies as a consultant
or advisor under Instruction A.1.(a)(1) of Form S-8 under the Securities Act. |
| 2.15. | Designated
Beneficiary means, if permitted by the Company, the beneficiary or beneficiaries
the Participant designates, in a manner the Company determines, to receive amounts due or
exercise the Participant’s rights if the Participant dies. If a Participant does not
make an effective designation, then the “Designated Beneficiary” will mean the
Participant’s estate or legal heirs. |
| 2.16. | Director
means a Board member. |
| 2.17. | Disability
means a permanent and total disability under Code Section 22(e)(3). |
| 2.18. | Dividend
Equivalents means a right granted to a Participant to receive the equivalent value
(in cash or Shares) of dividends paid on a specified number of Shares. Such Dividend Equivalents
shall be converted to cash or additional Shares, or a combination of cash and Shares, by
such formula and at such time and subject to such limitations as may be determined by the
Administrator. |
| 2.19. | Effective
Date has the meaning ascribed to such term in Section 21. |
| 2.20. | Employee
means any employee of the Company or any of its Subsidiaries. |
| 2.21. | Exchange
Act means the United States Securities Exchange Act of 1934, as amended, and all
regulations, guidance, and other interpretive authority issued thereunder. |
| 2.22. | Fair
Market Value means unless otherwise provided by the Administrator in accordance with
Applicable Law, on a given date, (i) if the Shares are listed on a national securities exchange,
the closing sales price on the principal exchange of the Shares on such date, as reported
in The Wall Street Journal or another source the Administrator deems reliable, or,
in the absence of reported sales on such date, the closing sales price on the immediately
preceding date on which sales were reported, or (ii) if the Shares are not listed on a national
securities exchange, the mean between the bid and offered prices as quoted by any nationally
recognized interdealer quotation system for such date, as reported in The Wall Street
Journal or another source the Administrator deems reliable, provided that if the Shares
are not quoted on an interdealer quotation system or it is determined that the fair market
value is not properly reflected by such quotations, Fair Market Value will be determined
by such other method as the Administrator determines in good faith to be reasonable and in
compliance with Section 409A. |
| 2.23. | GAAP
means United States Generally Accepted Accounting Principles. |
| 2.24. | Greater
Than 10% Shareholder means an individual then owning (within the meaning of Code
Section 424(d)) more than 10% of the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary. |
| 2.25. | Incentive
Stock Option means an Option that meets the requirements to qualify as an “incentive
stock option” as defined in Code Section 422. |
| 2.26. | Incumbent
Directors means, for any period of 12 consecutive months, individuals who, at the
beginning of such period, constitute the Board together with any new Director(s) (other than
a Director designated by a person who shall have entered into an agreement with the Company
to effect a transaction described in clause 2.8.1 or 2.8.3 of the Change in Control definition)
whose election or nomination for election to the Board was approved by a vote of at least
a majority (either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for Director without objection to such nomination)
of the Directors then still in office who either were Directors at the beginning of the 12-month
period or whose election or nomination for election was previously so approved. No individual
initially elected or nominated as a director of the Company as a result of an actual or threatened
election contest with respect to Directors or as a result of any other actual or threatened
solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent
Director. |
| 2.27. | Non-Employee
Director means a Director who is not an Employee. |
| 2.28. | Nonqualified
Option means an Option that by its terms, or in operation, does not qualify or is
not intended to qualify as an Incentive Stock Option. |
| 2.29. | Option
means an Award granted pursuant to Section 6 hereof (excepting Stock Appreciation
Rights) to purchase a specified number of Shares at a specified price per Share during a
specified time period, each as specified in an Award Agreement. An Option may be either an
Incentive Stock Option or a Nonqualified Option. |
| 2.30. | Other
Stock or Cash Based Awards means cash awards, awards of Shares, and other awards
valued by reference to or based on, Shares or other property. |
| 2.31. | Parent
means a “parent corporation,” whether now or hereafter existing, as defined
by Code Section 424(e). |
| 2.32. | Participant
means a Service Provider who has been granted an Award. |
| 2.33. | Performance
Award means an Award granted hereunder that vests or is earned based at least in
part upon the attainment of performance criteria established by the Administrator. |
| 2.34. | Period
of Restriction means the period during which the transfer of Restricted Stock is
subject to restrictions and a substantial risk of forfeiture. Such restrictions may be based
on the passage of time, the achievement of certain performance criteria, or the occurrence
of other events as determined by the Administrator. |
| 2.35. | Person
means as defined in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the Company or
any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding
securities pursuant to an offering of such securities; or (D) a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same proportion as
their ownership of stock of the Company. |
| 2.36. | Plan
means this Amended and Restated Ispire Technology Inc. 2022 Equity Incentive Plan. |
| 2.37. | Restricted
Stock means Shares, subject to a Period of Restriction or certain other specified
restrictions (including, without limitation, a requirement that the Participant remain continuously
employed or provide continuous service for a specified period of time), granted under Section
7 or issued pursuant to the early exercise of an Option. |
| 2.38. | Restricted
Stock Unit or RSU means an unfunded and unsecured promise to deliver
Shares, cash, other securities, or other property, subject to certain restrictions (including,
without limitation, a requirement that the Participant remain continuously employed or provide
continuous service for a specified period of time), granted under Section 8. |
| 2.39. | Restrictive
Covenant means any non-competition, non-solicitation, confidentiality, non-disparagement,
non-disclosure, or similar agreement between a Participant and the Company or an Affiliate. |
| 2.40. | Rule
16b-3 means Rule 16b-3 promulgated under the Exchange Act, as amended. |
| 2.41. | Securities
Act means the United States Securities Act of 1933, as amended, and all regulations,
guidance, and other interpretive authority issued thereunder. |
| 2.42. | Section
409A means Code Section 409A and the regulations and other guidance promulgated thereunder
by the United States Treasury Department, as amended. |
| 2.43. | Service
Provider means an Employee, Consultant, or a Director. |
| 2.44. | Share
Limit has the meaning ascribed to such term in Section 5.1. |
| 2.45. | Shares
means shares of Common Stock. |
| 2.46. | Stock
Appreciation Right or SAR means a right granted under Section 6 hereof
to receive a payment equal to the excess of the Fair Market Value of a specified number of
Shares on the date the right is exercised over the exercise price set forth in the applicable
Award Agreement. |
| 2.47. | Subsidiary
means a “subsidiary corporation,” whether now or hereafter existing,
as defined by Code Section 424(f). |
| 2.48. | Substitute
Awards means Awards granted or Shares issued by the Company in assumption of, or
in substitution or exchange for, awards previously granted, or the right or obligation to
make future awards, in each case by a company or other entity acquired by the Company or
any Subsidiary or with which the Company or any Subsidiary combines. |
| 2.49. | Tax
Obligations means any United States and non-United States federal, state, and/or
local taxes, including income tax, social insurance contributions, fringe benefit tax, employment
tax, stamp tax, and any employer tax liability which has been transferred to a Participant,
for which a Participant is liable in connection with Awards and/or Shares. |
| 2.50. | Termination
of Service means the time at which a Participant has terminated from all service
with the Company and its Affiliates, for any reason. A Termination of Service shall occur
when a Participant is no longer a Consultant, Employee, or Non-Employee Director. The Company,
in its sole discretion, shall make all determinations regarding whether a Termination of
Service has occurred. |
Service
Providers are eligible to receive Awards pursuant to the Plan, subject to the Plan’s conditions and limitations. No Service Provider
shall have any right to be granted an Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat
Service Providers, Participants, or other persons uniformly.
| 4.1. | Generally.
The Plan will be administered by the Administrator. The Administrator is authorized, subject
to the provisions of the Plan, to establish such rules and regulations as it deems necessary
for the proper administration of the Plan and to make such determinations and interpretations,
and to take such action in connection with the Plan and any benefits granted hereunder as
it deems necessary or advisable. Without limiting the foregoing, the Administrator shall
have the sole discretion to (i) designate Participants; (ii) determine the type or types
of Awards to be granted to a Participant; (iii) determine the number of Shares to be covered
by, or with respect to which payments, rights, or other matters are to be calculated in connection
with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether,
to what extent, and under what circumstances Awards may be settled or exercised in cash,
Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended,
and the method or methods by which Awards may be settled, exercised, canceled, forfeited,
or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery
of cash, Shares, other securities, other Awards or other property and other amounts payable
with respect to an Award shall be made; (vii) interpret, administer, reconcile any inconsistency
in, settle any controversy regarding, correct any defect in and/or complete any omission
in this Plan and any instrument or agreement relating to, or Award granted under, this Plan;
(viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents
as the Administrator shall deem appropriate for the proper administration of this Plan; (ix)
accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards;
(x) to reprice existing Awards or to grant Awards in connection with or in consideration
of the cancellation of an outstanding Award with a higher price; and (xi) make any other
determination and take any other action that the Administrator deems necessary or desirable
for the administration of the Plan. All determinations and interpretations made by the Administrator
shall be binding and conclusive on all Participants and their legal representatives. |
| 4.2. | Delegation.
The Board or a Committee may delegate its powers and authorities to one or more Committees
or officers of the Company, provided, however, that no officer of the Company or any Subsidiary
may be delegated authority to grant, amend, modify, make any administrative determination
to, or cancel any Awards held by either (A) any person subject to Section 16 of the Exchange
Act or (B) an officer who has been delegated any authority under the Plan. All delegations
shall be subject to terms and conditions determined by the Board or a Committee. Any delegation
of authority under the Plan may be revoked at any time. Regardless of any delegation, the
Board or a Committee may act as the Administrator at any time in accordance with Applicable
Law. |
| 4.3. | Liability.
Neither the Administrator nor any employee of the Company shall be liable for any act or
failure to act hereunder, except in circumstances involving his or her bad faith, gross negligence,
or willful misconduct, or for any act or failure to act hereunder by any other member or
employee or by any agent to whom duties in connection with the administration of this Plan
have been delegated. The Company shall indemnify members of the Administrator and any agent
of the Administrator who is an employee of the Company, a Subsidiary, or an Affiliate against
any and all liabilities or expenses to which they may be subjected by reason of any act or
failure to act with respect to their duties on behalf of the Plan, except in circumstances
involving such person’s bad faith, gross negligence or willful misconduct. |
| 4.4. | Administrative
Delegation and Reliance. The Administrator may delegate to one or more of its members,
or to one or more agents, such administrative duties as it may deem advisable, and the Administrator,
or any person to whom it has delegated duties as aforesaid, may employ one or more persons
to render advice with respect to any responsibility the Administrator or such person may
have under the Plan. The Administrator may employ such legal or other counsel, consultants,
and agents as it may deem desirable for the administration of the Plan and may rely upon
any opinion or computation received from any such counsel, consultant, or agent. |
| 5.1. | Number
of Shares Available for Issuance. Subject to the provisions of Section 11, the maximum aggregate number of Shares that may be issued
under the Plan shall be the sum of (A) 9,724,741, plus (B) an increase commencing on January 1, 2025 and continuing annually
on each anniversary thereof through and including January 1, 2034, equal to the lesser of (i) five percent (5%) of the Shares outstanding
on the last day of the immediately preceding calendar year and (ii) such smaller number of Shares as determined by the Board or the Committee
(the “Share Limit”). The Shares subject to the Plan may be authorized, but unissued, or reacquired shares. |
| 5.2. | Share
Recycling. Upon payment in Shares pursuant to the exercise or settlement of an Award,
the number of Shares available for issuance under the Plan shall be reduced only by the number
of Shares actually issued in such payment. If a Participant pays the exercise price (or purchase
price, if applicable) of an Award through the tender of Shares, or if the Shares are tendered
or withheld to satisfy any tax withholding obligations, the number of Shares so tendered
or withheld shall again be available for issuance pursuant to future Awards under the Plan,
although such Shares shall not again become available for issuance as Incentive Stock Options.
Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion
of an Award that is settled in cash. If any outstanding Award expires or is terminated or
canceled without having been exercised or settled in full, or if the Shares acquired pursuant
to an Award subject to forfeiture or repurchase are forfeited or repurchased by the Company,
the Shares allocable to the terminated portion of such Award or such forfeited or repurchased
Shares shall again be available for grant under the Plan. |
| 5.3. | Incentive
Stock Option Limit. No more than 15,000,000 Shares (subject to adjustment pursuant to
Section 11) may be issued under the Plan upon the exercise of Incentive Stock Options. |
| 5.4. | Substitute
Awards. Substitute Awards shall not be counted against the Share Limit; provided, however,
that Substitute Awards issued in connection with the assumption of, or in substitution for,
outstanding Options intended to qualify as Incentive Stock Options shall be counted against
the Incentive Stock Option limit in Section 5.3. Additionally, Shares subject to Substitute
Awards shall not be added to the Shares available for Awards under the Plan pursuant to Section
5.2. If the Company or any Subsidiary acquires or combines with a company that has shares
available under an equity plan approved by shareholders and in place prior to such acquisition
or combination (and not adopted in contemplation of such acquisition or combination), the
available shares under the acquired or combined entity’s plan (as appropriately adjusted
to reflect the transaction) may be used for Awards under the Plan and shall not count against
the Share Limit (and Shares subject to such Awards may again become available for Awards
under the Plan as provided in Section 5.2). Awards made from the available shares of an acquired
or combined entity’s plan shall not be made after the date awards or grants could not
be under the terms of the acquired or combined entity’s plan prior to the acquisition
or combination, and shall only be made to individuals who were not Service Providers prior
to such acquisition or combination. Substitute Awards may be granted on such terms and conditions
as the Administrator deems appropriate. |
| 5.5. | Non-Employee
Director Award Limit. Notwithstanding any provision to the contrary in the Plan or in
any policy of the Company regarding Non-Employee Director compensation, the sum of the grant
date fair value (determined as of the grant date in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of
all equity-based Awards and the maximum amount that may become payable pursuant to all cash-based
Awards that may be granted to a Service Provider as compensation for services as a Non-Employee
Director during any calendar year shall not exceed $750,000 for such Service Provider’s
first year of service as a Non-Employee Director and $500,000 for each year thereafter. |
| 6. | Options
and Stock Appreciation Rights |
| 6.1. | General.
The Administrator, at any time and from time to time, may grant Options or Stock Appreciation
Rights under the Plan to Service Providers. Each Option or Stock Appreciation Right shall
be subject to such terms and conditions consistent with the Plan as the Administrator may
impose from time to time, subject to the limitations in this Section 6. Any Option or Stock
Appreciation Rights granted hereunder will be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator and set forth
in the Award Agreement. Exercising an Option or Stock Appreciation Right in any manner will
decrease the number of Shares thereafter available for purchase under the Option or Stock
Appreciation Right, by the number of Shares as to which the Option or Stock Appreciation
Right is exercised. |
| 6.2. | Exercise
Price. The per share exercise price for Shares to be issued pursuant to exercise of an
Option or Stock Appreciation Right will be determined by the Administrator; provided, however,
that to avoid the imposition of taxes under Section 409A, the exercise price per Share shall
be no less than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant, subject to Section 5.4. In the case of an Option or Stock Appreciation Right that
is a Substitute Award, the exercise price for Shares subject to such Option or Stock Appreciation
Right may be less than the Fair Market Value per Share on the date of grant; provided that
the exercise price of any Substitute Award shall be determined in accordance with the applicable
requirements of Code Sections 424 and 409A. |
| 6.3. | Exercise
Period. Options and Stock Appreciation Rights shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Administrator; provided,
however, that no Option or Stock Appreciation Right shall be exercisable later than ten (10)
years after the date it is granted. No portion of an Option or Stock Appreciation Right which
is unexercisable at a Participant’s Termination of Service shall thereafter become
exercisable and the portion of an Option or Stock Appreciation Right which is unexercisable
at a Participant’s Termination of Service shall automatically expire on the date of
such Termination of Service. Options and Stock Appreciation Rights granted to an Employee
who is a non-exempt employee for purposes of overtime pay under the United States Fair Labor
Standards Act of 1938 shall not become exercisable earlier than six months after its date
of grant. Options and Stock Appreciation Rights shall terminate at such earlier times and
upon such conditions or circumstances as the Administrator shall in its discretion set forth
in such Award Agreement at the date of grant; provided, however, the Administrator may, in
its sole discretion, later waive any such condition. If, prior an Option’s or Stock
Appreciation Right’s exercise and prior to its termination, a Participant commits an
act of Cause (to be determined by the Administrator), or violates a Restrictive Covenant,
the Administrator may terminate the Participant’s right to exercise the Option or Stock
Appreciation Right when it reasonably believes that the Participant may have participated
in such act or violation. |
| 6.4. | Exercise.
Options and Stock Appreciation Rights may be exercised by delivering to the Company (or such
other person or entity designated by the Administrator) a notice of exercise, in a form and
manner the Company approves, which may be written or electronic, signed or authenticated
by the person authorized to exercise the Option or Stock Appreciation Right, together with,
as applicable, (a) payment in full of the exercise price for the number of Shares for which
the Option is exercised in a manner consistent with Section 6.5 and (b) satisfaction in full
of any withholding obligations for Tax Obligations in a manner specified in Section 12.5.
The Administrator may, in its discretion, require that any partial exercise of an Option
or Stock Appreciation Right be with respect to a minimum number of Shares. |
| 6.5. | Payment
Upon Exercise. To the extent permitted by Applicable Law, the Participant may pay the
Option exercise price by cash, wire transfer, or check and, if approved by the Administrator,
as determined in its sole discretion, by the following methods: |
| 6.5.1. | surrender
of other Shares that meet the conditions established by the Administrator to avoid adverse
accounting consequences to the Company (as determined by the Administrator); |
| 6.5.2. | by
a broker-assisted cashless exercise in accordance with procedures approved by the Administrator,
whereby payment of the exercise price may be satisfied, in whole or in part, with Shares
subject to the Option by delivery of an irrevocable direction to a securities broker (on
a form prescribed by the Administrator) to sell Shares and to deliver all or part of the
sale proceeds to the Company in payment of the aggregate exercise price; |
| 6.5.3. | for
a Nonqualified Option, by delivery of a notice of “net exercise” to the Company,
pursuant to which the Participant shall surrender Shares then issuable upon the Nonqualified
Option’s exercise valued at their Fair Market Value on the exercise date; |
| 6.5.4. | such
other consideration and method of payment for the issuance of Shares to the extent permitted
by Applicable Law; |
| 6.5.5. | any
combination of the foregoing methods of payment. |
| 6.6. | Incentive
Stock Options. |
| 6.6.1. | Each
Option will be designated in the Award Agreement as either an Incentive Stock Option or a
Nonqualified Option. However, notwithstanding such designation, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable
for the first time by the Participant during any calendar year (under all plans of the Company,
its Parent, or any Subsidiary) exceeds $100,000 (or such other limit established in the Code),
such Options will be treated as Nonqualified Options. For purposes of this Section 6.6.1,
Incentive Stock Options will be taken into account in the order in which they were granted.
The Fair Market Value of the Shares will be determined as of the time the Option is granted. |
| 6.6.2. | In
the case of an Incentive Stock Option, the exercise price will be determined by the Administrator,
but shall be no less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant. The term of any Incentive Stock Option will be ten (10) years from the
date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in
the case of an Incentive Stock Option granted to a Greater Than 10% Shareholder, the term
of the Incentive Stock Option will be five (5) years from the date of grant or such shorter
term as may be provided in the Award Agreement and the exercise price shall not be less than
one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. |
| 6.6.3. | No
Option shall be treated as an Incentive Stock Option unless this Plan has been approved by
the shareholders of the Company in a manner intended to comply with the shareholder approval
requirements of Code Section 422(b)(1), provided that any Option intended to be an Incentive
Stock Option shall not fail to be effective solely on account of a failure to obtain such
approval, but rather such Option shall be treated as a Nonqualified Option unless and until
such approval is obtained. |
| 6.6.4. | In
the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject
to and comply with such rules as may be prescribed by Code Section 422. If for any reason
an Option intended to be an Incentive Stock Option (or any portion thereof) shall not qualify
as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or
portion thereof shall be regarded as a Nonqualified Option appropriately granted under this
Plan. |
| 6.6.5. | By
accepting an Incentive Stock Option, the Participant agrees to give prompt notice to the
Company of dispositions or other transfers (other than in connection with a Change in Control)
of Shares acquired under the Option made within the later of (a) two years from the grant
date of the Option or (b) one year after the transfer of such Shares to the Participant,
specifying the date of the disposition or other transfer and the amount the Participant realized,
in cash, other property, or other consideration, in such disposition or transfer. Neither
the Company nor the Administrator will be liable to a Participant, or any other party, if
an Incentive Stock Option fails or ceases to qualify as an “incentive stock option”
under Code Section 422. Any Incentive Stock Option or portion thereof that fails to qualify
as an “incentive stock option” under Code Section 422 for any reason, will be
a Nonqualified Option. |
| 7.1. | Generally.
The Administrator, at any time and from time to time, may grant Restricted Stock to Service
Providers in such amounts as the Administrator, in its sole discretion, will determine, subject
to the limitations of this Section 7. Each Award of Restricted Stock will be evidenced by
an Award Agreement that will specify the Period of Restriction and the applicable restrictions,
the number of Shares granted, and such other terms and conditions as the Administrator, in
its sole discretion, will determine. Restricted Stock may be awarded in consideration for
(i) cash, check, bank draft or money order payable to the Company, (ii) past service, or
(iii) any other form of legal consideration (including future Service) that may be acceptable
to the Administrator, in its sole discretion, and permissible under Applicable Laws. |
| 7.2. | Restrictions;
Voting Rights; Transferability. Unless the Administrator determines otherwise, Restricted
Stock will be held by the Company as escrow agent until the restrictions on such Restricted
Stock have lapsed. The Administrator, in its discretion, may accelerate the time at which
any restrictions will lapse or be removed. During the Period of Restriction, a Participant
holding Restricted Stock may exercise the voting rights applicable to those restricted Shares,
unless the Administrator determines otherwise. Restricted Stock may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction. |
| 7.3. | Dividends
and Other Distributions. Except as provided in the Award Agreement, during the Period
of Restriction, a Participant holding Restricted Stock will be entitled to receive all dividends
and other distributions paid with respect to such Restricted Stock. If any such dividends
or distributions are paid in Shares, such Shares will be subject to the same restrictions
on transferability and forfeitability as the Restricted Stock with respect to which they
were paid. |
| 7.4. | Return
of Restricted Stock to the Company. On the date set forth in the Award Agreement, the
Restricted Stock for which restrictions have not lapsed will be forfeited and will revert
to the Company and again will become available for grant under the Plan. |
| 7.5. | Section
83(b) Election. If a Participant makes an election under Code Section 83(b) to be taxed
with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather
than as of the date or dates upon which such Participant would otherwise be taxable under
Code Section 83(a), such Participant shall be required to deliver a copy of such election
to the Company promptly after filing such election with the Internal Revenue Service along
with proof of the timely filing thereof. |
| 8. | Restricted
Stock Units (RSUs) |
| 8.1. | Generally.
The Administrator, at any time and from time to time, may grant RSUs under the Plan to Service
Providers. Each RSU shall be subject to such terms and conditions as are consistent with
the Plan and as the Administrator may impose from time to time, subject to this Section 8.
Each Award of RSUs will be evidenced by an Award Agreement that will specify the terms, conditions,
and restrictions related to the grant, including the number of RSUs and such other terms
and conditions as the Administrator, in its sole discretion, will determine. A Participant
holdings RSUs will have only the rights of a general unsecured creditor of the Company until
delivery of Shares, cash, other securities, other property, or a combination of the foregoing. |
| 8.2. | Vesting
and Other Terms. The Administrator will set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will determine the number of RSUs
that will be paid out to the Participant. Upon meeting the applicable vesting criteria, the
Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding
the foregoing, at any time after the grant of RSUs, the Administrator, in its sole discretion,
may reduce or waive any vesting criteria that must be met to receive a payout. |
| 8.3. | Form
and Timing of Payment. Payment of earned RSUs will be made as soon as practicable after
the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator,
in its sole discretion, may settle earned RSUs in Shares, cash, other securities, other property,
or a combination of the foregoing. If a cash payment is made in lieu of delivering Shares,
the amount of such payment shall be equal to the fair market value of the Shares as of the
date on which the restricted period lapsed with respect to such RSUs, less an amount equal
to any taxes required to be withheld or paid. The Administrator may provide that RSUs will
be deferred, on a mandatory basis or at the Participant’s election, subject to compliance
with Applicable Law. |
| 8.4. | Voting.
The holders of RSUs shall have no voting rights as the Company’s shareholders. |
| 9.1. | Generally.
The Administrator shall have the authority to designate any Award described in Sections 6
through 8 of the Plan as a Performance Award. Additionally, the Administrator shall have
the authority to make an award of a cash bonus to any Participant and designate such Award
as a Performance Award. |
| 9.2. | Discretion
of Administrator. The Administrator shall have the discretion to establish the terms,
conditions, and restrictions of any Performance Award. For each performance period, the Administrator
shall have the sole authority to select the length of such performance period, the types
of Performance Awards to be granted, the performance criteria that will be used to establish
the performance goals, and the level(s) of performance which shall result in a Performance
Award being earned. |
| 9.3. | Performance
Criteria. The Administrator may establish performance-based conditions for an Award as
specified in the Award Agreement, which may be based on the attainment of specific levels
of performance of the Company (and/or one or more Subsidiaries, divisions, business segments
or operational units, or any combination of the foregoing) and may include, without limitation,
any of the following: (i) net earnings or net income (before or after taxes); (ii) basic
or diluted earnings per share (before or after taxes); (iii) revenue or revenue growth (measured
on a net or gross basis); (iv) gross profit or gross profit growth; (v) operating profit
(before or after taxes); (vi) return measures (including, but not limited to, return on assets,
capital, invested capital, equity, or sales); (vii) cash flow (including, but not limited
to, operating cash flow, free cash flow, net cash provided by operations and cash flow return
on capital); (viii) financing and other capital raising transactions (including, but not
limited to, sales of the Company’s equity or debt securities); (ix) earnings before
or after taxes, interest, depreciation and/or amortization; (x) gross or operating margins;
(xi) productivity ratios; (xii) share price (including, but not limited to, growth measures
and total shareholder return); (xiii) expense targets; (xiv) margins; (xv) productivity and
operating efficiencies; (xvi) customer satisfaction; (xvii) customer growth; (xviii) working
capital targets; (xix) measures of economic value added; (xx) inventory control; (xxi) enterprise
value; (xxii) sales; (xxiii) debt levels and net debt; (xxiv) combined ratio; (xxv) timely
launch of new facilities; (xxvi) client retention; (xxvii) employee retention; (xxviii) timely
completion of new product rollouts; (xxix) cost targets; (xxx) reductions and savings; (xxxi)
productivity and efficiencies; (xxxii) strategic partnerships or transactions; and (xxxiii)
personal targets, goals or completion of projects. Any one or more of the performance criteria
may be used on an absolute or relative basis to measure the performance of the Company and/or
one or more Subsidiaries as a whole or any business unit(s) of the Company and/or one or
more Subsidiaries or any combination thereof, as the Administrator may deem appropriate,
or any of the above performance criteria may be compared to the performance of a selected
group of comparison or peer companies, or a published or special index that the Administrator,
in its sole discretion, deems appropriate, or as compared to various stock market indices.
The Administrator also has the authority to provide for accelerated vesting of any Award
based on the achievement of performance criteria specified in this paragraph. Any performance
criteria that are financial metrics, may be determined in accordance with GAAP or may be
adjusted when established to include or exclude any items otherwise includable or excludable
under GAAP. |
| 9.4. | Modification
of Performance Goals. At any time, the Administrator may adjust or modify the calculation
of a performance goal for a performance period, to appropriately reflect any circumstance
or event that occurs during a performance period and that in the Administrator’s sole
discretion, warrants adjustment or modification. Adjustments the Administrator may make include
but are not limited to the following: (i) asset write-downs; (ii) litigation or claim judgments
or settlements; (iii) the effect of changes in tax laws, accounting principles, or other
laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring
programs; (v) unusual and/or infrequently occurring items; (vi) acquisitions or divestitures;
(vii) discontinued operations; (viii) any other specific unusual or infrequently occurring
or non-recurring events, or objectively determinable category thereof; (ix) foreign exchange
gains and losses; and (x) a change in the Company’s fiscal year. |
| 9.5. | Terms
and Conditions to Payment. Except as otherwise provided in an Award Agreement, a Participant
must be employed by the Company on the last day of a performance period to be eligible to
vest and receive Shares, cash, or other consideration in respect of a Performance Award for
such performance period. A Participant shall be eligible to receive payment in respect of
a Performance Award only to the extent that the performance goals for such period are achieved
and any other vesting conditions specified in the Participant’s Award Agreement are
satisfied. Following the completion of a performance period, the Administrator shall determine
whether, and to what extent, the performance goals for the performance period have been achieved
and determine the number of Shares, cash or other consideration that will be settled pursuant
to Performance Awards. |
| 9.6. | Timing
of Award Payments. Except as provided in an Award agreement, Performance Awards granted
for a performance period shall be paid to Participants as soon as administratively practicable
following the Administrator’s determination in accordance with Section 9.5. |
| 10.1. | General.
The Administrator may grant Dividend Equivalents or Other Stock or Cash Based Awards, to
one or more Service Providers, in such amounts and subject to such terms and conditions as
are consistent with the Plan. |
| 10.2. | Dividend
Equivalents. The Administrator may provide that any Award, other than an Option or Stock
Appreciation Right, may provide a Participant with the right to receive Dividend Equivalents.
Dividend Equivalents may be paid currently or credited to an account for the Participant,
settled in cash or Shares and subject to the same restrictions on transferability and forfeitability
as the Award with respect to which the Dividend Equivalents are granted. The payment of Dividend
Equivalents shall be specified in the applicable Award Agreement and shall in all cases be
subject to Applicable Law. |
| 10.3. | Other
Stock or Cash Based Awards. Other Stock-Based Awards may be granted either alone, in
addition to, or in tandem with, other Awards granted under the Plan and/or cash awards made
outside of the Plan. The Administrator shall have authority to determine the Service Providers
to whom and the time or times at which Other Stock-Based Awards shall be made, the amount
of such Other Stock-Based Awards, and all other conditions of the Other Stock-Based Awards
including any dividend and/or voting rights. The Administrator may grant Cash Awards in such
amounts and subject to such performance or other vesting criteria and terms and conditions
as the Administrator may determine. Cash Awards shall be evidenced in such form as the Administrator
may determine. |
| 11. | Adjustments;
Change in Control |
| 11.1. | Adjustments.
In the event that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, share split, reverse share split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs such that an adjustment is determined by the Administrator
(in its sole discretion) to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan, then the
Administrator shall, in such manner as it may deem equitable, adjust (i) the number
and class of Shares which may be delivered under the Plan (or number and kind of other securities
or other property); (ii) the number, class and price (including the exercise or strike price
of Options and SARs) of Shares subject to outstanding Awards, (iii) any applicable performance
criteria, performance period, and other terms and conditions of outstanding Performance Awards,
and (iv) the numerical limits in Section 5. Notwithstanding the preceding, the number of
Shares subject to any Award always shall be a whole number. |
| 11.2. | Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of the Company,
the Administrator will notify each Participant as soon as practicable prior to the effective
date of such proposed transaction. The Administrator in its discretion may provide for a
Participant to have the right to exercise an Award, to the extent applicable, until ten (10)
days prior to such transaction as to all of the Shares covered thereby, including Shares
as to which the Award would not be vested or otherwise be exercisable. In addition, the Administrator
may provide that any Company repurchase option or forfeiture rights applicable to any Award
shall lapse one hundred percent (100%), and that any Award vesting shall accelerate one hundred
percent (100%), provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously vested and, if applicable,
exercised, an Award will terminate immediately prior to the consummation of such proposed
action. |
| 11.3. | Change
in Control. In the event of a Change in Control, each outstanding Award shall be assumed
or an equivalent award substituted by the acquiring or successor corporation or a parent
of the acquiring or successor corporation. Unless determined otherwise by the Administrator,
in the event that the successor corporation refuses to assume or substitute an Award, (A)
the Participant shall fully vest in and have the right to exercise the Award as to all of
the Shares, including those as to which it would not otherwise be vested or exercisable;
(B) all applicable restrictions will lapse; and (C) all performance objectives and other
vesting criteria will be deemed achieved at targeted levels. If an Option or SAR is not assumed
or substituted in the event of a Change in Control, the Administrator shall notify the Participant
in writing or electronically that the Option or SAR shall be exercisable, to the extent vested,
for a period of up to fifteen (15) days from the date of such notice, and the Option or SAR
shall terminate upon the expiration of such period. For the purposes of this Section 11.3,
the Award shall be considered assumed if, following the Change in Control, the Award confers
the right to purchase or receive, for each Share subject to the Award immediately prior to
the Change in Control, the consideration (whether shares, cash, or other securities or property)
received in the Change in Control by holders of Shares for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in Control is not solely
common shares of the acquiring or successor corporation or its parent, the Administrator
may, with the consent of the acquiring or successor corporation, provide for the consideration
to be received, for each Share subject to the Award, to be solely common shares of the acquiring
or successor corporation or its parent equal in fair market value to the per share consideration
received by holders of Shares in the Change in Control. Notwithstanding anything herein to
the contrary, an Award that vests, is earned, or is paid out upon the satisfaction of one
or more performance goals will not be considered assumed if the Company or the acquiring
or successor corporation modifies any of such performance goals without the Participant’s
consent; provided, however, that a modification to such performance goals only
to reflect the acquiring or successor corporation’s post-Change in Control corporate
structure will not be deemed to invalidate an otherwise valid Award assumption. Payments
under this Section 11.3 may be delayed to the same extent that payment of consideration to
the holders of Shares in connection with the Change in Control is delayed as a result of
escrows, earnouts, holdbacks, or any other contingencies. |
| 12. | Provisions
Applicable to Awards |
| 12.1. | Conditions
Upon Issuance of Shares. Shares will not be issued pursuant to an Award unless the exercise
of such Award and the issuance and delivery of such Shares will comply with Applicable Law
and will be further subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise or receipt of an Award, the Company may require
the person exercising or receiving such Award to represent and warrant at the time of any
such exercise or receipt that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required or desirable. |
| 12.2. | Transferability.
No Award may be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily
or by operation of law, except by will or the laws of descent and distribution. Each Participant
may file with the Administrator a written designation of one or more persons as the beneficiary(ies)
who shall be entitled to receive the amounts payable with respect to an Award, if any, due
under this Plan upon his or her death. A Participant may, from time to time, revoke or change
his or her beneficiary designation without the consent of any prior beneficiary by filing
a new designation with the Administrator. The last such designation filed with the Administrator
shall be controlling; provided, however, that no designation, or change or revocation thereof,
shall be effective unless received by the Administrator prior to the Participant’s
death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by a Participant, the beneficiary shall be deemed to be his or her spouse
or, if the Participant is unmarried at the time of death, his or her estate. Upon the occurrence
of a Participant’s divorce (as evidenced by a final order or decree of divorce), any
spousal designation previously given by such Participant shall automatically terminate. |
| 12.3. | Documentation.
All Awards made under the Plan shall be made pursuant to an Award Agreement. The Administrator
may, in its sole discretion, determine the terms and conditions set forth in each Award Agreement,
provided that all such terms and conditions are consistent with the Plan. |
| 12.4. | Discretion.
All Awards made pursuant to the Plan may be made alone or in addition to or in conjunction
with any other Award. The terms of each Award are not required to be identical, and the Administrator
does not have to treat Participants or Awards uniformly. |
| 12.5. | Withholding.
A Participant shall be required to pay to the Company or any Affiliate, or the Company or
any Affiliate shall have the right and is hereby authorized to withhold, from any cash, Shares,
other securities or other property deliverable under any Award or from any compensation or
other amounts owing to a Participant, the amount (in cash, Shares, other securities or other
property) of any required withholding taxes, including any Tax Obligations, in respect of
an Award, its exercise, or any payment or transfer under an Award or under this Plan and
to take such other action as may be necessary in the opinion of the Administrator or the
Company to satisfy all obligations for the payment of such withholding and taxes. In addition,
the Administrator, in its discretion, may make arrangements mutually agreeable with a Participant
who is not an employee of the Company or an Affiliate to facilitate the payment of applicable
income and self-employment taxes. Without limitation, the Administrator may, in its sole
discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding
liability by (A) the delivery of Shares (which are not subject to any pledge or other security
interest) owned by the Participant having a fair market value equal to such withholding liability,
(B) having the Company withhold from the number of Shares otherwise issuable or deliverable
pursuant to the exercise or settlement of the Award a number of shares with a fair market
value equal to such withholding liability, (C) deducting an amount sufficient to satisfy
such withholding obligation from any payment of any kind otherwise due to a Participant,
(D) accepting a payment from the Participant in cash, by wire transfer of immediately available
funds, or by check made payable to the order of the Company, or (E) if there is a public
market for Shares at the time the withholding obligation for Tax Obligations is to be satisfied,
selling Shares issued pursuant to the Award creating the withholding obligation. The amount
withheld pursuant to any of the foregoing payment forms shall be determined by the Company
and may be up to (but not in excess of) the aggregate amount of such obligations based on
the maximum statutory withholding rates in the Participant’s jurisdiction for all Tax
Obligations that are applicable to such taxable income. |
| 12.6. | Award
Modification; Repricing. The Administrator may at any time, and from time to time, amend
the terms of any one or more Awards without the consent of any Participant; provided, however,
that the Administrator may not make any amendment which would otherwise constitute an impairment
of the material rights under any Award unless the Participant consents to such impairment
in writing. Notwithstanding anything to the contrary in Section 4 and except for an adjustment
pursuant to Section 11 or a repricing approved by shareholders, in no case may the Administrator
(i) amend an outstanding Option or Stock Appreciation Right to reduce the exercise price
of the Award, (ii) cancel, exchange, or surrender an outstanding Option or Stock Appreciation
Right in exchange for cash or other awards for the purpose of repricing the Award, or (iii)
cancel, exchange, or surrender an outstanding Option or Stock Appreciation Right in exchange
for an Option or Stock Appreciation Right with an exercise price that is less than the exercise
price of the original Award. |
| 12.7. | Acceleration.
The Administrator may at any time provide that any Award will become immediately vested and
fully or partially exercisable, free of some or all restrictions or conditions, or otherwise
fully or partially realizable, in each case, subject to Applicable Law. |
| 12.8. | Fractional
Shares. No fractional Shares shall be issued or delivered pursuant to the Plan. The Administrator
shall determine whether cash, additional Awards, or other property shall be issued or paid
in lieu of fractional Shares or whether any fractional Shares should be rounded, forfeited,
or otherwise eliminated. |
| 13.1. | General.
The Plan is intended to comply with Section 409A to the extent subject thereto, and shall
be interpreted and administered to be in compliance therewith. Any payments described in
the Plan that are due within the “short-term deferral period” (as defined in
Section 409A) shall not be treated as deferred compensation unless Applicable Law requires
otherwise. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the
Administrator may, without a Participant’s consent, amend this Plan or any Award, adopt
policies and procedures, make corrective filings, or take any other actions (including amendments
and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment
of Awards, including exempting the Plan and Awards from Section 409A or complying with 409A. |
| 13.2. | Payments
to Specified Employees. Notwithstanding anything in the Plan or an Award Agreement to
the contrary, any payment or settlement made pursuant to an Award to a “specified employee”
(as defined by Section 409A and as determined by the Administrator) due to such Participant’s
“separation from service” (as defined by Section 409A) will, to the extent necessary
to avoid adverse tax consequences to the Participant, be delayed for the six-month period
immediately following such “separation from service (or, if earlier, on the “specified
employee’s” death) and will instead be paid on the day immediately following
such six-month period or as soon as practicable thereafter. Any delayed payment under this
Section 13.2 shall not accrue interest during the delay. All payments of “nonqualified
deferred compensation” (as defined by Section 409A) that are scheduled to be paid more
than six months following a “specified employee’s” termination, shall be
made on their regular schedule. |
| 13.3. | Change
in Control. If any Award is or becomes subject to Code Section 409A and if payment of
such Award would be accelerated or otherwise triggered under a Change in Control, then the
definition of Change in Control shall be deemed modified, only to the extent necessary to
avoid the imposition of an excise tax under Code Section 409A, to mean a “change in
control event” as such term is defined for purposes of Code Section 409A. |
The
Board may at any time amend, alter, suspend, or terminate the Plan. The Company may obtain shareholder approval of any Plan amendment
to the extent necessary or, as determined by the Administrator in its sole discretion, desirable to comply with Applicable Law, including
any amendment that (i) increases the number of Shares available for issuance under the Plan or (ii) changes the persons or class of persons
eligible to receive Awards. No amendment, alteration, suspension, or termination of the Plan will materially impair the rights of any
Participant with respect to outstanding Awards, unless mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
The
Administrator may from time to time establish sub-plans under the Plan for purposes of satisfying securities, tax, or other laws of various
jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and conditions
as the Administrator determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall
apply only to the Participants in the jurisdiction for which the sub-plan was designed.
Notwithstanding
any other provisions in the Plan, the Administrator may cancel any Award, require reimbursement of any Award, and effect any other right
of recoupment of equity or other compensation provided under the Plan in accordance with Company policies, including the Company’s
Clawback Policies. A Participant may be required to repay to the Company previously paid compensation, whether provided pursuant to the
Plan or an Award Agreement, in accordance with the Clawback Policies. By accepting an Award, the Participant agrees to be bound by the
Clawback Policies and to adhere to the Clawback Policies to the extent required by Applicable Law.
| 17. | No
Right to Continued Service |
Nothing
in the Plan or any instrument executed or Award granted pursuant thereto shall 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 shall affect the right of the Company or an
Affiliate to terminate (i) a Participant’s employment with or without notice and with or without Cause, or (ii) a Participant’s
service as a Consultant or Director.
| 18. | No
Rights as a Shareholder |
Except
as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any Shares subject to such Award unless and until such Participant has satisfied all requirements for exercise
of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities,
or other property) or distributions of other rights for which the record date is prior to the date such Share certificates are issued,
except as provided in Section 11.
| 19.1. | Limitations
on Liability. Neither the Company, nor its Parent, nor any Subsidiary, nor any person
serving as Administrator shall have any liability to a Participant in the event an Award
held by the Participant fails to achieve its intended characterization under the tax, securities,
or other applicable laws and regulations. |
| 19.2. | Inability
to Obtain Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company
of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority will not have been obtained. |
| 19.3. | Severability.
Notwithstanding any contrary provision of the Plan or an Award Agreement, if any one or more
of the provisions (or any part thereof) of this Plan or an Award Agreement shall be held
invalid, illegal, or unenforceable in any respect, such provision shall be modified so as
to make it valid, legal, and enforceable, and the validity, legality, and enforceability
of the remaining provisions (or any part thereof) of the Plan or Award Agreement, as applicable,
shall not in any way be affected or impaired thereby. |
| 19.4. | Governing
Documents. The Plan and each Award Agreement evidencing an Award are intended to be read
together, and together, set forth the complete terms and conditions of each Award. To the
extent of any contradiction between the Plan and any Award Agreement or other written agreement
between a Participant and the Company, the Plan will govern unless the Award Agreement or
other written agreement was approved by the Administrator and expressly provides that a specific
provision of the Plan will not apply. |
| 19.5. | Governing
Law. The Plan will be governed by and construed in accordance with the internal laws
of the State of Delaware, without reference to any choice of law principles. |
| 19.6. | Titles
and Headings. The titles and headings in the Plan are for purposes of convenience only
and are not intended to define or limit the construction of the provisions hereof. |
| 19.7. | Intended
to Comply with Applicable Law. The Plan and all Awards granted hereunder are intended
to fully comply with Applicable Law. All administrative actions, determinations, and exercises
of discretion by the Administrator shall comply with Applicable Law. |
The
Plan will be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such
shareholder approval will be obtained in the manner and to the degree required under Applicable Law. All Awards hereunder are contingent
on approval of the Plan by the Company’s shareholders. Notwithstanding any other provision of this Plan, if the Plan is not approved
by the Company’s shareholders within twelve (12) months after the date the Plan is adopted, the Plan and any Awards hereunder shall
be automatically terminated.
The
2022 Equity Incentive Plan was originally effective on September 30, 2022. This amended and restated Plan shall be effective as of ________________
___, 2024, the date on which the Plan was adopted by the Board (the “Effective Date”).
Unless
terminated earlier under Section 14, this Plan shall terminate on ________ ___, 2034, ten
(10) years after the Effective Date.
36
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