Audit Committee Report
The
information contained in the following report is not considered to
be “soliciting material,” “filed” or
incorporated by reference in any past or future filing by us under
the Exchange Act or the Securities Act unless and only to the
extent that we specifically incorporate it by
reference.
The
Audit Committee has reviewed and discussed with our management and
Wolinetz, Lafazan & Company, P.C. (“Wolinetz”) our
audited consolidated financial statements as of and for the fiscal
year ended December 31, 2020. The Audit Committee has discussed
with the independent registered public accounting firm the matters
required to be discussed by the applicable requirements of the
Public Company Accounting Oversight Board (“PCAOB”) and
the SEC.
The
Audit Committee has received and reviewed the written disclosures
and the letter from Wolinetz required by applicable requirements of
the PCAOB regarding the independent accountant’s
communications with the audit committee concerning independence,
and has discussed with Wolinetz its independence.
Based
on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial
statements be included in our company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2020, for filing with
the SEC.
Audit
Committee:
Nola E. Masterson
John B. Payne
Alison A. Cornell
Risk Oversight
The
Board of Directors oversees the Company’s risk management
primarily through the following:
●
review and approval
of an annual business plan;
●
review of a summary
of risks and opportunities at meetings of the Board of
Directors;
●
review of business
developments, business plan implementation and financial
results;
●
oversight of
internal controls over financial reporting; and
●
review of employee
compensation and its relationship to our business
plans.
Communication with Shareholders
We have
established a process for shareholders to communicate with the
Board of Directors. Shareholders wishing to communicate with the
Board of Directors of ZIVO can send an email to
investors@zivobioscience.com or write or telephone Keith Marchiando
at the Company’s corporate offices:
Keith Marchiando
Zivo Bioscience, Inc.
2804 Orchard Lake Rd, Suite 202
Keego Harbor, MI 48320
Telephone: (248) 452-9866
All
such communication must state the type and amount of Company
securities held by the shareholder and must clearly state that the
communication is intended to be shared with the Board of Directors.
Mr. Marchiando will forward all such communications to the members
of the Board.
Code of Ethics
We have
adopted a code of ethics that applies to the Principal Executive
Officer and Principal Financial Officer, or those performing
similar functions. A copy of the code of ethics is available on our
website, www.zivobioscience.com,
under the “Investors
– Corporate Governance” tab and will be
sent to any shareholder, without charge, upon written request sent
to the Company’s Chief Financial Officer, Keith Marchiando,
Zivo Bioscience, Inc., 2804 Orchard Lake Rd, Suite 202, Keego
Harbor, MI 48320.
Directors and Executive Officers
The
following table sets forth the name, age and position of each of
our executive officers and directors:
|
Name
|
|
Age
|
|
Positions
|
|
Since
|
|
Andrew
A. Dahl
|
|
67
|
|
President
/ Chief Executive Officer / Director
|
|
2011/2020
|
|
Keith
R. Marchiando
|
|
59
|
|
Chief
Financial Officer
|
|
2021
|
|
Christopher
D. Maggiore
|
|
55
|
|
Director
|
|
2013
|
|
Nola E.
Masterson
|
|
74
|
|
Director
|
|
2014
|
|
John B.
Payne
|
|
73
|
|
Director
|
|
2013
|
|
Robert O. Rondeau, Jr.
|
|
55
|
|
Director
|
|
2016
|
|
Alison
A. Cornell
|
|
59
|
|
Director
|
|
2021
|
Keith R. Marchiando
Chief Financial Officer
Mr.
Marchiando was appointed Chief Financial Officer in January 2021.
He joined the Company from New US Nonwovens, LLC
(“Nonwovens”), a contract manufacturer of personal care
and home care products, where he was Chief Financial Officer since
August 2019. At US Nonwovens, he was responsible for all aspects of
the company’s financial activities, including strengthening
corporate controls, implementing financial planning and developing
the Company’s IT strategy. Prior to Nonwovens, he
served as a consultant to Plante & Moran PLLC from January 2017
to August 2019, where he engaged in interim chief financial officer
roles which included restructuring and transitioning companies in
ownership changes, supporting M&A activities and enhancing
financial functions and processes. Prior to this position, he
served as CFO of Perceptron, Inc. beginning in February 2014, and
then CFO of AP Exhaust LLC beginning in May 2015. Mr. Marchiando
earned a Master’s Degree in Business Administration (MBA) in
corporate finance from Carnegie Mellon University’s Tepper
School of Management and an undergraduate degree in finance and
economics at Lehigh University.
Information
with respect to Mr. Dahl, Mr. Maggiore, Ms. Masterson, Mr. Payne,
Mr. Rondeau and Ms. Cornell is contained herein under the caption
“Proposal No. 1
– Election of Directors
– Nominees.”
Each of
the officers will serve as such until his respective successor is
appointed and qualified, or until his earlier resignation or
removal. All directors hold their positions for one year or until
their successors are elected and qualified, subject to their
earlier resignation or removal.
Family Relationships
There
are no familial relationships between any of our officers and
directors.
Procedures for Shareholders to Nominate Directors
Our
bylaws provide a procedure for shareholders to nominate directors.
Nominations for the election of directors may be made by the Board
of Directors or by any shareholder entitled to vote for the
election of directors. Subject to compliance with applicable United
States securities laws and the rules and regulations of the SEC,
nominations by shareholders may be made by notice in writing to the
Secretary of the Company not less than 14 days nor more than 60
days prior to any meeting of the shareholders called for the
election of directors; provided, however, that if less than 21
written days’ notice of the meeting is given to shareholders,
such notice of nomination by a shareholder shall be given to the
Secretary of the Company not later than the close of the fifth day
following the day on which notice of the meeting was mailed to
shareholders.
Delinquent Section 16(a) Reports
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires the
Company’s directors and officers, as well as persons
beneficially owning more than 10% of the Company’s
outstanding Common Stock, to file reports of ownership and changes
in ownership with the SEC within specified time
periods.
Based
on a review of Forms 3, 4 and 5 filed with the SEC with respect to
the year ended December 31, 2020, we believe that none of our
directors and officers have failed to file required reports and/or
made late filings during the most recent year, except for the
following: (1) Ms. Cornell filed a late Form 3 on February 19,
2021; (2) Mr. Maggiore filed late Form 4’s on January 7, 2020
to report six purchases of common stock on December 19, 2019
through January 3, 2020, on February 11, 2020 to report four
purchases of common stock on January 10, 2020 through January 22,
2020, and on December 1, 2020 to report the exercise of common
stock warrants and the withholding of shares to satisfy the tax
withholding obligations on September 9, 2020 and the grant of
common stock warrants on September 30, 2020; (3) Ms. Masterson
filed a late Form 4 on December 1, 2020 to report the exercise of
common stock warrants and the withholding of shares to satisfy the
tax withholding obligations on August 18, 2020 and the grant of
common stock warrants on September 30, 2020; (4) Mr. Payne filed a
late Form 4 on December 2, 2020 to report the exercise of common
stock warrants and the withholding of shares to satisfy the tax
withholding obligations on September 9, 2020 and the grant of
common stock warrants on September 30, 2020; (5) Mr. Rondeau filed
a late Form 4 on December 1, 2020 to report the grant of common
stock warrants on September 30, 2020; and (6) Mr. Rice filed a late
Form 4 on December 1, 2020.
Summary Compensation Table
The
following table summarizes the compensation paid to our Chief
Executive Officer and Chief Financial Officer (referred to herein
as our “named executive officers”) during or with
respect to fiscal 2020 and 2019 for services rendered to us in all
capacities.
|
Name and
Principal
Position
|
Year
|
|
|
All Other
Compensation
($)
|
|
|
Andrew
A. Dahl
|
2020
|
440,000(6)
|
-
|
-
|
350,000
|
|
Chief
Executive Officer and Director
|
2019
|
376,667(6)
|
2,635,967(2)
|
-
|
2,960,134
|
|
|
|
|
|
|
|
Philip
M. Rice II
|
2020
|
304,852
|
297,248(3)
|
1,750(4)
|
603,850
|
|
Former
Chief Financial
Officer
and Director
|
2019
|
238,000
|
55,798(5)
|
10,000(4)
|
303,798
|
(1) The
amounts reported reflect the grant date fair value (excluding the
effect of estimated forfeitures). The grant date fair value of each
warrant is calculated using the Black Scholes option-pricing model
computed in accordance with FASB ASC Topic 718 and does not
correspond to the actual amount that will be realized upon exercise
by the named executive officers. Valuation assumptions used in
determining the grant date fair value of 2020 Option Awards using
the Black Scholes pricing model.
(2)
Represents the fair value of an award of compensatory options,
pursuant to which Mr. Dahl received the right to purchase 362,500
shares of Common Stock at an exercise price between $8.00 and
$11.20 with a term of ten years for his role as
CEO.
(3)
Represents the fair value of an award of compensatory options,
pursuant to which Mr. Rice received the right to purchase 25,000
shares of Common Stock at an exercise price of $12.00 with a term
of ten years for his role as CFO.
(4)
Represents fees paid to Mr. Rice for his role as a Director of the
Company. On March 3, 2020, Mr. Rice resigned as a Director of
the Company.
(5)
(a) $38,523 represents the fair value of an award of compensatory
warrants, pursuant to which Mr. Rice received the right to purchase
6,250 shares of Common Stock at an exercise price of $6.40 with a
term of five years for his role as Director; (b) $17,275 represents
the fair value of an award of compensatory warrants, pursuant to
which Mr. Rice received the right to purchase 2,500 shares of
Common Stock at an average exercise price of $8.00 with a term of
five years, in his position as Chief Financial
Officer.
(6)
Includes $90,000 and $52,500 for 2020 and 2019 respectively
of deferred salary owed to Mr. Dahl upon the achievement of a
Trigger Event as detailed below in “Mr. Dahl’s
Employment Agreement”.
Executive Compensation Programs
In
2020, the Compensation Committee reviewed financial information and
other performance metrics relative to the historical compensation
of executive management and comparative information prepared
internally. The Compensation Committee also reviewed
management’s recommendations for compensation levels of all
of the Company’s senior executive officers and considered
these recommendations with reference to relative compensation
levels of like-size institutions. The totality of the information
reviewed by the Compensation Committee was considered when
establishing current executive salary levels, and similar analysis
is expected to be considered when reviewing and establishing future
salaries and long term incentives. The Company’s compensation
policies and practices are designed to ensure that they do not
foster risk taking above the level of risk associated with the
Company’s business model. For this purpose, the Compensation
Committee generally considers the Company’s financial
performance, comparing that performance to the performance metrics
included in the Company’s strategic plan. The Compensation
Committee also generally evaluates management’s compensation
in light of other specific risk parameters. Based on this
assessment, the Compensation Committee believes that the Company
has a balanced pay and performance program that does not promote
excessive risk taking.
The
Company’s compensation programs are aimed at enabling it to
attract and retain the best possible executive talent and rewarding
those executives commensurate with their ability and performance.
The Company’s compensation programs consist primarily of base
salary and bonus.
Base Salary. Base salaries for executive officers are
determined in the same manner as those other salaried employees.
Salary guidelines are established by comparing the responsibilities
of the individual’s position in relation to similar positions
in other nutraceutical companies of similar size. Individual
salaries were determined this year by considering respective levels
of responsibility, position and industry information.
Bonuses. Mr. Dahl is entitled to a Revenue Bonus (as defined
in the Dahl Agreement, as defined below) equal to 2% of the
Company’s revenue contribution in accordance with a formula
as detailed in the Dahl Agreement. No Revenue Bonus is payable in
any year where there is an Operating Net Loss (as defined in the
Agreement). For the 2020 fiscal year (January 1, 2020 to December
31, 2020) (“Dahl Year One”), the Company shall pay Mr.
Dahl a bonus equal to 50% of the Dahl Base Salary (as defined
below) if the Company achieves revenues for Dahl Year One which are
(w) at least $500,000; and (x) greater than that for the 12-month
period immediately preceding Dahl Year One.
Mr.
Rice had no bonus plan; any bonuses awarded would have been at the
discretion of the Board of Directors.
No
bonuses were paid to Mr. Dahl or Mr. Rice in fiscal 2020 or
2019.
Incentive Compensation Plan. In November 2019, the Company
adopted the 2019 Omnibus Long-Term Incentive Plan (the “2019
Incentive Plan”) for the purpose of enhancing the
Company’s ability to attract and retain highly qualified
directors, officers, key employees and other persons and to
motivate such persons to improve the business results and earnings
of the Company by providing an opportunity to acquire or increase a
direct proprietary interest in the operations and future success of
the Company. The 2019 Incentive Plan is administered by the
compensation committee of the Board who will, amongst other duties,
have full power and authority to take all actions and to make all
determinations required or provided for under the 2019 Incentive
Plan. Pursuant to the 2019 Incentive Plan, the Company may grant
options, share appreciation rights, restricted shares, restricted
share units, unrestricted shares and dividend equivalent rights.
The 2019 Incentive Plan has a duration of ten years. Subject to
adjustment as described in the 2019 Incentive Plan, the aggregate
number of common shares available for issuance under the 2019
Incentive Plan is 1,275,000 shares. The exercise price of each
share subject to an Option (as defined in the 2019 Incentive Plan)
shall be at least the Fair Market Value (as defined in the 2019
Incentive Plan) (except in the case of a more than 10% shareholder
of the Company, in which case the price should not be less than
110% of the Fair Market Value) on the date of the grant of a Share
and shall have a term of no more than ten years.
Employment Agreements
We
currently have compensation agreements with our President / Chief
Executive Officer and with our new Chief Financial
Officer.
Mr. Dahl’s Employment Agreement:
The
Company’s Chief Executive Officer, Andrew Dahl, is serving as
Chief Executive Officer under the terms of an amended and restated
employment agreement dated November 15, 2019 (“Dahl
Agreement”) that superseded all prior employment agreements
and understandings. Under the terms of the Dahl Agreement, Mr.
Dahl’s agreement provides for a term of three years, with
successive automatic renewals for one year terms, unless either
party terminates the Dahl Agreement on at least 60 days’
notice prior to the expiration of the then current term of Mr.
Dahl’s employment. Mr. Dahl has received an annual base
salary, commencing on June 1, 2019, of $440,000 (“Base
Salary”), of which $7,500 per month has been deferred until
either of the following events occur: (i) within five (5) years
after the effective date, the Company enters into a term sheet to
receive at least $25,000,000 in equity or other form of investment
or debt on terms satisfactory to the board of directors of the
Company including funding at closing on such terms of at least $10
million; or (ii) within 12 months after the effective date that the
Company receives revenue of at least $10 million. The Dahl Base
Salary is subject to annual review and increase (but not decrease)
by the Board during the employment term with minimum annual
increases of 4% over the previous year’s Dahl Base
Salary.
Mr.
Dahl is entitled to a Revenue Bonus under the Dahl Agreement (see
Bonuses
above).
Mr.
Dahl was awarded a non-qualified option to purchase 350,000 shares
of the Company’s Common Stock at a price of $8.00 per share
upon signing the Dahl Agreement. Mr. Dahl will be entitled to
non-qualified performance-based options having an exercise price
equal to the greater of $8.00 per share and the Fair Market Value
(as defined in the 2019 Incentive Plan), upon the attainment of
specified milestones as follows: (i) non-qualified option to
purchase 12,500 common shares upon identification of bioactive
agents in the Company product and filing of a patent with respect
thereto; (ii) non-qualified option to purchase 18,750 common shares
upon entering into a contract under which the Company receives at
least $500,000 in cash payments; (iii) non-qualified option to
purchase 18,750 common shares upon the Company entering into a
co-development agreement with a research company to develop
medicinal or pharmaceutical applications (where the partner
provides at least $2,000,000 in cash or in-kind outlays); (iv)
non-qualified option to purchase 18,750 common shares upon the
Company entering into a co-development agreement for nutraceutical
or dietary supplement applications (where the partner provides at
least $2,000,000 in cash or in-kind outlays); and (v) non-qualified
option to purchase 18,750 common shares upon the Company entering
into a pharmaceutical development agreement. Note that item (i) was
achieved in 2019 and the Company awarded a non-qualified option to
purchase 12,500 common shares of the Company’s Common Stock
at a price of $11.20 per share.
As it
relates to Wellmetrix, if and when at least $2 million in equity
capital is raised from a third party and invested in Wellmetrix in
an arms-length transaction, Mr. Dahl shall be granted a warrant to
purchase an equity interest in Wellmetrix that is equal to the
equity interest in Wellmetrix owned by the Company at the time of
the first tranche of any such capital raise (the “Wellmetrix
Warrant”). The Wellmetrix Warrant shall be fully vested as of
the date it is granted and shall expire on the 10th anniversary of
the grant date. Once granted, the Wellmetrix Warrant may be
exercised from time to time in whole or in part, with Mr. Dahl
retaining any unexercised portion. The exercise price for the
Wellmetrix Warrant shall be equal to the fair market value of the
interest in Wellmetrix implied by the pricing of the first tranche
of any such capital raise.
The
Dahl Agreement provides that if a Change of Control (as defined in
the Dahl Agreement) occurs and Mr. Dahl’s employment is
terminated without Cause (as defined in the Dahl Agreement) or Mr.
Dahl resigns for Good Reason (as defined in the Dahl Agreement)
during the 24-month period following the Change of Control or
during the sixty (60) days immediately preceding the date of a
Change of Control, 100% of Mr. Dahl’s unvested options will
be fully vested. The Dahl Agreement also provides for severance
payments of, amongst other things, 300% of the Dahl Base Salary and
2x the amount of the Revenue Bonus in such event.
Mr. Marchiando’s Employment Agreement:
On
January 1, 2021, the Company entered into an employment letter with
Mr. Marchiando (“Marchiando Agreement”). Under the
terms of the Marchiando Agreement, Mr. Marchiando will serve as
Chief Financial Officer of the Company for one year, with
successive automatic renewals for one year terms, unless either
party terminates the Marchiando Agreement on at least sixty
days’ notice prior to the expiration of the then current term
of the Marchiando Agreement. Mr. Marchiando will receive an annual
base salary, commencing on January 1, 2021, of $280,000
(“Marchiando Base Salary”). The Marchiando Base Salary
shall increase to $300,000 if within one (1) year after the
effective date, the Company enters into a term sheet and receives
the related financing to receive at least $10,000,000 in equity or
other form of investment or debt (“Third Party
Financing”) on terms satisfactory to the board of directors
of the Company. On January 1, 2021, Mr. Marchiando received a stock
option award issued pursuant to the Company’s 2019 Omnibus
Long-Term Incentive Plan to purchase 162,500 shares of the
Company’s Common Stock, with an exercise price of $11.20 per
share. Vesting of these options shall be as follows: 37,500 shares
vested immediately upon grant of the option award, and 15,625
shares will vest on each 6 month anniversary of January 1, 2021.
Mr. Marchiando shall also receive $25,000 upon the closing, prior
to December 31, 2021, of a Third Party Financing that raises at
least $10,000,000. If, upon the closing prior to December 31, 2021
of a Third Party Financing that raises over $13,000,000 for the
Company, Mr. Marchiando shall receive a maximum bonus of $50,000,
as long as Mr. Marchiando is employed at the time of
closing.
If Mr.
Marchiando’s employment is terminated by the Company due to
death or Disability, or without Cause, or if Mr. Machiando resigns
for Good Reason (each as defined in the Marchiando Agreement) or if
either party does not renew the employment term, Mr. Marchiando
will be entitled to receive the following severance benefits: a
continuation of the Marchiando Base Salary for one year, payment of
an amount equal to Mr. Marchiando’s target bonus in the year
of termination and a fully-vested, nonqualified stock option to
purchase 12,500 shares of Common Stock. Additionally, all
outstanding and contingent nonqualified options owned directly or
beneficially by Mr. Marchiando shall be converted immediately into
vested options, with terms as specified in the applicable award
agreement.
The
Marchiando Agreement provides that if a Change of Control (as
defined in the Marchiando Agreement) occurs and Mr. Marchiando
resigns for Good Reason (as defined in the Marchiando Agreement) or
Mr. Marchiando’s employment is terminated without Cause (as
defined in the Marchiando Agreement) during the 24-month period
following the Change of Control or during the sixty (60) days
immediately preceding the date of a Change of Control, 100% of Mr.
Marchiando’s unvested options will be fully vested and the
restrictions on his restricted shares will lapse. The Marchiando
Agreement also provides for severance payments of, amongst other
things, a lump sum payment of 200% of the Marchiando Base Salary,
200% of Mr. Marchiando’s Performance Bonus (as defined in the
Marchiando Agreement) earned in the last 12 months preceding the
Change of Control and payment of 24 months of the Marchiando Base
Salary in such event.
Mr. Rice’s Employment Arrangement:
On
March 4, 2020, the Company entered into an employment letter with
Philip Rice, Chief Financial Officer of the Company (“Rice
Agreement”) that superseded all prior employment
understandings and agreements. Under the terms of the Rice
Agreement, Mr. Rice will serve as Chief Financial Officer of the
Company for one year, with successive automatic renewals for one
year terms, unless either party terminates the Rice Agreement on at
least sixty days’ notice prior to the expiration of the then
current term of the Rice Agreement. Mr. Rice will receive an annual
base salary, commencing on January 1, 2020, of $280,000
(“Rice Base Salary”). The Rice Base Salary shall
increase to $300,000, when the following event occurs: within one
(1) year after the effective date, the Company enters into a term
sheet and receives the related financing to receive at least
$15,000,000 in equity or other form of investment or debt
(“Third Party Financing”) on terms satisfactory to the
board of directors of the Company. On the date the Rice Agreement
was executed, Mr. Rice received a fully-vested nonqualified stock
option to purchase 25,000 shares of the Company’s Common
Stock at a price of $12.00 per share and a $25,000 retention
bonus.
On
January 7, 2021, the Company and Rice entered into a written
agreement concerning Rice’s departure from the Company (the
“Separation Agreement”). Pursuant to the
Separation Agreement, Mr. Rice resigned from his position as Chief
Financial Officer of the Company effective on January 1, 2021, and
following a transition period, agreed to resign from all positions
as an officer or employee of the Company effective as of January
31, 2021 (the “Separation Date”). The Separation
Agreement provides that Mr. Rice will receive certain benefits that
he is entitled to receive under his employment agreement dated
March 4, 2020. Accordingly, under the Separation Agreement, subject
to non-revocation of a general release and waiver of claims in
favor of the Company, the Company has agreed to pay Mr. Rice his
base salary of $280,000 for one year and three weeks, beginning on
the Separation Date, and grant him an option to purchase 12,500
shares of Common Stock.
Outstanding Equity Awards at Fiscal Year-End 2020
The
following table provides information on the outstanding equity
awards held by our named executive officers as of December 31,
2020.
|
Name
|
Grant Date
|
Number of shares of Common Stock underlying unexercised warrants
exercisable
|
Number of shares of Common Stock
underlying
unexercised
options
exercisable (1)
|
Equity incentive
plan awards:
Number of securities
underlying unexercised
unearned options
|
Option / Warrant
Exercise
Price
($)
|
Option / Warrant
Expiration
Date
|
|
Andrew A.
Dahl
|
11/15/2019
|
|
350,000
|
|
$8.00
|
11/15/2029
|
|
12/6/2019
|
|
12,500
|
|
$11.20
|
12/6/2029
|
|
11/8/2017
|
75,000
|
|
|
$6.40
|
11/8/2022
|
|
11/15/2019
|
|
|
75,000(2)
|
$8.00
|
11/15/2029
|
|
Philip M. Rice
II
|
3/4/2020
|
|
25,000
|
|
$12.00
|
3/4/2030
|
|
10/28/2019
|
625
|
|
|
$6.40
|
10/28/2024
|
|
9/26/2019
|
6,250
|
|
|
$6.40
|
9/26/2024
|
|
8/7/2019
|
625
|
|
|
$8.00
|
8/7/2024
|
|
5/13/2019
|
625
|
|
|
$8.00
|
5/13/2024
|
|
2/13/2019
|
625
|
|
|
$8.00
|
2/13/2024
|
|
11/14/2018
|
625
|
|
|
$11.20
|
11/14/2023
|
|
9/28/2018
|
6,250
|
|
|
$11.20
|
9/28/2023
|
|
8/14/2018
|
625
|
|
|
$9.60
|
8/14/2023
|
|
4/23/2018
|
625
|
|
|
$8.00
|
4/23/2023
|
|
2/21/2018
|
625
|
|
|
$8.00
|
2/21/2023
|
|
11/8/2017
|
75,000
|
|
|
$6.40
|
11/8/2022
|
|
10/19/2017
|
625
|
|
|
$7.20
|
10/19/2022
|
|
9/11/2017
|
6,250
|
|
|
$5.60
|
9/11/2022
|
|
8/11/2017
|
625
|
|
|
$8.00
|
8/11/2022
|
|
5/12/2017
|
625
|
|
|
$4.80
|
5/12/2022
|
|
3/31/2017
|
625
|
|
|
$7.20
|
3/21/2022
|
|
11/14/2016
|
625
|
|
|
$6.40
|
11/14/2021
|
|
9/10/2016
|
3,125
|
|
|
$4.00
|
9/10/2021
|
|
8/12/2016
|
625
|
|
|
$5.60
|
8/12/2021
|
|
5/13/2016
|
625
|
|
|
$6.40
|
5/13/2021
|
|
3/29/2016
|
625
|
|
|
$6.40
|
3/29/2021
|
|
3/4/2020
|
|
|
12,500(3)
|
$11.52(3)
|
3/4/2030
|
(1) All
warrants and options granted are immediately
vested.
(2)
Represents compensatory warrants granted pursuant to the terms of
the Dahl Agreement, which shall become exercisable upon the
occurrence of a specific event(s). The Exercise Price is the
greater of $8.00 per share and the Fair Market Value of a share on
the date of grant. See “Mr. Dahl’s Employment
Agreement” for a description of these
warrants.
(3)
Represents performance-based options that vest based on certain
performance conditions.
PROPOSAL NO. 3
— ADOPTION OF THE 2021 PLAN
Our
Board of Directors adopted the 2021 Plan on September 4, 2021, and
requests that the shareholders approve the 2021 Plan. No grants
will be made under the 2021 Plan prior to its effectiveness. Once
the 2021 Plan is effective, no further grants will be made under
any of ZIVO’s other existing equity incentive
plans.
Awards. The 2021 Plan provides for the grant of incentive
stock options, or ISOs, within the meaning of Section 422 of the
Code to ZIVO employees, including employees of any parent or
subsidiary, and for the grant of nonstatutory stock options, or
NSOs, stock appreciation rights, restricted stock awards,
restricted stock unit awards, performance awards and other forms of
awards to employees, directors and consultants, including employees
and consultants of ZIVO affiliates.
Authorized Shares. Initially, the maximum number of shares
of ZIVO common stock that may be issued under the 2021 Plan after
it becomes effective will not exceed 1,000,000 shares. In addition,
the number of shares of ZIVO common stock reserved for issuance
under the 2021 Plan will automatically increase on January 1 of
each calendar year, starting on January 1, 2022 through January 1,
2031, in an amount equal to (i) 5% of the total number of shares of
ZIVO common stock outstanding on December 31 of the fiscal year
before the date of each automatic increase, or (ii) a lesser number
of shares determined by our Board of Directors prior to the date of
the increase. The maximum number of shares of ZIVO common stock
that may be issued on the exercise of ISOs under the 2021 Plan is
2,000,000.
Shares
subject to stock awards granted under the 2021 Plan that expire or
terminate without being exercised in full or that are paid out in
cash rather than in shares do not reduce the number of shares
available for issuance under the 2021 Plan. Shares withheld under a
stock award to satisfy the exercise, strike or purchase price of a
stock award or to satisfy a tax withholding obligation do not
reduce the number of shares available for issuance under the 2021
Plan. If any shares of ZIVO common stock issued pursuant to a stock
award are forfeited back to or repurchased or reacquired by ZIVO
(1) because of a failure to meet a contingency or condition
required for the vesting of such shares; (2) to satisfy the
exercise, strike or purchase price of an award; or (3) to satisfy a
tax withholding obligation in connection with an award, the shares
that are forfeited or repurchased or reacquired will revert to and
again become available for issuance under the 2021 Plan. Any shares
previously issued which are reacquired in satisfaction of tax
withholding obligations or as consideration for the exercise or
purchase price of a stock award will again become available for
issuance under the 2021 Plan.
Plan Administration. The Board of Directors, or a duly
authorized committee of the Board, will administer the 2021 Plan
and is referred to as the “plan administrator” herein.
The Board may also delegate to one or more of ZIVO’s officers
the authority to: (1) designate employees (other than officers) to
receive specified stock awards; and (2) determine the number of
shares subject to such stock awards. Under the 2021 Plan, the Board
has the authority to determine award recipients, grant dates, the
numbers and types of stock awards to be granted, the applicable
fair market value, and the provisions of each stock award,
including the period of exercisability and the vesting schedule
applicable to a stock award.
Under
the 2021 Plan, the Board also generally has the authority to
effect, with the consent of any materially adversely affected
participant, (A) the reduction of the exercise, purchase, or strike
price of any outstanding option or stock appreciation right; (B)
the cancellation of any outstanding option or stock appreciation
right and the grant in substitution therefore of other awards,
cash, or other consideration; or (C) any other action that is
treated as a repricing under U.S. GAAP.
Stock Options. ISOs and NSOs are granted under stock option
agreements adopted by the plan administrator. The plan
administrator determines the exercise price for stock options,
within the terms and conditions of the 2021 Plan; provided that the
exercise price of a stock option generally cannot be less than 100%
of the fair market value of ZIVO common stock on the date of grant.
Options granted under the 2021 Plan vest at the rate specified in
the stock option agreement as determined by the plan
administrator.
The
plan administrator determines the term of stock options granted
under the 2021 Plan, up to a maximum of 10 years. Unless the terms
of an optionholder’s stock option agreement provide
otherwise, if an optionholder’s service relationship with
ZIVO or any of its affiliates ceases for any reason other than
disability, death, or cause, the optionholder may generally
exercise any vested options for a period of three months following
the cessation of service. This period may be extended in the event
that exercise of the option is prohibited by applicable securities
laws. If an optionholder’s service relationship with ZIVO or
any of its affiliates ceases due to death, or an optionholder dies
within a certain period following cessation of service, the
optionholder or a beneficiary may generally exercise any vested
options for a period of 18 months following the date of death. If
an optionholder’s service relationship with ZIVO or any of
its affiliates ceases due to disability, the optionholder may
generally exercise any vested options for a period of 12 months
following the cessation of service. In the event of a termination
for cause, options generally terminate upon the termination date.
In no event may an option be exercised beyond the expiration of its
term.
Acceptable
consideration for the purchase of common stock issued upon the
exercise of a stock option will be determined by the plan
administrator and may include: (1) cash, check, bank draft or money
order: (2) a broker-assisted cashless exercise; (3) the tender of
shares of ZIVO common stock previously owned by the optionholder;
(4) a net exercise of the option if it is an NSO; or (5) other
legal consideration approved by the plan
administrator.
Unless
the plan administrator provides otherwise, options or stock
appreciation rights generally are not transferable except by will
or the laws of descent and distribution. Subject to approval of the
plan administrator or a duly authorized officer, an option may be
transferred pursuant to a domestic relations order, official
marital settlement agreement, or other divorce or separation
instrument.
Tax Limitations on ISOs. The aggregate fair market value,
determined at the time of grant, of ZIVO common stock with respect
to ISOs that are exercisable for the first time by an award holder
during any calendar year under all of ZIVO’s stock plans may
not exceed $100,000. Options or portions thereof that exceed such
limit will generally be treated as NSOs. No ISO may be granted to
any person who, at the time of the grant, owns or is deemed to own
stock possessing more than 10% of ZIVO total combined voting power
or that of any of its parent or subsidiary corporations unless: (1)
the option exercise price is at least 110% of the fair market value
of the stock subject to the option on the date of grant; and (2)
the term of the ISO does not exceed five years from the date of
grant.
Restricted Stock Unit Awards. Restricted stock unit awards
are granted under restricted stock unit award agreements adopted by
the plan administrator. Restricted stock unit awards may be granted
in consideration for any form of legal consideration that may be
acceptable to the ZIVO Board and permissible under applicable law.
A restricted stock unit award may be settled by cash, delivery of
stock, a combination of cash and stock as deemed appropriate by the
plan administrator, or in any other form of consideration set forth
in the restricted stock unit award agreement. Additionally,
dividend equivalents may be credited in respect of shares covered
by a restricted stock unit award. Except as otherwise provided in
the applicable award agreement, restricted stock unit awards that
have not vested will be forfeited once the participant’s
continuous service ends for any reason.
Restricted Stock Awards. Restricted stock awards are granted
under restricted stock award agreements adopted by the plan
administrator. A restricted stock award may be awarded in
consideration for cash, check, bank draft or money order, past or
future services to ZIVO, or any other form of legal consideration
that may be acceptable to the ZIVO Board and permissible under
applicable law. The plan administrator determines the terms and
conditions of restricted stock awards, including vesting and
forfeiture terms. If a participant’s service relationship
with ZIVO ends for any reason, it may receive any or all of the
shares of common stock held by the participant that have not vested
as of the date the participant terminates service with ZIVO through
a forfeiture condition or a repurchase right.
Stock Appreciation Rights. Stock appreciation rights are
granted under stock appreciation right agreements adopted by the
plan administrator. The plan administrator determines the purchase
price or strike price for a stock appreciation right, which
generally cannot be less than 100% of the fair market value of ZIVO
common stock on the date of grant. A stock appreciation right
granted under the 2021 Plan vests at the rate specified in the
stock appreciation right agreement as determined by the plan
administrator. Stock appreciation rights may be settled in cash or
shares of common stock or in any other form of payment as
determined by the ZIVO Board and specified in the stock
appreciation right agreement.
The
plan administrator determines the term of stock appreciation rights
granted under the 2021 Plan, up to a maximum of 10 years. If a
participant’s service relationship with ZIVO or any of its
affiliates ceases for any reason other than cause, disability, or
death, the participant may generally exercise any vested stock
appreciation right for a period of three months following the
cessation of service. This period may be further extended in the
event that exercise of the stock appreciation right following such
a termination of service is prohibited by applicable securities
laws. If a participant’s service relationship with ZIVO, or
any of its affiliates, ceases due to disability or death, or a
participant dies within a certain period following cessation of
service, the participant or a beneficiary may generally exercise
any vested stock appreciation right for a period of 12 months in
the event of disability and 18 months in the event of death. In the
event of a termination for cause, stock appreciation rights
generally terminate immediately upon the occurrence of the event
giving rise to the termination of the individual for cause. In no
event may a stock appreciation right be exercised beyond the
expiration of its term.
Performance Awards. The 2021 Plan permits the grant of
performance awards that may be settled in stock, cash or other
property. Performance awards may be structured so that the stock or
cash will be issued or paid only following the achievement of
certain pre-established performance goals during a designated
performance period. Performance awards that are settled in cash or
other property are not required to be valued in whole or in part by
reference to, or otherwise based on, the common stock.
The
performance goals may be based on any measure of performance
selected by the board of directors. The performance goals may be
based on company-wide performance or performance of one or more
business units, divisions, affiliates, or business segments, and
may be either absolute or relative to the performance of one or
more comparable companies or the performance of one or more
relevant indices. Unless specified otherwise by the board of
directors at the time the performance award is granted, the board
will appropriately make adjustments in the method of calculating
the attainment of performance goals as follows: (i) to exclude
restructuring charges; (ii) to exclude exchange rate effects; (iii)
to exclude the effects of changes to generally accepted accounting
principles; (iv) to exclude the effects of any statutory
adjustments to corporate tax rates; (v) to exclude the effects of
items that are “unusual” in nature or occur
“infrequently” as determined under U.S. GAAP; (vi) to
exclude the dilutive effects of acquisitions or joint ventures;
(vii) to assume that any portion of ZIVO’s business which is
divested achieved performance objectives at targeted levels during
the balance of a performance period following such divestiture;
(viii) to exclude the effect of any change in the outstanding
shares of ZIVO common stock by reason of any stock dividend or
split, stock repurchase, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other
similar corporate change, or any distributions to common
stockholders other than regular cash dividends; (ix) to exclude the
effects of stock based compensation and the award of bonuses under
ZIVO’s bonus plans; (x) to exclude costs incurred in
connection with potential acquisitions or divestitures that are
required to be expensed under U.S. GAAP; and (xi) to exclude the
goodwill and intangible asset impairment charges that are required
to be recorded under U.S. GAAP.
Other Stock Awards. The plan administrator may grant other
awards based in whole or in part by reference to ZIVO common stock.
The plan administrator will set the number of shares under the
stock award (or cash equivalent) and all other terms and conditions
of such awards.
Non-Employee Director Compensation Limit. The aggregate
value of all compensation granted or paid to any non-employee
director with respect to any calendar year, including awards
granted and cash fees paid by ZIVO to such non-employee director,
will not exceed $750,000 in total value or, in the event such
non-employee director is first appointed or elected to the ZIVO
Board during such calendar year, $1,000,000 in total
value.
Changes to Capital Structure. In the event there is a
specified type of change in ZIVO’s capital structure, such as
a stock split, reverse stock split, or recapitalization,
appropriate adjustments will be made to: (1) the class and maximum
number of shares reserved for issuance under the 2021 Plan; (2) the
class and maximum number of shares by which the share reserve may
increase automatically each year; (3) the class and maximum number
of shares that may be issued on the exercise of ISOs; and (4) the
class and number of shares and exercise price, strike price, or
purchase price, if applicable, of all outstanding stock
awards.
Corporate Transactions. The following applies to stock
awards under the 2021 Plan in the event of a corporate transaction
(as defined in the 2021 Plan), unless otherwise provided in a
participant’s stock award agreement or other written
agreement with ZIVO or one of its affiliates or unless otherwise
expressly provided by the plan administrator at the time of
grant.
In the
event of a corporate transaction, any stock awards outstanding
under the 2021 Plan may be assumed, continued or substituted for by
any surviving or acquiring corporation (or its parent company), and
any reacquisition or repurchase rights held by ZIVO with respect to
the stock award may be assigned to the successor (or its parent
company). If the surviving or acquiring corporation (or its parent
company) does not assume, continue or substitute for such stock
awards, then (i) with respect to any such stock awards that are
held by participants whose continuous service has not terminated
prior to the effective time of the corporate transaction, or
current participants, the vesting (and exercisability, if
applicable) of such stock awards will be accelerated in full to a
date prior to the effective time of the corporate transaction
(contingent upon the effectiveness of the corporate transaction),
and such stock awards will terminate if not exercised (if
applicable) at or prior to the effective time of the corporate
transaction, and any reacquisition or repurchase rights held by
ZIVO with respect to such stock awards will lapse (contingent upon
the effectiveness of the corporate transaction), and (ii) any such
stock awards that are held by persons other than current
participants will terminate if not exercised (if applicable) prior
to the effective time of the corporate transaction, except that any
reacquisition or repurchase rights held by ZIVO with respect to
such stock awards will not terminate and may continue to be
exercised notwithstanding the corporate transaction.
In the
event a stock award will terminate if not exercised prior to the
effective time of a corporate transaction, the plan administrator
may provide, in its sole discretion, that the holder of such stock
award may not exercise such stock award but instead will receive a
payment equal in value to the excess (if any) of (i) the per share
amount payable to holders of common stock in connection with the
corporate transaction, over (ii) any per share exercise price
payable by such holder, if applicable. In addition, any escrow,
holdback, earn out or similar provisions in the definitive
agreement for the corporate transaction may apply to such payment
to the same extent and in the same manner as such provisions apply
to the holders of common stock.
Change in Control. Awards granted under the 2021 Plan may be
subject to acceleration of vesting and exercisability upon or after
a change in control (as defined in the 2021 Plan) as may be
provided in the applicable stock award agreement or in any other
written agreement between ZIVO or any affiliate and the
participant, but in the absence of such provision, no such
acceleration will automatically occur.
Plan Amendment or Termination. The ZIVO Board has the
authority to amend, suspend, or terminate the 2021 Plan; provided
that such action does not materially impair the existing rights of
any participant without such participant’s written consent.
Certain material amendments also require the approval of ZIVO
shareholders. No ISOs may be granted after the tenth anniversary of
the date that the 2021 Plan becomes effective. No stock awards may
be granted under the 2021 Plan while it is suspended or after it is
terminated.
New Plan Benefits
Awards
granted under the 2021 Plan to ZIVO’s executive officers and
other employees are discretionary and are not subject to set
benefits or amounts under the terms of the 2021 Plan. Neither the
ZIVO Board nor ZIVO’s Compensation Committee has granted any
awards under the 2021 Plan subject to shareholder approval of this
Proposal No. 3. Accordingly, the benefits or amounts that will be
received by or allocated to ZIVO’s executive officers and
other employees under the 2021 Plan, as well as the benefits or
amounts which would have been received by or allocated to
ZIVO’s executive officers and other employees for fiscal year
ended December 31, 2020 if the 2021 Plan had been in effect, are
not determinable.
Federal Income Tax Consequences
The
material federal income tax consequences of the issuance and
exercise of stock options and other awards under the 2021 Plan,
based on the current provisions of the Code and regulations, are as
follows. Changes to these laws could alter the tax consequences
described below. This summary assumes that all awards granted under
the 2021 Plan are exempt from or comply with, the rules under
Section 409A of the Code related to nonqualified deferred
compensation.
Incentive Stock Options. The grant of an incentive stock
option will not be a taxable event for the participant or for ZIVO.
A participant will not recognize taxable income upon exercise of an
incentive option (except that the alternative minimum tax may
apply), and any gain realized upon a disposition of common shares
received pursuant to the exercise of an incentive stock option will
be taxed as long-term capital gain if the participant holds the
common shares for at least two years after the date of grant and
for one year after the date of exercise (the “holding period
requirement”). ZIVO will not be entitled to any compensation
expense deduction with respect to the exercise of an incentive
option, except as discussed below.
For the
exercise of an incentive stock option to qualify for the foregoing
tax treatment, the grant must be made by ZIVO or a parent or
subsidiary of ZIVO. The employee must remain employed from the date
the incentive stock option is granted through a date within three
months before the date of exercise of the incentive stock option.
If a participant sells or otherwise disposes of the common shares
acquired without satisfying the holding period requirement (known
as a “disqualifying disposition”), the participant will
recognize ordinary income upon the disposition of the common shares
in an amount generally equal to the excess of the fair market value
of the common shares at the time the incentive stock option was
exercised over the option exercise price (but not in excess of the
gain realized on the sale). The balance of the realized gain, if
any, will be capital gain. ZIVO will generally be allowed a
compensation expense deduction to the extent that the participant
recognizes ordinary income.
Nonstatutory Stock Options. The grant of a nonstatutory
stock option will not be a taxable event for the participant or
ZIVO. Upon exercising a nonstatutory stock option, a participant
will recognize ordinary income in an amount equal to the difference
between the exercise price and the fair market value of the common
shares on the date of exercise. Upon a subsequent sale or exchange
of common shares acquired pursuant to the exercise of a
nonstatutory stock option, the participant will have taxable
capital gain or loss, measured by the difference between the amount
realized on the disposition and the tax basis of the common shares
(generally, the amount paid for the common shares plus the amount
treated as ordinary income at the time the nonstatutory stock
option was exercised). ZIVO will generally be entitled to a
compensation expense deduction in the same amount and generally at
the same time as the participant recognizes ordinary
income.
Restricted Stock Award. A participant who is granted a
restricted stock award will not recognize any taxable income for
U.S. federal income tax purposes in the year of the restricted
stock award, provided that the shares are subject to restrictions
(that is, the shares of restricted common stock are nontransferable
and subject to a substantial risk of forfeiture). However, the
participant may elect under Section 83(b) of the Code to recognize
compensation income (which is ordinary income) in the year of the
restricted award in an amount equal to the fair market value of the
common shares on the date of the restricted stock award (less the
purchase price, if any), determined without regard to the
restrictions. If the participant does not make such a Section 83(b)
election, the fair market value of the common shares on the date
the restrictions lapse (less the purchase price, if any) will be
treated as compensation income to the participant and will be
taxable in the year the restrictions lapse and dividends or
distributions that are paid while the common shares are subject to
restrictions will be subject to withholding taxes. ZIVO will
generally be entitled to a compensation expense deduction in the
same amount and generally at the same time as the participant
recognizes ordinary income.
RSU Award. There are no immediate tax consequences of
receiving or vesting in an RSU award under the 2021 Plan; however,
an RSU award is subject to the Federal Insurance Contribution Act
tax upon vesting (based on the fair market value of the common
shares on the vesting date). A participant who is granted an RSU
award will recognize ordinary income upon receiving common shares
or cash under the award in an amount equal to the fair market value
of the common shares at the time of delivery or the amount of cash.
ZIVO will generally be entitled to a compensation expense deduction
in the same amount and generally at the same time as the
participant recognizes ordinary income.
Performance Award. A participant generally will recognize no
income upon the receipt of a performance award. Upon the settlement
of such awards, participants normally will recognize ordinary
income in the year of settlement in an amount equal to the cash
received and/or the fair market value of any substantially vested
common shares received. If the participant is an employee, such
ordinary income generally is subject to withholding of income and
employment taxes. If the participant receives shares of restricted
stock, the participant generally will be taxed in the same manner
as described above under “Restricted Stock Award.” ZIVO
generally should be entitled to a deduction equal to the amount of
ordinary income recognized by the participant on the determination
date, except to the extent such deduction is limited by applicable
provisions of the Code.
Stock Appreciation Rights. There are no immediate tax
consequences of receiving an award of stock appreciation rights
under the 2021 Plan. Upon exercising a stock appreciation right, a
participant will recognize ordinary income in an amount equal to
the difference between the exercise price and the fair market value
of the common shares on the date of exercise. ZIVO will generally
be entitled to a compensation expense deduction in the same amount
and generally at the same time as the participant recognizes
ordinary income.
Dividend or Dividend Equivalents. A participant will
recognize taxable income, subject to withholding of employment tax,
upon receipt of a dividend equivalent in cash or in shares of
stock. Similarly, a participant who receives a restricted stock
award, and does not make an election under Section 83(b) of the
Code with respect to the stock, will recognize taxable ordinary
income, subject to withholding of employment tax, upon receipt of
dividends on the stock. If the participant made a Section 83(b)
election, the dividends will be taxable to the participant as
dividend income.
Other Awards. Participants who are awarded unrestricted
stock will be required to recognize ordinary income in an amount
equal to the fair market value of the common shares on the date of
the award, reduced by the amount, if any, paid for such common
shares. ZIVO will generally be entitled to a compensation expense
deduction in the same amount and generally at the same time as the
participant recognizes ordinary income.
OUR BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR”
APPROVAL OF PROPOSAL NO.
3.
FINANCIAL MATTERS AND FORM 10-K REPORT
As
noted above under “Questions
and Answers – How can I access the Company’s proxy
materials and annual report on Form 10-K?” we will
provide each beneficial owner of our securities with a copy of our
Annual Report on Form 10-K including the financial statements and
schedules thereto filed with the Securities and Exchange Commission
for our most recent fiscal year, without charge upon receipt of a
written request from such person. Such request should be sent to:
Keith R. Marchiando, Chief Financial Officer, Zivo Bioscience,
Inc., 2804 Orchard Lake Rd, Suite 202, Keego Harbor, MI 48320.
Alternatively, the Company’s Annual Report on Form 10-K may
be accessed on the Company’s internet website at:
https://www.iproxydirect.com/index.php/ZIVO.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON OCTOBER 12, 2021
The Proxy Statement and the ZIVO Annual Report for the fiscal year
ended December 31, 2020 are available at:
https://www.iproxydirect.com/index.php/ZIVO.
Annex A
ZIVO BIOSCIENCE, INC.
2021
EQUITY INCENTIVE PLAN
ADOPTED
BY THE BOARD OF DIRECTORS: September
4, 2021
APPROVED
BY THE STOCKHOLDERS: [
]
(a) Plan
Purpose. The Company, by means of this Plan, seeks to secure
and retain the services of Employees, Directors and Consultants, to
provide incentives for such persons to exert maximum efforts for
the success of the Company and any Affiliate and to provide a means
by which such persons may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of
Awards.
(b) Available
Awards. The Plan provides for the grant of the following
Awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock
Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards;
(vi) Performance Awards; and (vii) Other Awards.
(c) Adoption
Date; Effective Date. The Plan will come into existence on
the Adoption Date, but no Award may be granted prior to the
Effective Date.
2.
SHARES
SUBJECT TO THE PLAN.
(a) Share
Reserve. Subject to adjustment in accordance with
Section 2(c) and
any adjustments as necessary to implement any Capitalization
Adjustments, the aggregate number of shares of the Common Stock
that may be issued pursuant to Awards will not exceed 1,000,000 shares. In addition,
subject to any adjustments as necessary to implement any
Capitalization Adjustments, such aggregate number of shares of the
Common Stock will automatically increase on January 1 of each year
for a period of ten years commencing on January 1, 2021 and ending
on (and including) January 1, 2030, in an amount equal to 5% of the
total number of shares of the Common Stock outstanding on December
31 of the preceding year; provided, however, that the Board may act
prior to January 1st of a given year to
provide that the increase for such year will be a lesser number of
shares of the Common Stock.
(b) Aggregate
Incentive Stock Option Limit. Notwithstanding anything to
the contrary in Section
2(a) and subject to any adjustments as necessary to
implement any Capitalization Adjustments, the aggregate maximum
number of shares of the Common Stock that may be issued pursuant to
the exercise of Incentive Stock Options is 2,000,000.
(c) Share
Reserve Operation.
(i) Limit
Applies to Common Stock Issued Pursuant to Awards. For
clarity, the Share Reserve is a limit on the number of shares of
the Common Stock that may be issued pursuant to Awards and does not
limit the granting of Awards, except that the Company will keep
available at all times the number of shares of the Common Stock
reasonably required to satisfy its obligations to issue shares
pursuant to such Awards. Shares may be issued in connection with a
merger or acquisition as permitted by, as applicable, Nasdaq
Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08,
NYSE American Company Guide Section 711 or other applicable rule,
and such issuance will not reduce the number of shares available
for issuance under this Plan.
(ii) Actions
that Do Not Constitute Issuance of Common Stock and Do Not Reduce
Share Reserve. The following actions do not result in an
issuance of shares under this Plan and accordingly do not reduce
the number of shares subject to the Share Reserve and available for
issuance under this Plan: (1) the expiration or termination of any
portion of an Award without the shares covered by such portion of
the Award having been issued, (2) the settlement of any portion of
an Award in cash (i.e., the Participant receives cash rather than
Common Stock), (3) the withholding of shares that would otherwise
be issued by the Company to satisfy the exercise, strike or
purchase price of an Award; or (4) the withholding of shares that
would otherwise be issued by the Company to satisfy a tax
withholding obligation in connection with an Award.
(iii) Reversion
of Previously Issued Shares of the Common Stock to Share
Reserve. The following shares of the Common Stock previously
issued pursuant to an Award and accordingly initially deducted from
the Share Reserve will be added back to the Share Reserve and again
become available for issuance under this Plan: (1) any shares that
are forfeited back to or repurchased by the Company because of a
failure to meet a contingency or condition required for the vesting
of such shares; (2) any shares that are reacquired by the Company
to satisfy the exercise, strike or purchase price of an Award; and
(3) any shares that are reacquired by the Company to satisfy a tax
withholding obligation in connection with an Award.
3.
ELIGIBILITY
AND LIMITATIONS.
(a) Eligible
Award Recipients. Subject to the terms of this Plan,
Employees, Directors and Consultants are eligible to receive
Awards.
(b) Specific
Award Limitations.
(i) Limitations
on Incentive Stock Option Recipients. Incentive Stock
Options may be granted only to Employees of the Company or a
“parent corporation” or “subsidiary
corporation” thereof (as such terms are defined in Sections
424(e) and (f) of the Code).
(ii) Incentive
Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and any Affiliates)
exceeds $100,000 (or such other limit established in the Code) or
otherwise does not comply with the rules governing Incentive Stock
Options, the Options or portions thereof that exceed such limit
(according to the order in which they were granted) or otherwise do
not comply with such rules will be treated as Nonstatutory Stock
Options, notwithstanding any contrary provision of the applicable
Option Agreement(s).
(iii) Limitations
on Incentive Stock Options Granted to Ten Percent
Stockholders. A Ten Percent Stockholder may not be granted
an Incentive Stock Option unless (i) the exercise price of such
Option is at least 110% of the Fair Market Value on the date of
grant of such Option and (ii) the Option is not exercisable after
the expiration of five years from the date of grant of such
Option.
(iv) Limitations
on Nonstatutory Stock Options and SARs. Nonstatutory Stock
Options and SARs may not be granted to Employees, Directors and
Consultants who are providing Continuous Service only to any
“parent” of the Company (as such term is defined in
Rule 405) unless the stock underlying such Awards is treated as
“service recipient stock” under Section 409A because
the Awards are granted pursuant to a corporate transaction (such as
a spin off transaction) or unless such Awards otherwise comply with
the distribution requirements of Section 409A.
(c) Aggregate
Incentive Stock Option Limit. The aggregate maximum number
of shares of the Common Stock that may be issued pursuant to the
exercise of Incentive Stock Options is the number of shares
specified in Section
2(b).
(d) Non-Employee
Director Compensation Limit. The aggregate value of all
compensation granted or paid, as applicable, to any individual for
service as a Non-Employee Director with respect to any calendar
year, including Awards granted and cash fees paid by the Company to
such Non-Employee Director, will not exceed (i) $750,000 in total
value or (ii) in the event such Non-Employee Director is first
appointed or elected to the Board during such calendar year,
$1,000,000 in total value, in each case calculating the value of
any equity awards based on the grant date fair value of such equity
awards for financial reporting purposes.
4.
OPTIONS
AND STOCK APPRECIATION RIGHTS.
Each
Option and SAR will have such terms and conditions as determined by
the Board. Each Option will be designated in writing as an
Incentive Stock Option or Nonstatutory Stock Option at the time of
grant; provided, however, that if an Option is not so designated,
then such Option will be a Nonstatutory Stock Option, and the
shares purchased upon exercise of each type of Option will be
separately accounted for. Each SAR will be denominated in shares of
the Common Stock equivalents. The terms and conditions of separate
Options and SARs need not be identical; provided, however, that
each Option Agreement and SAR Agreement will conform (through
incorporation of provisions hereof by reference in the Award
Agreement or otherwise) to the substance of each of the following
provisions:
(a) Term.
Subject to Section
3(b) regarding Ten Percent Stockholders, no Option or SAR
will be exercisable after the expiration of ten years from the date
of grant of such Award or such shorter period specified in the
Award Agreement.
(b) Exercise
or Strike Price. Subject to Section 3(b) regarding Ten
Percent Stockholders, the exercise or strike price of each Option
or SAR will not be less than 100% of the Fair Market Value on the
date of grant of such Award. Notwithstanding the foregoing, an
Option or SAR may be granted with an exercise or strike price lower
than 100% of the Fair Market Value on the date of grant of such
Award if such Award is granted pursuant to an assumption of or
substitution for another option or stock appreciation right
pursuant to a Corporate Transaction and in a manner consistent with
the provisions of Sections 409A and, if applicable, 424(a) of the
Code.
(c) Exercise
Procedure and Payment of Exercise Price for Options. In
order to exercise an Option, the Participant must provide notice of
exercise to the Plan Administrator in accordance with the
procedures specified in the Option Agreement or otherwise provided
by the Company. The Board has the authority to grant Options that
do not permit all of the following methods of payment (or otherwise
restrict the ability to use certain methods) and to grant Options
that require the consent of the Company to utilize a particular
method of payment. The exercise price of an Option may be paid, to
the extent permitted by Applicable Law and as determined by the
Board, by one or more of the following methods of payment to the
extent set forth in the Option Agreement:
(i) by
cash or check, bank draft or money order payable to the
Company;
(ii) pursuant
to a “cashless exercise” program developed under
Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of the Common Stock subject to the Option,
results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the exercise price
to the Company from the sales proceeds;
(iii) by
delivery to the Company (either by actual delivery or attestation)
of shares of the Common Stock that are already owned by the
Participant free and clear of any liens, claims, encumbrances or
security interests, with a Fair Market Value on the date of
exercise that does not exceed the exercise price, provided that (1)
at the time of exercise the Common Stock is publicly traded, (2)
any remaining balance of the exercise price not satisfied by such
delivery is paid by the Participant in cash or other permitted form
of payment, (3) such delivery would not violate any Applicable Law
or agreement restricting the redemption of the Common Stock, (4)
any certificated shares are endorsed or accompanied by an executed
assignment separate from certificate, and (5) such shares have been
held by the Participant for any minimum period necessary to avoid
adverse accounting treatment as a result of such
delivery;
(iv) if
the Option is a Nonstatutory Stock Option, by a “net
exercise” arrangement pursuant to which the Company will
reduce the number of shares of the Common Stock issuable upon
exercise by the largest whole number of shares with a Fair Market
Value on the date of exercise that does not exceed the exercise
price, provided that (1) such shares used to pay the exercise price
will not be exercisable thereafter and (2) any remaining balance of
the exercise price not satisfied by such net exercise is paid by
the Participant in cash or other permitted form of payment;
or
(v) in
any other form of consideration that may be acceptable to the Board
and permissible under Applicable Law.
(d) Exercise
Procedure and Payment of Appreciation Distribution for SARs.
In order to exercise any SAR, the Participant must provide notice
of exercise to the Plan Administrator in accordance with the SAR
Agreement. The appreciation distribution payable to a Participant
upon the exercise of a SAR will not be greater than an amount equal
to the excess of (i) the aggregate Fair Market Value on the date of
exercise of a number of shares of the Common Stock equal to the
number of Common Stock equivalents that are vested and being
exercised under such SAR, over (ii) the strike price of such SAR.
Such appreciation distribution may be paid to the Participant in
the form of Common Stock or cash (or any combination of Common
Stock and cash) or in any other form of payment, as determined by
the Board and specified in the SAR Agreement.
(e) Transferability.
Options and SARs may not be transferred to third party financial
institutions for value. The Board may impose such additional
limitations on the transferability of an Option or SAR as it
determines. In the absence of any such determination by the Board,
the following restrictions on the transferability of Options and
SARs will apply, provided that except as explicitly provided
herein, neither an Option nor a SAR may be transferred for
consideration and provided, further, that if an Option is an
Incentive Stock Option, such Option may be deemed to be a
Nonstatutory Stock Option as a result of such
transfer:
(i) Restrictions
on Transfer. An Option or SAR will not be transferable,
except by will or by the laws of descent and distribution, and will
be exercisable during the lifetime of the Participant only by the
Participant; provided, however, that the Board may permit transfer
of an Option or SAR in a manner that is not prohibited by
applicable tax and securities laws upon the Participant’s
request, including to a trust if the Participant is considered to
be the sole beneficial owner of such trust (as determined under
Section 671 of the Code and applicable state law) while such Option
or SAR is held in such trust, provided that the Participant and the
trustee enter into a transfer and other agreements required by the
Company.
(ii) Domestic
Relations Orders. Notwithstanding the foregoing, subject to
the execution of transfer documentation in a format acceptable to
the Company and subject to the approval of the Board or a duly
authorized Officer, an Option or SAR may be transferred pursuant to
a domestic relations order.
(f) Vesting.
The Board may impose such restrictions on or conditions to the
vesting and/or exercisability of an Option or SAR as determined by
the Board. Except as otherwise provided in the Award Agreement or
other written agreement between a Participant and the Company or an
Affiliate, vesting of Options and SARs will cease upon termination
of the Participant’s Continuous Service.
(g) Termination
of Continuous Service for Cause. Except as explicitly
otherwise provided in the Award Agreement or other written
agreement between a Participant and the Company or an Affiliate, if
a Participant’s Continuous Service is terminated for Cause,
the Participant’s Options and SARs will terminate and be
forfeited immediately upon such termination of Continuous Service,
and the Participant will be prohibited from exercising any portion
(including any vested portion) of such Awards on and after the date
of such termination of Continuous Service and the Participant will
have no further right, title or interest in such forfeited Award,
the shares of the Common Stock subject to the forfeited Award, or
any consideration in respect of the forfeited Award.
(h) Post-Termination
Exercise Period Following Termination of Continuous Service for
Reasons Other than Cause. Subject to Section 4(i), if a
Participant’s Continuous Service terminates for any reason
other than for Cause, the Participant may exercise his or her
Option or SAR to the extent vested, but only within the following
period of time or, if applicable, such other period of time
provided in the Award Agreement or other written agreement between
a Participant and the Company or an Affiliate; provided, however,
that in no event may such Award be exercised after the expiration
of its maximum term (as set forth in Section 4(a)):
(i) 3
months following the date of such termination if such termination
is a termination without Cause (other than any termination due to
the Participant’s Disability or death);
(ii) 12
months following the date of such termination if such termination
is due to the Participant’s Disability;
(iii) 18
months following the date of such termination if such termination
is due to the Participant’s death; or
(iv) 18
months following the date of the Participant’s death if such
death occurs following the date of such termination but during the
period such Award is otherwise exercisable (as provided in (i) or
(ii) above).
Following the date
of such termination, to the extent the Participant does not
exercise such Award within the applicable Post-Termination Exercise
Period (or, if earlier, prior to the expiration of the maximum term
of such Award), such unexercised portion of the Award will
terminate, and the Participant will have no further right, title or
interest in terminated Award, the shares of the Common Stock
subject to the terminated Award, or any consideration in respect of
the terminated Award.
(i) Restrictions
on Exercise; Extension of Exercisability. A Participant may
not exercise an Option or SAR at any time that the issuance of
shares of the Common Stock upon such exercise would violate
Applicable Law. Except as otherwise provided in the Award Agreement
or other written agreement between a Participant and the Company or
an Affiliate, if a Participant’s Continuous Service
terminates for any reason other than for Cause and, at any time
during the last thirty days of the applicable Post-Termination
Exercise Period: (i) the exercise of the Participant’s Option
or SAR would be prohibited solely because the issuance of shares of
the Common Stock upon such exercise would violate Applicable Law,
or (ii) the immediate sale of any shares of the Common Stock issued
upon such exercise would violate the Company’s Trading
Policy, then the applicable Post-Termination Exercise Period will
be extended to the last day of the calendar month that commences
following the date the Award would otherwise expire, with an
additional extension of the exercise period to the last day of the
next calendar month to apply if any of the foregoing restrictions
apply at any time during such extended exercise period, generally
without limitation as to the maximum permitted number of
extensions); provided, however, that in no event may such Award be
exercised after the expiration of its maximum term (as set forth in
Section
4(a)).
(j) Non-Exempt
Employees. No Option or SAR, whether or not vested, granted
to an Employee who is a non-exempt employee for purposes of the
Fair Labor Standards Act of 1938, as amended, will be first
exercisable for any shares of the Common Stock until at least six
months following the date of grant of such Award. Notwithstanding
the foregoing, in accordance with the provisions of the Worker
Economic Opportunity Act, any vested portion of such Award may be
exercised earlier than six months following the date of grant of
such Award in the event of (i) such Participant’s death or
Disability, (ii) a Corporate Transaction in which such Award is not
assumed, continued or substituted, (iii) a Change in Control, or
(iv) such Participant’s retirement (as such term may be
defined in the Award Agreement or another applicable agreement or,
in the absence of any such definition, in accordance with the
Company’s then current employment policies and guidelines).
This Section 4(j)
is intended to operate so that any income derived by a non-exempt
employee in connection with the exercise or vesting of an Option or
SAR will be exempt from his or her regular rate of
pay.
(k) Whole
Shares. Options and SARs may be exercised only with respect
to whole shares of the Common Stock or their
equivalents.
5.
AWARDS
OTHER THAN OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) Restricted
Stock Awards and RSU Awards. Each Restricted Stock Award and
RSU Award will have such terms and conditions as determined by the
Board; provided, however, that each Restricted Stock Award
Agreement and RSU Award Agreement will conform (through
incorporation of the provisions hereof by reference in the Award
Agreement or otherwise) to the substance of each of the following
provisions:
(i) Form
of Award.
(1) RSAs:
To the extent consistent with the Company’s Bylaws, at the
Board’s election, shares of the Common Stock subject to a
Restricted Stock Award may be (i) held in book entry form subject
to the Company’s instructions until such shares become vested
or any other restrictions lapse, or (ii) evidenced by a
certificate, which certificate will be held in such form and manner
as determined by the Board. Unless otherwise determined by the
Board, a Participant will have voting and other rights as a
stockholder of the Company with respect to any shares subject to a
Restricted Stock Award.
(2) RSUs:
A RSU Award represents a Participant’s right to be issued on
a future date the number of shares of the Common Stock that is
equal to the number of restricted stock units subject to the RSU
Award. As a holder of a RSU Award, a Participant is an unsecured
creditor of the Company with respect to the Company’s
unfunded obligation, if any, to issue shares of the Common Stock in
settlement of such Award and nothing contained in this Plan or any
RSU Agreement, and no action taken pursuant to its provisions, will
create or be construed to create a trust of any kind or a fiduciary
relationship between a Participant and the Company or an Affiliate
or any other person. A Participant will not have voting or any
other rights as a stockholder of the Company with respect to any
RSU Award (unless and until shares are actually issued in
settlement of a vested RSU Award).
(ii) Consideration.
(1) RSA:
A Restricted Stock Award may be granted in consideration for (A)
cash or check, bank draft or money order payable to the Company,
(B) past services to the Company or an Affiliate, or (C) any other
form of consideration as the Board may determine and permissible
under Applicable Law.
(2) RSU:
Unless otherwise determined by the Board at the time of grant, a
RSU Award will be granted in consideration for the
Participant’s services to the Company or an Affiliate, such
that the Participant will not be required to make any payment to
the Company (other than such services) with respect to the grant or
vesting of the RSU Award, or the issuance of any shares of the
Common Stock pursuant to the RSU Award. If, at the time of grant,
the Board determines that any consideration must be paid by the
Participant (in a form other than the Participant’s services
to the Company or an Affiliate) upon the issuance of any shares of
the Common Stock in settlement of the RSU Award, such consideration
may be paid in any form of consideration as the Board may determine
and permissible under Applicable Law.
(iii) Vesting.
The Board may impose such restrictions on or conditions to the
vesting of a Restricted Stock Award or RSU Award as determined by
the Board. Except as otherwise provided in the Award Agreement or
other written agreement between a Participant and the Company or an
Affiliate, vesting of Restricted Stock Awards and RSU Awards will
cease upon termination of the Participant’s Continuous
Service.
(iv) Termination
of Continuous Service. Except as otherwise provided in the
Award Agreement or other written agreement between a Participant
and the Company or an Affiliate, if a Participant’s
Continuous Service terminates for any reason, (i) the Company may
receive through a forfeiture condition or a repurchase right any or
all of the shares of the Common Stock held by the Participant under
his or her Restricted Stock Award that have not vested as of the
date of such termination as set forth in the Restricted Stock Award
Agreement and (ii) any portion of his or her RSU Award that has not
vested will be forfeited upon such termination and the Participant
will have no further right, title or interest in the RSU Award, the
shares of the Common Stock issuable pursuant to the RSU Award, or
any consideration in respect of the RSU Award.
(v) Dividends
and Dividend Equivalents. Dividends or dividend equivalents
may be paid or credited, as applicable, with respect to any shares
of the Common Stock subject to a Restricted Stock Award or RSU
Award, as determined by the Board and specified in the Award
Agreement).
(vi) Settlement
of RSU Awards. A RSU Award may be settled by the issuance of
shares of the Common Stock or cash (or any combination thereof) or
in any other form of payment, as determined by the Board and
specified in the RSU Award Agreement. At the time of grant, the
Board may determine to impose such restrictions or conditions that
delay such delivery to a date following the vesting of the RSU
Award.
(b) Performance
Awards. With respect to any Performance Award, the length of
any Performance Period, the Performance Goals to be achieved during
the Performance Period, the other terms and conditions of such
Award, and the measure of whether and to what degree such
Performance Goals have been attained will be determined by the
Board.
(c) Other
Awards. Other Awards may be granted either alone or in
addition to Awards provided for under Section 4 and the preceding
provisions of this Section
5. Subject to the provisions of this Plan, the Board will
have sole and complete discretion to determine the persons to whom
and the time or times at which such Other Awards will be granted,
the number of shares of the Common Stock (or the cash equivalent
thereof) to be granted pursuant to such Other Awards and all other
terms and conditions of such Other Awards.
6.
ADJUSTMENTS
UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.
(a) Capitalization
Adjustments. In the event of a Capitalization Adjustment,
the Board shall appropriately and proportionately adjust: (i) the
class(es) and maximum number of shares of the Common Stock subject
to this Plan and the maximum number of shares by which the Share
Reserve may annually increase pursuant to Section 2(a), (ii) the
class(es) and maximum number of shares that may be issued pursuant
to the exercise of Incentive Stock Options pursuant to Section 2(a), and (iii) the
class(es) and number of securities and exercise price, strike price
or purchase price of Common Stock subject to outstanding Awards.
The Board shall make such adjustments, and its determination shall
be final, binding and conclusive. Notwithstanding the foregoing, no
fractional shares or rights for fractional shares of the Common
Stock shall be created in order to implement any Capitalization
Adjustment. The Board shall determine an equivalent benefit for any
fractional shares or fractional shares that might be created by the
adjustments referred to in the preceding provisions of this
Section
6(a).
(b) Dissolution
or Liquidation. Except as otherwise provided in the Award
Agreement, in the event of a dissolution or liquidation of the
Company, all outstanding Awards (other than Awards consisting of
vested and outstanding shares of the Common Stock not subject to a
forfeiture condition or the Company’s right of repurchase)
will terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of the Common Stock
subject to the Company’s repurchase rights or subject to a
forfeiture condition may be repurchased or reacquired by the
Company notwithstanding the fact that the holder of such Award is
providing Continuous Service, provided, however, that the Board may
determine to cause some or all Awards to become fully vested,
exercisable and/or no longer subject to repurchase or forfeiture
(to the extent such Awards have not previously expired or
terminated) before the dissolution or liquidation is completed but
contingent on its completion.
(c) Corporate
Transaction. The following provisions will apply to Awards
in the event of a Corporate Transaction except as set forth in
Section 11, and
unless otherwise provided in the instrument evidencing the Award or
any other written agreement between the Company or any Affiliate
and the Participant or unless otherwise expressly provided by the
Board at the time of grant of an Award.
(i) Awards
May Be Assumed. In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation (or the surviving or
acquiring corporation’s parent company) may assume or
continue any or all Awards outstanding under this Plan or may
substitute similar awards for Awards outstanding under this Plan
(including but not limited to, awards to acquire the same
consideration paid to the stockholders of the Company pursuant to
the Corporate Transaction), and any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued
pursuant to Awards may be assigned by the Company to the successor
of the Company (or the successor’s parent company, if any),
in connection with such Corporate Transaction. A surviving
corporation or acquiring corporation (or its parent) may choose to
assume or continue only a portion of an Award or substitute a
similar award for only a portion of an Award, or may choose to
assume or continue the Awards held by some, but not all
Participants. The terms of any assumption, continuation or
substitution will be set by the Board.
(ii) Awards
Held by Current Participants. In the event of a Corporate
Transaction in which the surviving corporation or acquiring
corporation (or its parent company) does not assume or continue
such outstanding Awards or substitute similar awards for such
outstanding Awards, then with respect to Awards that have not been
assumed, continued or substituted and that are held by Participants
whose Continuous Service has not terminated prior to the effective
time of the Corporate Transaction (referred to as the “Current
Participants”), the vesting of such Awards (and, with
respect to Options and Stock Appreciation Rights, the time when
such Awards may be exercised) will be accelerated in full to a date
prior to the effective time of such Corporate Transaction
(contingent upon the effectiveness of the Corporate Transaction) as
the Board determines (or, if the Board does not determine such a
date, to the date that is five days prior to the effective time of
the Corporate Transaction), and such Awards will terminate if not
exercised (if applicable) at or prior to the effective time of the
Corporate Transaction, and any reacquisition or repurchase rights
held by the Company with respect to such Awards will lapse
(contingent upon the effectiveness of the Corporate Transaction).
With respect to the vesting of Performance Awards that will
accelerate upon the occurrence of a Corporate Transaction pursuant
to this subsection (ii) and that have multiple vesting levels
depending on the level of performance, unless otherwise provided in
the Award Agreement, the vesting of such Performance Awards will
accelerate at 100% of the target level upon the occurrence of the
Corporate Transaction. With respect to the vesting of Awards that
will accelerate upon the occurrence of a Corporate Transaction
pursuant to this subsection (ii) and are settled in the form of a
cash payment, such cash payment will be made no later than 30 days
following the occurrence of the Corporate Transaction.
(iii) Awards
Held by Persons other than Current Participants. In the
event of a Corporate Transaction in which the surviving corporation
or acquiring corporation (or its parent company) does not assume or
continue such outstanding Awards or substitute similar awards for
such outstanding Awards, then with respect to Awards that have not
been assumed, continued or substituted and that are held by persons
other than Current Participants, such Awards will terminate if not
exercised (if applicable) prior to the occurrence of the Corporate
Transaction; provided, however, that any reacquisition or
repurchase rights held by the Company with respect to such Awards
will not terminate and may continue to be exercised notwithstanding
the Corporate Transaction.
(iv) Payment
for Awards in Lieu of Exercise. Notwithstanding the
foregoing, in the event an Award will terminate if not exercised
prior to the effective time of a Corporate Transaction, the Board
may provide, in its sole discretion, that the holder of such Award
may not exercise such Award but will receive a payment, in such
form as may be determined by the Board, equal in value, at the
effective time, to the excess, if any, of (1) the value of the
property the Participant would have received upon the exercise of
the Award (including, at the discretion of the Board, any unvested
portion of such Award), over (2) any exercise price payable by such
holder in connection with such exercise.
(d) Appointment
of Stockholder Representative. As a condition to the receipt
of an Award under this Plan, a Participant will be deemed to have
agreed that the Award will be subject to the terms of any agreement
governing a Corporate Transaction involving the Company, including,
without limitation, a provision for the appointment of a
stockholder representative that is authorized to act on the
Participant’s behalf with respect to any escrow, indemnities
and any contingent consideration.
(e) No
Restriction on Right to Undertake Transactions. The grant of
any Award under this Plan and the issuance of shares pursuant to
any Award does not affect or restrict in any way the right or power
of the Company or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other
change in the Company’s capital structure or its business,
any merger or consolidation of the Company, any issue of stock or
of options, rights or options to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are
superior to or affect the Common Stock or the rights thereof or
which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(a) Administration
by Board. The Board will administer this Plan unless and
until the Board delegates administration of this Plan to a
Committee or Committees, as provided in subsection (c)
below.
(b) Powers
of Board. The Board will have the power, subject to, and
within the limitations of, the express provisions of this
Plan:
(i) To
determine from time to time: (1) which of the persons eligible
under this Plan will be granted Awards; (2) when and how each Award
will be granted; (3) what type or combination of types of Award
will be granted; (4) the provisions of each Award granted (which
need not be identical), including the time or times when a person
will be permitted to receive an issuance of Common Stock or other
payment pursuant to an Award; (5) the number of shares of the
Common Stock or cash equivalent with respect to which an Award will
be granted to each such person; (6) the Fair Market Value
applicable to an Award; and (7) the terms of any Performance Award
that is not valued in whole or in part by reference to, or
otherwise based on, the Common Stock, including the amount of cash
payment or other property that may be earned and the timing of
payment.
(ii) To
construe and interpret this Plan and Awards granted under it, and
to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in this Plan or in
any Award Agreement, in a manner and to the extent it deems
necessary or expedient to make this Plan or Award fully
effective.
(iii) To
settle all controversies regarding this Plan and Awards granted
under it.
(iv) To
accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest,
notwithstanding the provisions in the Award Agreement stating the
time at which it may first be exercised or the time during which it
will vest.
(v) To
prohibit the exercise of any Option, SAR or other exercisable Award
during a period of up to 30 days prior to the consummation of any
pending stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other distribution (other than
normal cash dividends) of Company assets to stockholders, or any
other change affecting the shares of the Common Stock or the share
price of the Common Stock including any Corporate Transaction, for
reasons of administrative convenience.
(vi) To
suspend or terminate this Plan at any time. Suspension or
termination of this Plan will not Materially Impair rights and
obligations under any Award granted while this Plan is in effect
except with the written consent of the affected
Participant.
(vii) To
amend this Plan in any respect the Board deems necessary or
advisable; provided, however, that stockholder approval will be
required for any amendment to the extent required by Applicable
Law. Except as provided above, rights under any Award granted
before amendment of this Plan will not be Materially Impaired by
any amendment of this Plan unless (1) the Company requests the
consent of the affected Participant, and (2) such Participant
consents in writing.
(viii) To
submit any amendment to this Plan for stockholder
approval.
(ix) To
approve forms of Award Agreements for use under this Plan and to
amend the terms of any one or more Awards, including, but not
limited to, amendments to provide terms more favorable to the
Participant than previously provided in the Award Agreement,
subject to any specified limits in this Plan that are not subject
to Board discretion; provided however, that, a Participant’s
rights under any Award will not be Materially Impaired by any such
amendment unless (1) the Company requests the consent of the
affected Participant, and (2) such Participant consents in
writing.
(x) Generally,
to exercise such powers and to perform such acts as the Board deems
necessary or expedient to promote the best interests of the Company
and that are not in conflict with the provisions of this Plan or
Awards.
(xi) To
adopt such procedures and sub-plans as are necessary or appropriate
to permit and facilitate participation in this Plan by, or take
advantage of specific tax treatment for Awards granted to,
Employees, Directors or Consultants who are foreign nationals or
employed outside the United States (provided that Board approval
will not be necessary for immaterial modifications to this Plan or
any Award Agreement to ensure or facilitate compliance with the
laws of the relevant foreign jurisdiction).
(xii) To
effect, at any time and from time to time, subject to the consent
of any Participant whose Award is Materially Impaired by such
action, (1) the reduction of the exercise price (or strike price)
of any outstanding Option or SAR; (2) the cancellation of any
outstanding Option or SAR and the grant in substitution therefor of
(A) a new Option, SAR, Restricted Stock Award, RSU Award or Other
Award, under this Plan or another equity plan of the Company,
covering the same or a different number of shares of the Common
Stock, (B) cash and/or (C) other valuable consideration (as
determined by the Board); or (3) any other action that is treated
as a repricing under generally accepted accounting
principles.
(c) Delegation
to Committee.
(i) General.
The Board may delegate some or all of the administration of this
Plan to a Committee or Committees. If administration of this Plan
is delegated to a Committee, the Committee will have, in connection
with the administration of this Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee,
including the power to delegate to another Committee or a
subcommittee of the Committee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to
the Board will thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the
provisions of this Plan, as may be adopted from time to time by the
Board. Each Committee may retain the authority to concurrently
administer this Plan with Committee or subcommittee to which it has
delegated its authority hereunder and may, at any time, revest in
such Committee some or all of the powers previously delegated. The
Board may retain the authority to concurrently administer this Plan
with any Committee and may, at any time, revest in the Board some
or all of the powers previously delegated.
(ii) Rule
16b-3 Compliance. To the extent an Award is intended to
qualify for the exemption from Section 16(b) of the Exchange Act
that is available under Rule 16b-3 of the Exchange Act, the Award
will be granted by the Board or a Committee that consists solely of
two or more Non-Employee Directors, as determined under Rule
16b-3(b)(3) of the Exchange Act and thereafter any action
establishing or modifying the terms of the Award will be approved
by the Board or a Committee meeting such requirements to the extent
necessary for such exemption to remain available.
(d) Effect
of Board’s Decision. All determinations,
interpretations and constructions made by the Board or any
Committee in good faith will not be subject to review by any person
and will be final, binding and conclusive on all
persons.
(e) Delegation
to an Officer. The Board or any Committee may delegate to
one or more Officers the authority to do one or both of the
following (i) designate Employees who are not Officers to be
recipients of Options and SARs (and, to the extent permitted by
Applicable Law, other types of Awards) and, to the extent permitted
by Applicable Law, the terms thereof, and (ii) determine the number
of shares of the Common Stock to be subject to such Awards granted
to such Employees; provided, however, that the resolutions or
charter adopted by the Board or any Committee evidencing such
delegation will specify the total number of shares of the Common
Stock that may be subject to the Awards granted by such Officer and
that such Officer may not grant an Award to himself or herself. Any
such Awards will be granted on the applicable form of Award
Agreement most recently approved for use by the Board or the
Committee, unless otherwise provided in the resolutions approving
the delegation authority. Notwithstanding anything to the contrary
herein, neither the Board nor any Committee may delegate to an
Officer who is acting solely in the capacity of an Officer (and not
also as a Director) the authority to determine the Fair Market
Value.
(a) Withholding
Authorization. As a condition to acceptance of any Award
under this Plan, a Participant authorizes withholding from payroll
and any other amounts payable to such Participant, and otherwise
agree to make adequate provision for (including), any sums required
to satisfy any U.S. federal, state, local and/or foreign tax or
social insurance contribution withholding obligations of the
Company or an Affiliate, if any, which arise in connection with the
exercise, vesting or settlement of such Award, as applicable.
Accordingly, a Participant may not be able to exercise an Award
even though the Award is vested, and the Company shall have no
obligation to issue shares of the Common Stock subject to an Award,
unless and until such obligations are satisfied.
(b) Satisfaction
of Withholding Obligation. To the extent permitted by the
terms of an Award Agreement, the Company may, in its sole
discretion, satisfy any U.S. federal, state, local and/or foreign
tax or social insurance withholding obligation relating to an Award
by any of the following means or by a combination of such means:
(i) causing the Participant to tender a cash payment; (ii)
withholding shares of the Common Stock from the shares of the
Common Stock issued or otherwise issuable to the Participant in
connection with the Award; (iii) withholding cash from an Award
settled in cash; (iv) withholding payment from any amounts
otherwise payable to the Participant; (v) by allowing a Participant
to effectuate a “cashless exercise” pursuant to a
program developed under Regulation T as promulgated by the Federal
Reserve Board, or (vi) by such other method as may be set forth in
the Award Agreement.
(c) No
Obligation to Notify or Minimize Taxes; No Liability to
Claims. Except as required by Applicable Law the Company has
no duty or obligation to any Participant to advise such holder as
to the time or manner of exercising such Award. Furthermore, the
Company has no duty or obligation to warn or otherwise advise such
holder of a pending termination or expiration of an Award or a
possible period in which the Award may not be exercised. The
Company has no duty or obligation to minimize the tax consequences
of an Award to the holder of such Award and will not be liable to
any holder of an Award for any adverse tax consequences to such
holder in connection with an Award. As a condition to accepting an
Award under this Plan, each Participant (i) agrees to not make any
claim against the Company, or any of its Officers, Directors,
Employees or Affiliates related to tax liabilities arising from
such Award or other Company compensation and (ii) acknowledges that
such Participant was advised to consult with his or her own
personal tax, financial and other legal advisors regarding the tax
consequences of the Award and has either done so or knowingly and
voluntarily declined to do so. Additionally, each Participant
acknowledges any Option or SAR granted under this Plan is exempt
from Section 409A only if the exercise or strike price is at least
equal to the “fair market value” of the Common Stock on
the date of grant as determined by the Internal Revenue Service and
there is no other impermissible deferral of compensation associated
with the Award. Additionally, as a condition to accepting an Option
or SAR granted under this Plan, each Participant agrees not make
any claim against the Company, or any of its Officers, Directors,
Employees or Affiliates in the event that the Internal Revenue
Service asserts that such exercise price or strike price is less
than the “fair market value” of the Common Stock on the
date of grant as subsequently determined by the Internal Revenue
Service.
(d) Withholding
Indemnification. As a condition to accepting an Award under
this Plan, in the event that the amount of the Company’s
and/or its Affiliate’s withholding obligation in connection
with such Award was greater than the amount actually withheld by
the Company and/or its Affiliates, each Participant agrees to
indemnify and hold the Company and/or its Affiliates harmless from
any failure by the Company and/or its Affiliates to withhold the
proper amount.
(a) Source
of Shares. The stock issuable under this Plan will be shares
of authorized but unissued or reacquired shares of the Common
Stock, including shares repurchased by the Company on the open
market or otherwise.
(b) Use
of Proceeds from Sales of the Common Stock. Proceeds from
the sale of shares of the Common Stock pursuant to Awards will
constitute general funds of the Company.
(c) Corporate
Action Constituting Grant of Awards. Corporate action
constituting a grant by the Company of an Award to any Participant
will be deemed completed as of the date of such corporate action,
unless otherwise determined by the Board, regardless of when the
instrument, certificate, or letter evidencing the Award is
communicated to, or actually received or accepted by, the
Participant. In the event that the corporate records (e.g., Board
consents, resolutions or minutes) documenting the corporate action
approving the grant contain terms (e.g., exercise price, vesting
schedule or number of shares) that are inconsistent with those in
the Award Agreement or related grant documents as a result of a
clerical error in the Award Agreement or related grant documents,
the corporate records will control and the Participant will have no
legally binding right to the incorrect term in the Award Agreement
or related grant documents.
(d) Stockholder
Rights. No Participant will be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any
shares of the Common Stock subject to such Award unless and until
(i) such Participant has satisfied all requirements for exercise of
the Award pursuant to its terms, if applicable, and (ii) the
issuance of the Common Stock subject to such Award is reflected in
the records of the Company.
(e) No
Employment or Other Service Rights. Nothing in this Plan,
any Award Agreement or any other instrument executed thereunder or
in connection with any Award granted pursuant thereto will confer
upon any Participant any right to continue to serve the Company or
an Affiliate in the capacity in effect at the time the Award was
granted or affect the right of the Company or an Affiliate to
terminate at will and without regard to any future vesting
opportunity that a Participant may have with respect to any Award
(i) the employment of an Employee with or without notice and with
or without cause, (ii) the service of a Consultant pursuant to the
terms of such Consultant’s agreement with the Company or an
Affiliate, or (iii) the service of a Director pursuant to the
Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state or foreign
jurisdiction in which the Company or the Affiliate is incorporated,
as the case may be. Further, nothing in this Plan, any Award
Agreement or any other instrument executed thereunder or in
connection with any Award will constitute any promise or commitment
by the Company or an Affiliate regarding the fact or nature of
future positions, future work assignments, future compensation or
any other term or condition of employment or service or confer any
right or benefit under the Award or this Plan unless such right or
benefit has specifically accrued under the terms of the Award
Agreement and/or Plan.
(f) Change
in Time Commitment. In the event a Participant’s
regular level of time commitment in the performance of his or her
services for the Company and any Affiliates is reduced (for
example, and without limitation, if the Participant is an Employee
of the Company and the Employee has a change in status from a
full-time Employee to a part-time Employee or takes an extended
leave of absence) after the date of grant of any Award to the
Participant, the Board may determine, to the extent permitted by
Applicable Law, to (i) make a corresponding reduction in the number
of shares or cash amount subject to any portion of such Award that
is scheduled to vest or become payable after the date of such
change in time commitment, and (ii) in lieu of or in combination
with such a reduction, extend the vesting or payment schedule
applicable to such Award. In the event of any such reduction, the
Participant will have no right with respect to any portion of the
Award that is so reduced or extended.
(g) Execution
of Additional Documents. As a condition to accepting an
Award under this Plan, the Participant agrees to execute any
additional documents or instruments necessary or desirable, as
determined in the Plan Administrator’s sole discretion, to
carry out the purposes or intent of the Award, or facilitate
compliance with securities and/or other regulatory requirements, in
each case at the Plan Administrator’s request.
(h) Electronic
Delivery and Participation. Any reference herein or in an
Award Agreement to a “written” agreement or document
will include any agreement or document delivered electronically,
filed publicly at www.sec.gov (or any successor website thereto) or
posted on the Company’s intranet (or other shared electronic
medium controlled by the Company to which the Participant has
access). By accepting any Award the Participant consents to receive
documents by electronic delivery and to participate in this Plan
through any on-line electronic system established and maintained by
the Plan Administrator or another third party selected by the Plan
Administrator. The form of delivery of any Common Stock (e.g., a
stock certificate or electronic entry evidencing such shares) shall
be determined by the Company.
(i) Clawback/Recovery.
All Awards granted under this Plan will be subject to recoupment in
accordance with any clawback policy that the Company is required to
adopt pursuant to the listing standards of any national securities
exchange or association on which the Company’s securities are
listed or as is otherwise required by the Dodd-Frank Wall Street
Reform and Consumer Protection Act or other Applicable Law and any
clawback policy that the Company otherwise adopts, to the extent
applicable and permissible under Applicable Law. In addition, the
Board may impose such other clawback, recovery or recoupment
provisions in an Award Agreement as the Board determines necessary
or appropriate, including but not limited to a reacquisition right
in respect of previously acquired shares of the Common Stock or
other cash or property upon the occurrence of Cause. No recovery of
compensation under such a clawback policy will be an event giving
rise to a Participant’s right to voluntary terminate
employment upon a “resignation for good reason,” or for
a “constructive termination” or any similar term under
any plan of or agreement with the Company.
(j) Securities
Law Compliance. A Participant will not be issued any shares
in respect of an Award unless either (i) the shares are registered
under the Securities Act; or (ii) the Company has determined that
such issuance would be exempt from the registration requirements of
the Securities Act. Each Award also must comply with other
Applicable Law governing the Award, and a Participant will not
receive such shares if the Company determines that such receipt
would not be in material compliance with Applicable
Law.
(k) Transfer
or Assignment of Awards; Issued Shares. Except as expressly
provided in this Plan or the form of Award Agreement, Awards
granted under this Plan may not be transferred or assigned by the
Participant. After the vested shares subject to an Award have been
issued, or in the case of Restricted Stock and similar awards,
after the issued shares have vested, the holder of such shares is
free to assign, hypothecate, donate, encumber or otherwise dispose
of any interest in such shares provided that any such actions are
in compliance with the provisions herein, the terms of the Trading
Policy and Applicable Law.
(l) Effect
on Other Employee Benefit Plans. The value of any Award
granted under this Plan, as determined upon grant, vesting or
settlement, shall not be included as compensation, earnings,
salaries, or other similar terms used when calculating any
Participant’s benefits under any employee benefit plan
sponsored by the Company or any Affiliate, except as such plan
otherwise expressly provides. The Company expressly reserves its
rights to amend, modify, or terminate any of the Company’s or
any Affiliate’s employee benefit plans.
(m) Deferrals.
To the extent permitted by Applicable Law, the Board, in its sole
discretion, may determine that the delivery of Common Stock or the
payment of cash, upon the exercise, vesting or settlement of all or
a portion of any Award may be deferred and may also establish
programs and procedures for deferral elections to be made by
Participants. Deferrals by will be made in accordance with the
requirements of Section 409A.
(n) Section
409A. Unless otherwise expressly provided for in an Award
Agreement, this Plan and Award Agreements will be interpreted to
the greatest extent possible in a manner that makes this Plan and
the Awards granted hereunder exempt from Section 409A, and, to the
extent not so exempt, in compliance with the requirements of
Section 409A. If the Board determines that any Award granted
hereunder is not exempt from and is therefore subject to Section
409A, the Award Agreement evidencing such Award will incorporate
the terms and conditions necessary to avoid the consequences
specified in Section 409A(a)(1) of the Code, and to the extent an
Award Agreement is silent on terms necessary for compliance, such
terms are hereby incorporated by reference into the Award
Agreement. Notwithstanding anything to the contrary in this Plan
(and unless the Award Agreement specifically provides otherwise),
if the shares of the Common Stock are publicly traded, and if a
Participant holding an Award that constitutes “deferred
compensation” under Section 409A is a “specified
employee” for purposes of Section 409A, no distribution or
payment of any amount that is due because of a “separation
from service” (as defined in Section 409A without regard to
alternative definitions thereunder) will be issued or paid before
the date that is six months and one day following the date of such
Participant’s “separation from service” or, if
earlier, the date of the Participant’s death, unless such
distribution or payment can be made in a manner that complies with
Section 409A, and any amounts so deferred will be paid in a lump
sum on the day after such six month period elapses, with the
balance paid thereafter on the original schedule.
(o) Choice
of Law. This Plan and any controversy arising out of or
relating to this Plan shall be governed by, and construed in
accordance with, the internal laws of the State of Michigan,
without regard to conflict of law principles that would result in
any application of any law other than the law of the State of
Michigan.
10.
COVENANTS
OF THE COMPANY.
(a) Compliance
with Law. The Company will seek to obtain from each
regulatory commission or agency, as may be deemed to be necessary,
having jurisdiction over this Plan such authority as may be
required to grant Awards and to issue and sell shares of the Common
Stock upon exercise or vesting of the Awards; provided, however,
that this undertaking will not require the Company to register
under the Securities Act this Plan, any Award or any Common Stock
issued or issuable pursuant to any such Award. If, after reasonable
efforts and at a reasonable cost, the Company is unable to obtain
from any such regulatory commission or agency the authority that
counsel for the Company deems necessary or advisable for the lawful
issuance and sale of Common Stock under this Plan, the Company will
be relieved from any liability for failure to issue and sell Common
Stock upon exercise or vesting of such Awards unless and until such
authority is obtained. A Participant is not eligible for the grant
of an Award or the subsequent issuance of Common Stock pursuant to
the Award if such grant or issuance would be in violation of any
Applicable Law.
11.
ADDITIONAL
RULES FOR AWARDS SUBJECT TO SECTION 409A.
(a) Application.
Unless the provisions of this Section 11 of this Plan are
expressly superseded by the provisions in the form of Award
Agreement, the provisions of this Section 11 shall apply and
shall supersede anything to the contrary set forth in the Award
Agreement for a Non-Exempt Award.
(b) Non-Exempt
Awards Subject to Non-Exempt Severance Arrangements. To the
extent a Non-Exempt Award is subject to Section 409A due to
application of a Non-Exempt Severance Arrangement, the following
provisions of this subsection (b) apply.
(i) If
the Non-Exempt Award vests in the ordinary course during the
Participant’s Continuous Service in accordance with the
vesting schedule set forth in the Award Agreement, and does not
accelerate vesting under the terms of a Non-Exempt Severance
Arrangement, in no event will the shares be issued in respect of
such Non-Exempt Award any later than the later of: (i) December
31st of the calendar year that includes the applicable vesting
date, or (ii) the 60th day that follows the applicable vesting
date.
(ii) If
vesting of the Non-Exempt Award accelerates under the terms of a
Non-Exempt Severance Arrangement in connection with the
Participant’s Separation from Service, and such vesting
acceleration provisions were in effect as of the date of grant of
the Non-Exempt Award and, therefore, are part of the terms of such
Non-Exempt Award as of the date of grant, then the shares will be
earlier issued in settlement of such Non-Exempt Award upon the
Participant’s Separation from Service in accordance with the
terms of the Non-Exempt Severance Arrangement, but in no event
later than the 60th day that follows the date of the
Participant’s Separation from Service. However, if at the
time the shares would otherwise be issued the Participant is
subject to the distribution limitations contained in Section 409A
applicable to “specified employees,” as defined in
Section 409A(a)(2)(B)(i) of the Code, such shares shall not be
issued before the date that is six months following the date of
such Participant’s Separation from Service, or, if earlier,
the date of the Participant’s death that occurs within such
six month period.
(iii) If
vesting of a Non-Exempt Award accelerates under the terms of a
Non-Exempt Severance Arrangement in connection with a
Participant’s Separation from Service, and such vesting
acceleration provisions were not in effect as of the date of grant
of the Non-Exempt Award and, therefore, are not a part of the terms
of such Non-Exempt Award on the date of grant, then such
acceleration of vesting of the Non-Exempt Award shall not
accelerate the issuance date of the shares, but the shares shall
instead be issued on the same schedule as set forth in the Grant
Notice as if they had vested in the ordinary course during the
Participant’s Continuous Service, notwithstanding the vesting
acceleration of the Non-Exempt Award. Such issuance schedule is
intended to satisfy the requirements of payment on a specified date
or pursuant to a fixed schedule, as provided under Treasury
Regulations Section 1.409A-3(a)(4).
(c) Treatment
of Non-Exempt Awards Upon a Corporate Transaction for Employees and
Consultants. The provisions of this subsection (c) shall
apply and shall supersede anything to the contrary set forth in
this Plan with respect to the permitted treatment of any Non-Exempt
Award in connection with a Corporate Transaction if the Participant
was either an Employee or Consultant upon the applicable date of
grant of the Non-Exempt Award.
(i) Vested
Non-Exempt Awards. The following provisions shall apply to
any Vested Non-Exempt Award in connection with a Corporate
Transaction:
(1) If
the Corporate Transaction is also a Section 409A Change in Control
then the Acquiring Entity may not assume, continue or substitute
the Vested Non- Exempt Award. Upon the Section 409A Change in
Control the settlement of the Vested Non-Exempt Award will
automatically be accelerated and the shares will be immediately
issued in respect of the Vested Non-Exempt Award. Alternatively,
the Company may instead provide that the Participant will receive a
cash settlement equal to the Fair Market Value of the shares that
would otherwise be issued to the Participant upon the Section 409A
Change in Control.
(2) If
the Corporate Transaction is not also a Section 409A Change in
Control, then the Acquiring Entity must either assume, continue or
substitute each Vested Non-Exempt Award. The shares to be issued in
respect of the Vested Non-Exempt Award shall be issued to the
Participant by the Acquiring Entity on the same schedule that the
shares would have been issued to the Participant if the Corporate
Transaction had not occurred. In the Acquiring Entity’s
discretion, in lieu of an issuance of shares, the Acquiring Entity
may instead substitute a cash payment on each applicable issuance
date, equal to the Fair Market Value of the shares that would
otherwise be issued to the Participant on such issuance dates, with
the determination of the Fair Market Value of the shares made on
the date of the Corporate Transaction.
(ii) Unvested
Non-Exempt Awards. The following provisions shall apply to
any Unvested Non-Exempt Award unless otherwise determined by the
Board pursuant to subsection (e) of this Section.
(1) In
the event of a Corporate Transaction, the Acquiring Entity shall
assume, continue or substitute any Unvested Non-Exempt Award.
Unless otherwise determined by the Board, any Unvested Non-Exempt
Award will remain subject to the same vesting and forfeiture
restrictions that were applicable to the Award prior to the
Corporate Transaction. The shares to be issued in respect of any
Unvested Non-Exempt Award shall be issued to the Participant by the
Acquiring Entity on the same schedule that the shares would have
been issued to the Participant if the Corporate Transaction had not
occurred. In the Acquiring Entity’s discretion, in lieu of an
issuance of shares, the Acquiring Entity may instead substitute a
cash payment on each applicable issuance date, equal to the Fair
Market Value of the shares that would otherwise be issued to the
Participant on such issuance dates, with the determination of Fair
Market Value of the shares made on the date of the Corporate
Transaction.
(2) If
the Acquiring Entity will not assume, substitute or continue any
Unvested Non-Exempt Award in connection with a Corporate
Transaction, then such Award shall automatically terminate and be
forfeited upon the Corporate Transaction with no consideration
payable to any Participant in respect of such forfeited Unvested
Non-Exempt Award. Notwithstanding the foregoing, to the extent
permitted and in compliance with the requirements of Section 409A,
the Board may in its discretion determine to elect to accelerate
the vesting and settlement of the Unvested Non-Exempt Award upon
the Corporate Transaction, or instead substitute a cash payment
equal to the Fair Market Value of such shares that would otherwise
be issued to the Participant, as further provided in subsection
(e)(ii) below. In the absence of such discretionary election by the
Board, any Unvested Non-Exempt Award shall be forfeited without
payment of any consideration to the affected Participants if the
Acquiring Entity will not assume, substitute or continue the
Unvested Non-Exempt Awards in connection with the Corporate
Transaction.
(3) The
foregoing treatment shall apply with respect to all Unvested
Non-Exempt Awards upon any Corporate Transaction, and regardless of
whether or not such Corporate Transaction is also a Section 409A
Change in Control.
(d) Treatment
of Non-Exempt Awards Upon a Corporate Transaction for Non-Employee
Directors. The following provisions of this subsection (d)
shall apply and shall supersede anything to the contrary that may
be set forth in this Plan with respect to the permitted treatment
of a Non-Exempt Director Award in connection with a Corporate
Transaction.
(i) If
the Corporate Transaction is also a Section 409A Change in Control
then the Acquiring Entity may not assume, continue or substitute
the Non-Exempt Director Award. Upon the Section 409A Change in
Control the vesting and settlement of any Non-Exempt Director Award
will automatically be accelerated and the shares will be
immediately issued to the Participant in respect of the Non-Exempt
Director Award. Alternatively, the Company may provide that the
Participant will instead receive a cash settlement equal to the
Fair Market Value of the shares that would otherwise be issued to
the Participant upon the Section 409A Change in Control pursuant to
the preceding provision.
(ii) If
the Corporate Transaction is not also a Section 409A Change in
Control, then the Acquiring Entity must either assume, continue or
substitute the Non-Exempt Director Award. Unless otherwise
determined by the Board, the Non-Exempt Director Award will remain
subject to the same vesting and forfeiture restrictions that were
applicable to the Award prior to the Corporate Transaction. The
shares to be issued in respect of the Non-Exempt Director Award
shall be issued to the Participant by the Acquiring Entity on the
same schedule that the shares would have been issued to the
Participant if the Corporate Transaction had not occurred. In the
Acquiring Entity’s discretion, in lieu of an issuance of
shares, the Acquiring Entity may instead substitute a cash payment
on each applicable issuance date, equal to the Fair Market Value of
the shares that would otherwise be issued to the Participant on
such issuance dates, with the determination of Fair Market Value
made on the date of the Corporate Transaction.
(e) If
the RSU Award is a Non-Exempt Award, then the provisions in this
Section 11(e) shall
apply and supersede anything to the contrary that may be set forth
in this Plan or the Award Agreement with respect to the permitted
treatment of such Non-Exempt Award:
(i) Any
exercise by the Board of discretion to accelerate the vesting of a
Non-Exempt Award shall not result in any acceleration of the
scheduled issuance dates for the shares in respect of the
Non-Exempt Award unless earlier issuance of the shares upon the
applicable vesting dates would be in compliance with the
requirements of Section 409A.
(ii) The
Company explicitly reserves the right to earlier settle any
Non-Exempt Award to the extent permitted and in compliance with the
requirements of Section 409A, including pursuant to any of the
exemptions available in Treasury Regulations Section
1.409A-3(j)(4)(ix).
(iii) To
the extent the terms of any Non-Exempt Award provide that it will
be settled upon a Change in Control or Corporate Transaction, to
the extent it is required for compliance with the requirements of
Section 409A, the Change in Control or Corporate Transaction event
triggering settlement must also constitute a Section 409A Change in
Control. To the extent the terms of a Non-Exempt Award provides
that it will be settled upon a termination of employment or
termination of Continuous Service, to the extent it is required for
compliance with the requirements of Section 409A, the termination
event triggering settlement must also constitute a Separation From
Service. However, if at the time the shares would otherwise be
issued to a Participant in connection with a “separation from
service” such Participant is subject to the distribution
limitations contained in Section 409A applicable to
“specified employees,” as defined in Section
409A(a)(2)(B)(i) of the Code, such shares shall not be issued
before the date that is six months following the date of the
Participant’s Separation From Service, or, if earlier, the
date of the Participant’s death that occurs within such six
month period.
(iv) The
provisions in this subsection (e) for delivery of the shares in
respect of the settlement of a RSU Award that is a Non-Exempt Award
are intended to comply with the requirements of Section 409A so
that the delivery of the shares to the Participant in respect of
such Non-Exempt Award will not trigger the additional tax imposed
under Section 409A, and any ambiguities herein will be so
interpreted.
If all
or any part of this Plan or any Award Agreement is declared by any
court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this
Plan or such Award Agreement not declared to be unlawful or
invalid. Any Section of this Plan or any Award Agreement (or part
of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the
terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.
13.
TERMINATION
OF THE PLAN.
The
Board may suspend or terminate this Plan at any time. No Incentive
Stock Options may be granted after the tenth anniversary of the
earlier of: (i) the Adoption Date, or (ii) the date this Plan is
approved by the Company’s stockholders. No Awards may be
granted under this Plan while this Plan is suspended or after it is
terminated.
As used
in this Plan, the following definitions apply to the capitalized
terms indicated below:
(a) “Acquiring
Entity” means the surviving or acquiring corporation
(or its parent company) in connection with a Corporate
Transaction.
(b) “Adoption
Date” means the date this Plan is first approved by
the Board or Compensation Committee.
(c) “Affiliate”
means, at the time of determination, any “parent” or
“subsidiary” of the Company as such terms are defined
in Rule 405 promulgated under the Securities Act. The Board may
determine the time or times at which “parent” or
“subsidiary” status is determined within the foregoing
definition.
(d) “Applicable
Law” means shall mean any applicable securities,
federal, state, foreign, material local or municipal or other law,
statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, listing rule, regulation,
judicial decision, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under
the authority of any Governmental Body (including under the
authority of any applicable self-regulating organization such as
the Nasdaq Stock Market, New York Stock Exchange, or the Financial
Industry Regulatory Authority).
(e) “Award”
means any right to receive Common Stock, cash or other property
granted under this Plan (including an Incentive Stock Option, a
Nonstatutory Stock Option, a Restricted Stock Award, a RSU Award, a
SAR, a Performance Award or any Other Award).
(f) “Award
Agreement” means a written agreement between the
Company and a Participant evidencing the terms and conditions of an
Award. The Award Agreement generally consists of the Grant Notice
and the agreement containing the written summary of the general
terms and conditions applicable to the Award and which is provided
to a Participant along with the Grant Notice.
(g) “Board”
means the Board of Directors of the Company (or its designee). Any
decision or determination made by the Board shall be a decision or
determination that is made in the sole discretion of the Board (or
its designee), and such decision or determination shall be final
and binding on all Participants.
(h) “Capitalization
Adjustment”
means any change that is made in, or other events that occur with
respect to, the Common Stock subject to this Plan or subject to any
Award after the Effective Date without the receipt of consideration
by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in
property other than cash, large nonrecurring cash dividend, stock
split, reverse stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or any
similar equity restructuring transaction, as that term is used in
Statement of Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (or any successor thereto).
Notwithstanding the foregoing, the conversion of any convertible
securities of the Company will not be treated as a Capitalization
Adjustment.
(i) “Cause”
has the meaning ascribed to such term in any written agreement
between the Participant and the Company defining such term and, in
the absence of such agreement, such term means, with respect to a
Participant, the occurrence of any of the following events: (i)
such Participant’s attempted commission of, or participation
in, a fraud or act of dishonesty against the Company; (ii) such
Participant’s intentional, material violation of any contract
or agreement between the Participant and the Company or of any
statutory duty owed to the Company; (iii) such Participant’s
unauthorized use or disclosure of the Company’s confidential
information or trade secrets; or (iv) such Participant’s
gross misconduct. The determination that a termination of the
Participant’s Continuous Service is either for Cause or
without Cause will be made by the Board with respect to
Participants who are executive officers of the Company and by the
Company’s Chief Executive Officer with respect to
Participants who are not executive officers of the Company. Any
determination by the Company that the Continuous Service of a
Participant was terminated with or without Cause for the purposes
of outstanding Awards held by such Participant will have no effect
upon any determination of the rights or obligations of the Company
or such Participant for any other purpose.
(j) “Change
in Control” means the occurrence, in a single
transaction or in a series of related transactions, of any one or
more of the following events; provided, however, to the extent
necessary to avoid adverse personal income tax consequences to the
Participant in connection with an Award, also constitutes a Section
409A Change in Control:
(i) any
Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding
securities other than by virtue of a merger, consolidation or
similar transaction. Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company,
(B) on account of the acquisition of securities of the Company by
an investor, any affiliate thereof or any other Exchange Act Person
that acquires the Company’s securities in a transaction or
series of related transactions the primary purpose of which is to
obtain financing for the Company through the issuance of equity
securities, or (C) solely because the level of Ownership held by
any Exchange Act Person (the “Subject
Person”) exceeds the designated percentage threshold
of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the
number of shares outstanding, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of
the acquisition of voting securities by the Company, and after such
share acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or other
acquisition had not occurred, increases the percentage of the then
outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be
deemed to occur;
(ii) there
is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar
transaction, the stockholders of the Company immediately prior
thereto do not Own, directly or indirectly, either (A) outstanding
voting securities representing more than 50% of the combined
outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than 50% of the
combined outstanding voting power of the parent of the surviving
Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership
of the outstanding voting securities of the Company immediately
prior to such transaction;
(iii) the
stockholders of the Company approve or the Board approves a plan of
complete dissolution or liquidation of the Company, or a complete
dissolution or liquidation of the Company shall otherwise occur,
except for a liquidation into a parent corporation;
(iv) there
is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets
of the Company and its Subsidiaries, other than a sale, lease,
license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries to an
Entity, more than 50% of the combined voting power of the voting
securities of which are Owned by stockholders of the Company in
substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to
such sale, lease, license or other disposition; or
(v) individuals
who, on the date this Plan is adopted by the Board, are members of
the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if
the appointment or election (or nomination for election) of any new
Board member was approved or recommended by a majority vote of the
members of the Incumbent Board then still in office, such new
member shall, for purposes of this Plan, be considered as a member
of the Incumbent Board.
Notwithstanding
the foregoing or any other provision of this Plan, (A) the term
Change in Control shall not include a sale of assets, merger or
other transaction effected exclusively for the purpose of changing
the domicile of the Company, and (B) the definition of Change in
Control (or any analogous term) in an individual written agreement
between the Company or any Affiliate and the Participant shall
supersede the foregoing definition with respect to Awards subject
to such agreement; provided, however, that if no definition of
Change in Control or any analogous term is set forth in such an
individual written agreement, the foregoing definition shall
apply.
(k) “Code”
means the Internal Revenue Code of 1986, as amended, including any
applicable regulations and guidance thereunder.
(l) “Committee”
means the Compensation Committee and any other committee of one or
more Directors to whom authority has been delegated by the Board or
Compensation Committee in accordance with this Plan.
(m) “Common
Stock” means the common stock of the
Company.
(n) “Company”
means Zivo Bioscience, Inc., a Nevada corporation.
(o) “Compensation
Committee” means the Compensation Committee of the
Board.
(p) “Consultant”
means any person, including an advisor, who is (i) engaged by the
Company or an Affiliate to render consulting or advisory services
and is compensated for such services, or (ii) serving as a member
of the board of directors of an Affiliate and is compensated for
such services. However, service solely as a Director, or payment of
a fee for such service, will not cause a Director to be considered
a “Consultant” for purposes of this Plan.
Notwithstanding the foregoing, a person is treated as a Consultant
under this Plan only if a Form S-8 Registration Statement under the
Securities Act is available to register either the offer or the
sale of the Company’s securities to such person.
(q) “Continuous
Service” means that the Participant’s service
with the Company or an Affiliate, whether as an Employee, Director
or Consultant, is not interrupted or terminated. A change in the
capacity in which the Participant renders service to the Company or
an Affiliate as an Employee, Director or Consultant or a change in
the Entity for which the Participant renders such service, provided
that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, will
not terminate a Participant’s Continuous Service; provided,
however, that if the Entity for which a Participant is rendering
services ceases to qualify as an Affiliate, as determined by the
Board, such Participant’s Continuous Service will be
considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or to a
Director will not constitute an interruption of Continuous Service.
To the extent permitted by law, the Board or the chief executive
officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service will be considered interrupted
in the case of (i) any leave of absence approved by the Board or
chief executive officer, including sick leave, military leave or
any other personal leave, or (ii) transfers between the Company, an
Affiliate, or their successors. Notwithstanding the foregoing, a
leave of absence will be treated as Continuous Service for purposes
of vesting in an Award only to such extent as may be provided in
the Company’s leave of absence policy, in the written terms
of any leave of absence agreement or policy applicable to the
Participant, or as otherwise required by law. In addition, to the
extent required for exemption from or compliance with Section 409A,
the determination of whether there has been a termination of
Continuous Service will be made, and such term will be construed,
in a manner that is consistent with the definition of
“separation from service” as defined under Treasury
Regulation Section 1.409A-1(h) (without regard to any alternative
definition thereunder).
(r) “Corporate
Transaction” means the consummation, in a single
transaction or in a series of related transactions, of any one or
more of the following events:
(i) a
sale or other disposition of all or substantially all, as
determined by the Board, of the consolidated assets of the Company
and its Subsidiaries;
(ii) a
sale or other disposition of at least 50% of the outstanding
securities of the Company;
(iii) a
merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or
(iv) a
merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of the Common
Stock outstanding immediately preceding the merger, consolidation
or similar transaction are converted or exchanged by virtue of the
merger, consolidation or similar transaction into other property,
whether in the form of securities, cash or otherwise.
(s) “Director”
means a member of the Board.
(t) “determine”
or “determined”
means as determined by the Board or the Committee (or its designee)
in its sole discretion.
(u) “Disability”
means, with respect to a Participant, such Participant is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months, as
provided in Section 22(e)(3) of the Code, and will be determined by
the Board on the basis of such medical evidence as the Board deems
warranted under the circumstances.
(v) “Effective
Date” means the effective date of this Plan
document.
(w) “Employee”
means any person employed by the Company or an Affiliate. However,
service solely as a Director, or payment of a fee for such
services, will not cause a Director to be considered an
“Employee” for purposes of this Plan.
(x) “Employer”
means the Company or the Affiliate of the Company that employs the
Participant.
(y) “Entity”
means a corporation, partnership, limited liability company or
other entity.
(z) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
(aa) “Exchange
Act Person” means any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act), except that “Exchange Act Person”
will not include (i) the Company or any Subsidiary of the Company,
(ii) any employee benefit plan of the Company or any Subsidiary of
the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of
the Company, (iii) an underwriter temporarily holding securities
pursuant to a registered public offering of such securities, (iv)
an Entity Owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their Ownership of
stock of the Company; or (v) any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) that, as of the Effective Date, is the Owner,
directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company’s
then outstanding securities.
(bb) “Fair
Market Value” means, as of any date, unless otherwise
determined by the Board, the value of the Common Stock (as
determined on a per share or aggregate basis, as applicable)
determined as follows:
(i) If
the Common Stock is listed on any established stock exchange or
traded on any established market, the Fair Market Value will be the
closing sales price for such stock as quoted on such exchange or
market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the date of determination, as
reported in a source the Board deems reliable.
(ii) If
there is no closing sales price for the Common Stock on the date of
determination, then the Fair Market Value will be the closing
selling price on the last preceding date for which such quotation
exists.
(iii) In
the absence of such markets for the Common Stock, or if otherwise
determined by the Board, the Fair Market Value will be determined
by the Board in good faith and in a manner that complies with
Sections 409A and 422 of the Code.
(cc) “Governmental
Body” means any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal,
foreign or other government; (c) governmental or regulatory body,
or quasi-governmental body of any nature (including any
governmental division, department, administrative agency or bureau,
commission, authority, instrumentality, official, ministry, fund,
foundation, center, organization, unit, body or Entity and any
court or other tribunal, and for the avoidance of doubt, any Tax
authority) or other body exercising similar powers or authority; or
(d) self-regulatory organization (including the Nasdaq Stock
Market, New York Stock Exchange, and the Financial Industry
Regulatory Authority).
(dd) “Grant
Notice” means the notice provided to a Participant
that he or she has been granted an Award under this Plan and which
includes the name of the Participant, the type of Award, the date
of grant of the Award, number of shares of the Common Stock subject
to the Award or potential cash payment right, (if any), the vesting
schedule for the Award (if any) and other key terms applicable to
the Award.
(ee) “Incentive
Stock Option” means an option granted pursuant to
Section 4 of this
Plan that is intended to be, and qualifies as, an “incentive
stock option” within the meaning of Section 422 of the
Code.
(ff) “Materially
Impair” means any amendment to the terms of the Award
that materially adversely affects the Participant’s rights
under the Award. A Participant’s rights under an Award will
not be deemed to have been Materially Impaired by any such
amendment if the Board, in its sole discretion, determines that the
amendment, taken as a whole, does not materially impair the
Participant’s rights. For example, the following types of
amendments to the terms of an Award do not Materially Impair the
Participant’s rights under the Award: (i) imposition of
reasonable restrictions on the minimum number of shares subject to
an Option that may be exercised, (ii) to maintain the qualified
status of the Award as an Incentive Stock Option under Section 422
of the Code; (iii) to change the terms of an Incentive Stock Option
in a manner that disqualifies, impairs or otherwise affects the
qualified status of the Award as an Incentive Stock Option under
Section 422 of the Code; (iv) to clarify the manner of exemption
from, or to bring the Award into compliance with or qualify it for
an exemption from, Section 409A; or (v) to comply with other
Applicable Laws.
(gg) “Non-Employee
Director” means a Director who either (i) is not a
current employee or officer of the Company or an Affiliate, does
not receive compensation, either directly or indirectly, from the
Company or an Affiliate for services rendered as a consultant or in
any capacity other than as a Director (except for an amount as to
which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act
(“Regulation
S-K”)), does not possess an interest in any other
transaction for which disclosure would be required under Item
404(a) of Regulation S-K, and is not engaged in a business
relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule
16b-3.
(hh) “Non-Exempt
Award” means any Award that is subject to, and not
exempt from, Section 409A, including as the result of (i) a
deferral of the issuance of the shares subject to the Award which
is elected by the Participant or imposed by the Company or (ii) the
terms of any Non-Exempt Severance Agreement.
(ii) “Non-Exempt
Director Award” means a Non-Exempt Award granted to a
Participant who was a Director but not an Employee on the
applicable grant date.
(jj) “Non-Exempt
Severance Arrangement” means a severance arrangement
or other agreement between the Participant and the Company that
provides for acceleration of vesting of an Award and issuance of
the shares in respect of such Award upon the Participant’s
termination of employment or separation from service (as such term
is defined in Section 409A(a)(2)(A)(i) of the Code (and without
regard to any alternative definition thereunder) (“Separation from
Service”) and such severance benefit does not satisfy
the requirements for an exemption from application of Section 409A
provided under Treasury Regulations Section 1.409A-1(b)(4),
1.409A-1(b)(9) or otherwise.
(kk) “Nonstatutory
Stock Option” means any option granted pursuant to
Section 4 of this Plan that does not qualify as an Incentive Stock
Option.
(ll) “Officer”
means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act.
(mm) “Option”
means an Incentive Stock Option or a Nonstatutory Stock Option to
purchase shares of the Common Stock granted pursuant to this
Plan.
(nn) “Option
Agreement” means a written agreement between the
Company and the Optionholder evidencing the terms and conditions of
the Option grant. The Option Agreement includes the Grant Notice
for the Option and the agreement containing the written summary of
the general terms and conditions applicable to the Option and which
is provided to a Participant along with the Grant Notice. Each
Option Agreement will be subject to the terms and conditions of
this Plan.
(oo) “Optionholder”
means a person to whom an Option is granted pursuant to this Plan
or, if applicable, such other person who holds an outstanding
Option.
(pp) “Other
Award” means an award valued in whole or in part by
reference to, or otherwise based on, Common Stock, including the
appreciation in value thereof (e.g., options or stock rights with
an exercise price or strike price less than 100% of the Fair Market
Value at the time of grant) that is not an Incentive Stock Options,
Nonstatutory Stock Option, SAR, Restricted Stock Award, RSU Award
or Performance Award.
(qq) “Other
Award Agreement” means a written agreement between the
Company and a holder of an Other Award evidencing the terms and
conditions of an Other Award grant. Each Other Award Agreement will
be subject to the terms and conditions of this Plan.
(rr) “Own,”
“Owned,”
“Owner,”
“Ownership” means that a person or Entity will
be deemed to “Own,” to have “Owned,” to be
the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting,
with respect to such securities.
(ss) “Participant”
means an Employee, Director or Consultant to whom an Award is
granted pursuant to this Plan or, if applicable, such other person
who holds an outstanding Award.
(tt) “Performance
Award” means an Award that may vest or may be
exercised or a cash award that may vest or become earned and paid
contingent upon the attainment during a Performance Period of
certain Performance Goals and which is granted under the terms and
conditions of Section
5(b) pursuant to such terms as are approved by the Board. In
addition, to the extent permitted by Applicable Law and set forth
in the applicable Award Agreement, the Board may determine that
cash or other property may be used in payment of Performance
Awards. Performance Awards that are settled in cash or other
property are not required to be valued in whole or in part by
reference to, or otherwise based on, the Common Stock.
(uu) “Performance
Criteria” means the one or more criteria that the
Board will select for purposes of establishing the Performance
Goals for a Performance Period. The Performance Criteria that will
be used to establish such Performance Goals may be based on any one
of, or combination of, the following as determined by the Board:
earnings (including earnings per share and net earnings); earnings
before interest, taxes and depreciation; earnings before interest,
taxes, depreciation and amortization; total stockholder return;
return on equity or average stockholder’s equity; return on
assets, investment, or capital employed; stock price; margin
(including gross margin); income (before or after taxes); operating
income; operating income after taxes; pre-tax profit; operating
cash flow; sales or revenue targets; increases in revenue or
product revenue; expenses and cost reduction goals; improvement in
or attainment of working capital levels; economic value added (or
an equivalent metric); market share; cash flow; cash flow per
share; share price performance; debt reduction; customer
satisfaction; stockholders’ equity; capital expenditures;
debt levels; operating profit or net operating profit; workforce
diversity; growth of net income or operating income; billings;
product development goals; financing; regulatory milestones,
including approval of a product; stockholder liquidity; corporate
governance and compliance; product commercialization; intellectual
property; personnel matters; customer satisfaction; budget
management; data from clinical studies; internal controls,
including those related to the Sarbanes-Oxley Act of 2002; investor
relations, analysts and communication; manufacturing achievements
(including obtaining particular yields from manufacturing runs and
other measurable objectives related to process development
activities); strategic partnerships or transactions (including
in-licensing and out-licensing of intellectual property;
establishing relationships with commercial entities with respect to
the marketing, distribution and sale of the Company’s
products (including with group purchasing organizations,
distributors and other vendors); supply chain achievements;
co-development, co-marketing, profit sharing, joint venture or
other similar arrangements; individual performance goals; corporate
development and planning goals; and other measures of performance
selected by the Board or Committee.
(vv) “Performance
Goals” means, for a Performance Period, the one or
more goals established by the Board for the Performance Period
based upon the Performance Criteria. Performance Goals may be based
on a Company-wide basis, with respect to one or more business
units, divisions, Affiliates, or business segments, and in either
absolute terms or relative to the performance of one or more
comparable companies or the performance of one or more relevant
indices. Unless specified otherwise by the Board (i) in the Award
Agreement at the time the Award is granted or (ii) in such other
document setting forth the Performance Goals at the time the
Performance Goals are established, the Board will appropriately
make adjustments in the method of calculating the attainment of
Performance Goals for a Performance Period as follows: (1) to
exclude restructuring and/or other nonrecurring charges; (2) to
exclude exchange rate effects; (3) to exclude the effects of
changes to generally accepted accounting principles; (4) to exclude
the effects of any statutory adjustments to corporate tax rates;
(5) to exclude the effects of items that are “unusual”
in nature or occur “infrequently” as determined under
generally accepted accounting principles; (6) to exclude the
dilutive effects of acquisitions or joint ventures; (7) to assume
that any business divested by the Company achieved performance
objectives at targeted levels during the balance of a Performance
Period following such divestiture; (8) to exclude the effect of any
change in the outstanding shares of the Common Stock of the Company
by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or other similar corporate
change, or any distributions to common stockholders other than
regular cash dividends; (9) to exclude the effects of stock based
compensation and the award of bonuses under the Company’s
bonus plans; (10) to exclude costs incurred in connection with
potential acquisitions or divestitures that are required to
expensed under generally accepted accounting principles; and (11)
to exclude the goodwill and intangible asset impairment charges
that are required to be recorded under generally accepted
accounting principles. In addition, the Board retains the
discretion to reduce or eliminate the compensation or economic
benefit due upon attainment of Performance Goals and to define the
manner of calculating the Performance Criteria it selects to use
for such Performance Period. Partial achievement of the specified
criteria may result in the payment or vesting corresponding to the
degree of achievement as specified in the Award Agreement or the
written terms of a Performance Cash Award.
(ww) “Performance
Period” means the period of time selected by the Board
over which the attainment of one or more Performance Goals will be
measured for the purpose of determining a Participant’s right
to vesting or exercise of an Award. Performance Periods may be of
varying and overlapping duration, at the sole discretion of the
Board.
(xx) “Plan”
means this Zivo Bioscience, Inc. 2021 Equity Incentive
Plan.
(yy) “Plan
Administrator” means the person, persons, and/or
third-party administrator designated by the Company to administer
the day to day operations of this Plan and the Company’s
other equity incentive programs.
(zz) “Post-Termination
Exercise Period” means the period following
termination of a Participant’s Continuous Service within
which an Option or SAR is exercisable, as specified in Section 4(h).
(aa) “Prospectus”
means the document containing this Plan information specified in
Section 10(a) of the Securities Act.
(bb) “Restricted
Stock Award” or “RSA”
means an Award of shares of the Common Stock which is granted
pursuant to the terms and conditions of Section 5(a).
(cc) “Restricted
Stock Award Agreement” means a written agreement
between the Company and a holder of a Restricted Stock Award
evidencing the terms and conditions of a Restricted Stock Award
grant. The Restricted Stock Award Agreement includes the Grant
Notice for the Restricted Stock Award and the agreement containing
the written summary of the general terms and conditions applicable
to the Restricted Stock Award and which is provided to a
Participant along with the Grant Notice. Each Restricted Stock
Award Agreement will be subject to the terms and conditions of this
Plan.
(dd) “RSU
Award” or “RSU”
means an Award of restricted stock units representing the right to
receive an issuance of shares of the Common Stock which is granted
pursuant to the terms and conditions of Section 5(a).
(ee) “RSU
Award Agreement” means a written agreement between the
Company and a holder of a RSU Award evidencing the terms and
conditions of a RSU Award. The RSU Award Agreement includes the
Grant Notice for the RSU Award and the agreement containing the
written summary of the general terms and conditions applicable to
the RSU Award and which is provided to a Participant along with the
Grant Notice. Each RSU Award Agreement will be subject to the terms
and conditions of this Plan.
(ff) “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.
(gg) “Rule
405” means Rule 405 promulgated under the Securities
Act.
(hh) “Section
409A” means Section 409A of the Code and the
regulations and other guidance thereunder.
(ii) “Section
409A Change in Control” means a change in the
ownership or effective control of the Company, or in the ownership
of a substantial portion of the Company’s assets, as provided
in Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations
Section 1.409A-3(i)(5) (without regard to any alternative
definition thereunder).
(jj) “Securities
Act” means the Securities Act of 1933, as
amended.
(kk) “Share
Reserve” means the number of shares available for
issuance under this Plan as set forth in Section 2(a).
(ll) “Stock
Appreciation Right” or “SAR”
means a right to receive the appreciation on Common Stock that is
granted pursuant to the terms and conditions of Section 4.
(mm) “SAR
Agreement” means a written agreement between the
Company and a holder of a SAR evidencing the terms and conditions
of a SAR grant. The SAR Agreement includes the Grant Notice for the
SAR and the agreement containing the written summary of the general
terms and conditions applicable to the SAR and which is provided to
a Participant along with the Grant Notice. Each SAR Agreement will
be subject to the terms and conditions of this Plan.
(nn) “Subsidiary”
means, with respect to the Company, (i) any corporation of which
more than 50% of the outstanding Common Stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any
other class or classes of such corporation will have or might have
voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, Owned by the Company, and (ii)
any partnership, limited liability company or other entity in which
the Company has a direct or indirect interest (whether in the form
of voting or participation in profits or capital contribution) of
more than 50%.
(oo) “Ten
Percent Stockholder” means a person who Owns (or is
deemed to Own pursuant to Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Affiliate.
(pp) “Trading
Policy” means the Company’s policy permitting
certain individuals to sell Company shares only during certain
“window” periods and/or otherwise restricts the ability
of certain individuals to transfer or encumber Company shares, as
in effect from time to time.
(qq) “Unvested
Non-Exempt Award” means the portion of any Non-Exempt
Award that had not vested in accordance with its terms upon or
prior to the date of any Corporate Transaction.
(rr) “Vested
Non-Exempt Award” means the portion of any Non-Exempt
Award that had vested in accordance with its terms upon or prior to
the date of a Corporate Transaction.
|
ZIVO BIOSCIENCE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS – OCTOBER 12, 2021 AT 9:00AM LOCAL
TIME
|
|
|
|
|
|
|
CONTROL ID:
|
|
|
|
|
|
|
|
|
REQUEST ID:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
undersigned shareholder of Zivo Bioscience, Inc., a Nevada
corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement dated, September 13,
2021. The undersigned hereby appoints Keith R. Marchiando, Chief
Financial Officer, and Andrew A. Dahl, Chief Executive Officer, and
each of them, as attorneys and proxies with full power of
substitution to represent the undersigned at the Annual Meeting of
shareholders of the Company to be at 3600 Centerpoint Parkway,
Pontiac, MI 48341, on October 12, 2021 at 9:00 a.m., EST, and at
any adjournment or postponement thereof, with all power which the
undersigned would possess if personally present, and to vote all
shares of stock which the undersigned may be entitled to vote at
said meeting upon the matters set forth in the Notice of Meeting in
accordance with the following instructions and with discretionary
authority upon such other matters as may come before the meeting.
All previous proxies are hereby revoked.
|
|
|
|
|
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VOTING INSTRUCTIONS
|
|
|
|
|
|
|
|
If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAIL:
|
Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
|
|
|
|
|
|
|
|
FAX:
|
Complete the reverse portion of this Proxy Card
and Fax to 202-521-3464.
|
|
|
|
|
|
|
|
INTERNET:
|
https://www.iproxydirect.com/ZIVO
|
|
|
|
|
|
|
|
PHONE:
|
1-866-752-VOTE(8683)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNUAL MEETING OF THE STOCKHOLDERS OF
ZIVO BIOSCIENCE, INC.
|
PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE: ✍
|
|
|
|
|
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
|
|
Proposal 1
|
|
FOR
|
|
WITHHOLD
|
|
|
|
|
|
|
|
To elect the following person to the Board of Directors to serve
until the next annual meeting of shareholders in 2022 and until
his/her successor is elected and qualified:
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
A. Dahl
|
|
☐
|
|
☐
|
|
|
|
CONTROL ID:
|
|
|
|
Nola
E. Masterson
|
|
☐
|
|
☐
|
|
|
|
REQUEST ID:
|
|
|
|
Robert
O. Rondeau, Jr.
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
Christopher
D. Maggiore
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
John
B. Payne
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
Alison
A. Cornell
|
|
☐
|
|
☐
|
|
|
|
|
|
|
Proposal 2
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
To ratify the appointment of our independent registered public
accounting firm for the fiscal year ending December 31,
2021
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal 3
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
To approve the adoption of the Zivo Bioscience, Inc. 2021 Equity
Incentive Plan
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal 4
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
To approve (on an advisory basis) the compensation of our named
executive officers
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARK “X” HERE IF YOU PLAN
TO ATTEND THE MEETING: ☐
|
|
THIS PROXY IS REVOCABLE. WHEN PROPERLY EXECUTED AND RETURNED, THIS
PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER, UNLESS REVOKED IN COMPLIANCE WITH THE
PROCEDURE DESCRIBED IN THE PROXY STATEMENT RELATING TO THE ANNUAL
MEETING. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
“FOR” THE NOMINEES IN PROPOSAL 1, “FOR” THE
RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
IN PROPOSAL 2, “FOR” THE ADOPTION OF THE ZIVO
BIOSCIENCE, INC. 2021 EQUITY INCENTIVE PLAN IN PROPOSAL 3, AND
“FOR” THE APPROVAL (ON AN ADVISORY BASIS) OF THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IN PROPOSAL
4.
|
|
|
|
MARK HERE FOR ADDRESS CHANGE ☐ New Address (if applicable):
_________________________________
_________________________________
_________________________________
IMPORTANT: Please sign exactly
as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by authorized person.
Dated: ________________________, 2021
|
|
|
|
|
(Print Name of Stockholder and/or Joint Tenant)
|
|
|
|
(Signature of Stockholder)
|
|
|
|
(Second Signature if held jointly)
|
Register to chat with like-minded investors on our interactive forums.
Hot Features
Premium
