25 Share Authorization. Subject to certain adjustments, as of January 1, 2021, the total number of shares of the Company’s common stock that have been reserved and may be issued pursuant to awards under the Incentive Plan is 203,000 shares. On January 1st of each year, the number of shares reserved for issuance under the Incentive Plan will automatically increase by 5% of the number of outstanding shares of common stock on such date pursuant to its Revised Evergreen Provision. Shares to be issued may be made available from authorized but unissued shares of common stock, shares of common stock held by the Company in its treasury, or shares of common stock purchased by the Company on the open market or otherwise. During the term of the Incentive Plan, the Company will at all times reserve and keep enough shares available to satisfy the requirements of the Incentive Plan. Administration. The administrator of the Incentive Plan (the “Administrator”) will be the Board of Directors, except to the extent the Board of Directors delegates its authority to a committee of the Board of Directors, which members shall be nonemployee directors as defined in Rule 16b-3 of the Exchange Act. The Board of Directors has designated the Compensation Committee of the Board of Directors as the Administrator. The Administrator will administer the Incentive Plan and may take appropriate actions with respect to the administration of the Incentive Plan, including, without limitation, determining the persons to whom awards are to be made, determining the type, size and terms of awards, amending any term or condition of any outstanding awards, interpreting the Incentive Plan, establishing and revising rules and regulations relating to the Incentive Plan and making any other determinations that it believes necessary for the administration of the Incentive Plan. Eligibility. Employees (including any employee who is also a director or an officer), consultants, and directors of the Company or its affiliates whose judgment, initiative and efforts contributed to or may be expected to contribute to the successful performance of the Company are eligible to participate in the Incentive Plan. The Administrator shall, in its sole discretion, select the employees, consultants, and directors who will participate in the Incentive Plan. As of April 18, 2022, the Company (including its affiliates) had approximately 27 employees and 5 non-employee directors who would be eligible for awards under the Incentive Plan. Financial Effect of Awards. The Company will receive no monetary consideration for the issuance of stock grant awards under the Incentive Plan, unless otherwise provided when granting such awards. The Company will receive no monetary consideration other than the exercise price for shares of common stock issued to participants upon the exercise of their stock options and the Company will receive no monetary consideration upon the exercise of stock appreciation rights. Stock Options. The Administrator may grant either incentive stock options qualifying under Section 422 of the Code or nonqualified stock options, provided that only employees of the Company and its subsidiaries (excluding subsidiaries that are not corporations) are eligible to receive incentive stock options. Stock options may not be granted with an exercise price less than 100% of the fair market value of a share of common stock on the date the stock option is granted. If an incentive stock option is granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary), the exercise price shall be at least 110% of the fair market value of a common share on the date of grant. The Administrator will determine the terms of each stock option at the time of grant. The maximum term of each option, the times at which each option will be exercisable, the vesting terms, and provisions requiring forfeiture of unexercised options at or following termination of employment or service generally are fixed by the Administrator, except that the Administrator may not grant stock options with a term exceeding 10 years. A stock option (or any part or installment thereof) may be exercised by giving written notice to the Company or its designee (in a form acceptable to the Administrator, which may include electronic notice), together with provision for payment of the aggregate purchase price for the shares of common stock as to which such option is being exercised, and upon compliance with any other condition(s) set forth in the applicable option agreement. Such written notice shall be signed by the person exercising the stock option (which signature may be provided electronically), shall state the number of shares of common stock with respect to which the stock option is being exercised and shall contain any representation required by the Incentive Plan or the option agreement. Payment of the exercise price for the shares of common stock as to which such option is being exercised shall be made (a) in United States dollars in cash or by check; (b) at the discretion of the Administrator, through delivery of shares of common stock held for at least six months (if required to avoid negative accounting treatment) having a fair market value equal as of the date of the exercise to the aggregate cash exercise price for the number of shares of common stock as to which the option is being exercised; (c) at the discretion of the Administrator, by having the Company retain from the shares otherwise issuable upon exercise of the option, a number of shares having a fair market value equal as of the date of exercise to the aggregate exercise price for the number of shares of common stock as to which the Option is being exercised; (d) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm and approved by the Administrator; (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above; or (f) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an incentive stock option as is permitted by Section 422 of the Code.
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