INFORMATION
STATEMENT
PURSUANT
TO SECTION 14(C)
OF
THE SECURITIES EXCHANGE ACT OF 1934
AND
RULE 14C-2 THEREUNDER
NO
VOTE OR OTHER ACTION OF THE COMPANY’S STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT
.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
The
Company is distributing this Information Statement to its stockholders in full satisfaction of any notice requirements it may
have under Securities and Exchange Act of 1934, as amended, and applicable Delaware law. No additional action will be undertaken
by the Company with respect to the receipt of written consents, and no dissenters’ rights with respect to the receipt of
the written consents.
Expenses
in connection with the distribution of this Information Statement, which are anticipated to be approximately $5,000.00, will be
paid by the Company.
ABOUT
THE INFORMATION STATEMENT
What
Is the Purpose Of The Information Statement?
This
Information Statement is being provided pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “
Exchange
Act
”) to notify the Company’s shareholders, as of the close of business on February 09, 2018 (the “
Record
Date
”), of corporate action taken pursuant to the consent or authorization of certain shareholders of the Company. Shareholders
holding the power to vote in excess of a majority of the Company’s outstanding common stock have acted upon the corporate
matters outlined in this Information Statement, consisting of the following:
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(1)
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To
amend the Company’s Certificate of Incorporation to increase the number of authorized
Company Common Shares from 25,000,000 to 55,000,000, and
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(2)
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To
adopt the 2018 Stock Incentive Plan.
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The
Company will refer to this action as the “Proposals”.
Who
Is Entitled to Notice?
Each
holder of an outstanding share of common stock or voting preferred stock of record on the close of business on the Record Date
will be entitled to notice of each matter voted upon pursuant to consents or authorizations by certain shareholders who, as of
the close of business on the Record Date, were entitled to cast in excess of fifty percent (50%) of the votes entitled to vote
in favor of the Proposal. Under Delaware corporate law, all the activities requiring shareholder approval may be taken by obtaining
the written consent and approval by the holders of fifty percent (50%) of the votes entitled to be cast on the matter in lieu
of a meeting of the shareholders. No action by the minority shareholders in connection with the Proposal is required.
What
Corporate Matters Did the Majority of the Shareholders Vote for And How Did They Vote?
As
of February 09, 2018, the Company received executed consents from shareholders entitled to in excess of fifty percent (50%) of
the total eligible votes, which means that a majority of the votes entitled to be cast on the Proposal were in fact cast. The
Shareholders provided consent with respect to the following matters:
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(1)
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To amend the Company’s
Certificate of Incorporation to increase the number of authorized Company Common Shares from 25,000,000 to 55,000,000, and
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(2)
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To adopt the 2018
Stock Incentive Plan.
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What
Vote Is Required to Approve the Proposal?
With
respect to the Proposal, the affirmative vote of a majority of the votes entitled to be cast on the Proposal was required for
approval of the Proposal. Certain of the Company’s shareholders have voted in favor of the Proposal and these shareholders
represented in excess of fifty percent (50%) of the votes entitled to be cast on the Proposal. These shareholders were entitled
to cast fifty percent (50%) of the votes eligible to be cast on the Proposal. Accordingly, these shareholders had sufficient voting
shares to approve the Proposal.
Shareholders
Who Voted in Favor of The Proposal
The
table below indicates all of the holders of shares of the Company’s Common Stock and Series D Preferred stock that have
voted in favor of the Proposal. On the Record Date, 21,323,742 votes were eligible to be cast on the Proposal.
Shares
of Common Stock (or equivalent
shares of Common Stock in the case of
Series D Preferred Stockholders)
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Name
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Votes
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Percentage
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Fountainhead Capital Management Ltd.
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10,246,864
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48.05
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%
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Craig Kirsch
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57,934
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0.27
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%
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Peter Zachariou
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323,196
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1.52
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%
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Steven Girgenti
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49,800
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0.23
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%
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Lowell Rush
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28,192
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0.13
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%
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Oscar Bronsther
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40,155
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0.19
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%
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Total
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10,746,141
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50.40
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%
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Total Company Eligible Votes
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21,323,742
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BACKGROUND
1.
Organizational History
The
Company was formed as a limited liability company under the laws of the State of New York on June 17, 2005 as “Vycor Medical
LLC”. On August 14, 2007, we converted into a Delaware corporation and changed our name to “Vycor Medical, Inc.”.
The Company’s listing went effective on February 2009 and on November 29, 2010 Vycor completed the acquisition of substantially
all of the assets of NovaVision, Inc. (“NovaVision”) and on January 4, 2012 Vycor, through its wholly-owned NovaVision
subsidiary, completed the acquisition of all the shares of Sight Science Limited (“Sight Science”), a previous competitor
to NovaVision.
2.
Overview of Business
Vycor
is dedicated to providing the medical community with innovative and superior surgical and therapeutic solutions and operates two
distinct business units within the medical device industry. Vycor Medical designs, develops and markets medical devices for use
in neurosurgery. NovaVision provides non-invasive rehabilitation therapies for those who have vision disorders resulting from
neurological brain damage such as that caused by a stroke. Both businesses adopt a minimally or non-invasive approach. Both technologies
have strong sales growth potential, address large potential markets and have the requisite regulatory approvals. The Company has
59 issued or allowed patents and a further 15 pending. The Company leverages joint resources across the divisions to operate in
a cost-efficient manner.
The
Company periodically engages in discussions with potential strategic partners for or purchasers of each or both of our operating
divisions.
Vycor
Medical
Vycor
Medical designs, develops and markets medical devices for use in neurosurgery. Vycor Medical’s ViewSite Brain Access System
(“VBAS”) is a next generation retraction and access system that was fully commercialized in early 2010 and is the
first significant technological change to brain tissue retraction in over 50 years in contrast to significant development in most
other neuro-surgical technologies. Vycor Medical is ISO 13485:2003 compliant, and VBAS has U.S. FDA 510(k) clearance and CE Marking
for Europe (Class III) for brain and spine surgeries, and regulatory approvals in Australia, Brazil, Canada, China, Korea, Japan,
Russia and Taiwan.
We
believe VBAS offers several advantages over other brain retractor systems, commonly known as ribbon or blade retractors that are
metallic, including having the potential to significantly reduce brain tissue trauma that arises from excessive pressure at the
edges of the blade. The design of VBAS can minimize the size of the brain entry access necessary for surgical procedures and is
believed to significantly reduce the pressure and hence trauma on the surrounding brain tissue.
NovaVision
NovaVision
provides non-invasive, computer-based rehabilitation targeted at a substantial and largely un-addressed market of people who have
lost their sight as a result of stroke or other brain injury. NovaVision addresses a significant target market, estimated at approximately
$2 billion in each of the U.S. and the EU and over $13 billion globally.
NovaVision
has a family of therapies that both restore and compensate for lost vision:
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Restoration
of vision: NovaVision’s VRT and Sight Science’s Neuro-Eye Therapy (NeET), aim to improve visual sensitivity in
a person’s blind area. VRT delivers a series of light stimuli along the border of the patient’s visual field loss.
These programmed light sequences stimulate the border zone between the “seeing” and “blind” visual
fields, repetitively challenging the visual cortex in the border zone with a large number of stimuli over the course of time.
NeET targets deep within the blind area by repeated stimulation, allowing patients to detect objects within the blind field.
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Compensation
and re-training: Normal eye movements are also affected after brain injury adding to the problems of blindness. NeuroEyeCoach
provides a complementary therapy to VRT and NeET, which re-trains a patient to move their eyes, re-integrate left and right
vision and to make the most of their remaining visual field.
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VRT
and NeuroEyeCoach are therefore highly complementary and are provided in an Internet-delivered suite to ensure broad benefits
to NovaVision’s patients.
NovaVision
also has models of VRT and NeuroEyeCoach for physicians and rehabilitation clinics, as well as VIDIT, a diagnostic program that
enables therapists to perform high-resolution visual field tests in less than ten minutes.
NovaVision’s
VRT is the only medical device aimed at the restoration of vision lost as a result of neurological damage which has FDA 510(k)
clearance to be marketed in the U.S; and NeuroEyeCoach is registered in the US as a Class I 510(k) exempt device. VRT, NEC and
NeET have CE Marking for the EU. NovaVision has 41 granted and 2 pending patents worldwide.
The
Board of Directors believes that the proposed increase in authorized shares of Common Stock is beneficial to the Company because
it provides the Company with the flexibility it needs to raise additional capital consistent with its Business Plan.
No
further action on the part of stockholders will be required to either implement or abandon the increase in authorized capital.
The Board of Directors reserves its right to elect not to proceed, and abandon, the increase in authorized capital if it determines,
in its sole discretion, that this proposal is no longer in the best interests of the Company’s stockholders.
ADVANTAGES
AND DISADVANTAGES OF INCREASING AUTHORIZED COMMON STOCK
There
are certain advantages and disadvantages of increasing the Company’s authorized common stock. The Company believes that
the impact of increasing its authorized capital is largely mitigated by increased ability of the Company to raise capital for
the future growth of the Company consistent with its Business Plan. As a result of the increase in authorized capital, authorized
but unissued Company Common Shares are increased from 5,183,495 to 35,183,495. The current number of authorized but unissued shares
does not include shares which are reserved for issuance in the event of the exercise of certain warrants and options which required
to be reserved.
The
Company believes that this increased number of authorized but unissued Common Shares will facilitate:
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The ability to raise
capital by issuing capital stock under future financing transactions, if any.
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To have shares of
common stock available to pursue business expansion opportunities, if any.
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The issuance of
authorized but unissued stock could be used to deter a potential takeover of the Company that may otherwise be beneficial
to stockholders by diluting the shares held by a potential suitor or issuing shares to a stockholder that will vote in accordance
with the desires of the Company’s Board of Directors, at that time. Notwithstanding, a takeover may be beneficial to
independent stockholders because, among other reasons, a potential suitor may offer Company stockholders a premium for their
shares of stock compared to the then-existing market price. The Company does not have any plans or Proposal to adopt such
provisions or enter into agreements that may have material anti-takeover consequences.
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Disadvantages
of this action include the following:
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The issuance of
additional authorized but unissued shares of Common Stock could result in decreased net income per share which could result
in dilution to existing shareholders.
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In the long run,
the Company may be limiting the number of authorized but unissued shares it can issue in the future without a further amendment
of its Certificate of Incorporation. Notwithstanding, the Company believes that maintaining 35,183,495 authorized but unissued
Common shares will cover all of its reasonably foreseeable requirements.
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VYCOR
MEDICAL, INC. 2018 STOCK INCENTIVE PLAN
Description
of the Vycor Medical, Inc. 2018 Stock Incentive Plan
The
Company and the Consenting Shareholder believe the Plan is in the best interest of the Company and its shareholders and will help
the Company to (a) provide meaningful long-term incentive award opportunities as part of a competitive total compensation program
that enables the Company to attract and retain its key employees and consultants, (b) align the interests of those employees and
consultants with those of the Company and its shareholders and (c) motivate and reward long-term commitment to the Company that
results in profitable growth and sustained shareholder value creation.
A
copy of the Plan is attached to this Information Statement as Exhibit B. The Plan was approved by the Board and the consenting
shareholders (who delivered a written consent approving the Plan) on February 9, 2018. The Plan shall become effective on the
date which is twenty days following the mailing this Information Statement to the Company’s shareholders (the “Plan
Effective Date”). Terms included in this discussion of the Plan that are not otherwise defined in this Information Statement
shall have the meaning ascribed to them in the Plan.
The
Plan permits the granting of an aggregate number of shares of Company Common Stock not to exceed ten percent (10%) of the total
Company Common Shares outstanding from time to time. The Plan replaces the previous 2008 Employee, Director and Consultant Stock
Plan, which has expired. No awards or grants have been awarded or granted under the Plan. The Plan provides for grants of equity
incentive compensation to employees and consultants of the Company and such other individuals as the Company reasonably expects
to become employees or consultants of the Company. The Plan allows for awards of (a) Incentive Stock Options (“ISOs”),
(b) Non-qualified Stock Options (“NSOs”) (c) Stock Appreciation Rights (“SARs”), (d) restricted awards,
and (e) other equity-based awards. The Plan will terminate automatically on the tenth anniversary of the Plan Effective Date.
Administration
of the Plan
The
Plan will be administered by the full Board, or by a committee of the Board, as the Board determines in its sole discretion. For
purposes of this description of the Plan, references to the “Board” include a committee of the Board, if one is appointed.
If the Board elects to appoint a committee, such committee will consist solely of two or more non-employee directors.
Subject
to the provisions of the Plan, the Board determines the recipients of awards made pursuant to the Plan. The amount, terms, rules
and procedure associated with any award shall be determined by the Board as it deems proper and shall be reflected in an award
agreement at the time of such award. The Board is authorized in its sole discretion to construe and interpret the Plan and the
respective award agreements executed thereunder, to prescribe such rules and regulations relating to the Plan as it may deem advisable
to carry out the Plan, and to determine the terms, restrictions and provisions of each award or grant, as shall be requisite in
the judgment of the Board.
Any
shares of Common Stock subject to an award that expires, or its canceled, forfeited or terminated without issuance of the full
number of shares of Common Stock to which the award related will again be available for issuance under the Plan.
Options
ISOs
may be granted only to Company employees. NSO awards may be made to Company employees and consultants. The exercise price of an
ISO may not be less than 100% of the fair market value of the Company’s Common Stock on the date of grant, except in the
case of an employee who is also a 10% shareholder of the Company, in which case, the exercise price must be at least 110% of the
fair market value of the Common Stock on the date of grant. The exercise price of an NSO may not be less than 100% of the value
of the Common Stock on the date of grant, except in certain limited circumstances. The term of an ISO may not exceed ten years
from the date of grant, except grants made to an employee who is also a 10% shareholder may not exceed five years from the date
of grant. The term of an NSO will be determined by the Board, but will not be exercisable after ten years from the date of grant.
Exercise price payment terms and forms of payment, transferability, vesting generally and in the event of death or disability,
extensions and similar matters of each option award will be determined by the Board at the time of grant.
SARs
A
SAR is an award that allows the recipient, upon exercise, to receive in cash or shares an amount equal to the appreciation in
the Company’s Common Stock over a specified period of time established by the Board,
provided however
, that no SAR
will be exercisable after the tenth anniversary of the date of grant. The Plan provides that SARs may be granted alone or in tandem
with an option. The exercise price, exercise and payment terms, vesting, and similar matters of each SAR award will be determined
by the Board at the time of grant.
Restricted
Awards
A
restricted award is an award of actual shares of Common Stock or of hypothetical common stock units (“RSUs”) having
a value equal to the fair market value of an identical number of shares of Common Stock. No shares of Common Stock will be issued
at the time an RSU is granted. At the time of grant of each restricted award, the Board will determine the applicable restriction
terms and conditions. During the restricted period, the Company generally will hold the restricted award until the restrictions
have been satisfied. Unless otherwise determined by the Board at the time of grant, during the restricted period the holder will
not have the right to sell, assign, transfer or otherwise dispose of, pledge or hypothecate as collateral for a loan or as security
for the performance of an obligation, the Common Stock underlying the award. Unless otherwise determined by the Board at the time
of grant, during the restricted period, the holder will generally have the rights and privileges of a shareholder of Common Stock
to vote and to receive dividends,
provided however
, that such dividends will be withheld by the Company for the holder’s
account until all restrictions have been satisfied. Unless otherwise determined by the Board, recipients of restricted awards
generally are not entitled to possession of the Common Stock underlying the restricted award until such time as all restrictions
have been satisfied. Upon satisfaction of the restrictions, the Company will deliver to the holder of a restricted stock award
the Common Stock underlying such award, along with any dividends awarded on such Common Stock during the restricted periods, without
charge,
provided however
, that if explicitly provided in the RSU award agreement, the Board may, in its sole discretion,
elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock.
Award
Limits
Subject
to adjustment upon changes in the Company’s Common Stock, in the event of a Change in Control, all outstanding Options and
Stock Appreciation Rights will become immediately exercisable with respect to 100% of the shares subject to such Options or Stock
Appreciation Rights, and/or the Restricted Period will expire immediately with respect to 100% of the outstanding shares of Restricted
Stock or Restricted Stock Units.
Acceleration
in the Event of a Change of Control
Unless
otherwise provided in the award agreement, in the event of a change in control of the Company all outstanding options and SARs
will become immediately exercisable with respect to 100% of the Common Stock underlying such options or SARs, and or the restricted
period associated with any restricted award will expire immediately with respect to 100% of the shares of Common Stock underlying
the restricted award. In the event of a change in control, the Board may, in its discretion and upon 10 days advance notice to
the affected persons, cancel any outstanding awards and pay the holder thereof, in cash or Common Stock, or any combination thereof,
the value of such award based on the price per share of Common Stock received or to be received by other shareholders of the Company
in the change of control event. In the case of options or SARs with an exercise price that equals or exceeds the price paid for
a share of Common Stock in connection with a change in control, the Board may cancel the option or SAR without the payment of
consideration therefor.
U.S.
Federal Income Tax Consequences
The
following is a summary of the effects of U.S. federal income taxation on the Plan participants and the Company. This summary does
not discuss the income tax laws of any other jurisdiction in which the recipient of the award may reside. (“Code”
is the Internal Revenue Code of 1986, as amended.)
ISOs
.
There
generally are no federal ordinary income tax consequences to the participant by reason of the grant of exercise of an ISO. However,
the exercise of an ISO may increase the participant’s alternative minimum tax liability, if any. The excess, if any, of
the fair market value of the ISO shares on the date of exercise over the exercise price is an adjustment to income for purposes
of alternative minimum tax. Alternative minimum taxable income is determined by adjusting regular taxable income for certain items,
increasing that income by certain tax preference items and reducing this amount by the applicable exemption amount.
The
participant will recognize long-term capital gain or loss on the sale of the Common Stock acquired on the exercise of the ISO
if the sale occurs at least two years after the grant date and more than one year after the exercise date and the holder has been
an employee at all times beginning with the grant date and ending three months before the exercise date. If the sale occurs earlier
than the expiration of these holding periods, then the participant will recognize ordinary income equal to the lesser of the difference
between the exercise price of the option and the fair market value of the shares of Common Stock on the exercise date or the difference
between the sales price and the exercise price. Any additional gain on the sale will be capital gain. The Company can deduct the
amount, if any, that the participant recognizes as ordinary income.
NSOs
and SARs
.
There
is no tax consequence to the participant at the time of grant of an NSO or an SAR. Upon exercise, the excess, of the fair market
value of the shares of Common Stock over the exercise price will be treated as ordinary income. Any gain or loss realized on the
sale of the shares of Common Stock will be treated as a capital gain or loss. The Company may deduct the amount that the participant
recognizes as ordinary income.
Restricted
Stock
.
No
taxes are due on the grant of restricted stock. The fair market value of the shares of Common Stock subject to the award is taxable
as ordinary income when no longer subject to a “substantial risk of forfeiture” (i.e., when the shares become vested
or transferable). Unless an election pursuant to Code Section 83(b) is made (subjecting the value of the shares on the award date
to current income tax), income tax is paid by the participant on the value of the shares of Common Stock at ordinary rates when
the restrictions lapse and the Company will be entitled to a corresponding deduction at that time. Any gain or loss realized on
the sale of the shares of Common Stock will be treated as a capital gain or loss.
RSUs
.
No
taxes are due upon the grant of the award. The fair market value of the shares of Common Stock subject to the award is taxable
to the participant as ordinary income when the Common Stock is distributed to the participant. The Company can deduct the amount
that the participant recognizes as ordinary income.
Section
280G
.
Under
certain circumstances, accelerated vesting, exercise or payment of awards under the Plan in connection with a “change of
control” may be deemed an “excess parachute payment” for purposes of the golden parachute payment provisions
of Code Section 280G. To the extent it is so considered, the holder would be subject to an excise tax equal to 20% of the amount
of the excess parachute payment, and the Company would be denied a tax deduction for the excess parachute payment.
Section
409A
.
RSU
awards, the receipt of which may be deferred beyond the vesting dates, are subject to Code Section 409A. If Section 409A is violated,
deferred amounts will be subject to income tax immediately and to penalties equal to (i) 20% of the amount deferred and (ii) interest
at a specified rate on the underpayment of tax that would have occurred if the amount had been taxed in the year it was first
deferred.
Section
83(b)
.
If
a Section 83(b) election is filed by the recipient with the Internal Revenue Service within 30 days after the date of grant of
a restricted stock award, then the recipient will recognize ordinary income and the holding period will commence as of the date
of grant. The amount of ordinary income recognized by the recipient will equal the excess of the fair market value of the shares
of Common Stock underlying the restricted stock award as of the date of grant over the amount paid by the recipient for the restricted
stock award. The Company will be entitled to a deduction in a like amount. If such election is made and the recipient thereafter
forfeits the restricted stock award, the recipient may be entitled to a capital loss.
Miscellaneous
Rules
.
Special
rules will apply in cases where a recipient of an award pays the exercise or purchase price of the award or any applicable withholding
tax obligations under the Plan by delivering previously owned shares of Common Stock or by reducing the number of shares Common
Stock otherwise issuable pursuant to the award. The surrender or withholding of such shares of Common Stock will in certain circumstances
result in the recognition of income with respect to such shares or a carry-over basis in the shares acquired and may constitute
a disqualifying disposition with respect to ISO shares.
Changes
to the Plan
The
Plan may be terminated or amended at any time by the Board, but no amendment increasing the maximum number of shares for which
options may be granted (except to reflect a stock split, stock dividend or other distributions), reducing the option price of
outstanding options, extending the period during which options may be granted, otherwise materially increasing the benefits accruing
to optionees or changing the class of persons eligible to be optionees shall be made without first obtaining approval by a majority
of the Company’s stockholders. No termination or amendment of the Plan shall adversely affect any right previously acquired
by the grantee or other beneficiary under the Plan.
The
foregoing description of the Plan is only a summary of the Plan and is qualified in its entirety by reference to the Vycor Medical,
Inc. 2018 Stock Incentive Plan.
OTHER
MATTERS
The
Board knows of no other matters other than those described in this Information Statement which have been approved or considered
by the holders of a majority of the shares of the Company’s voting stock.
IF
YOU HAVE ANY QUESTIONS REGARDING THIS INFORMATION STATEMENT, PLEASE CONTACT
:
Robert
L. B. Diener
Law
Offices of Robert Diener
41
Ulua Place
Haiku,
HI 96708
Telephone:
(808) 573-6163
BY
ORDER OF THE BOARD OF DIRECTORS OF VYCOR MEDICAL, INC.
EXHIBIT
A
CERTIFICATE
OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VYCOR
MEDICAL, INC.
The
corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST:
That at a meeting of the Board of Directors of Vycor Medical, Inc. held on February 9th, 2018, the Directors approved the following
resolution:
RESOLVED,
that the Certificate of Incorporation of this corporation be amended by changing ARTICLE FOURTH, Subparagraph (a) to read as follows:
(a)
Authorized Capital.
The total number of shares of all classes of stock which the Corporation shall have authority to issue
is 65,000,000, of which 55,000,000 shares, par value of $0.0001 shall be designated as Common Stock (“Common Stock”),
and 10,000,000 shares, par value of S0.0001, shall be designated as Preferred Stock (“Preferred Stock”).
The
effective date of this Amendment (“Effective Date”) shall be March __, 2018. From and after the Effective Date, the
amount of capital represented by the Common Stock immediately after the Effective Date shall be the same as the amount of capital
represented by such shares immediately prior to the Effective Date.
SECOND:
Pursuant to Delaware General Corporation Laws Section 228, a consent in writing, setting forth the action so taken, was signed
by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were present.
THIRD:
That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN
WITNESS WHEREOF, said corporation has caused this certificate to be signed this ___ day of April, 2018.
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By:
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/s/
Peter C. Zachariou
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Authorized Officer
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Title:
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Chief Executive
Officer
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Name:
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Peter C. Zachariou
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EXHIBIT
B
Vycor
Medical, Inc.
2018
Stock Incentive Plan
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1.
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Establishment
and Purpose
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Vycor
Medical, Inc. (the “Company”), is establishing this 2018 Stock Incentive Plan (the “Plan”) to:
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attract
and retain high-quality employees;
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motivate
participants to achieve long-term Company goals; and
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align
participants’ interests with those of the Company’s other stockholders.
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The
Plan is effective as of February 13, 2018, subject to approval by the Company’s stockholders within 12 months of the adoption
date. The Company will not grant any options under this Plan on or after the date 10 years after the Plan is approved by the Company’s
Board of Directors (the “Board”)
Employees,
officers, directors, and consultants of the Company and its affiliates may be eligible to participate in the Plan. Payment of
a director’s fee does not render a director an “employee” under this plan. The specific stock options, stock
appreciation rights, and stock awards (collectively, “Awards”) available to each class of participants are described
in Sections 5, 6, and 7.
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3.1
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General.
The Board will have plenary authority as administrator of the Plan, and it may grant Awards under this Plan to eligible
individuals listed in Section 2. The administrator may determine terms for Awards under this Plan that are not specifically
prohibited by the Plan or by applicable law. If the Board delegates this authority to an administrator, then the Board will
reserve the right to reverse any decision made by the administrator. The administrator may grant an Award to a person who
is not an eligible individual if the grant is conditioned on the person becoming an eligible individual before the Company
grants the Award. If the administrator grants an Award to an individual under this Plan, then that individual remains eligible
to receive other Awards from the Company.
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|
|
|
|
3.2
|
Administrator.
The Board will be the default administrator of the Plan. The Plan may be administered by different committees of the Board
with respect to different groups of eligible individuals. The Board may adopt administrative rules governing the Plan. The
Board may also interpret the Plan and any Award issued under it.
|
|
|
3.3
|
Alternative
or Substitute Awards.
The Company may grant Awards as alternatives or substitutes for outstanding Awards under the Plan
or any other plan or arrangement of the Company or its affiliates. This provision applies to a plan or arrangement of an entity
acquired by the Company or its affiliates. Award terms need not be the same with respect to each awardee.
|
|
|
|
|
|
|
3.4
|
Authority.
The administrator is authorized to do the following under this Plan:
|
|
|
(A)
|
approve
eligible individuals to receive Awards;
|
|
|
|
|
|
|
(B)
|
determine
the terms for Awards granted, to include:
|
|
|
(1)
|
option
price;
|
|
|
|
|
|
|
(2)
|
vesting
schedule;
|
|
|
|
|
|
|
(3)
|
vesting
acceleration or forfeiture waiver; and
|
|
|
|
|
|
|
(4)
|
transfer
restrictions;
|
|
|
(C)
|
determine
the number of shares of stock covered with each Award granted;
|
|
|
|
|
|
|
(D)
|
approve
forms of agreement;
|
|
|
|
|
|
|
(E)
|
determine
when stock and other amounts payable under an Award will be deferred;
|
|
|
|
|
|
|
(F)
|
determine
the fair market value of shares underlying a stock option; and
|
|
|
|
|
|
|
(G)
|
determine
the consideration the Company will receive for any stock award granted under Section 7.
|
|
|
3.5
|
Delegation.
The Board may delegate its administration powers and duties to a director, committee of the Board, or any other person
or group. The Board may revoke a delegation at any time. The administrator may authorize a director or officer of the Company
to execute and deliver documents on behalf of the administrator.
|
|
|
|
|
|
|
3.6
|
Binding
Effect.
The administrator has the sole discretion to make determinations concerning the grant of an Award. The administrator’s
decisions will be final and binding on all persons (including the Company and Plan participants) unless the Board exercises
its power to reverse the administrator’s decision.
|
|
4.
|
Stock
Governed by the Plan
|
|
|
4.1
|
Stock
Pool.
The Company may issue an aggregate number of shares under the Plan that constitutes 10% or less of the outstanding
common shares on a fully-diluted basis immediately after the Board adopts this Plan.
|
|
|
(A)
|
Rolling
Provision.
On January 1 of each calendar year, commencing with the year 2019, the maximum number of shares covered by
the Plan will automatically increase to a number constituting 10% of the Company common shares then outstanding, on a fully-diluted
basis.
|
.
|
|
4.2
|
Effect
of Non-Delivery.
Any shares underlying an Award that are not delivered because of the following will not be deemed delivered
for determining the maximum number of shares available for delivery under the Plan:
|
|
|
(A)
|
an
Award is expired, canceled, forfeited, or otherwise terminated; or
|
|
|
|
|
|
|
(B)
|
an
Award is settled in cash or used to satisfy the applicable tax withholding obligation.
|
|
|
4.3
|
Change
in Capitalization or Organization.
If the Company changes its capital structure or organization, then the administrator
may make the following adjustments to the Plan that equitably reflect the change:
|
|
|
(A)
|
the
number and kind of shares that may be delivered under the Plan;
|
|
|
|
|
|
|
(B)
|
the
rolling provision in Section 4.1(A);
|
|
|
|
|
|
|
(C)
|
the
number and kind of shares subject to outstanding Awards;
|
|
|
|
|
|
|
(D)
|
the
exercise price of outstanding stock options and stock appreciation rights; and
|
|
|
|
|
|
|
(E)
|
other
characteristics of the Awards it determines appropriate in its sole discretion.
|
|
|
5.1
|
General.
The Plan administrator may grant stock options alone or in addition to other Awards granted under the Plan. The administrator
may grant two types of stock options: Incentive Stock Options (ISOs) and Non-Statutory Stock Options (NSOs). These options
may be granted with or without the stock appreciation rights defined in Section 6.
|
|
|
(A)
|
Incentive
Stock Options.
ISOs granted under this plan must comply with the provisions of Internal Revenue Code (I.R.C.) § 422(b).
The administrator may only grant ISOs to an officer or employee of the Company or its affiliates. The administrator may only
grant ISOs within 10 years from the date the Plan is adopted, or the date the Plan is approved by the Company’s stockholders,
whichever is earlier.
|
|
|
|
|
|
|
(B)
|
Non-Statutory
Stock Options.
A NSO is a stock option that is not designated as an ISO or does not satisfy the requirements of I.R.C.
§ 422(b). The Company may grant NSOs to any director or consultant of the Company or its affiliates.
|
|
|
5.2
|
Form
of Agreement.
A stock option must be evidenced by a written option agreement in a form approved by the administrator.
An option agreement must indicate whether it is for an ISO or a NSO. The administrator will determine the stock option’s
date of grant.
|
|
|
|
|
|
|
5.3
|
Safe
Harbor for ISOs.
The Board and the administrator may not interpret or amend a term concerning ISOs under this Plan in
a way that disqualifies the Plan (or any ISO granted under the Plan) under I.R.C. § 422. The Board and administrator
do not have authority to exercise discretion in a way that would disqualify the Plan (or any ISO granted under the Plan) under
I.R.C. § 422.
|
|
|
|
|
|
|
5.4
|
Terms.
Stock options granted under this Section 5 will be subject to the following terms and any additional terms the administrator
deems appropriate.
|
|
|
(A)
|
Exercise
Price.
The administrator will determine the exercise price per share under a stock option. The exercise price per share
must be equal to or greater than the fair market value per share on the date the stock option is granted.
|
|
|
(1)
|
Ten-Percent
Holders.
If the administrator intends to grant an ISO to an individual who possesses more than 10 percent of the total
combined voting power of all classes of stock of the Company or its affiliates, then the exercise price must be equal to or
greater than 110% of the fair market value per share.
|
|
|
(B)
|
Shares.
Each option agreement must state the number of shares underlying the option.
|
|
|
|
|
|
|
(C)
|
Term.
An ISO issued under this Plan cannot be exercised more than 10 years after the date it is granted. An ISO issued under
this Plan to a ten-percent holder (as defined in Section 5.4(A)(1)) cannot be exercised more than 5 years after the date it
is granted.
|
|
|
(D)
|
Exercisability.
The administrator will determine terms under which stock options may be exercised.
|
|
|
(1)
|
Installments.
If the administrator provides that a stock option is exercisable only in installments, then the administrator may waive
those provisions at its discretion.
|
|
|
|
|
|
|
(2)
|
Acceleration.
The administrator may accelerate the exercisability of any stock option
,
but it may not accelerate the exercise
date of an installment of any ISO if doing so would violate the annual exercisability limitation under Section 5.4(F) and
I.R.C. § 422(d).
|
|
|
|
|
|
|
(3)
|
Early
Exercise.
The award agreement may include a provision allowing the awardee to exercise any part or all of a NSO before
it is fully vested. Any unvested shares received by the awardee will be subject to a repurchase right in favor of the Company
or its affiliates, and to any other restriction the administrator deems appropriate.
|
|
|
(E)
|
Method
of Exercise.
An optionee may exercise a stock option during the option term by giving written notice of exercise to the
Company (or its designee), and by complying with any other condition(s) set forth in the option agreement. The written notice
of exercise must specify the number of shares subject to the stock option that the optionee wishes to purchase. Only the optionee
(or optionee’s legal representative) may exercise a stock option during the optionee’s lifetime.
|
|
|
(1)
|
Method
of Payment.
An optionee must pay in full for the shares underlying a stock option by any of the following methods (unless
the administrator specifically designates the option to be eligible for “cashless exercise”):
|
|
|
(a)
|
in
cash (by certified check, bank check, or any other instrument the Company deems acceptable);
|
|
|
|
|
|
|
(b)
|
in
unrestricted Company common stock already owned by the optionee and held for at least 6 months (valued at the fair market
value of the stock on the date the stock option is exercised);
|
|
|
|
|
|
|
(c)
|
in
restricted stock subject to a stock award under Section 7 when the optionee is exercising a NSO;
|
|
|
(d)
|
by
certifying ownership of Company common stock owned by the optionee to the administrator’s satisfaction for later delivery
to the Company (on a date specified by the Company);
|
|
|
|
|
|
|
(e)
|
by
irrevocably authorizing a third party to sell Company common stock (or a sufficient portion of the stock) acquired upon exercise
of the stock option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and
any resulting tax withholding resulting; or
|
|
|
|
|
|
|
(f)
|
by
any combination of cash and one or more of the methods specified in clauses (b), (c), (d), and (e).
|
|
|
(2)
|
Accounting
Restriction.
The administrator must only accept payment on exercise of an ISO as permitted by I.R.C. § 422. The administrator
must not accept a form of payment that would cause the Company to recognize a compensation expense (or additional compensation
expense) concerning the stock option.
|
|
|
|
|
|
|
(3)
|
Payment
with Restricted Stock.
If the optionee pays the exercise price of an NSO with restricted stock, then the administrator
may subject an equal number of shares transferred to the optionee to same restriction as those tendered by the optionee.
|
|
|
|
|
|
|
(4)
|
Issuance.
The Company will not issue shares upon exercise of a stock option until the optionee pays in full for the shares. The
Company will have a reasonable time to issue the shares for which the stock option was exercised, and the optionee will not
be treated as a stockholder until the shares are issued. The Company will not make an adjustment for cash dividends or other
rights for which the record date is prior to the date the shares are recorded as issued and transferred in the Company’s
official stockholder records.
|
|
|
(F)
|
Limitation
on Yearly Exercise for ISOs.
The Company shall not permit the issuance of ISO’s which would cause the aggregate
fair market value (under this or any other ISO plan of the Company or an affiliate, determined at the time each ISO is granted
and based on the value of the shares underlying the ISO) of such shares exercisable for the first time by the optionee in
any calendar year to exceed $100,000.
|
|
|
(G)
|
Transfer
Restrictions.
|
|
|
(1)
|
NSOs.
An optionee may transfer an NSO as a gift to his or her family member, but no further transfer is allowed other than by
will or the laws of descent and distribution. An NSO is not otherwise transferable except by will or the laws of descent and
distribution.
|
|
|
|
|
|
|
(2)
|
ISOs.
An ISO will not be transferable except as provided in I.R.C. § 422.
|
|
|
(H)
|
Termination
by Death.
If an optionee’s employment or service terminates by death of the optionee, then the optionee’s
estate may exercise any stock option that was exercisable on the date of death.
|
|
|
(1)
|
Periodic
Vesting.
If the optionee’s exercise rights vested periodically, then the optionee’s estate may exercise a
pro-rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date
had the optionee not died. The proration will be based on the number of days accrued in the current vesting period prior to
the optionee’s date of death.
|
|
|
|
|
|
|
(2)
|
Timing.
If the optionee’s estate wishes to exercise the stock option, then the estate must do so within one year after the
optionee’s death (or, if earlier, within the originally prescribed term of the stock option).
|
|
|
|
|
|
|
(3)
|
Loss
of ISO Status.
If an optionee’s estate exercises an ISO after the exercise periods expires under I.R.C. § 422,
then that ISO will be treated as an NSO.
|
|
|
(I)
|
Termination
Due to Disability.
If an optionee’s employment or service terminates because the optionee becomes disabled (as defined
in I.R.C. § 22(e)(3)), then the optionee may exercise any stock option that was exercisable on the date of disability.
|
|
|
(1)
|
Periodic
Vesting.
If the optionee’s exercise rights vested periodically, then the optionee may exercise a pro-rata portion
through the date of disability of any additional vesting rights that would have accrued on the next vesting date had the optionee
not become disabled. The proration will be based on the number of days accrued in the current vesting period prior to the
optionee’s date of disability.
|
|
|
|
|
|
|
(2)
|
Timing.
A disabled optionee must exercise his or her stock options within one year after the optionee’s termination due
to disability (or, if earlier, within the originally prescribed term of the stock option).
|
|
|
(3)
|
Loss
of ISO Status.
If an optionee exercises an ISO after the exercise period expires under I.R.C. § 422, then that ISO
will be treated as an NSO.
|
|
|
|
|
|
|
(4)
|
Exclusion.
This Section 5.4 (J) does not apply to disabilities incurred due to willfully self-inflicted injury, willfully self-induced
sickness, or injury incurred while participating in a criminal offense.
|
|
|
|
|
|
|
(5)
|
Conflict
with Employment or Service Agreement.
If the definition of “disabled” under I.R.C. § 22(e)(3) differs
from the definition of disabled under the optionee’s employment or service agreement, then the governing definition
will depend on the nature of the stock option as follows:
|
|
|
(a)
|
ISO
.
The definition of “disabled” under I.R.C. § 22(e)(3) will govern.
|
|
|
|
|
|
|
(b)
|
NSO.
The definition under the employment or service agreement will govern.
|
|
|
(6)
|
Determination
of Disability.
The administrator will determine whether the optionee is disabled and the date of disability. If a different
procedure exists in another agreement between the Company and optionee, then the administrator must follow that procedure
instead of this Section 5.4(J)(6). The optionee is entitled to an examination (at the Company’s expense) by a physician
selected by the administrator. A determination of disability under this Plan is not an admission of disability for any other
purpose.
|
|
|
(J)
|
Termination
for Cause.
If an optionee’s employment or service terminates for cause, then the Company will cancel all of the
optionee’s outstanding and unexercised stock options. The cancellation will be effective when the Company delivers the
notice of termination for cause to the optionee.
|
|
|
(1)
|
Definition
of “Cause”.
The term “cause” under this Plan includes:
|
|
|
(a)
|
dishonesty
toward the Company or its affiliates;
|
|
|
|
|
|
|
(b)
|
substantial
malfeasance or non-feasance of duty;
|
|
|
|
|
|
|
(c)
|
unauthorized
disclosure of confidential information;
|
|
|
|
|
|
|
(d)
|
optionee’s
breach of any provision of any written agreement between the optionee and the Company or its affiliates; and
|
|
|
|
|
|
|
(e)
|
conduct
substantially prejudicial to the Company’s business.
|
|
|
(2)
|
Conflict
with Employment or Service Agreement.
The definition of “cause” under an employment or services agreement
between the optionee and the Company in effect at the time of termination will govern if that definition conflicts with the
definition of “cause” under this Plan.
|
|
|
|
|
|
|
(3)
|
Determination.
The administrator will determine whether the optionee’s termination satisfies the definition of “cause”
under this Plan.
|
|
|
|
|
|
|
(4)
|
Scope.
Cause is not limited to events that occurred prior to an optionee’s termination of employment or services. The administrator
may make a finding of cause before or after the Company terminates the optionee’s employment or services.
|
|
|
|
|
|
|
(5)
|
Subsequent
Determination of Cause.
If, after an optionee is terminated, the administrator determines that the optionee engaged in
behavior constituting cause (before or after termination), then the administrator will immediately cancel any unvested Awards,
and any vested Awards will cease to be exercisable.
|
|
|
(K)
|
Other
Termination.
If the Company terminates an optionee’s employment or service for a reason other than death, disability,
or cause, then the optionee may exercise any vested stock option for up to three months after termination, or until the expiration
date of the stock option, whichever is earlier.
|
|
|
(1)
|
Death
or Disability After Termination.
This Section 5.4(K), and not Sections 5.4 (H) and 5(I), will apply to an optionee who
dies or becomes disabled after the Company terminates the optionee’s employment or service. If an optionee dies or becomes
disabled within three months after the termination, the optionee or the optionee’s estate may exercise the stock option
within one year after the optionee’s termination, but in not after the stock option term expires.
|
|
|
|
|
|
|
(2)
|
Temporary
Disability.
An optionee who is absent from work with the Company or its affiliates because of temporary disability (any
disability other than a permanent and total disability), or who is on leave of absence, will not be deemed to have terminated
his or her employment or service with the Company or its affiliates unless the administrator expressly finds otherwise after
the optionee is given notice and a hearing.
|
|
|
(3)
|
Change
in Status.
A change of an optionee’s status within the Company or its affiliates will not affect stock options granted
under the Plan, so long as the optionee continues to be an officer, employee, director, or consultant of the Company or its
affiliates. This paragraph is subject to applicable law and the option agreement governing the stock options.
|
|
|
|
|
|
|
(4)
|
Loss
of ISO Status.
If the Company terminates an optionee for a reason other than death, disability, or cause, and the optionee
subsequently exercises an ISO after the exercise period expires under I.R.C. § 422, then that ISO will be treated as
an NSO.
|
|
6.
|
Stock
Appreciation Rights
|
|
|
6.1
|
General.
The administrator may grant stock appreciation rights on a stand-alone basis or in conjunction with a stock option granted
under the Plan. Stock appreciation rights may be granted concurrently with an NSO, or at some point after the NSO is granted.
Stock appreciation rights that are coupled with an ISO must be granted concurrently with the ISO. A stock appreciation right
will expire on a date determined by the administrator or, if coupled with a stock option, when the related stock option is
exercised or expires.
|
|
|
|
|
|
|
6.2
|
Exercise.
An awardee may exercise a stock appreciation right as directed by the administrator under this Section 6. If an awardee
exercises a stock appreciation right granted in conjunction with a stock option, then the awardee must surrender the corresponding
portion of the stock option under procedures established by the administrator. When an awardee exercises a stock appreciation
right and surrenders the corresponding stock option, the awardee will be entitled to receive an amount determined in the manner
prescribed in this Section 6. Surrendered stock options that were coupled with a stock appreciation right will no longer be
exercisable by the awardee to the extent of the stock appreciation right exercised.
|
|
|
|
|
|
|
6.3
|
Terms.
The administrator is authorized to determine terms and conditions for stock appreciation rights, including the following:
|
|
|
(A)
|
Exercisability.
The administrator will determine when and how an awardee may exercise his or her stand-alone stock appreciation rights.
A stock appreciation right granted in conjunction with a stock option will only be exercisable when the related stock option
is exercisable under Section 5 and this Section 6.
|
|
|
|
|
|
|
(B)
|
Value.
An awardee who exercises a stock appreciation right is entitled to receive an amount in cash, common stock, or both. The
value of the stock appreciation right will be calculated by subtracting the grant price per share from the fair market value
per share at exercise, multiplied by the number of shares with respect to which stock appreciation rights were exercised.
The grant price per share will be determined by the administrator for stand-alone rights, and under the related stock option
grant agreement for stock appreciation rights that are coupled with a stock option.
|
|
|
|
|
|
|
|
The
administrator will retain the right to determine the form of payment.
|
|
|
|
|
|
|
(C)
|
Transferability.
Stock appreciation rights are only transferable under the conditions described in Section 5(G)(1) of the Plan.
|
|
|
7.1
|
General.
The administrator may issue Company common stock (without any intervening options) to any person who qualifies as an eligible
individual under Section 2 of the Plan.
|
|
|
|
|
|
|
7.2
|
Authority.
The administrator is authorized to establish terms upon which the Company will issue Company common stock to eligible
individuals under the Plan. These terms may include performance requirements, restrictions, forfeiture provisions, contingencies,
and other limitations.
|
|
|
|
|
|
|
7.3
|
Vesting.
The administrator may issue an award of Company common stock under any of the following vesting schedules:
|
|
|
(A)
|
fully
vested upon issuance;
|
|
|
|
|
|
|
(B)
|
vested
in installments over the awardee’s employment or service to the Company; or
|
|
|
|
|
|
|
(C)
|
vested
when the awardee attains specified performance objectives; or
|
|
|
7.4
|
Stock
Grant Agreement.
Every stock award under this Section 7 must be evidenced by a written stock grant agreement signed by
the administrator on behalf of the Company. The administrator will determine the form of agreement and terms of each stock
grant agreement. At a minimum, the stock grant agreement must state the number of shares granted under the agreement.
|
|
|
|
|
|
|
7.5
|
Certificates.
The administrator may record shares issued under Section 7 of this Plan through book-entry registration by issuing stock
certificates. Stock certificates issued under Section 7 may bear appropriate legends referring to the terms and restrictions
from the applicable stock grant agreement. The administrator may require the Company to hold stock certificates under Section
7 until the shares become unrestricted. Under such circumstances, the administrator may also require the awardee to deliver
a proxy to the Company.
|
|
|
7.6
|
Consideration.
The administrator may issue a stock award in exchange for consideration it deems appropriate, to include:
|
|
|
(A)
|
cash
or cash equivalents;
|
|
|
|
|
|
|
(B)
|
past
services rendered to the Company or its affiliates; or
|
|
|
|
|
|
|
(C)
|
future
services to the Company or its affiliates.
|
|
|
8.1
|
Scope.
If the Company experiences a change in control (as defined in this Section 8), then this Section 8 of the Plan will apply
to any stock option, stock appreciation right, or stock award issued under the Plan. If a provision of Section 8 conflicts
with another provision of the Plan (or applicable grant agreement), then this Section 8 will govern as of the date the change
in control is carried out.
|
|
|
|
|
|
|
8.2
|
Effect.
If the Company experiences a change in control under this Section 8, then the following will apply:
|
|
|
(A)
|
all
stock options outstanding and stock appreciation rights outstanding as of the change of control date will become fully exercisable
and vested to the full extent of the original grant;
|
|
|
|
|
|
|
(B)
|
the
restrictions applicable to any outstanding stock award will lapse, and the Company common stock subject to the applicable
stock award grant will become unrestricted, fully vested, and transferable to the full extent of the original grant; and
|
|
|
|
|
|
|
(C)
|
all
the Company’s outstanding repurchase rights concerning any outstanding Awards will terminate.
|
|
|
8.3
|
Merger
or Reorganization Agreement.
Outstanding Awards will be subject to the merger or reorganization agreement governing the
change in control, which must provide for:
|
|
|
(A)
|
continuation
of the Company’s outstanding Awards, if the Company is a surviving entity;
|
|
|
|
|
|
|
(B)
|
the
surviving corporation’s assumption of the outstanding Awards;
|
|
|
|
|
|
|
(C)
|
the
surviving corporation’s substitution of equivalent awards for the outstanding Awards; or
|
|
|
|
|
|
|
(D)
|
cash
settlement of each share of Company common stock subject to an outstanding Award for the change in control price determined
under Section 8.4 (less, if applicable, the per share exercise price). The outstanding Award will terminate if the per share
exercise price equals or exceeds the change in control price.
|
|
|
8.4
|
Change
in Control Price.
The administrator will establish the change of control price using the following formula:
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(A)
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Publicly
Traded Shares.
The highest reported sales price, regular way, of a share of Company common stock in any transaction reported
on any securities exchange or listing service on which the shares are listed during the 60-day period prior to and including
the change in control date.
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(B)
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Non-Publicly
Traded Shares.
The administrator will determine the fair market value of the shares.
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(C)
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Tender
Offer, Exchange, Merger, or Acquisition.
The highest price per share of Company common stock paid in the tender offer,
exchange, merger, or acquisition.
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The
Board retains sole discretion to determine the value of securities or other non-cash consideration offered in any transaction
under this Section 8.
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8.5
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Definition.
The following events will constitute a change of control under this Plan:
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(A)
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Change
in Shareholder Control.
An acquisition by an individual, entity, or group (as defined in Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934) (a “Person”) of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of 50% or more of either:
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(1)
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the
then outstanding shares of common stock of the Company; or
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(2)
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the
combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election
of directors.
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The
following types of acquisitions will not constitute a change of control under this Section 8.4(A):
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(1)
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directly
from the Company, other than an acquisition through exercise of a conversion right;
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(2)
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by
the Company;
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(3)
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by
an employee benefit plan sponsored by the Company or its affiliates; or
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(4)
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by
any Person through a merger or reorganization under Section 8.4 (C).
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(B)
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Change
in Board Control.
A change in Board composition within 24 consecutive months where the directors who served on the Board
prior to the change no longer constitute a majority of the Board after the change.
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(1)
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Inclusion.
An individual who becomes a Board member through a majority vote (after the change in Board composition) of the directors
who served on the board before the change in composition will be treated as if he or she served on the Board before the change
in composition.
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(2)
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Exclusion.
Any individual who becomes a director after an actual or threatened election contest (as those terms are used in Rule
14a-11 of Regulation 14A under the Exchange Act) will not be treated as if he or she served on the Board before the change
in composition.
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(C)
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Merger.
A merger or consolidation in which the Company is not the surviving entity.
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(D)
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Liquidation.
The sale, transfer, or other disposition of all or substantially all of the Company’s assets (including the capital
stock of the Company’s subsidiary corporations).
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(E)
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Reverse
Merger.
A reverse merger in which the Company is the surviving entity, but in which securities possessing more than 50
percent of the total combined voting power of the Company’s outstanding securities are transferred to persons different
from those who held the securities immediately before the merger. The administrator may exercise discretion to determine whether
a transaction falls within the purview of this Section 8.4 (E).
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9.1
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Amendment,
Suspension, or Termination of the Plan.
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(A)
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Authority.
The Board may amend, suspend, or terminate the Plan at any time. The Company will obtain shareholder approval of any Plan
amendment as required by applicable law.
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(B)
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Effect
of Suspension or Termination.
The administrator may not grant any awards while the Plan is suspended or after it is terminated.
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(C)
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Outstanding
Awards.
Awards granted before the administrator amends, suspends, or terminates the Plan will not be affected by those
actions unless:
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(1)
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the
awardee and the administrator agree to the contrary in a writing signed by both parties; or
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(2)
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the
administrator determines that the amendment, suspension, or termination is necessary to comply with applicable law or to avoid
adverse accounting treatment.
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9.2
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Reservation
of Shares.
The Company will reserve a number of shares sufficient to satisfy the Plan’s requirements. The Company
will not be liable for failing to issue or sell shares under this Plan if the Company cannot obtain required authorization
from a regulatory body having jurisdiction over the lawful issuance or sale of the shares.
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9.3
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Issuance
of Shares.
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(A)
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Delivery.
The Company or its agents may deliver shares acquired under this Plan by any of the following means:
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(1)
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preparing
a certificate representing the shares; or
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(2)
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delivering
evidence of the book entry of the shares.
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This
Section 9.3 (A) is subject to the Company’s governing documents, the relevant award agreement, and applicable law.
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(B)
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Shareholder
Rights.
The awardee may not exercise any shareholder rights appurtenant to an award under this Plan until the Company
issues the shares (as evidenced by an appropriate book entry made by the Company or its transfer agent). The Company will
not make an adjustment for a dividend or other right for which the record date is prior to the date the shares are issued,
except as provided in Section 4.3 of the Plan.
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(C)
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No
Fractional Shares.
The Company will not be required to issue fractional shares acquired under this Plan. This Section
9.3 (C) will govern over any contrary provision in this Plan or an award agreement.
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9.4
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Not
an ERISA Plan or Deferred Compensation Plan.
The Plan is not a “Retirement Plan” or “Welfare Plan”
under the Employee Retirement Income Security Act of 1974, as amended. The Plan is not intended to provide for the deferral
of compensation under I.R.C. § 409A. Awards under the Plan will not be deemed compensation for purposes of computing
benefits or contributions under any Company or affiliate retirement plan, deferred compensation plan, or other benefit plan.
If this Section 9.4 conflicts with an applicable retirement plan, deferred compensation plan, or other benefits plan, then
the conflicting plan will govern over this Section 9.4.
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9.5
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I.R.C.
§ 409A Compliance.
The Company intends for Awards granted under this Plan to be exempt from I.R.C. § 409A. This
Plan and all Award agreements will be construed in favor of satisfying the requirements of I.R.C. § 409A. Awardees and
the Company are prohibited from accelerating or delaying payment under an Award in a manner not in compliance with I.R.C.
§ 409A.
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9.6
|
Tax
Treatment of Awards.
The Company does not warrant or guarantee tax treatment of Awards under the Plan. The Company or
its agents may provide awardees with information, but the Company and its agents cannot give tax advice. Awardees may not
information provided by the Company concerning the tax consequences of Awards. Awardees should consult with an independent
tax specialist concerning the purchase or disposition of shares under an Award. The Company and its agents will not be held
liable for any taxes, penalties, or other monetary amounts owed by an awardee or other person resulting from an exercise,
purchase, or payment under the Plan or the administration of the Plan.
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For
example, the administrator will determine the fair market value of its common stock under I.R.C. § 409A and grant options
at or above the fair market value on the date of grant so that the options are exempt from I.R.C. § 409A. However, the
Internal Revenue Service may challenge the fair market value determination and find that an option is subject to I.R.C. §
409A. If this were to happen, the awardee cannot make any claim against the administrator, the Board, the Company, or the
Company’s agents.
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9.7
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Information
to Awardee.
The Company will provide each awardee a copy of financial statements (as it generally provides to its shareholders)
during the term of an Option granted under the Plan. The Company will at least provide the information annually. The Company
can comply with this Section 9.7 of the Plan by complying with Rule 701 of the Securities Act of 1933 with respect to the
Plan. Any registered domestic partner shall be considered a “family member,” as that term is defined in Rule 701,
for purposes of compliance.
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9.8
|
Interpretation.
|
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(A)
|
Severability.
If a court of competent jurisdiction determines any provision of the Plan is illegal
or unenforceable, then that provision will be enforced to the fullest extent under the
law, and the other provisions will remain enforceable.
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(B)
|
No
Constraint on Corporate Action.
Nothing in this Plan will be construed to:
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(1)
|
limit
or otherwise affect the Company’s or its affiliate’s right to make adjustments, reclassifications, reorganizations,
or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all
or any part of its business or assets; or
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|
(2)
|
limit
the Company’s or its affiliates’ right to act in a way the entity deems necessary or appropriate.
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(C)
|
Choice
of Law.
The Plan is governed by Delaware law, without giving effect to any choice-of-law rule that would cause the application
of the laws of any other jurisdiction.
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The
Company’s secretary certifies that this document contains the Vycor Medical, Inc., 2018 Stock Incentive Plan adopted by
the Board on February 9, 2018.
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VYCOR
MEDICAL, INC.
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/s/
David Cantor
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By:
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David Cantor
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Title:
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President
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