UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
| ☐ |
Preliminary Information Statement |
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| ☐ |
Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) |
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| ☒ |
Definitive Information Statement |
Aerkomm 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. |
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| ☐ |
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 |
INFORMATION STATEMENT OF
AERKOMM INC.
44043 Fremont BLVD.
Fremont, CA 94538
Telephone: 877-742-3094
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS
AND NO STOCKHOLDERS’ MEETING WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN. THIS INFORMATION STATEMENT IS BEING FURNISHED
TO YOU SOLELY FOR THE PURPOSE OF INFORMING YOU OF THE MATTERS DESCRIBED HEREIN.
To: The Stockholders of Aerkomm Inc.
Re: Action by Written Consent In Lieu of a Special Meeting of Stockholders
We are furnishing this notice
and the accompanying Information Statement to the stockholders of Aerkomm Inc., a Nevada corporation (the “Company”, or the
“Registrant”), for informational purposes only pursuant to Section 14(c) of the Exchange Act of 1934, as amended (the “Exchange
Act”), and the rules and regulations prescribed thereunder.
On May 5, 2023, the Board
of Directors of the Company unanimously authorized and approved the establishment of the Aerkomm Inc. 2023 Equity Incentive Plan (the
“2023 Plan”) and set the number of shares of the Company’s common stock, par value $0.001 per share (“Common Stock”),
reserved for issuance under the 2023 Plan at 3,683,929 shares of Common Stock. Our management implemented the 2023 Plan on June 13, 2023,
our board of directors ratified the 2023 Plan on April 29, 2024 and on May 8, 2024, a majority of the voting power held by our stockholders
approved the 2023 Plan by written consent in lieu of a special meeting of the stockholders (the “Majority Stockholder Consent”).
The Majority Stockholder Consent that we have received constitutes the only stockholder approval required for the stockholder ratification
of the 2023 Plan under the Nevada Revised Statutes, our Amended and Restated Articles of Incorporation, as further amended, and Amended
and Restated Bylaws. Accordingly, ratification of the 2023 Plan will not be submitted to the other stockholders of the Company for a vote.
A copy of the 2023 Plan is attached hereto as Exhibit A.
The date used for purposes
of determining the stockholders of the Company entitled to receive this notice is May 13, 2024 (the “Record Date”).
As of the Record Date, the
Company had 17,962,613 shares of voting stock outstanding, with all 17,962,613 shares being Common Stock. All outstanding shares are fully
paid and nonassessable.
This Information Statement has
been mailed to you for information purposes only on or about June 20, 2024, and you are not required to take any action.
You may also request a copy
of the Information Statement by contacting our main office at (877)-742-3094.
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: |
|
| |
|
| /s/ Louis Giordimaina |
|
| Louis Giordimaina |
|
| Chief Executive Officer and Director |
|
| |
|
| Fremont, California |
|
June 17, 2024 |
|
AERKOMM INC.
44043 Fremont BLVD.
Fremont, CA 94538
Information Statement Pursuant to Section 14C
of the Securities Exchange Act of 1934
This Information Statement (the
“Information Statement”) is being mailed on or about June 20, 2024 to the holders of record at the close of business on May
13, 2024 (the “Record Date”) of the shares of common stock, par value $0.001 per share (the “Comon Stock”), of
Aerkomm Inc., a Nevada corporation (the “Company” or the “Registrant”), in connection with an action taken by
written consent of the record holders of a majority of the voting power of the outstanding shares of Common Stock of the Company (the
“Majority Stockholder Consent”) in lieu of a meeting to approve the Company’s 2023 Equity Incentive Plan (the “2023
Plan”). The 2023 Plan, a copy of which is attached hereto as Exhibit A, reserves for issuance a total of 3,683,929 shares
of the Company’s Common Stock for awards under the 2023 Plan.
No vote or other consent
of our stockholders is solicited in connection with this Information Statement. We are not asking you for a proxy and you are requested
not to send us a proxy.
The elimination of the need
for a formal meeting of the stockholders to approve the actions is authorized by NRS §78.320. This Section provides that the written
consent of the holders of outstanding shares of voting capital stock, having not less than the minimum number of votes which would be
necessary to authorize or take the action at a meeting at which all shares entitled to vote on a matter were present and voted, may be
substituted for the formal meeting. According to NRS §78.380(1)(b), an action by the stockholders on a matter other than the election
of directors is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action
and such action is taken pursuant to NRS §78.330. In order to eliminate the costs and management time involved in holding a special
meeting and in order to effect the action described herein, the Board determined to utilize the written consent of the Majority Stockholders
of the Company and did in fact obtain, the Majority Stockholder Consent to approve the actions described above.
On May 8, 2024, the beneficial
holders (as determined in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”))
of approximately 53.92% of the voting power of the outstanding shares of capital stock of the Company (the “Majority Stockholders”),
executed and delivered the Majority Stockholder Consent approving the 2023 Plan. Because the action was approved by the written consent
of stockholders holding a majority of the voting power of the outstanding shares of capital stock of the Company, no proxies are being
solicited with this Information Statement. All necessary corporate approvals have been obtained, and this Information Statement is furnished
solely to advise stockholders of the action taken by the Majority Stockholder Consent.
The Information Statement is being
furnished only to (1) inform the Company’s stockholders of the action described above before it takes effect in accordance with
Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended, and (2) provide the notice required under Nevada Revised
Statutes. The Information Statement is expected to be mailed on or about June 20, 2024.
The entire cost of furnishing
this Information Statement will be borne by the Company.
The Company has only shares
of Common Stock outstanding. As of the Record Date, there were 17,962,613 shares of Common Stock outstanding. All of the above shares
are entitled to vote with respect to the matters discussed in this Information Statement. Each stockholder of record as of the Record
Date is entitled to one vote for each share of Common Stock. The Nevada Revised Statutes do not provide for dissenter’s rights of
appraisal with respect to the Plan Amendment nor have we provided for appraisal rights in our Certificate of Incorporation or Bylaws.
THE
AERKOMM INC. 2023 Equity Incentive Plan
This discussion of this item is qualified in
its entirety by reference to the Aerkomm Inc. 2023 Equity Incentive Plan, as amended.
On May 5, 2023, the Board
of Directors of the Company (the “Board”) unanimously authorized and approved the establishment of the 2023 Plan and set the
number of shares of the Company’s Common Stock reserved for issuance under the 2023 Plan at 3,683,929 shares of Common Stock. Our
management implemented the 2023 Plan on June 13, 2023, our Board ratified the 2023 Plan on April 29, 2024 and on May 8, 2024, a majority
of the voting power held by the stockholders of our outstanding capital stock approved the 2023 Plan. A copy of the 2023 Plan is attached
hereto as Exhibit A.
Summary of Material Features of the Plan
The following summary of the
material terms of the 2023 Plan is qualified in its entirety by the full text of the Plan, a copy of which is attached as Exhibit A
to this information statement. You also may obtain a copy of the 2023 Plan, free of charge, by writing to the Company, Attention: Corporate
Secretary, 44043 Fremont Blvd., Fremont, CA 94538.
Effective Date
The 2023 Plan became effective
on June 13, 2023.
The purpose of the 2023 Plan
is to advance our interests and the interests of our shareholders by providing an incentive to attract, retain, and reward persons performing
services for us and by motivating such persons to contribute to our growth and profitability. Under the 2023 Plan, we are authorized to
grant stock and options to purchase our common stock to our, and our affiliates, current and prospective employees, directors and key
consultants. The maximum number of shares of common stock that may be issued pursuant to awards granted under the 2023 Plan is 3,683,929
shares, subject to automatic increases in accordance with Section 4.1 to the 2023 Plan. Notwithstanding the foregoing, the maximum number
of Shares that may be issued as incentive stock options is equal to the maximum number of shares available for issuance under the 2023
Plan without taking into account any automatic increases in the share reserve thereunder. Cancelled and forfeited stock options and stock
awards may again become available for grant under the 2023 Plan.
As of the date of this information
statement, we have granted 3,683,927 awards under the 2023 Plan.
Administration
The 2023 Plan is administered by our Compensation
Committee. Our Compensation Committee has the authority to select the eligible participants to whom awards will be granted, to determine
the types of awards and the number of shares covered and to set the terms, conditions and provisions of such awards, to cancel or suspend
awards under certain conditions, and to accelerate the exercisability of awards. Our Compensation Committee is authorized to interpret
the 2023 Plan, to establish, amend, and rescind any rules and regulations relating to the 2023 Plan, to determine the terms of agreements
entered into with recipients under the 2023 Plan, and to make all other determinations that may be necessary or advisable for the administration
of the 2023 Plan.
Eligibility
All current and prospective employees, directors
and individuals providing, or reasonably expected to provide, services to our company or its affiliates are eligible to participate in
the 2023 Plan.
Shares Subject to 2023 Plan
The number of shares of common stock that is available
for grant of awards under the 2023 Plan, as amended, is 3,683,929 shares, subject to automatic, annual increases according to Section
4.1 of the 2023 Plan.
Stock Option and SAR Grants
The exercise price per share of common stock purchasable
under any stock option or stock appreciation right, or SAR, will be determined by our Compensation Committee, but cannot in any event
be less than 100% of the fair market value of our common stock on the date the option is granted. Our Compensation Committee will determine
the term of each stock option or SAR (subject to a maximum of 10 years) and each stock option or SAR will be exercisable pursuant to a
vesting schedule determined by our Compensation Committee. The grants and the terms of incentive stock options, or ISOs, shall be restricted
to the extent required for qualification as ISOs by the Internal Revenue Code, or the Code. Subject to approval of our Compensation Committee,
stock options or SARs may be exercised by payment of the exercise price in cash, shares of our common stock, which have been held for
at least six months, or pursuant to a “cashless exercise” through a broker-dealer under an arrangement approved by us. We
may require the grantee to pay to us any applicable withholding taxes that we are required to withhold with respect to the grant or exercise
of any award. The withholding tax may be paid in cash or, subject to applicable law, our Compensation Committee may permit the grantee
to satisfy such obligations by the withholding or delivery of shares of our common stock. We may withhold from any shares of our common
stock issuable pursuant to a stock option or SAR or from any cash amounts otherwise due from us to the recipient of the award an amount
equal to such taxes.
Stock Grants
Shares may be sold or awarded for consideration
and with or without restriction as determined by the Compensation Committee, including cash, full-recourse promissory notes, as well as
past and future services. Any award of shares will be subject to the vesting schedule, if any, determined by the Compensation Committee.
In general, holders of shares sold or awarded under the 2023 Plan will have the same voting, dividend and other rights as our other stockholders.
As a condition to the purchase of shares under the 2023 Plan, the purchaser will make such arrangements as our Compensation Committee
may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with
such purchase.
Adjustments
In the event of any change affecting the shares
of our common stock by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, combination or exchange
of shares or other similar corporate change, or any distribution to stockholders other than cash dividends, our board of directors will
make such substitution or adjustment in the aggregate number of shares that may be distributed under the 2023 Plan and in the number and
option price (or exercise or purchase price, if applicable) as it deems to be appropriate in order to maintain the purpose of the original
grant.
Termination of Service
If a participant’s service to our company
terminates on account of death or disability, then the participant’s unexercised options, if exercisable immediately before the
participant’s death, disability or retirement, may be exercised in whole or in part, on the earlier of the date on which such stock
option would otherwise expire or one year after the event. If a participant’s service to us terminates for any other reason, then
the participant’s unexercised options, to the extent exercisable immediately before such termination, will remain exercisable, and
may be exercised in whole or in part, for a period ending on the earlier of the date on which such stock option would otherwise expire
or three months after such termination of service.
Amendment and Termination
Our board of directors may, at any time, alter,
amend, suspend, discontinue, or terminate the 2023 Plan; provided that such action shall not adversely affect the right of grantees to
stock awards or stock options previously granted and no amendment, without the approval of our stockholders, shall increase the maximum
number of shares which may be awarded under the 2023 Plan in the aggregate, materially increase the benefits accruing to grantees under
the 2023 Plan, change the class of employees eligible to receive options under the 2023 Plan, or materially modify the eligibility requirements
for participation in the 2023 Plan.
In April 2024, in recognition of their commitment
to our mission, certain of our employees and consultants entered into binding agreements with the Company to accelerate and exercise the
vesting of a portion of their outstanding options under the 2023 Plan in lieu of $2,870,736 of deferred cash salaries, a portion of which
constitute a portion of the accrued payables noted on the balance sheet in our consolidated financial statements. The form of letter outlining
this agreement is included in Exhibit 10.85 to our Annual Report on Form 10-K filed with the SEC on May 7, 2024.
Equity Compensation
Plan Information
The following table sets forth certain information
about the securities authorized for issuance under our equity incentive plans as of December 31, 2023.
| Plan category | |
Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights | | |
Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights | | |
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans | |
| Equity compensation plans approved by security holders | |
| 2,000,000 | | |
$ | 7.6279 | | |
| 0 | |
| Equity compensation plans not approved by security holders | |
| 4,083,929 | | |
$ | 2.5915 | | |
| 423,961 | |
| Total | |
| 6,083,929 | | |
$ | 4.4466 | | |
| 423,961 | |
Summary Compensation Table - Fiscal Years Ended
December 31, 2023 and 2022
The following table sets forth information concerning
all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the
noted periods. No other executive officers received total annual salary and bonus compensation in excess of $100,000.
| Name and Principal Position | |
Year | |
Salary
($) | | |
Option
Awards
($)(1) | | |
All Other
Compensation
($) | | |
Total
($) | |
| Louis Giordimaina,
Chief Executive Officer and | |
2023 | |
| 584,672 | | |
| 1,117,573 | | |
| 28,692 | | |
| 1,730,937 | |
| Interim Chief Financial Officer(2) | |
2022 | |
| 567,999 | | |
| 460,157 | | |
| 71,088 | | |
| 1,099,244 | |
| Georges Caldironi (3) | |
2023 | |
| 324,818 | | |
| - | | |
| - | | |
| 324,818 | |
| | |
2022 | |
| 265,066 | | |
| 522,000 | | |
| 33,648 | | |
| 820,714 | |
| Jeffrey Wun, President and Chief Technology Officer (4) | |
2023 | |
| 384,000 | | |
| 1,869,980 | | |
| - | | |
| | |
| | |
2022 | |
| 192,301 | | |
| - | | |
| - | | |
| 192,301 | |
| (1) |
These amounts shown represent the aggregate grant date fair value for options granted to the named executive officers computed in accordance with FASB ASC Topic 718. |
| (2) |
Mr. Giordimaina, a former consultant to us, became a full-time employee on May 25, 2018 and was appointed, as of that date, Chief Operating Officer – Aviation. On March 22, 2020, Mr. Giordimaina was appointed as our Chief Executive Officer. On August 29, 2022, Mr. Giordimaina was also appointed as our interim Chief Financial Officer. |
| (3) |
Mr. Caldironi, a former consultant to us, became a full-time employee and was appointed as our Chief Operating Officer on March 22, 2020. The option awards were granted to AA Twins, which is controlled by Mr. Caldironi, according to the consulting agreement. |
| (4) |
Mr. Wun has served as our President since December 31, 2017 and as our Chief Technology Officer since March 22, 2020. |
Employment Agreements
We have executed the following
employment agreement with our Chief Executive Officers. The material terms of those arrangements are summarized below. The summary is
not a complete description of all provisions of the employment arrangement and is qualified in its entirety by reference to the written
employment agreement with Mr. Giordimaina filed as an exhibit to our Annual Report.
Louis Giordimaina
Pursuant to the terms of his
employment agreement, we agreed to pay Mr. Giordimaina an annual salary of €540,000, or $567,999. A bonus will be considered, comparable
to those that may be offered to other executives once a satisfactory revenue stream is established at Aircom as a result of Mr. Giordimaina’s
efforts. Mr. Giordimaina was granted options on 18,750 shares of common stock of the Company each calendar quarter, at the prevailing
market price on Euronext at the time of grant in accordance with the equity incentive plan of the Company. These options will vest when
issued. We will cover and pay any premium up to a maximum of €2,500, or $2,830, per annum for any international private health insurance
which Mr. Giordimaina may have in place from time to time covering Mr. Giordimaina and his wife; we will pay Mr. Giordimaina the sum of
€6,000, or $6,408, per year to any private pension fund scheme/s designated by Mr. Giordimaina, we will pay Mr. Giordimaina €18,000,
or $19,224, per annum as an allowance for a leased car and fuel expenses, to be paid in equal monthly instalments, we will provide Mr.
Giordimaina with a mobile telephone for his business use, as well as a lap top computer and an iPad, and we will reimburse Mr. Giordimaina
for all actual, necessary and reasonable expenses incurred by him in the course of his performance of services for the Company. The employment
agreement contains customary confidentiality provisions and covenants prohibiting Mr. Giordimaina from competing with us during his employment,
and from soliciting any of our employees or consultants for a period of one year after his employment end. If Mr. Giordimaina’s
employment is terminated by us without cause, he shall be entitled to one-half of his full salary for the remainder of the initial three-year
term of his agreement.
Outstanding Equity Awards Fiscal Year Ended
December 31, 2023 and 2022
As of December 31, 2023 and 2022, Mr. Wun had
options outstanding and exercisable for 23,141 and 23,141 shares of our common stock at an average exercise price of $9.66 and $9.66 per
share, respectively. As of December 31, 2022 and December 31, 2021, Mr. Giordimaina had options outstanding and exercisable for 366,099
and 291,099 shares of our common stock at an average exercise price of $6.56 and $6.21 per share. As of December 31, 2022 and 2021, Mr.
Caldironi had options outstanding and exercisable for 99,676 and 24,676 shares of our common stock at an average exercise price of $8.91
and $8.82 per share, respectively. As of December 31, 2022 and 2021, Mr. Lin had options outstanding and exercisable for 19,605 and
19,605 shares of our common stock at an average exercise price of $10.33 and $10.33 per share, respectively.
| | |
Option Awards |
| Name | |
| |
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | |
Number of
Securities
Underlying
Unexercised
Options (#)
Un-exercisable | | |
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | |
Option
Exercise Price
($) | | |
Option
Expiration
Date |
| Louis Giordimaina | |
December 31, 2023 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 2.58 | | |
12/01/2033 |
| | |
December 31, 2023 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 2.58 | | |
09/01/2033 |
| | |
December 31, 2023 | |
| 351,500 | | |
| - | | |
| - | | |
$ | 2.59 | | |
06/13/2033 |
| | |
December 31, 2023 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 2.89 | | |
06/01/2033 |
| | |
December 31, 2023 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 3.00 | | |
03/01/2033 |
| | |
December 31, 2022 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 4.26 | | |
12/01/2032 |
| | |
December 31, 2022 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 6.42 | | |
09/01/2032 |
| | |
December 31, 2022 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 8.94 | | |
06/01/2032 |
| | |
December 31, 2022 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 12.10 | | |
03/01/2032 |
| | |
December 31, 2022 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 2.72 | | |
12/01/2031 |
| | |
December 31, 2022 | |
| 150,000 | | |
| - | | |
| - | | |
$ | 3.89 | | |
10/21/2031 |
| | |
December 31, 2022 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 4.12 | | |
09/01/2031 |
| | |
December 31, 2022 | |
| 43,599 | | |
| - | | |
| - | | |
$ | 8.30 | | |
12/11/2030 |
| | |
December 31, 2022 | |
| 30,000 | | |
| - | | |
| - | | |
$ | 3.96 | | |
07/02/2029 |
| | |
December 31, 2022 | |
| 30,000 | | |
| - | | |
| - | | |
$ | 20.50 | | |
05/25/2028 |
| | |
December 31, 2021 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 2.72 | | |
12/01/2031 |
| | |
December 31, 2021 | |
| 150,000 | | |
| - | | |
| - | | |
$ | 3.89 | | |
10/21/2031 |
| | |
December 31, 2021 | |
| 18,750 | | |
| - | | |
| - | | |
$ | 4.12 | | |
09/01/2031 |
| | |
December 31, 2021 | |
| 43,599 | | |
| - | | |
| - | | |
$ | 8.30 | | |
12/11/2030 |
| | |
December 31, 2021 | |
| 30,000 | | |
| - | | |
| - | | |
$ | 3.96 | | |
07/02/2029 |
| | |
December 31, 2021 | |
| 30,000 | | |
| - | | |
| - | | |
$ | 20.50 | | |
05/25/2028 |
| Georges Caldironi | |
December 31, 2022 | |
| 75,000 | | |
| - | | |
| - | | |
$ | 8.94 | | |
06/01/2032 |
| | |
December 31, 2022 | |
| 2,000 | | |
| - | | |
| - | | |
$ | 9.90 | | |
12/31/2031 |
| | |
December 31, 2022 | |
| 2,000 | | |
| - | | |
| - | | |
$ | 7.25 | | |
12/29/2030 |
| | |
December 31, 2022 | |
| 18,676 | | |
| - | | |
| - | | |
$ | 8.30 | | |
12/11/2030 |
| | |
December 31, 2022 | |
| 2,000 | | |
| - | | |
| - | | |
$ | 14.20 | | |
02/29/2030 |
| | |
December 31, 2021 | |
| 2,000 | | |
| - | | |
| - | | |
$ | 9.90 | | |
12/31/2031 |
| | |
December 31, 2021 | |
| 2,000 | | |
| - | | |
| - | | |
$ | 7.25 | | |
12/29/2030 |
| | |
December 31, 2021 | |
| 18,676 | | |
| - | | |
| - | | |
$ | 8.30 | | |
12/11/2030 |
| | |
December 31, 2021 | |
| 2,000 | | |
| - | | |
| - | | |
$ | 14.20 | | |
02/29/2030 |
| Jeffrey Wun | |
December 31, 2023 | |
| 722,000 | | |
| - | | |
| - | | |
$ | 2.59 | | |
06/13/2033 |
| | |
December 31, 2022 | |
| 14,141 | | |
| - | | |
| - | | |
$ | 8.30 | | |
12/11/2030 |
| | |
December 31, 2022 | |
| 6,000 | | |
| - | | |
| - | | |
$ | 3.96 | | |
07/02/2029 |
| | |
December 31, 2022 | |
| 3,000 | | |
| - | | |
| - | | |
$ | 27.50 | | |
06/23/2027 |
| | |
December 31, 2021 | |
| 14,141 | | |
| - | | |
| - | | |
$ | 8.30 | | |
12/11/2030 |
| | |
December 31, 2021 | |
| 6,000 | | |
| - | | |
| - | | |
$ | 3.96 | | |
07/02/2029 |
| | |
December 31, 2021 | |
| 3,000 | | |
| - | | |
| - | | |
$ | 27.50 | | |
06/23/2027 |
Executive Compensation Philosophy
Our Compensation Committee
determines the compensation given to our executive officers in its sole determination. Our Compensation Committee reserves the right to
pay our executives or any future executives a salary, and/or issue them shares of common stock issued in consideration for services rendered
and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance.
This package may also include long-term stock-based compensation to certain executives, which is intended to align the performance of
our executives with our long-term business strategies.
Incentive Bonus
The Compensation Committee
may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion, if the Compensation Committee
believes such bonuses are in the Company’s best interest, after analyzing our current business objectives and growth, if any, and
the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives.
Long-Term, Stock-Based Compensation
In order to attract, retain
and motivate executive talent necessary to support the Company’s long-term business strategy, we may award our executives and any
future executives with long-term, stock-based compensation in the future, at the sole discretion of our compensation committee.
Director Compensation
Director Compensation Program
Directors who are also our
employees receive no separate compensation for serving as directors or as members of committees of our board of directors.
We have entered into independent
director agreements with Richmond Akumiah, Raymond Choy and Colin Lim. Under the terms of these independent director agreements, we have
agreed to pay the independent directors an annual cash fee of $20,000, paid quarterly in four equal installments, commencing in the first
quarter following closing of our public offering, and an additional $5,000 cash compensation fee for serving as board of directors committee
chairmen. We commenced payment of these fees on September 30, 2018.
Each independent director
received an initial, fully vested stock option to purchase 4,000 shares of our common stock. If the director is still a member of the
board of directors and continues to serve as a non-employee director immediately following each annual meeting of our stockholders, the
director will be automatically granted an additional option to purchase 4,000 shares of our common stock as of the date of each such annual
meeting. These additional option grants will vest and become exercisable in twelve (12) equal monthly installments over the first year
following the date of grant, subject to the director continuing in service on the board of directors through each such vesting date. The
per share exercise price of each option granted to the independent director will equal 100% of the fair market value (as defined by the
board of directors) of a share of our common stock on the date the option is granted, and the term of each stock option granted to the
director will be ten (10) years from the date of grant.
We purchased a Directors and
Officers Liability Insurance with coverage up to an aggregate maximum of $3 million commencing promptly upon the final closing of our
prior public offering, and to reimburse the independent directors for pre-approved reasonable business expenses incurred by them. In November
2019, with the approval of the board, we purchased a directors and officers liability insurance with $5 million coverage effective November
25, 2019. In November 2020, we renewed and increased the Directors and Officers Liability Insurance with $10 million coverage effective
November 25, 2020 and subsequently reduced the coverage to $6 million to conserve expenses. In December 2021, we decided not to renew
this coverage, to further reduce our insurance expenses, and this policy has been terminated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding
beneficial ownership of our common stock as of April 15, 2024 (i) by each person who is known by us to beneficially own more than 5% of
our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group. Unless otherwise
specified, the address of each of the persons set forth below is in care of our company, 44043 Fremont Blvd., Fremont, CA 94538.
| Name and Address of Beneficial Owner | |
Title of Class | |
Amount and
Nature of
Beneficial
Ownership(1) | | |
Percent of
Class(2) | |
| Jeffrey Wun, Chairman, President and Chief Technology Officer(3) | |
Common Stock | |
| 917,121 | | |
| 5.44 | % |
| Louis Giordimaina, Chief Executive Officer and Director(4) | |
Common Stock | |
| 488,699 | | |
| 2.90 | % |
| Georges Caldironi, Chief Operating Officer(5) | |
Common Stock | |
| 99,676 | | |
| * | % |
| Richmond Akumiah, Director(6) | |
Common Stock | |
| 25,019 | | |
| * | % |
| Raymond Choy, Director(7) | |
Common Stock | |
| 31,875 | | |
| * | % |
| Chih-Ming (Albert) Hsu, Director(8) | |
Common Stock | |
| 728,481 | | |
| 4.32 | % |
| Colin Lim, Director(9) | |
Common Stock | |
| 118,455 | | |
| * | % |
| Jan-Yung Lin, Secretary (10) | |
Common Stock | |
| 482,008 | | |
| 2.86 | % |
| Jeff T. C. Hsu, Director(13) | |
Common Stock | |
| 58,910 | | |
| * | % |
| All officers and directors as a group (11 persons named above) | |
Common Stock | |
| 2,950,244 | | |
| 17.49 | % |
| | |
| |
| | | |
| | |
| dMedia Inc (11) | |
Common Stock | |
| 2,237,428 | | |
| 13.26 | % |
| Sheng-Chun Chang(12) | |
Common Stock | |
| 1,397,909 | | |
| 8.29 | % |
| (1) |
Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock. |
| (2) |
A total of 17,962,613 shares of our common stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of April 15, 2024. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator. |
| (3) |
Includes (i) 447,486 shares of our common stock held directly; (ii) 120,914 shares of our common stock which Mr. Wun has the right to acquire within 60 days through the exercise of vested options; and (iii) 2,237,428 shares of our common stock owned by dMedia Inc. Through his ownership interest in dMedia Inc., Mr. Wun indirectly beneficially owns 348,721 shares of our common stock held by dMedia Inc. Mr. Wun disclaims beneficial ownership of the remaining 1,888,707 shares of our common stock held by dMedia Inc. |
| (4) |
Consists of 488,699 shares of our common stock which Mr. Giordimaina has the right to acquire within 60 days through the exercise of vested options. |
| (5) |
Consists of 18,676 shares held directly and 6,000 shares of common stock which AA TWIN ASSOCIATES LTD has the right to acquire within 60 days through the exercise of vested options. Mr. Caldironi is the principal of AA TWIN ASSOCIATES LTD and has voting and dispositive control of the securities held by AA TWIN ASSOCIATES LTD. |
| (6) |
Consists of 25,019 shares of our common stock which Mr. Akumiah has the right to acquire within 60 days through the exercise of vested options but does not include 334 shares of our common stock issuable upon the exercise of options not exercisable within 60 days. |
| (7) |
Consists of 31,875 shares of our common stock which Mr. Choy has the right to acquire within 60 days through the exercise of vested options but does not include 1,334 shares of our common stock issuable upon the exercise of options not exercisable within 60 days. |
| (8) |
Represents (i) 3,312 shares of our common stock held directly by Mr. Hsu and (ii) 28,000 shares of our common stock which Mr. Hsu has the right to acquire within 60 days through the exercise of vested options (iii) 2,237,428 shares of our common stock owned by dMedia Inc. Through his ownership interest in in dMedia Inc., Mr. Hsu indirectly beneficially owns 697,169 shares of our common stock held by dMedia Inc. Mr. Hsu disclaims beneficial ownership of the remaining 1,540,259 shares of our common stock held by dMedia Inc. |
| (9) |
Consists of 118,455 shares of our common stock which Mr. Lim has the right to acquire within 60 days through the exercise of vested options but does not include 1,334 shares of our common stock issuable upon the exercise of options not exercisable within 60 days. |
| (10) |
Includes 462,403 shares of our common stock owned by Mr. Lin directly and 19,605 shares of our common stock which Mr. Lin has the right to acquire within 60 days through the exercise of vested options. Does not include 348,731 shares of our common stock owned by Mr. Lin through his approximately 15.57% ownership interest in dMedia Inc., as Mr. Lin does not, directly or indirectly, have voting or dispositive power over these shares although he does own a pecuniary interest in them. |
| (11) |
dMedia Inc. (formerly named dMedia Inc.) was changed to C Corporation in 2022. Therefore, it is no longer that Mr. Wun has sole voting and dispositive power over these shares of our common stock. |
| (12) |
Consists of (i) 881,500 shares of common stock held by Well Thrive Limited; (ii) 293,281 shares of our common stock owned directly by Mr. Sheng-Chun Chang; and (iii) 72,752 of our common stock which Mr. Chang has the right to acquire within 60 days through the exercise of vested warrants (but does not include 451,127 shares of our common stock issuable upon the exercise of warrants not exercisable within 60 days). Mr. Chang is the Chief Executive Officer and owner of Well Thrive Limited and has voting and dispositive power of the securities held by it. Mr. Chang disclaims beneficial ownership of the shares held by Well Thrive Limited. The address of Well Thrive Limited is No 79, Heng Yang Road, Taipei City, Taiwan. |
| |
|
| (13) |
Consists of 58,910 shares of our common stock which Mr. Hsu has the right to acquire within 60 days through the exercise of vested options. |
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION
TO MATTERS TO BE ACTED UPON
Other than with respect to the receipt of option
awards under the 2023 Plan as indicated in the tables above, no person who has been our officer or director, or to our knowledge, any
of their associates, has any substantial interest, direct or indirect, by security holdings or otherwise in the matter to be acted upon.
None of our directors opposed the actions to be taken by the Company.
DISSENTERS’ RIGHTS
There are no rights of appraisal or similar rights
of dissenters with respect to any matter described in this Information Statement.
EXPENSE OF INFORMATION STATEMENT
The expenses of mailing this Information Statement
will be borne by the Company, including expenses in connection with the preparation and mailing of this Information Statement and all
documents that now accompany or may hereafter supplement it. It is contemplated that brokerage houses, custodians, nominees and fiduciaries
will be requested to forward the Information Statement to the beneficial owners of common stock held of record by such persons and that
the Company will reimburse them for their reasonable expenses incurred in connection therewith.
STOCKHOLDERS’ RIGHTS
The elimination of the need for a special meeting
of the stockholders to approve the actions described in this Information Statement is authorized by the Nevada Revised Statutes which
provides that any action required or permitted to be taken at a meeting of stockholders of a corporation may be taken without a meeting,
before or after the action, if a written consent thereto is signed by the stockholders holding at least a majority of the voting power.
In order to eliminate the costs and management time involved in holding a special meeting and in order to effect the action disclosed
herein as quickly as possible in order to accomplish the purposes of our Company, we chose to obtain the written consent of a majority
of our voting power to approve the action described in this Information Statement.
STOCKHOLDERS SHARING THE SAME LAST NAME AND
ADDRESS
The SEC has adopted rules that permit companies
and intermediaries such as brokers to satisfy delivery requirements for proxy and information statements with respect to two or more stockholders
sharing the same address by delivering a single proxy or information statement addressed to those stockholders. This process, which is
commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for
companies. We and some brokers household proxy materials, delivering a single proxy or information statement to multiple stockholders
sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from
your broker or us that they are or we will be householding materials to your address, householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive
a separate proxy or information statement, or if you currently receive multiple proxy or information statements and would prefer to participate
in householding, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can
notify us by sending a written request to Aerkomm Inc., 44043 Fremont Blvd., Fremont, CA 94538.
ADDITIONAL INFORMATION
The Company is subject to the filing requirements
of the Exchange Act, and in accordance therewith files reports, proxy/information statements and other information including annual and
quarterly reports on Form 10-K and 10-Q with the SEC. Reports and other information filed by the Company can be inspected and copied on
the SEC’s web site on the Internet at http://www.sec.gov.
WHERE YOU CAN FIND MORE INFORMATION
This Information Statement refers to certain documents
that are not presented herein or delivered herewith. Such documents are available to any person, including any beneficial owner of our
shares, to whom this Information Statement is delivered upon oral or written request, without charge. Requests for such documents should
be directed to our Corporate Secretary, at 44043 Fremont Blvd., Fremont, CA 94538.
We file annual and quarterly reports and other
information with the SEC. Certain of our SEC filings are available over the Internet at the SEC’s website at http://www.sec.gov.
Additionally, copies of our filings and reports with the SEC are made available on our website at www.Aerkomm.com, under the heading “Investor
Relations”. Our website contains information we do not desire to incorporate by reference in this Information Statement.
| By Order of the Board of Directors: |
|
| |
|
| |
/s/ Louis Giordimaina |
|
| Name: |
Louis Giordimaina |
|
| Title: |
Chief Executive Officer and Director |
|
| |
|
| Fremont, California |
|
June 17, 2024 |
|
Exhibit
A
AERKOMM INC.
2023 EQUITY INCENTIVE PLAN
1. Purpose;
Eligibility.
1.1. General
Purpose. The name of this plan is the Aerkomm Inc. 2023 Equity Incentive Plan (the “Plan”). The purposes of the
Plan are to (a) enable Aerkomm Inc., a Nevada corporation (the “Company”), and any Affiliate to attract and retain
the types of Employees, Consultants and Directors who will contribute to the Company’s long-term success; (b) provide incentives
that align the interests of Employees, Consultants and Directors with those of the stockholders of the Company; and (c) promote the success
of the Company’s business.
1.2. Eligible
Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates
and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors after
the receipt of Awards.
1.3. Available
Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock
Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards.
2. Definitions.
“Affiliate” means
a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control
with, the Company, including, without limitation, any corporation that is a “parent corporation” or a “subsidiary corporation”
with respect to the Company within the meaning of Section 424(e) or (f) of the Code, and any other non-corporate entity
that would be such a subsidiary corporation if such entity were a corporation.
“Applicable Laws” means
the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal
and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common Stock are listed or quoted,
and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.
“Award” means
any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted
Award, a Performance Share Award or a Performance Compensation Award.
“Award Agreement” means
a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award
granted under the Plan which may, in the discretion of the Company, be transmitted electronically to any Participant. Each Award Agreement
shall be subject to the terms and conditions of the Plan.
“Beneficial Owner” has
the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership
of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall
be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise
of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially
Owns” and “Beneficially Owned” have a corresponding meaning.
“Board” means
the Board of Directors of the Company, as constituted at any time.
“Cause” means:
With respect to any
Employee or Consultant: (a) if the Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates
and such agreement provides for a definition of Cause, the definition contained therein; or (b) if no such agreement exists, or if such
agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude
or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate;
(ii) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates;
(iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; or (iv) material violation of state or federal
securities laws.
With respect to any Director,
a determination by a majority of the disinterested Board members that the Director has engaged in any of the following: (a) malfeasance
in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing the director’s appointment; (d) willful
conversion of corporate funds; or (e) repeated failure to participate in Board meetings on a regular basis despite having received proper
notice of the meetings in advance.
The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to whether a Participant has been discharged for Cause.
“Change in Control” means
(a) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries, taken as
a whole, to any Person that is not a subsidiary of the Company; (b) the Incumbent Directors cease for any reason to constitute at least
a majority of the Board; (c) the date which is 10 business days prior to the consummation of a complete liquidation or dissolution of
the Company; (d) the acquisition by any Person of Beneficial Ownership of more than 50% (on a fully diluted basis) of either (i) the then
outstanding shares of Common Stock of the Company, taking into account as outstanding for this purpose such Common Stock issuable upon
the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such
Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this Plan, the following acquisitions shall not constitute a Change in Control: (A) any acquisition
by the Company or any Affiliate, (B) any acquisition by any employee benefit plan sponsored or maintained by the Company or any subsidiary,
(C) any acquisition which complies with clauses, (i), (ii) and (iii) of subsection (e) of this definition or (D) in respect of an Award
held by a particular Participant, any acquisition by the Participant or any group of persons including the Participant (or any entity
controlled by the Participant or any group of persons including the Participant); or (e) the consummation of a reorganization, merger,
consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the
Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”),
unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A) the entity resulting from such
Business Combination (the “Surviving Company”), or (B) if applicable, the ultimate parent entity that directly or indirectly
has beneficial ownership of sufficient voting securities eligible to elect a majority of the members of the board of directors (or the
analogous governing body) of the Surviving Company (the “Parent Company”), is represented by the Outstanding Company
Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into
which the Outstanding Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the voting power of the Outstanding Company Voting Securities among the holders
thereof immediately prior to the Business Combination; (ii) no Person (other than any employee benefit plan sponsored or maintained by
the Surviving Company or the Parent Company) is or becomes the Beneficial Owner, directly or indirectly, of 50% or more of the total voting
power of the outstanding voting securities eligible to elect members of the board of directors of the Parent Company (or the analogous
governing body) (or, if there is no Parent Company, the Surviving Company); and (iii) at least a majority of the members of the board
of directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company) following
the consummation of the Business Combination were Board members at the time of the Board’s approval of the execution of the initial
agreement providing for such Business Combination. The foregoing notwithstanding, if the Award constitutes non-qualified deferred compensation
under Section 409A of the Code, in no event shall a Change in Control be deemed to have occurred unless such change shall satisfy the
definition of a change in control under Section 409A of the Code.
“Code” means
the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be deemed to include
a reference to any regulations promulgated thereunder.
“Committee” means
the compensation committee of the Board, or if no such committee has been established, the full Board, or a committee of one or more members
appointed to administer the Plan in accordance with Section 3.3 and Section 3.4.
“Common Stock” means
the common stock, $0.001 par value per share, of the Company, or such other securities of the Company as may be designated by the Committee
from time to time in substitution thereof.
“Consultant” means
any individual who is engaged by the Company or any Affiliate to render consulting or advisory services.
“Continuous Service” means
that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted
or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity
for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s
Continuous Service; provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given
effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to a Director
of an Affiliate will not constitute an interruption of Continuous Service unless otherwise required by Section 409A of the Code. The Committee
or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave
of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence.
“Director” means
a member of the Board.
“Disability” means
that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental
impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section 6.10
hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of whether an
individual has a Disability shall be determined under procedures established by the Committee. Except in situations where the Committee
is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10 hereof within the
meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled for purposes of benefits
under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates. The foregoing notwithstanding,
if the Award is subject to Section 409A of the Code, in no event shall a Disability be deemed to have occurred unless such disability
satisfies the requirements of Section 409A of the Code.
“Effective Date” shall
mean June 13, 2023.
“Employee” means
any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, for purposes of determining
eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or a parent or subsidiary corporation
within the meaning of Section 424 of the Code. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate
shall not be sufficient to constitute “employment” by the Company or an Affiliate.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means,
as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange or
a national market system, including without limitation, the New York Stock Exchange, NYSE American LLC or The Nasdaq Stock Market LLC,
the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing price on the date
immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported in the Wall Street Journal
or similar publication. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good
faith by the Committee and such determination shall be conclusive and binding on all persons; provided that if an Award is subject
to Section 409A of the Code, then the Fair Market Value shall be determined in accordance with Section 409A of the Code.
“Grant Date” means
the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that
specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth
in such resolution.
“Incentive Stock
Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
“Incumbent Directors” means
individuals who, on the Effective Date, constitute the Board, provided that any individual becoming a Director subsequent to the
Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors
then on the Board (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) shall be an Incumbent Director. 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.
“Non-qualified Stock
Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
“Officer” means
a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
“Option” means
an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.
“Optionholder” means
a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
“Option Exercise
Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.
“Participant” means
an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Compensation
Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Section 7.4
of the Plan.
“Performance Criteria” means
the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period
with respect to any Performance Compensation Award under the Plan. The Performance Criteria that will be used to establish the Performance
Goal(s) shall be based on the attainment of specific levels of performance of the Company (or Affiliate, division, business unit or operational
unit of the Company) and may include the following: (a) net earnings or net income (before or after taxes); (b) basic or diluted
earnings per share (before or after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit or gross profit
growth; (f) net operating profit (before or after taxes); (g) return on assets, capital, invested capital, equity, or sales; (h) cash
flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after
taxes, interest, depreciation and/or amortization; (j) gross or operating margins; (k) improvements in capital structure; (l) budget and
expense management; (m) productivity ratios; (n) economic value added or other value added measurements; (o) share price (including, but
not limited to, growth measures and total stockholder return); (p) expense targets; (q) margins; (r) operating efficiency; (s) working
capital targets; (t) enterprise value; (u) safety record; (v) completion of acquisitions or business expansion; (w) achieving research
and development goals and milestones; (x) achieving product commercialization goals; and (y) other criteria as may be set by the Committee
from time to time.
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 an Affiliate as a whole or any
division, business unit or operational unit of the Company and/or an Affiliate or any combination thereof, as the Committee may deem appropriate,
or as compared to the performance of a group of comparable companies, or published or special index that the Committee, in its sole discretion,
deems appropriate, or the Committee may select Performance Criterion (o) above as compared to various stock market indices. The Committee
also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance
Criteria specified in this paragraph, provided that if the Award is subject to Section 409A of the Code, such accelerated vesting does
not violate the rules of Code Section 409A. The Committee shall, within the first 90 days of a Performance Period (or, such longer or
shorter time period as the Committee shall determine) define in an objective fashion the manner of calculating the Performance Criteria
it selects to use for such Performance Period. In the event that applicable tax and/or securities laws change to permit the Committee
discretion to alter the governing Performance Criteria without obtaining stockholder approval of such changes, the Committee shall have
sole discretion to make such changes without obtaining stockholder approval.
“Performance Formula” means,
for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to
the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance
Compensation Award has been earned for the Performance Period.
“Performance Goals” means,
for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.
The Committee is authorized at any time during the first 90 days of a Performance Period (or such longer or shorter time period as the
Committee shall determine) or at any time thereafter, in its sole and absolute discretion, to adjust or modify the calculation of a Performance
Goal for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants based on the following
events: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles,
or other laws or regulatory rules affecting reported results; (d) any reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s
discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders
for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurring events, or objectively determinable
category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company’s fiscal year.
“Performance Period” means
the one or more periods of time not less than one fiscal quarter in duration, as the Committee may select, over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance
Compensation Award.
“Performance Share” means
the grant of a right to receive a number of actual shares of Common Stock or share units based upon the performance of the Company during
a Performance Period, as determined by the Committee.
“Permitted Transferee” means:
(a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management
of assets, and any other entity in which these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties
designated by the Committee in connection with a program established and approved by the Committee pursuant to which Participants may
receive a cash payment or other consideration in consideration for the transfer of a Non-qualified Stock Option; and (c) such other transferees
as may be permitted by the Committee in its sole discretion.
“Restricted Award” means
any Award granted pursuant to Section 7.2(a).
“Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
“Securities Act” means
the Securities Act of 1933, as amended.
“Stock Appreciation
Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, an amount
payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified
in the Stock Appreciation Right Award Agreement.
“Ten Percent Stockholder” means
a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any of its Affiliates.
3.
Administration.
3.1.
Authority of Committee. The Plan shall be administered by the Committee or, in the Board’s sole discretion, by the
Board. Subject to the terms of the Plan and the provisions of Section 409A of the Code (if applicable), the Committee’s charter
and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee shall have the authority:
(a)
to construe and interpret the Plan and apply its provisions;
(b)
to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
(c)
to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(d)
to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve “insiders”
within the meaning of Section 16 of the Exchange Act;
(e)
to determine when Awards are to be granted under the Plan and the applicable Grant Date;
(f)
from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall be granted;
(g)
to determine the number of shares of Common Stock to be made subject to each Award;
(h)
to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;
(i)
to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and
vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;
(j)
to determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, the performance measures
that will be used to establish the performance goals, the performance period(s) and the number of Performance Shares earned by a Participant;
(k)
to designate an Award (including a cash bonus) as a Performance Compensation Award and to select the Performance Criteria that
will be used to establish the Performance Goals;
(l)
to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding
Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations
under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment
shall also be subject to the Participant’s consent;
(m)
to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination
of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under
the Company’s employment policies;
(n)
to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that
triggers anti-dilution adjustments;
(o)
to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any
instrument or agreement relating to, or Award granted under, the Plan; and
(p)
to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration
of the Plan.
The Committee also may modify
the purchase price or the exercise price of any outstanding Award, provided that if the modification effects a repricing, stockholder
approval shall be required before the repricing is effective.
3.2.
Committee Decisions Final. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and
binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.
3.3.
Delegation. The Committee may delegate administration of the Plan to a subcommittee or subcommittees of one or more members
of the Committee, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated.
The Committee shall have the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise
(and references in this Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish
the Committee at any time and re-vest in the Board the administration of the Plan. The members of the Committee shall be appointed by
and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional
members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused,
in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of
only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members
and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed
by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may
determine to be advisable.
3.4.
Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee
Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3.
However, if the Board intends to satisfy such exemption requirements, with respect to Awards to any insider subject to Section 16 of the
Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee
Directors. Within the scope of such authority, the Board or the Committee may delegate to a committee of one or more members of the Board
who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange
Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under
the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.
3.5.
Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of the Committee,
and to the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including
attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to
which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted
under the Plan, and against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has
been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding
that such Committee did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the
Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however,
that within 60 days after institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the
opportunity at its own expense to handle and defend such action, suit or proceeding.
4.
Shares Subject to the Plan.
4.1.
Subject to adjustment in accordance with Section 11, a total of 3,683,929 shares
of Common Stock shall be available for the grant of Awards under the Plan. In addition, the number of shares of Common Stock available
for issuance under the Plan will automatically increase on January 1 of each calendar year during the term of the Plan by an amount equal
to five percent (5%) of the total number of shares of Common Stock issued and outstanding on December 31 of the immediately preceding
calendar year. Shares of Common Stock granted in connection with all Awards under the Plan shall be counted against this limit as one
(1) share of Common Stock for every one (1) share of Common Stock granted in connection with such Award. During the terms of the Awards,
the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards. Notwithstanding the
foregoing, the maximum aggregate number of shares that may be issued as Incentive Stock Options is equal to the maximum number of shares
available for issuance under the Plan without taking into account any automatic increases in the share reserve according to this Section
4.1.
4.2.
Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares,
treasury shares or shares reacquired by the Company in any manner.
4.3.
Any shares of Common Stock subject to an Award that is canceled, forfeited or expires prior to exercise or realization, either
in full or in part, shall again become available for issuance under the Plan. Notwithstanding anything to the contrary contained herein:
shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are
(a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation,
or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.
5.
Eligibility.
5.1.
Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock
Options may be granted to Employees, Consultants and Directors and those individuals whom the Committee determines are reasonably expected
to become Employees, Consultants and Directors following the Grant Date.
5.2.
Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the Option Exercise
Price is at least 110% of the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisable after the expiration
of five years from the Grant Date.
6.
Option Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted
shall be subject to the conditions set forth in this Section 6, and to such other conditions not inconsistent with the Plan
as may be reflected in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified
Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares
of Common Stock purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any
Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option
is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms
of such Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical,
but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:
6.1.
Term. Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, no Incentive Stock Option
shall be exercisable after the expiration of 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the
Plan shall be determined by the Committee; provided, however, no Non-qualified Stock Option shall be exercisable after the expiration
of 10 years from the Grant Date.
6.2.
Exercise Price of An Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent
Stockholders, the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common
Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option
Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of the Code.
6.3.
Exercise Price of a Non-qualified Stock Option. The Option Exercise Price of each Non-qualified Stock Option shall be not
less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a
Non-qualified Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option
is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 409A of the Code.
6.4.
Consideration. The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted
by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) in
the discretion of the Committee, upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) by delivery
to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the
Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation
equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between
the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”);
(ii) a “cashless” exercise program established with a broker; (iii) by reduction in the number of shares of Common Stock otherwise
deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise;
(iv) any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee.
Unless otherwise specifically provided in the Option, the exercise price of Common Stock acquired pursuant to an Option that is paid by
delivery (or attestation) to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company that have been held for more than six months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes). Notwithstanding the foregoing, during any period for which the Common
Stock is publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system) an exercise
by a Director or Officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit
by the Company, directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect
to any Award under this Plan.
6.5.
Transferability of An Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding
the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.6.
Transferability of a Non-qualified Stock Option. A Non-qualified Stock Option may, in the sole discretion of the Committee,
be transferable to a Permitted Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. If the
Non-qualified Stock Option does not provide for transferability, then the Non-qualified Stock Option shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.7.
Vesting of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may,
but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may
vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for
an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event, provided that
if such Award is subject to Section 409A of the Code, such acceleration of vesting and exercisability complies with the provisions of
Section 409A of the Code.
6.8.
Termination of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement the terms
of which have been approved by the Committee, in the event an Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled
to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three
months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set
forth in the Award Agreement; provided that, if the termination of Continuous Service is by the Company for Cause, all outstanding
Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does
not exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.
6.9.
Extension of Termination Date. An Optionholder’s Award Agreement may also provide that if the exercise of the Option
following the termination of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance
of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the
expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination
of the Participant’s Continuous Service that is three months after the end of the period during which the exercise of the Option
would be in violation of such registration or other securities law requirements.
6.10.
Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent
that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending
on the earlier of (a) the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the
Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the
Award Agreement, the Option shall terminate.
6.11.
Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was
entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within
the period ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option
as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein
or in the Award Agreement, the Option shall terminate.
6.12.
Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such
limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.
7.
Provisions of Awards Other Than Options.
7.1.
Stock Appreciation Rights.
(a)
General. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation
Right so granted shall be subject to the conditions set forth in this Section 7.1, and to such other conditions not inconsistent
with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free Standing
Rights”) or in tandem with an Option granted under the Plan (“Related Rights”). All such grants shall be
exempt from, or comply with, the provisions of Section 409A of the Code.
(b)
Grant Requirements. Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the Option
is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an Incentive
Stock Option must be granted at the same time the Incentive Stock Option is granted.
(c)
Term of Stock Appreciation Rights. The term of a Stock Appreciation Right granted under the Plan shall be determined by
the Committee; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant
Date.
(d)
Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions
on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation
Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall
not be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon the occurrence
of a specified event, provided that if such Award is subject to Section 409A of the Code, such acceleration of vesting and exercisability
complies with the provisions of Section 409A of the Code.
(e)
Exercise and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company
an amount equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by
the excess of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise price specified
in the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on
the date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk
of forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined
by the Committee.
(f)
Exercise Price. The exercise price of a Free Standing Stock Appreciation Right shall be determined by the Committee, but
shall not be less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right.
A Related Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative
thereto shall have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as the
related Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Stock Appreciation
Right, by its terms, shall be exercisable only when the Fair Market Value per share of Common Stock subject to the Stock Appreciation
Right and related Option exceeds the exercise price per share thereof and no Stock Appreciation Rights may be granted in tandem with an
Option unless the Committee determines that the requirements of Section 7.1(b) are satisfied.
(g)
Reduction in the Underlying Option Shares. Upon any exercise of a Related Right, the number of shares of Common Stock for
which any related Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been
exercised. The number of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any
related Option by the number of shares of Common Stock for which such Option has been exercised.
7.2.
Restricted Awards.
(a)
General. A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical
Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number
of shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose
for such period (the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the
Plan shall be evidenced by an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section
7.2, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
(b)
Restricted Stock and Restricted Stock Units.
(i)
Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted
Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that
the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable
restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory
to the Committee, if applicable and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement.
If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock
power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the
rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to
receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall similarly be
held in escrow by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends so
placed in escrow at a rate and subject to such terms as determined by the Committee. The cash dividends or stock dividends so placed in
escrow by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed
to the Participant in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount
of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall
have no right to such dividends.
(ii)
The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock
shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment
of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee
may also grant Restricted Stock Units with a deferral feature, if permitted in Section 409A of the Code, whereby settlement is deferred
beyond the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock
Units”). At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common
Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”).
Dividend Equivalents shall not be paid but shall be credited to the Participant’s account, and interest may be credited on the amount
of cash Dividend Equivalents credited to the Participant’s account at a rate and subject to such terms as determined by the Committee.
Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock
Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement
of such Restricted Stock Unit or Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant
shall have no right to such Dividend Equivalents.
(c)
Restrictions.
(i)
Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted
Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is
used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions
on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable
Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights
of the Participant to such shares and as a stockholder with respect to such shares shall terminate without further obligation on the part
of the Company.
(ii)
Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration
of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable
Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the Participant to
such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part of the Company and (B) such
other terms and conditions as may be set forth in the applicable Award Agreement.
(iii)
The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock, Restricted Stock Units
and Deferred Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising
after the date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.
(d)
Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at
the time or times set forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted Award may be granted
or settled for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of
vesting in the terms of any Award Agreement upon the occurrence of a specified event, provided that if such Award is subject to Section
409A of the Code, such acceleration is consistent with the provisions of Section 409A of the Code.
(e)
Delivery of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period with
respect to any shares of Restricted Stock, the restrictions set forth in Section 7.2(c) and the applicable Award Agreement
shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the
stock certificate evidencing, or enter into book entry form, the shares of Restricted Stock which have not then been forfeited and with
respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the
Participant’s account with respect to such Restricted Stock and the interest thereon, if any. Upon the expiration of the Restricted
Period with respect to any outstanding Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding
Deferred Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock
for each such outstanding vested Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any
Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7.2(b)(ii) hereof and the
interest thereon or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents
and the interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee
may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for
Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the
Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the
delivery date in the case of Deferred Stock Units, with respect to each Vested Unit.
(f)
Stock Restrictions. Each certificate or book entry form representing Restricted Stock awarded under the Plan shall bear
a legend or notation in such form as the Company deems appropriate.
7.3.
Performance Share Awards.
(a)
Grant of Performance Share Awards. Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement.
Each Performance Share Award so granted shall be subject to the conditions set forth in this Section 7.3, and to
such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee shall have the
discretion to determine: (i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted
to any Participant; (ii) the performance period applicable to any Award; (iii) the conditions that must be satisfied for a Participant
to earn an Award; and (iv) the other terms, conditions and restrictions of the Award.
(b)
Earning Performance Share Awards. The number of Performance Shares earned by a Participant will depend on the extent to
which the performance goals established by the Committee are attained within the applicable Performance Period, as determined by the Committee.
No payout shall be made with respect to any Performance Share Award except upon written certification by the Committee that the minimum
threshold performance goal(s) have been achieved.
7.4.
Performance Compensation Awards.
(a)
General. The Committee shall have the authority, at the time of grant of any Award described in this Plan (other than Options
and Stock Appreciation Rights granted with an exercise price equal to or greater than the Fair Market Value per share of Common Stock
on the Grant Date), to designate such Award as a Performance Compensation Award. In addition, the Committee shall have the authority to
make an Award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award.
(b)
Eligibility. The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or
such shorter or longer time period as the Committee shall determine) which Participants will be eligible to receive Performance Compensation
Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance
Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance
Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation
Award shall be decided solely in accordance with the provisions of this Section 7.4. Moreover, designation of a Participant
eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible
to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive
an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period
or in any other period.
(c)
Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period,
the Committee shall have full discretion to select the length of such Performance Period (provided any such Performance Period shall be
not less than one fiscal quarter in duration), the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that
will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply to the
Company and the Performance Formula. Within the first 90 days of a Performance Period (or such shorter or longer time period as the Committee
shall determine), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise
its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section 7.4(c)
and record the same in writing.
(d)
Payment of Performance Compensation Awards.
(i)
Condition to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed
by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such
Performance Period.
(ii)
Limitation. A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the
extent that: (A) the Performance Goals for such period are achieved; and (B) the Performance Formula as applied against such Performance
Goals determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance
Period.
(iii)
Certification. Following the completion of a Performance Period, the Committee shall review and certify in writing whether,
and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the
amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine
the actual size of each Participant’s Performance Compensation Award for the Performance Period.
(iv)
Use of Discretion. The Committee shall not have the discretion to grant or provide payment in respect of Performance Compensation
Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained.
(v)
Timing of Award Payments. Performance Compensation Awards granted for a Performance Period shall be paid to Participants
as soon as administratively practicable following completion of the certifications required by this Section 7.4 but in no
event later than 2 1/2 months following the end of the fiscal year during which the Performance Period is completed.
8.
Securities Law Compliance. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or
sold thereunder unless and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fully
complied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed
and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committee may require. The
Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however,
that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued
or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission
or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until
such authority is obtained.
9.
Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof,
shall constitute general funds of the Company.
10.
Miscellaneous.
10.1.
Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Award
may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the
provisions in the Award stating the time at which it may first be exercised or the time during which it will vest, provided that if such
Award is subject to Section 409A of the Code, any such acceleration or exercisability or vesting is in compliance with the provisions
of Section 409A of the Code.
10.2.
Stockholder Rights. 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 of Common Stock 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 Common Stock certificate or book entry form is issued, except as provided in Section 11 hereof.
10.3.
No Employment or Other Service Rights. 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 (a) the employment of an Employee with or without
notice and with or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
10.4.
Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed
to result from either (a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate
to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if
the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with
Section 409A of the Code if the applicable Award is subject thereto.
10.5.
Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the
Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition
of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation
paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing the Company to
withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock
of the Company.
11.
Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure
of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction
such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization
occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and
Stock Appreciation Rights, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 and the
maximum number of shares of Common Stock with respect to which any one person may be granted Awards during any period stated in Section
4 will be equitably adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration
subject to such Awards to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant
to this Section 11, unless the Committee specifically determines that such adjustment is in the best interests of the Company
or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 11
will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the
Code and in the case of Non-qualified Stock Options, ensure that any adjustments under this Section 11 will not constitute
a modification of such Non-qualified Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section
11 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange
Act. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and
binding for all purposes.
12.
Effect of Change in Control.
12.1.
In the discretion of the Board and the Committee, any Award Agreement may provide, or the Board or the Committee may provide by
amendment of any Award Agreement or otherwise, notwithstanding any provision of the Plan to the contrary, that in the event of a Change
in Control, Options and/or Stock Appreciation Rights shall become immediately exercisable with respect to all or a specified portion of
the shares subject to such Options or Stock Appreciation Rights, and/or the Restricted Period shall expire immediately with respect to
all or a specified portion of the shares of Restricted Stock or Restricted Stock Units.
12.2.
In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance
notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof,
the value of such Awards based upon the price per share of Common Stock received or to be received by other stockholders of the Company
in the event. In the case of any Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a
share of Common Stock in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without
the payment of consideration therefor.
12.3.
The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially
all of the assets and business of the Company and its Subsidiaries, taken as a whole.
13.
Amendment of the Plan and Awards.
13.1.
Amendment of Plan. The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof at any
time; provided that (a) no amendment to the persons eligible to receive Awards set forth in Section 1.2 or to
the maximum number of shares as to which Awards may be granted set forth in Section 4.1 (except for adjustments pursuant
to Section 11), shall be made without stockholder approval, and (b) no such amendment,
alteration, suspension, discontinuation or termination shall be made without stockholder approval if such approval is necessary to comply
with any Applicable Laws (including, without limitation, as necessary to comply with any tax or regulatory requirement applicable to this
Plan); and provided further, that any such amendment, alteration, suspension, discontinuance or termination that would materially
and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent
be effective without the prior written consent of the affected Participant, holder or beneficiary.
13.2.
Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary
or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided under the provisions
of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation
provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.
13.3.
No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment
of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
13.4.
Amendment of Awards. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive
any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted
or the associated Award Agreement, prospectively or retroactively; provided, however that any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant
with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant.
14.
General Provisions.
14.1.
Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits
with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events,
in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation,
confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant,
a termination of the Participant’s Continuous Service for Cause, or other conduct by the Participant that is detrimental to the
business or reputation of the Company and/or its Affiliates.
14.2.
Clawback. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government
regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant
to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law,
government regulation or stock exchange listing requirement).
14.3.
Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
14.4.
Sub-plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky, 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 Committee 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.
14.5.
Deferral of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants the
opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event
that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an
Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual
of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Committee deems advisable for the administration of any such deferral program. All of such programs and procedures
shall be consistent with the rules of Section 409A of the Code.
14.6.
Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to establish
any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.
14.7.
Recapitalizations. Each Award Agreement shall contain provisions required to reflect the provisions of Section 11.
14.8.
Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amounts due
within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for
purposes of this Plan, thirty (30) days shall be considered a reasonable period of time.
14.9.
No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee
shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of
Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.
14.10.
Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with
this Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.
14.11.
Section 409A. The Plan and all Awards granted under the Plan are intended to comply with Section 409A of the Code to the
extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan and all Awards Agreements 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 of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding
anything to the contrary in the Plan or any Award Agreement, to the extent required to avoid accelerated taxation and tax penalties under
Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan or
Award Agreement during the six (6) month period immediately following the Participant’s termination of Continuous Service shall
instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s
death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action
to prevent the assessment of any excise tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the
Committee will have any liability to any Participant for such tax or penalty.
14.12.
Disqualifying Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the
Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant
Date of such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of such
Incentive Stock Option (a “Disqualifying Disposition”) shall be required to immediately advise the Company in writing
as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.
14.13.
Section 16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of
Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under
Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in
this Section 14.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid
such conflict.
14.14.
Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by
whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations
by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant
in writing with the Company during the Participant’s lifetime.
14.15.
Expenses. The costs of administering the Plan shall be paid by the Company.
14.16.
Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable,
whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality
or unenforceability and the remaining provisions shall not be affected thereby.
14.17.
Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the
construction of the provisions hereof.
14.18.
Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively
among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee
shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective
Award Agreements.
15.
Effective Date of Plan. The Plan shall become effective as of the Effective Date, but no Award shall be exercised
(or, in the case of a stock Award, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which
approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.
16.
Termination or Suspension of the Plan. The Plan shall terminate automatically on August 14, 2032. No Award shall
be granted pursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board may suspend or
terminate the Plan at any earlier date pursuant to Section 13.1 hereof, provided any such suspension or termination is consistent
with the provisions of Section 409A of the Code. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
17.
Choice of Law. Except to the extent governed by Federal law, the law of the State of Nevada shall govern all questions
concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of law rules.
As adopted by the Board of Directors of the Company
on June 13, 2023.
As approved by the stockholders of the Company
on May 8, 2024.
A-22
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