SCHEDULE 14C INFORMATION
Information
Statement Pursuant to Section 14(c) of
the
Securities Exchange Act of 1934 (Amendment No. )
|
Check
the appropriate box:
|
|
|
|
|
Preliminary
Information Statement
|
|
|
|
|
☐
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
|
|
|
|
|
☒
|
Definitive
Information Statement
|
|
|
|
YOUNGEVITY INTERNATIONAL, INC.
|
|
(Name
of Registrant as Specified in Its Charter) Commission File
Number:
|
|
Payment
of Filing Fee (Check the appropriate box):
|
|
|
|
☒
|
No fee
required
|
|
|
|
|
☐
|
Fee
computed on table below per Exchange Act Rules 14c-5(g)
and 0-11
|
|
|
|
|
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
(5)
|
Total
fee paid:
|
|
|
|
|
☐
|
Fee
paid previously with preliminary materials.
|
|
|
|
|
☐
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
|
|
|
|
|
|
(1)
|
Amount
Previously Paid:
|
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
|
(3)
|
Filing
Party:
|
|
|
(4)
|
Date
Filed:
|
Youngevity International, Inc.
2400 Boswell Road
Chula Vista, CA 91914
NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT
To the
Stockholders of Youngevity International, Inc.
This Information Statement is furnished to the stockholders of
Youngevity International, Inc., a Delaware corporation
(“YGYI”, the “Corporation”,
“we”, “our”, or “us”), in
connection with our prior receipt of approval by a written consent,
in lieu of a special meeting, of the holders of a majority of our
voting power of an amendment (the “Amendment”) to our
Amended and Restated 2012 Stock Option Plan (the “2012
Plan”), to increase the number of awards that we have
authority to grant from 4,000,000 to 9,000,000. The affirmative
vote of the holders of a majority of our voting power is required
to approve the Amendment. The Corporation has obtained the approval
of the Amendment by written consent of two (2) stockholders that
together are the record holders of shares of the
Corporation’s common stock, representing approximately 54.3%
of the voting power of the Corporation. The corporate action taken
by the written consent will become effective 20-days after the date
that this Information Statement is first mailed to our
stockholders. As a result, the Amendment cannot be effectuated
until 20-days after the mailing of this Information Statement. A
copy of the Amendment is attached to this Information Statement as
Exhibit
A
.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED TO NOT SEND
A PROXY.
Because the written consent of the holders of a
majority of our voting power satisfies all applicable stockholder
voting requirements, we are not asking for a proxy; please do not
send us one.
Only
stockholders of record at the close of business on January 11, 2019
shall be given a copy of the Information Statement. The date on
which this Information Statement will be sent to stockholders will
be on or about January 16, 2019.
The
accompanying Information Statement is for information purposes
only. Please read it carefully.
The
Information Statement serves as notice of the foregoing action
pursuant to the written consent in accordance with Section 228 of
the Delaware Law. The close of business on January 11, 2019 is the
record date (the “Record Date”) for the determination
of the holders of our common stock entitled to receive the
Information Statement. As of January 11, 2019, we had 50,000,000
shares of our common stock authorized and 25,760,708 shares of our
common stock outstanding and entitled to vote. Each share of our
common stock entitles the holder thereof to one vote on matters
submitted for approval to the holders of our common
stock.
By
Order of the Board
Very
truly yours,
YOUNGEVITY INTERNATIONAL, INC.
|
By:
|
/s/
David Briskie
|
|
|
|
Name:
|
David Briskie
|
|
|
|
Title:
|
President and Chief Financial Officer
|
|
January
16, 2019
Youngevity International, Inc.
2400 Boswell Road
Chula Vista, CA 91914
Telephone: (619) 934-3980
This
Information Statement is furnished to the stockholders of
Youngevity International, Inc., a Delaware corporation (the
“Corporation”), in connection with our prior receipt of
approval by a written consent, in lieu of a special meeting, of the
holders of a majority of our shares of voting stock (the
“Majority Stockholders”) of an amendment to our Amended
and Restated 2012 Stock Incentive Plan (the “2012
Plan”) to increase the number of awards that we have
authority to grant from 4,000,000 to 9,000,000 (the
“Amendment”). We obtained the approval of the Amendment
by written consent of the Majority Stockholders that represent
approximately 54.3% of the voting power of our
Corporation.
The
corporate action taken by the written consent will become effective
20-days after the date that this Information Statement is first
mailed to our stockholders. As a result, no awards will be issued
under the Amendment until 20-days after the mailing of this
Information Statement. A copy of the Amendment is attached to this
Information Statement as
Exhibit A
.
The
date on which this Information Statement will be sent to
stockholders will be on or about January 16, 2019, and this
Information Statement is being furnished to all holders of the
voting securities of the Corporation on record as of January 11,
2019 (the “Record Date”).
Our
Board of Directors, and the owners of a majority of our outstanding
voting securities, have unanimously adopted, ratified and approved
the proposed action by us. No other votes are required or
necessary.
Vote Required
A vote
by the holders of at least a majority of the Corporation’s
outstanding votes is required pursuant to our Bylaws and the
Delaware General Corporation Law (the “DGCL”) to effect
the Amendment. The Corporation’s Certificate of Incorporation
does not authorize cumulative voting. As of the record date, the
Corporation had 25,760,708 voting shares of common stock issued and
outstanding and 161,135 shares of Series A convertible preferred
stock issued and outstanding, 129,437 shares of Series B
convertible preferred stock issued and outstanding and no shares of
Series C convertible preferred stock issued and outstanding. The
Series A convertible preferred stock and the Series B convertible
preferred stock are each non-voting. 12,880,355 votes are required
to pass the Amendment. The consenting stockholders are entitled to
14,000,000 votes, which represents approximately 54.3% of the
issued and outstanding votes with respect to the
Corporation’s shares of common stock. The consenting
stockholders voted in favor of the Amendment described herein in a
written consent, dated January 10, 2019.
Interests of Certain Parties in the Matters to be Acted
Upon
Stephan
Wallach and Michelle Wallach comprise the Majority Stockholders and
are both members of our Board of Directors. The Majority
Stockholders have the ability to influence matters submitted to the
vote of our stockholders, including the election of directors and
will receive additional awards under the Amendment.
All of
our directors, officers, consultants and employees are eligible to
participate in, and receive awards under the 2012
Plan.
Record Date
The
Board of Directors has fixed the close of business on January 11,
2019 as the Record Date for the determination of stockholders who
are entitled to receive this Information Statement.
Effective Date
Under
applicable federal securities laws, issuances under the 2012 Plan
will be subject to forfeiture until at least 20 calendar days
following the date that this Information Statement has been mailed
to our stockholders. This Information Statement is first being
mailed by us to our stockholders on or about January 16,
2019.
PROPOSAL
On
January 9, 2019, our Board of Directors adopted, subject to
stockholder approval, the Amendment, which shareholder approval was
subsequently obtained.
The
2012 Plan without the Amendment does not have any shares available
for grants and therefore the Board of Directors has approved, the
Amendment. We obtained the approval of the Amendment by
written consent of the Majority Stockholders that represent
approximately 54.3% of the voting power of our Corporation as of
the Record Date. The corporate action taken by the written consent
will become effective 20-days after the date that this Information
Statement is first mailed to our stockholders.
In an
effort to preserve cash and to attract, retain and motivate persons
who make important contributions to our business, we desire to have
the ability to issue securities to our employees, officers,
directors and consultants and those of our subsidiaries under the
2012 Plan, as amended by the Amendment. Since the current 2012 Plan
has no remaining shares of common stock reserved for issuance for
awards, the 2012 Plan, without amendment, is insufficient to meet
our needs to provide for awards to our employees, officers,
directors and consultants and those of our subsidiaries and
insufficient in order to allow us the ability to compete
successfully for talented employees and consultants. Accordingly,
our Board of Director approved the Amendment which increases the
number of shares of our common stock available for grant and
provide our Board of Directors and management with greater
flexibility to provide grants of stock-based awards under the 2012
Plan.
On
January 9, 2019, the Board of Directors also approved grants to
Stephan Wallach, Michelle Wallach and David Briskie of options to
purchase 500,000, 500,000 and 458,529 shares of common stock,
respectively, such grants to be effective upon shareholder approval
of the Amendment and the passing of the 20-day period referenced
above.
The
principal provisions of the 2012 Plan, as amended by the Amendment
are summarized below and the proposed 2012 Plan, as amended and
restated, is attached hereto as
Exhibit A
. The following
discussion is qualified in its entirety by reference to the 2012
Plan.
Purpose of the Plan
The
Board of Directors believes that the Amendment is necessary for us
to attract, retain and motivate our employees, directors and
consultants through the grant of stock options, stock appreciation
rights, restricted stock and restricted stock units. We believe
that the 2012 Plan as amended by the Amendment is best designed to
provide the proper incentives for our employees, directors and
consultants, ensures our ability to make performance-based awards,
and meets the requirements of applicable law. As of January 11,
2019, we estimate there are approximately 267 individuals that
would be eligible to participate in the 2012 Plan, of which 7 are
directors or executive officers, 10 are consultants and 250 are
employees.
The
Board of Directors believes that approval of the Amendment is
advisable to enable us to continue to grant equity-based awards.
The Board of Directors further believes that the 2012 Plan as
amended by the Amendment is consistent with market practices and is
important to allow us to attract, retain, reward and motivate our
employees, directors and consultants, who are critical to achieving
our business goals.
The
Amendment will be effective 20-days after the date that this
Information Statement is first mailed to our stockholders. We
intend to register the shares authorized under the Amendment under
the Securities Act.
Significant Historical Award Information
Common
measures of a stock incentive equity plan’s cost include
dilution and overhang. Dilution measures the degree to which our
stockholders’ ownership has been diluted by stock-based
compensation awarded under our various equity plans and also
includes shares that may be awarded under our various equity plans
in the future, which is commonly referred to as
overhang.
|
Key Equity
Metrics
|
|
|
|
|
Overhang
(1)
|
15.4
%
|
22.7
%
|
10.1
%
|
|
Dilution
(2)
|
11.2
%
|
13.1
%
|
8.5
%
|
|
|
(1)
|
Overhang
is calculated by dividing (a) the sum of (i) the number of shares
subject to equity awards outstanding at the end of the year and
(ii) the number of shares available for future grants, by (b) the
number of shares outstanding at the end of the year.
|
|
|
(2)
|
Dilution
is calculated by dividing the number of shares subject to equity
awards outstanding at the end of the fiscal year by the number of
shares outstanding at the end of the fiscal year.
|
Administration
The 2012 Plan generally is to be administered by our Compensation
Committee, which has been appointed by the Board of Directors to
administer the 2012 Plan. The Compensation Committee has the
authority to establish rules and regulations for the proper
administration of the 2012 Plan, to recommend to the Board of
Directors the employees, directors and consultants to whom awards
are granted, and to recommend
to the Board of Directors the date of grant, the
type of award and the other terms and conditions of the awards,
consistent with the terms of the 2012 Plan.
Limitation on Awards and Shares Available
As of
January 9, 2019, there were no shares of our common stock available
for grant under the Corporation’s 2012 Plan. Due to the fact
that we have no shares of common stock available for grant under
the 2012 Plan, we sought the approval of our stockholders of the
Amendment, which will provide for an additional 5,000,000 shares of
our common stock that may be delivered pursuant to awards granted
during the life of the 2012 Plan.
Eligibility
Persons
eligible to participate in the 2012 Plan include all of our and our
subsidiaries’ employees, officers, directors and
consultants.
Awards
The
2012 Plan provides for the grant of: (i) incentive stock options;
(ii) nonqualified stock options; (iii) stock appreciation rights;
(iv) restricted stock; (v) restricted stock units; and (vi) other
stock-based and cash-based awards to eligible individuals. The
terms of the awards will be set forth in an award agreement,
consistent with the terms of the 2012 Plan. No stock option will be
exercisable later than ten years after the date it is
granted.
Stock Options
. The Compensation Committee may recommend
grants of incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”),
and nonqualified stock options. Options shall be exercisable for
such prices, shall expire at such times, and shall have such other
terms and conditions as the Compensation Committee may determine at
the time of grant and as set forth in the award agreement; however,
the exercise price must be at least equal to 100% of the fair
market value at the date of grant. The option price is payable in
cash or other consideration acceptable to us.
Stock Appreciation Rights
. The Compensation Committee may
recommend grants of stock appreciation rights with such terms and
conditions as the Compensation Committee may determine at the time
of grant and as set forth in the award agreement. The grant price
of a stock appreciation right shall be determined by the
Compensation Committee and shall be specified in the award
agreement; however, the grant price must be at least equal to 100%
of the fair market value of a share on the date of grant. Stock
appreciation rights may be exercised upon such terms and conditions
as are imposed by the Compensation Committee and as set forth in
the stock appreciation right award agreement.
Restricted Stock
. Restricted stock may be granted in such
amounts and subject to the terms and conditions as recommended by
the Compensation Committee at the time of grant and as set forth in
the award agreement. The Compensation Committee may impose
performance goals for restricted stock. The Compensation Committee
may authorize the payment of dividends on the restricted stock
during the restricted period.
Restricted Stock Units
. Restricted stock units may be
granted in such amounts and subject to the terms and conditions as
recommended by the Compensation Committee at the time of grant and
as set forth in the award agreement. Each restricted stock unit
represents a contingent right to receive one share of our common
stock or, in the Compensation Committee’s discretion, the
payment of cash for each unit in an amount equal to our share
price. The Compensation Committee may impose performance goals for
restricted stock units. The Compensation Committee may authorize
the payment of dividend equivalents on the restricted stock units
during the restricted period.
Other Awards
. The Compensation Committee may recommend
grants of other types of equity-based or equity-related awards not
otherwise described by the terms of the 2012 Plan, in such amounts
and subject to such terms and conditions, as the Compensation
Committee shall recommend. Such awards may be based upon attainment
of performance goals established by the Compensation Committee and
may involve the transfer of actual shares to participants, or
payment in cash or otherwise of amounts based on the value of
shares.
Amendment and Termination
Our
Board of Directors may amend the 2012 Plan at any time, subject to
stockholder approval to the extent required by applicable law or
regulation or the listing standards of any market or stock exchange
on which the common stock is at the time primarily traded.
Additionally, stockholder approval will be specifically required to
(i) increase the number of shares available for issuance under the
Plan, or (ii) decrease the exercise price of any outstanding option
or stock appreciation right granted under the 2012
Plan.
Our
Board of Directors may terminate the 2012 Plan at any time. Unless
sooner terminated by the Board of Directors, the 2012 Plan will
terminate on the close of business on May 16, 2022.
Adjustment for Change in Capitalization
In the
event that the Compensation Committee shall determine that any
dividend or other distribution (whether in the form of cash, common
stock, or other property), recapitalization, common stock split,
reverse common stock split, reorganization, merger, consolidation,
spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event has occurred, then the
Compensation Committee shall make such equitable changes or
adjustments as it deems necessary or appropriate to any or all of
(1) the number and kind of shares of common stock that may
thereafter be issued in connection with awards, (2) the number and
kind of shares of common stock, securities or other property
(including cash) issued or issuable in respect of outstanding
awards, (3) the exercise price, grant price or purchase price
relating to any award, and (4) the maximum number of shares subject
to awards which may be awarded to any employee during any tax year
of the Company; provided that, with respect to incentive stock
options, any such adjustment shall be made in accordance with
Section 424 of the Code; and provided further that, no such
adjustment shall cause any award hereunder that is or could be
subject to Section 409A of the Code to fail to comply with the
requirements of such section.
Effect of Change in Control
Unless
otherwise determined in an award agreement, in the event of a
Change in Control:
(a)
With respect to each outstanding award that is assumed or
substituted in connection with a Change in Control, in the event of
a termination of a participant’s employment or service by the
Corporation without Cause during the 24-month period following such
Change in Control, on the date of such termination (i) such award
shall become fully vested and, if applicable, exercisable, (ii) the
restrictions, payment conditions, and forfeiture conditions
applicable to any such award granted shall lapse, and (iii) any
performance conditions imposed with respect to awards shall be
deemed to be fully achieved at target levels.
(b)
With respect to each outstanding award that is not assumed or
substituted in connection with a Change in Control, immediately
upon the occurrence of the Change in Control, (i) such award shall
become fully vested and, if applicable, exercisable, (ii) the
restrictions, payment conditions, and forfeiture conditions
applicable to any such award granted shall lapse, and (iii) any
performance conditions imposed with respect to awards shall be
deemed to be fully achieved at target levels.
(c) An
award shall be considered assumed or substituted for if, following
the Change in Control, the award remains subject to the same terms
and conditions that were applicable to the award immediately prior
to the Change in Control except that, if the award related to
shares of common stock, the award instead confers the right to
receive common stock of the acquiring entity.
Under
the Plan, “Change in Control” shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
|
|
(i)
|
any
Person (as defined in the Plan) is or becomes the “Beneficial
Owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned (as defined in the
Plan) by such Person any securities acquired directly from the
Corporation) representing 30% or more of the Corporation’s
then outstanding securities, excluding any Person who becomes such
a Beneficial Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or
|
|
|
(ii)
|
the
following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals who, on the
Effective Date (as defined in the 2012 Plan), constitute the Board
of Directors and any new director (other than a director whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board of Directors or
nomination for election by the Corporation stockholders was
approved or recommended by a vote of at least a two-thirds of the
directors then still in office who either were directors on the
Effective Date or whose appointment, election or nomination for
election was previously so approved or recommended; or
|
|
|
(iii)
|
there
is consummated a merger or consolidation of the Corporation with
any other corporation other than (A) a merger or consolidation
which would result in the voting securities of the Corporation
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
any parent thereof) at least 50% of the combined voting power of
the voting securities of the Corporation or such surviving entity
or any parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to
implement a re-capitalization of the Corporation (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned by such Person any
securities acquired directly from the Corporation) representing 30%
or more of the combined voting power of YGYI’s then
outstanding securities; or
|
|
|
(iv)
|
the
stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is
consummated an agreement for the sale or disposition by YGYI of all
or substantially all of YGYI’s assets, other than a sale or
disposition by the Corporation of all or substantially all of the
Company’s assets to an entity at least 75% of the combined
voting power of the voting securities of which are owned by Persons
in substantially the same proportions as their ownership of the
Corporation immediately prior to such sale.
|
Miscellaneous
The
2012 Plan also contains provisions with respect to payment of
exercise prices, vesting and expiration of awards, treatment of
awards upon the sale of the Corporation, transferability of awards,
and tax withholding requirements. Various other terms, conditions,
and limitations apply, as further described in the 2012
Plan.
Federal Income Tax Consequences
The
following is a brief description of the principal federal income
tax consequences, as of the date of this proxy statement,
associated with the grant of awards under the 2012 Plan. This
summary is based on our understanding of present United States
federal income tax law and regulations. The summary does not
purport to be complete or applicable to every specific situation.
Furthermore, the following discussion does not address state or
local tax consequences.
Options
Grant
. There is no federal income tax consequence to the
participant solely by reason of the grant of incentive stock
options or nonqualified stock options under the 2012
Plan.
Exercise
. The exercise of an incentive stock option is not a
taxable event for regular federal income tax purposes if certain
requirements are satisfied, including the requirement that the
participant generally must exercise the incentive stock option no
later than ninety days following the termination of the
participant’s employment with us. However, such exercise may
give rise to alternative minimum tax liability (see
“Alternative Minimum Tax” below).
Upon
the exercise of a nonqualified stock option, the participant will
generally recognize ordinary income in an amount equal to the
excess of the fair market value of the shares at the time of
exercise over the amount paid by the participant as the exercise
price. The ordinary income recognized in connection with the
exercise by a participant of a nonqualified stock option will be
subject to both wage and employment tax withholding.
The
participant’s tax basis in the shares acquired pursuant to
the exercise of an option will be the amount paid upon exercise
plus, in the case of a nonqualified stock option, the amount of
ordinary income, if any, recognized by the participant upon
exercise thereof.
Qualifying Disposition
. If a participant disposes of shares
of our common stock acquired upon exercise of an incentive stock
option in a taxable transaction, and such disposition occurs more
than two years from the date on which the option was granted and
more than one year after the date on which the shares were
transferred to the participant pursuant to the exercise of the
incentive stock option, the participant will realize long-term
capital gain or loss equal to the difference between the amount
realized upon such disposition and the participant’s adjusted
basis in such shares (generally the option exercise
price).
Disqualifying Disposition
. If the participant disposes of
shares of our common stock acquired upon the exercise of an
incentive stock option (other than in certain tax free
transactions) within two years from the date on which the incentive
stock option was granted or within one year after the transfer of
shares to the participant pursuant to the exercise of the incentive
stock option, at the time of disposition the participant will
generally recognize ordinary income equal to the lesser of (i) the
excess of each such share’s fair market value on the date of
exercise over the exercise price paid by the participant, or (ii)
the participant’s actual gain. If the total amount realized
on a taxable disposition (including return on capital and capital
gain) exceeds the fair market value on the date of exercise of the
shares of our common stock purchased by the participant under the
option, the participant will recognize a capital gain in the amount
of the excess. If the participant incurs a loss on the disposition
(the total amount realized is less than the exercise price paid by
the participant), the loss will be a capital loss.
Other Disposition
. If a participant disposes of shares of
our common stock acquired upon exercise of a nonqualified stock
option in a taxable transaction, the participant will recognize
capital gain or loss in an amount equal to the difference between
the participant’s basis (as discussed above) in the shares
sold and the total amount realized upon disposition. Any such
capital gain or loss (and any capital gain or loss recognized on a
disqualifying disposition of shares of our common stock acquired
upon exercise of incentive stock options as discussed above) will
be short-term or long-term depending on whether the shares of our
common stock were held for more than one year from the date such
shares were transferred to the participant.
Alternative Minimum Tax
. Alternative minimum tax is payable
if and to the extent the amount thereof exceeds the amount of the
taxpayer’s regular tax liability, and any alternative minimum
tax paid generally may be credited against future regular tax
liability (but not future alternative minimum tax liability).
Alternative minimum tax applies to alternative minimum taxable
income. Generally, regular taxable income as adjusted for tax
preferences and other items is treated differently under the
alternative minimum tax.
For
alternative minimum tax purposes, the spread upon exercise of an
incentive stock option (but not a nonqualified stock option) will
be included in alternative minimum taxable income, and the taxpayer
will receive a tax basis equal to the fair market value of the
shares of our common stock at such time for subsequent alternative
minimum tax purposes. However, if the participant disposes of the
incentive stock option shares in the year of exercise, the
alternative minimum tax income cannot exceed the gain recognized
for regular tax purposes, provided that the disposition meets
certain third-party requirements for limiting the gain on a
disqualifying disposition. If there is a disqualifying disposition
in a year other than the year of exercise, the income on the
disqualifying disposition is not considered alternative minimum
taxable income.
There
are no federal income tax consequences to us by reason of the grant
of incentive stock options or nonqualified stock options or the
exercise of an incentive stock option (other than disqualifying
dispositions). At the time the participant recognizes ordinary
income from the exercise of a nonqualified stock option, we will be
entitled to a federal income tax deduction in the amount of the
ordinary income so recognized (as described above), provided that
we satisfy our reporting obligations described below. To the extent
the participant recognizes ordinary income by reason of a
disqualifying disposition of the stock acquired upon exercise of an
incentive stock option, and subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code
(“Section 162(m)”), and the satisfaction of a tax
reporting obligation, we generally will be entitled to a
corresponding deduction in the year in which the disposition
occurs. Prior to the enactment of the Tax Cut and Jobs Act of 2017
(the “Tax Act”), Section 162(m) of the Code precluded a
public corporation from taking a tax deduction for certain
compensation in excess of $1.0 million in any one year paid to its
Chief Executive Officer or any of its three other highest-paid
executive officers (not including our Chief Financial Officer),
unless certain specific and detailed criteria are satisfied.
However, certain qualifying “performance-based”
compensation (that is, compensation paid under a plan administered
by a committee of outside directors, based on achieving objective
performance goals, the material terms of which were approved by
shareholders, such as our prior plan) was not subject to the $1.0
million deduction limit. With the passage of the Tax Act, only
qualifying performance-based compensation paid pursuant to a
binding written contract in effect on November 2, 2017 (and not
modified in any material respect on or after November 2, 2017) as
set forth under the Tax Act will be eligible for the deduction
exception. The Tax Act also expanded the executive officers covered
by Section 162(m) to include the chief financial officer position
as well as any person who ever was a covered executive for any
prior taxable year, beginning after December 31, 2016. As a result
of these changes, starting in 2018, most compensation payable to
any person who was a named executive officer of the Corporation
since fiscal year 2016 will not be deductible, regardless of
whether the compensation is performance-based.
For our
chief executive officer, chief financial officer, and for the
individuals serving as officers who are among the three highest
compensated officers (other than the chief executive officer and
chief financial officer) for proxy reporting purposes, Section
162(m) limits the amount of compensation otherwise deductible by us
to $1,000,000 per year for each such individual. We are required to
report to the Internal Revenue Service any ordinary income
recognized by any participant by reason of the exercise of a
nonqualified stock option. We are required to withhold income and
employment taxes (and pay the employer’s share of the
employment taxes) with respect to ordinary income recognized by the
participant upon exercise of nonqualified stock
options.
Stock Appreciation Rights
There
are no tax consequences to the participant or us by reason of the
grant of stock appreciation rights. In general, upon exercise of a
stock appreciation rights award, the participant will recognize
taxable ordinary income equal to the excess of the stock’s
fair market value on the date of exercise over the stock
appreciation rights’ base price, or the amount payable.
Generally, with respect to employees, the Corporation is required
to withhold from regular wages or supplemental wage payments an
amount based on the ordinary income recognized. Subject to the
requirement of reasonableness, the provisions of Section 162(m) and
the satisfaction of a tax reporting obligation, we generally will
be entitled to a business expense deduction equal to the taxable
ordinary income realized by the participant.
Restricted Stock
Unless
a participant makes a Section 83(b) election, as described below,
with respect to restricted stock granted under the 2012 Plan, a
participant receiving such an award will not recognize income and
we will not be allowed a deduction at the time such award is
granted. While an award remains unvested or otherwise subject to a
substantial risk of forfeiture, a participant will recognize
compensation income equal to the amount of any dividends received
and we will be allowed a deduction in a like amount. When an award
vests or otherwise ceases to be subject to a substantial risk of
forfeiture, the excess of the fair market value of the award on the
date of vesting or the cessation of the substantial risk of
forfeiture over the amount paid, if any, by the participant for the
award will be ordinary income to the participant and will be
claimed as a deduction for federal income tax purposes by us. Upon
disposition of the shares received, the gain or loss recognized by
the participant will be treated as capital gain or loss, and the
capital gain or loss will be short-term or long-term depending upon
whether the participant held the shares for more than one year
following the vesting or cessation of the substantial risk of
forfeiture.
However,
by filing a Section 83(b) election with the Internal Revenue
Service within 30 days after the date of grant, a
participant’s ordinary income and commencement of holding
period and the deduction will be determined as of the date of
grant. In such a case, the amount of ordinary income recognized by
such a participant and deductible by us will be equal to the excess
of the fair market value of the award as of the date of grant over
the amount paid, if any, by the participant for the award. If such
election is made and a participant thereafter forfeits his or her
award, no refund or deduction will be allowed for the amount
previously included in such participant’s
income.
Generally,
with respect to employees, we are required to withhold from regular
wages or supplemental wage payments an amount based on the ordinary
income recognized. Subject to the requirement of reasonableness,
the provisions of Section 162(m) of the Code and the satisfaction
of a tax reporting obligation and any tax withholding condition, we
generally will be entitled to a business expense deduction equal to
the taxable ordinary income realized by the recipient. Upon
disposition of stock, the recipient will recognize a capital gain
or loss equal to the difference between the selling price and the
sum of the amount paid for such stock, if any, plus any amount
recognized as ordinary income upon acquisition (or vesting) of the
stock. Such gain or loss will be long- or short-term depending on
whether the stock was held for more than one year from the date
ordinary income is measured.
Restricted Stock Units
The
recipient of an award of restricted stock units generally will not
be taxed upon the grant or vesting of the award, but rather will
recognize ordinary income in an amount equal to the amount paid to
him or her in respect of such award at the time such award is paid.
In either case, we will be entitled to a deduction at the time
when, and in the amount that, the recipient recognizes ordinary
income.
EQUITY COMPENSATION PLAN INFORMATION
New Plan Benefits Under the 2012 Stock Option Plan
As of January 9, 2019, we have granted options to purchase
3,471,626 shares of our common stock with a weighted average
exercise price of $4.80 under the 2012 Plan and 487,500 shares of
restricted stock units, which were granted to officers, employees
and consultants. Of these options, options to purchase 489,120
shares of our common stock were granted to the non-executive
members of the Board of Directors and 3,470,006 were granted to
officers, employees and consultants. In addition, we have approved
the award of options to purchase 1,458,529 shares of common stock
to our executive officers to be granted and be effective upon the
receipt of shareholder approval of the Amendment and the expiration
of the 20-day period referred to above. Except as set forth above,
at this time the benefits and amounts that will be received by or
allocated to our other executive officers, non-executive directors
and employees and consultants under the Amendment are not
determinable. We have not approved any awards that are conditioned
upon stockholder approval of the Amendment to the 2012 Plan other
than an award to each of Stephan Wallach, Michelle Wallach and
David Briskie of an option to purchase 500,000, 500,000 and 458,529
shares of common stock, respectively, to be granted upon the
receipt of shareholder approval of the Amendment and the expiration
of the 20-day period referred to above.
Existing Plan Benefits
The
following table sets forth information with respect to options and
other awards previously granted under the 2012 Plan and outstanding
as of January 9, 2019 to our current executive officers, our
current non-executive directors and all employees, other than
executive officers.
2012 Plan
|
Name and
position
|
Number of Stock
Awards (#)
|
|
|
|
|
Stephan Wallach,
Chief Executive Officer and Chairman
|
125,000
|
|
Michelle Wallach,
Chief Operating Officer and Director
|
125,000
|
|
David Briskie,
President and Chief Financial Officer and Director
|
1,691,471
|
|
Richard Renton,
Director
|
126,655
|
|
Paul Sallwasser,
Director
|
116,655
|
|
William Thompson,
Director
|
129,155
|
|
Kevin Allodi,
Director
|
116,655
|
|
|
|
|
All Current
Executive Officers as a Group
|
1,941,471
|
|
All Current
Non-Executive Directors as a Group
|
489,120
|
|
All employees,
other than executive officers, as a group
|
1,528,535
|
New Plan Benefits Under the 2012 Plan
The following table sets forth the equity awards which the
Corporation has granted which were subject to shareholder approval
of the 2012 Plan.
2012 Stock Plan Benefits That Were Subject to Shareholder
Approval
|
Name and position
|
|
Number Stock
Awards Subject to Grant (#)
|
|
|
|
|
|
Stephan Wallach,
Chief Executive Officer
and Chairman
|
(1
)
|
500,000
|
|
Michelle Wallach,
Chief Operating Officer
and Director
|
(1
)
|
500,000
|
|
David Briskie,
President and Chief
Financial Officer and Director
|
(1
)
|
458,529
|
|
Richard
Renton, Director
|
-
|
-
|
|
Paul
Sallwasser, Director
|
-
|
-
|
|
William
Thompson, Director
|
-
|
-
|
|
Kevin
Allodi, Director
|
-
|
-
|
|
All
Current Executive Officers as a Group
|
(1
)
|
1,458,529
|
|
All
Current Non-Executive Directors as a Group
|
-
|
-
|
|
All
employees, other than executive officers, as a group
|
-
|
-
|
(1)
Upon
the expiration of the 20-day period described above, the awards set
forth above exercisable for 1,458,529 shares of our common stock
that have been approved will be effective. The dollar value of the
options will be determined based in part on the exercise price of
the shares of common stock to be issued upon exercise of the
options and the exercise price of the option will be based upon the
closing price of our common stock on the date of expiration of the
20-days period.
2012 Equity Compensation Plan Information
The 2012 Plan, is our only active equity incentive plan pursuant to
which options to acquire common stock have been granted and are
currently outstanding.
As of December 31, 2018, the number of stock options and restricted
common stock outstanding under the 2012 Plan, the weighted average
exercise price of outstanding options and restricted common stock
and the number of securities remaining available for issuance were
as follows:
|
Plan category
|
Number of
securities to be issued
upon exercise/vesting of outstanding options and restricted units
under the 2012 Plan
(1)
|
Weighted-average
exercise price of
outstanding options
|
Number of securities remaining available for
future issuance under the 2012 Plan
|
|
Equity compensation plan approved by security
holders under
2012 Plan
|
-
|
$
-
|
-
|
|
Equity
compensation plans not approved by security holders
|
2,881,879
|
4.45
|
1,077,297
|
|
|
|
|
|
|
Total
|
2,881,879
|
$
4.45
|
1,077,297
|
|
(1)
|
Includes stock options to purchase 2,394,379 shares of common stock
with a per share weighted-average exercise price of $4.45. Also
includes 487,500 restricted common stock units with no exercise
price.
|
On February 23, 2017, our Board of Directors
received the approval of our stockholders, to
amend the 2012 Plan to increase the number of shares of common
stock available for grant and to expand the types of awards
available for grant under the 2012 Plan. The amendment of the
February 2017 amendment to the 2012 Plan increased the number of
shares of the Corporation’s common stock that may be
delivered pursuant to awards granted during the life of the Plan
2012 from 2,000,000 to 4,000,000 shares authorized (as adjusted for
the 1-for-20 reverse stock split, which was effective on June 7,
2017). On January 10, 2019, our Board of Directors received
approval of our stockholders to further amend our 2012 Plan to
increase the number of shares of the Corporation’s common
stock that may be delivered pursuant to awards granted during the
life of the 2012 Plan from 4,000,000 to 9,000,000 shares authorized
The 2012 Plan as amended allows for the grant of: (i) incentive
stock options; (ii) nonqualified stock options; (iii) stock
appreciation rights; (iv) restricted stock; and (v) other
stock-based and cash-based awards to eligible individuals. The
terms of the awards will be set forth in an award agreement,
consistent with the terms of the 2012 Plan. No stock option is
exercisable later than ten years after the date it is
granted.
Executive Compensation
Summary Compensation Table
The following table sets forth a summary of cash and non-cash
compensation awarded, earned or paid for services rendered to us
during the years ended December 31, 2018 and 2017 by our
“named executive officers,” consisting of each
individual serving as (i) principal Chief Executive Officer, (ii)
our principal Chief Financial Officer, and (iii) Chief Operating
Officer.
|
|
Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephan
Wallach
(1)
|
2018
|
375,000
|
59,439
|
-
|
-
|
434,439
|
|
Chief Executive Officer
|
2017
|
357,212
|
-
|
-
|
-
|
357,212
|
|
|
|
|
|
|
|
|
David Briskie
(1)(2)
|
2018
|
375,000
|
59,439
|
-
|
566,500
|
1,000,939
|
|
President and Chief Financial Officer
|
2017
|
357,212
|
-
|
670,875
|
-
|
1,028,087
|
|
|
|
|
|
|
|
|
Michelle Wallach
(1)
|
2018
|
214,583
|
-
|
-
|
-
|
214,583
|
|
Chief Operating Officer
|
2017
|
192,660
|
-
|
-
|
-
|
192,660
|
|
(1)
|
Mr. Stephan
Wallach, Mr. David Briskie, and Ms. Michelle Wallach have direct
and or indirect (beneficially) distributor positions in our
Corporation that pay income based on the performance of those
distributor positions in addition to their base salaries, and the
people and or companies supporting those positions based upon the
contractual agreements that each and every distributor enter into
upon engaging in the network marketing business. The contractual
terms of these positions are the same as those of all the other
individuals that become distributors in our Company. There are no
special circumstances for these officers/directors. Mr. Stephan
Wallach and Ms. Michelle Wallach received or beneficially received
an aggregate of $330,429 and $362,292 in 2018 and 2017,
respectively related to their distributor positions, which are not
included above. Mr. Briskie beneficially received $17,209 and
$19,196 in 2018 and 2017, respectively, related to his
spouse’s distributor position, which is not included
above.
|
|
(2)
|
Represents
value of restricted stock unit (“RSU”) awards
determined in accordance with FASB ASC Topic
718.
|
|
(3)
|
We use a
Black-Scholes option-pricing model (Black-Scholes model) to
estimate the fair value of the stock option grant in accordance
with FASB ASC Topic 718. Expected volatility is calculated based on
the historical volatility of the Company’s stock. The
risk-free interest rate is based on the U.S. Treasury yield for a
term equal to the expected life of the options at the time of
grant. The amounts do not represent the actual amounts paid to or
released by any of the Named Executive Officers during the
respective periods.
|
|
|
|
Outstanding Equity Awards at Fiscal Year-End
The
table below reflects all outstanding equity awards made to each of
the named executive officers that are outstanding as of December
31, 2018. We currently grant stock-based awards pursuant to our
2012 Stock Option Plan.
|
|
|
|
|
Name
|
No. Of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
No. Of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
No.
Of Shares
or Units
of Stock
That Have Not
Vested (#)
|
Market Value
Of
Shares or
Units
of
Stock
That
Have
Not
Vested
($)
|
|
Stephan
Wallach
|
125,000
(1)
|
-
|
5/31/2022
|
$
4.40
|
|
|
|
|
|
|
|
|
|
|
|
David
Briskie
|
250,000
(2)
|
-
|
5/31/2022
|
$
4.40
|
|
|
|
|
50,000
(3)
|
-
|
10/31/2023
|
$
3.60
|
|
|
|
|
80,000
(4)
|
20,000
|
10/30/2024
|
$
3.80
|
|
|
|
|
100,000
(5)
|
150,000
|
12/27/2026
|
$
5.40
|
|
|
|
|
34,750
(6)
|
215,250
|
07/24/2028
|
$
3.92
|
250,000
(7)
|
$
1,430,000
|
|
|
|
|
|
|
|
|
|
Michelle
Wallach
|
125,000
(8)
|
-
|
5/31/2022
|
$
4.40
|
|
|
|
(1)
|
125,000
stock options granted on May 31, 2012, vested and
exercisable.
|
|
(2)
|
250,000
stock options granted on May 31, 2012, vested and
exercisable.
|
|
(3)
|
50,000
stock options granted on October 31, 2013, vested and are
exercisable.
|
|
(4)
|
100,000
stock options granted on October 30, 2014, 80,000 stock options
vested and are exercisable, with the remaining option shares
vesting in equal annual amounts over the next year as of December
31, 2018.
|
|
(5)
|
250,000
stock options granted on December 27, 2016, 100,000 stock options
vested and are exercisable, with the remaining option shares
vesting in equal annual amounts over the next three years as of
December 31, 2018.
|
|
(6)
|
250,000
stock options granted on July 24, 2018, 34,750 stock options vested
and are exercisable, with the remaining option shares vesting in
equal annual amounts over the next three years as of December 31,
2018.
|
|
(7)
|
250,000
restricted stock units were granted on August 9, 2017, each unit
representing contingent right to receive one share of common stock,
vesting as follows: (i) Year 3 - 25,000 shares; (ii) Year 4 –
37,500 shares; (iii) Year 5 - 125,000 shares; and (iv) Year 6
– 62,500 shares; if Mr. Briskie continues to serve as an
executive officer or otherwise is not terminated for cause prior to
such dates. The market value of the restricted stock units was
multiplied by the closing market price of our common stock at the
end of the 2018 fiscal year, which was $5.72 on December 31, 2018
(the last business day of the 2018 fiscal year.)
|
|
(8)
|
125,000
stock options granted on May 31, 2012, vested and
exercisable.
|
Employment Agreements
Our executive officers work as at-will employees. We do not have
any written employment agreements with any of our executive
officers.
Code Section 162(m) Provisions
Section 162(m) of the U.S. Internal Revenue Code, or the Code,
generally disallows a tax deduction to public companies for
compensation in excess of $1 million paid to the Chief Executive
Officer or any of the four most highly compensated officers.
Performance-based compensation arrangements may qualify for an
exemption from the deduction limit if they satisfy various
requirements under Section 162(m). Although we consider the impact
of this rule when developing and implementing our executive
compensation programs, we believe it is important to preserve
flexibility in designing compensation programs. Accordingly, we
have not adopted a policy that all compensation must qualify as
deductible under Section 162(m) of the Code. While our stock
options are intended to qualify as “performance-based
compensation” (as defined by the Code), amounts paid under
our other compensation programs may not qualify as
such.
2018 Director Compensation
The following table sets forth information for the fiscal year
ended December 31, 2018 regarding the compensation of our directors
who at December 31, 2018 were not also named executive
officers.
|
Name
|
Fees Earned or
Paid in Cash ($)
|
|
|
|
|
Richard
Renton
|
-
|
74,239
|
-
|
74,239
|
|
William
Thompson
|
-
|
74,239
|
-
|
74,239
|
|
Paul
Sallwasser
|
-
|
74,239
|
-
|
74,239
|
|
Kevin
Allodi
|
-
|
74,239
|
-
|
74,239
|
|
(1)
|
The amounts in the “Option Awards” column reflect the
dollar amounts recognized as compensation expense for the financial
statement reporting purposes for stock options for the fiscal year
ended December 31, 2018 in accordance with FASB ASC Topic 718. The
fair value of the options was determined using the Black-Scholes
model.
|
As of December 31, 2018, the following table sets forth the number
of aggregate outstanding option awards held by each of our
directors who were not also named executive officers:
|
Name
|
Aggregate
Number of
Option
Awards
(1)
|
|
|
|
|
Richard
Renton
|
76,655
|
|
William
Thompson
|
79,155
|
|
Paul
Sallwasser
|
66,655
|
|
Kevin
Allodi
|
66,655
|
We grant to non-employee members of the Board of Directors upon
appointment, stock options to purchase shares of our common stock
at an exercise price equal to the fair market value of the common
stock on the date of grant, and additional stock options each year
thereafter for their service. We also reimburse the non-employee
directors for travel and other out-of-pocket expenses incurred in
attending board and committee meetings. During 2018, we granted
each non-employee director a ten-year option to purchase 61,655
shares of our common stock at an exercise price of $4.29, which
vest during 2019.
(1)
Does not include an
option to purchase 50,000 shares of common stock granted to each of
Messrs, Renton, Thompson, Sallwasser and Allodi on January 9,
2019.
Vote Required
The
Board of Directors of the Corporation has adopted, ratified and
approved the proposal to authorize the Amendment and shareholders
of the Corporation holding in excess of a majority of the voting
power on the Record Date have approved the Amendment.
BOARD OF DIRECTORS’ RECOMMENDATION AND STOCKHOLDER
APPROVAL
On
January 9, 2019, our Board of Directors voted to authorize and seek
approval of our shareholders of the Amendment. In the absence of a
meeting, the affirmative consent of holders of a majority of the
voting securities was required to approve the Amendment. Because
the holders of in excess of 50% of our voting power signed a
written consent in favor of the Amendment, the Amendment has been
approved. Awards that have been issued under the 2012 Plan as
amended by the Amendment will not vest until the 20th day following
the mailing of this Information Statement to
stockholders.
The
information contained in this Information Statement constitutes the
only notice we will be providing stockholders.
QUESTIONS AND ANSWERS REGARDING THE PROPOSED AMENDMENT TO THE 2012
PLAN.
Q. WHY
HAS THE PROPOSAL BEEN MADE TO AMEND THE 2012 PLAN?
A. Our
Board of Directors believes that since there are no authorized
shares of common stock remaining available for issuance under the
2012 Plan, the 2012 Plan without the Amendment is not sufficient to
allow us to compensate officer, directors, employees and
consultants and take advantage of future business opportunities.
Accordingly, our Board of Directors believes that it is in our best
interests to authorize the Amendment. Adopting the Amendment is
recommended by the Board of Directors in order to provide a
sufficient reserve of such shares under the 2012 Plan to fulfill
such obligations and for our future growth and needs.
Q. HAS
THE BOARD OF DIRECTORS APPROVED THE PROPOSAL TO APPROVE THE
AMENDMENT?
A. All
members of the Board of Directors have approved the Amendment as in
our best interest and the best interest of our current
stockholders.
Q. WHAT
VOTE OF THE STOCKHOLDERS WILL RESULT IN THE PROPOSAL BEING
PASSED?
A. To
approve the proposal the affirmative vote of a majority of the
potential votes cast as stockholders is required. A consent in
favor of the proposals has already been received from several
stockholders holding a majority of our voting power.
Q. WHO
IS PAYING FOR THIS INFORMATION STATEMENT?
A. The
Company will pay for the delivery of this information
statement.
Q. WHOM
SHOULD I CONTACT IF I HAVE ADDITIONAL QUESTIONS?
A:
David Briskie, President and Chief Financial Officer, 2400 Boswell
Road, Chula Vista, California 91914.
DISSENTER'S RIGHTS OF APPRAISAL
Delaware
Law does not provide for dissenter's rights in connection with the
proposed adoption of the Amendment.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The
Board of Directors fixed the close of business on January 11, 2019
as the Record Date for the determination of the stockholders
entitled to notice of the action by written consent.
At the
Record Date, the Corporation had: (i) 50,000,000 shares of common
stock authorized with a stated par value of $0.001, of which
25,760,708
shares were issued
and outstanding and (ii) 10,000,000 shares of preferred stock
authorized with a stated par value of $0.001, of which 400,000 were
designated Series A Shares and 161,135 of which were issued and
outstanding, 3,000,000 shares were designated Series B Shares and
129,437 of which were issued an outstanding and 1,142,840 shares
were designated Series C Preferred Shares, none of which are
outstanding. The holders of shares of common stock are entitled to
one vote per share on matters to be voted upon by stockholders. The
holders of shares of Series A, B and C Preferred Stock are not
entitled to vote on the Amendment. The holders of shares of common
stock are entitled to receive pro rata dividends, when and if
declared by the Board of Directors in its discretion, out of funds
legally available therefore, but only if dividends on preferred
stock have been paid in accordance with the terms of the
outstanding preferred stock.
Dividends
on the common stock are declared by the Board of Directors. Payment
of dividends on the common stock in the future, if any, will be
subordinate to the preferred stock, must comply with the provisions
of the Delaware Law and will be determined by the Board. In
addition, the payment of any such dividends will depend on the
Company's financial condition, results of operations, capital
requirements and such other factors as the Board of Directors deems
relevant.
Shareholders
and the holders of a controlling interest equaling in excess of a
majority of the voting power of the Corporation, as of the Record
Date, have consented to adopt the Amendment. This consent was
sufficient, without any further action, to provide the necessary
shareholder approval of the action.
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS
AND FIVE PERCENT STOCKHOLDERS
The
following table sets forth information regarding beneficial
ownership of our common stock as of January 11, 2019
by:
|
|
(1)
|
each
person or group of affiliated persons known by us to be the
beneficial owner of more than 5% of our common stock;
|
|
|
(2)
|
each of
our named executive officers as of January 11, 2019;
|
|
|
(3)
|
each of
our directors; and
|
|
|
(4)
|
all of
our executive officers and directors as a group.
|
We have
determined beneficial ownership in accordance with the rules of the
SEC and the information is not necessarily indicative of beneficial
ownership for any other purpose. Unless otherwise indicated below,
to our knowledge, the persons and entities named in the table have
sole voting and sole investment power with respect to all shares
that they beneficially own, subject to community property laws
where applicable. To our knowledge, no person or entity, except as
set forth below, is the beneficial owner of more than 5% of the
voting power of our common stock as of the close of business on
January 11, 2019.
Under
SEC rules, the calculation of the number of shares of our common
stock beneficially owned by a person and the percentage ownership
of that person includes both outstanding shares of our common stock
then owned as well as any shares of our common stock subject to
options or warrants held by that person that are currently
exercisable or exercisable within 60 days of January 11, 2019.
Shares subject to those options or warrants for a particular person
are not included as outstanding, however, for the purpose of
computing the percentage ownership of any other person. We have
based percentage ownership of our common stock on 25,760,708 shares
of our common stock outstanding as of January 11,
2019.
|
Name of
Beneficial Owner
|
Number of Shares Beneficially
Owned
|
|
|
Executive Officers & Directors
(1)
|
|
|
|
Stephan Wallach,
Chairman and Chief Executive
Officer
|
14,127,811
(2)
|
54.6
%
|
|
David Briskie,
President
,
Chief Financial Officer and
Director
|
1,576,678
(3)
|
5.8
%
|
|
Michelle Wallach,
Chief Operating Officer and
Director
|
14,125,000
(2)
|
54.6
%
|
|
Richard Renton,
Director
|
75,166
(4)
|
*
|
|
William Thompson,
Director
|
64,000
(5)
|
*
|
|
Paul Sallwasser,
Director
|
154,042
(6)
|
*
|
|
Kevin Allodi,
Director
|
81,490
(7)
|
*
|
|
All Executive
Officers & Directors, as a group (7 persons)
|
16,204,187
|
59.4
%
|
|
|
|
|
|
Stockholders
owning 5% or more
|
|
|
|
Carl
Grover
|
2,858,132
(8)
|
9.99
%
|
*less
than 1%
___________________
|
(1)
|
Unless
otherwise set forth below, the mailing address of Executive
Officers, Directors and 5% or greater holders is c/o Youngevity
International, Inc., 2400 Boswell Road, Chula Vista, California
91914.
|
|
(2)
|
Mr.
Stephan Wallach, our Chief Executive Officer, owns 14,000,000
shares of common stock through joint ownership with his wife,
Michelle Wallach, with whom he shares voting and dispositive
control. Mr. Wallach also owns 2,811 shares and options to purchase
125,000 shares of common stock which are exercisable within 60 days
of January 11, 2019 and are included in the number of shares
beneficially owned by him and Ms. Wallach also owns options to
purchase 125,000 shares of common stock which are exercisable
within 60 days of January 11, 2019 and are included in the number
of shares beneficially owned by her. Does not include an option to
purchase 500,000 shares of our common stock that will be issued to
each of Stephan Wallach and Michelle Wallach on the passing of the
20-day period described above and will vest immediately upon
grant.
|
|
(3)
|
Mr.
David Briskie, our President and Chief Financial Officer, owns
170,429 shares of common stock, and beneficially owns 100,028
shares of common stock owned by Brisk Investments, LP, and 250,000
shares of common stock owned by Brisk Management, LLC. Mr. Briskie
also owns options to purchase 514,750 shares of common stock that
are exercisable within 60 days of January 11, 2019 and are included
in the number of shares beneficially owned by him. Does not include
250,000 restricted stock units issued to Mr. Briskie in August
2017, of which each unit represents a contingent right to receive
one share of common stock, vesting as follows: (i) Year 3 - 25,000
shares; (ii) Year 4 – 37,500 shares; (iii) Year 5 - 125,000
shares; and (iv) Year 6 – 62,500 shares; provided that Mr.
Briskie continues to serve as an executive officer or otherwise is
not terminated for cause prior to such dates. Includes an option to
purchase 541,471 shares of our common stock that was granted on
January 9, 2019. Does not include an option to purchase 458,529
shares of common stock which will be issued on the passing of the
20-day period described above and will vest immediately upon
grant.
|
|
(4)
|
Mr.
Renton is a director of the Corporation, owns 13,616 shares of
common stock. Mr. Renton also owns 11,550 options to purchase
common stock which are exercisable within 60 days of January 11,
2019. Includes an option to purchase 50,000 shares of our common
stock that was granted on January 9, 2019 and vested immediately
upon grant.
|
|
(5)
|
Mr.
Thompson is a director of the Corporation, owns 14,000 options to
purchase common stock which are exercisable within 60 days of
January 11, 2019 and are included in the number of shares
beneficially owned by him. Includes an option to purchase 50,000
shares of our common stock that was granted on January 9, 2019 and
vested immediately upon grant.
|
|
(6)
|
Mr.
Sallwasser is a director of the Corporation and owns a 2014 Note in
the principal amount of $75,000 convertible into 10,714 shares of
common stock and a 2014 Warrant exercisable for 14,673 shares of
common stock. Mr. Sallwasser also owns three 2017 Warrants
exercisable for 6,262 shares of common stock. He also owns 67,393
shares of common stock, which includes 9,264 shares from the
conversion of his 2017 Notes to common stock and an option to
purchase 5,000 shares of common stock which are exercisable within
60 days of January 11, 2019. Includes an option to purchase 50,000
shares of our common stock that was granted on January 9, 2019 and
vested immediately upon grant.
|
|
(7)
|
Mr.
Allodi is a director of the Corporation and owns 13,888 shares of
common stock directly and 12,602 shares of common stock through
joint ownership with his wife Nancy Larkin Allodi. Mr. Allodi also
owns an option to purchase 5,000 shares of common stock which are
exercisable within 60 days of January 11, 2019. Includes an option
to purchase 50,000 shares of our common stock that was granted on
January 9, 2019 and vested immediately upon grant.
|
|
(8)
|
Share
ownership is based on information contained in a Schedule 13D/A
filed with the SEC on December 4, 2018. Mr. Grover is the sole
beneficial owner of 2,858,132 shares of common stock. Mr. Grover
owns a 2014 Warrant exercisable for 782,608 shares of common stock,
a 2015 Warrant exercisable for 200,000 shares of common stock, 2017
Warrants exercisable for 735,030 shares of common stock, and a 2018
Warrant exercisable for 631,579 shares of common stock, a 2018
Warrant exercisable for 250,000 shares of common stock and a second
2018 Warrant exercisable for 250,000 shares of common stock. He
also owns 2,345,862 shares of common stock which includes 1,122,233
shares from the conversion of his 2017 Notes to common stock,
428,571 shares from the conversion of his 2015 Note to common
stock, 747,664 shares to be issued from the conversion of his 2014
Notes to common stock and 47,394 shares of common stock held by Mr.
Grover. Mr. Grover has a contractual agreement with us that limits
his exercise of warrants and conversion of notes such that his
beneficial ownership of our equity securities to no more than 9.99%
of the voting power of the Corporation at any one time and
therefore his beneficial ownership does not include the shares of
common stock issuable upon conversion of notes or exercise or
warrants owned by Mr. Grover if such conversion or exercise would
cause his beneficial ownership to exceed 9.99% of our outstanding
shares of common stock. Mr. Grover’s address is 1010 S. Ocean
Blvd., Apt. 1017, Pompano Beach, Florida 33062.
|
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED
UPON
Other
than the awards to be granted under the 2012 Plan, no director,
executive officer, nominee for election as a director, associate of
any director, executive officer or nominee or any other person has
any substantial interest, direct or indirect, by security holdings
or otherwise, in the adoption of the 2012 Plan or in any action
covered by the related resolutions adopted by the Board of
Directors, which is not shared by all other
stockholders.
Delaware Anti-Takeover Provisions
The
anti-takeover provisions of Section 203 of the Delaware General
Corporation Law apply to us. Section 203 of the Delaware General
Corporation Law prohibits the Corporation from engaging in any
business combination with any interested stockholder (any
stockholder who owns or owned more than 15% of any stock or any
entity related to a 15% stockholder) for a period of three years
following the time that such stockholder became an interested
stockholder, unless:
(1)
Prior to such time the board of directors approved either the
business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;
(2)
Upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
Corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock outstanding
(but not the outstanding voting stock owned by the interested
stockholder) those shares owned (i) by persons who are directors
and also officers and (ii) employee stock plans in which employee
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a
tender or exchange offer; or
(3) At
or subsequent to such time the business combination is approved by
the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested
stockholder.
FORWARD-LOOKING STATEMENTS
This
information statement may contain certain
“forward-looking” statements (as that term is defined
in the Private Securities Litigation Reform Act of 1995 or by the
SEC in its rules, regulations and releases) representing our
expectations or beliefs regarding our company. These
forward-looking statements include, but are not limited to,
statements concerning our operations, economic performance,
financial condition, and prospects and opportunities. For this
purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, words such as
“may,” “will,” “expect,”
“believe,” “anticipate,”
“intend,” “could,” “estimate,”
“might,” or “continue” or the negative or
other variations thereof or comparable terminology are intended to
identify forward-looking statements. These statements, by their
nature, involve substantial risks and uncertainties, certain of
which are beyond our control, and actual results may differ
materially depending on a variety of important factors, including
factors discussed in this and other of our filings with the
SEC.
WHERE YOU CAN FIND MORE INFORMATION
We are
subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance with
the Securities Exchange Act, we file periodic reports, documents,
and other information with the SEC relating to our business,
financial statements, and other matters. These reports and other
information may be inspected and are available for copying at the
offices of the SEC, 100 F Street, N.E., Washington, DC 20549. Our
SEC filings are also available to the public on the SEC’s
website at
http://www.sec.gov
.
You may
request a copy of our annual report on Form 10-K for period ending
December 31, 2017 and our quarterly report on Form 10-Q for the
quarterly periods ended March 31, 2018, June 30, 2018 and September
30, 2018 at no cost, by writing or telephoning us at the following
address:
Youngevity
International, Inc.
2400
Boswell Road
Chula
Vista, CA 91914
(619)
934-3980
As we
obtained the requisite stockholder vote for the Plan described in
this information statement upon delivery of written consents from
the holders of a majority of our outstanding shares of Common
stock,
WE ARE NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
. This
information statement is for informational purposes only. Please
read this information statement carefully.
|
Dated:
January 16, 2019
|
|
By
Order of the Board of Directors
|
|
|
|
|
|
|
|
/s/ David
Briskie
|
|
|
|
President,
Chief Financial Officer and Director
|
ANNEXES TO INFORMATION STATEMENT
|
Exhibit
|
|
Description
|
|
|
|
|
|
A
|
|
Amendment to the
Youngevity
International, Inc. Amended and Restated 2012 Stock Incentive
Plan
|
YOUNGEVITY
INTERNATIONAL, INC.
SECOND
AMENDED AND RESTATED 2012 STOCK OPTION PLAN
|
|
1.
|
Establishment and
Purpose.
|
The purpose of the
Youngevity International, Inc. 2012 Stock Option Plan (the
“Plan”) is to promote the interests of the Company and
the stockholders of the Company by providing directors, officers,
employees and consultants of the Company with appropriate
incentives and rewards to encourage them to enter into and continue
in the employ or service of the Company, to acquire a proprietary
interest in the long-term success of the Company and to reward the
performance of individuals in fulfilling long-term corporate
objectives.
|
|
2.
|
Administration of
the Plan.
|
The Plan shall be
administered by a Committee appointed by the Board of Directors.
The Committee shall have the authority, in its sole discretion,
subject to and not inconsistent with the express terms and
provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under
the Plan or necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Awards;
to determine the persons to whom and the time or times at which
Awards shall be granted; to determine the type and number of Awards
to be granted (including whether an Option granted is an Incentive
Stock Option or a Nonqualified Stock Option); to determine the
number of shares of stock to which an Award may relate and the
terms, conditions, restrictions and performance criteria, if any,
relating to any Award; to determine whether, to what extent, and
under what circumstances an Award may be settled, cancelled,
forfeited, exchanged or surrendered; to make adjustments in the
performance goals that may be required for any award in recognition
of unusual or nonrecurring events affecting the Company or the
financial statements of the Company (to the extent not inconsistent
with Section 162(m) of the Code, if applicable), or in
response to changes in applicable laws, regulations, or accounting
principles; to construe and interpret the Plan and any Award; to
prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of Agreements; and to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
The Committee may,
in its absolute discretion, without amendment to the Plan,
(a) accelerate the date on which any Option granted under the
Plan becomes exercisable, waive or amend the operation of Plan
provisions respecting exercise after termination of employment or
otherwise adjust any of the terms of such Option, and
(b) accelerate the vesting date, or waive any condition
imposed hereunder, with respect to any share of Restricted Stock,
or other Award or otherwise adjust any of the terms applicable to
any such Award. Notwithstanding the foregoing, and subject to
Sections 4(c) and 4(d), neither the Board of Directors, the
Committee nor their respective delegates shall have the authority
to re-price (or cancel and/or re-grant) any Option, Stock
Appreciation Right or, if applicable, other Award at a lower
exercise, base or purchase price without first obtaining the
approval of our stockholders.
Subject to
Section 162(m) of the Code and except as required by Rule
16b-3 with respect to grants of Awards to individuals who are
subject to Section 16 of the Exchange Act, or as otherwise
required for compliance with Rule 16b-3 or other applicable law,
the Committee may delegate all or any part of its authority under
the Plan to an employee, employees or committee of
employees.
Subject to
Section 162(m) of the Code and Section 16 of the Exchange
Act, to the extent the Committee deems it necessary, appropriate or
desirable to comply with foreign law or practices and to further
the purpose of the Plan, the Committee may, without amending this
Plan, establish special rules applicable to Awards granted to
Participants who are foreign nationals, are employed outside the
United States, or both, including rules that differ from those set
forth in the Plan, and grant Awards to such Participants in
accordance with those rules.
All decisions,
determinations and interpretations of the Committee or the Board of
Directors shall be final and binding on all persons with any
interest in an Award, including the Company and the Participant (or
any person claiming any rights under the Plan from or through any
Participant). No member of the Committee or the Board of Directors
shall be liable for any action taken or determination made in good
faith with respect to the Plan or any Award.
Notwithstanding
anything to the contrary set forth hereinabove, the full extent of
the rights and powers of the Committee shall be exclusively
determined by the Charter established by the Board of Directors for
the Committee. As such, to the extent the Charter may require the
Committee to seek the approval of the Board of Directors related to
any Awards granted hereunder, the Committee shall seek such Board
of Directors approval as a condition for any actions to be taken by
it.
(a)
“Agreement”
shall mean the written agreement between the Company and a
Participant evidencing an Award.
(b)
“Annual
Incentive Award” shall mean an Award described in Section
6(g) hereof that is based upon a period of one year or
less.
(c)
“Award”
shall mean any Option, Restricted Stock, Stock Bonus award, Stock
Appreciation Right, Performance Award, Other Stock-Based Award or
Other Cash-Based Award granted pursuant to the terms of the
Plan.
(d)
“Board
of Directors” shall mean the Board of Directors of the
Company.
(e)
“Cause”
shall mean a termination of a Participant’s employment by the
Company or any of its Subsidiaries due to (i) the continued
failure, after written notice, by such Participant substantially to
perform his or her duties with the Company or any of its
Subsidiaries (other than any such failure resulting from incapacity
due to reasonably documented physical illness or injury or mental
illness), (ii) the engagement by such Participant in serious
misconduct that causes, or in the good faith judgment of the Board
of Directors may cause, harm (financial or otherwise) to the
Company or any of its Subsidiaries including, without limitation,
the disclosure of material secret or confidential information of
the Company or any of its Subsidiaries, or (iii) the material
breach by the Participant of any agreement between such
Participant, on the one hand, and the Company, on the other hand.
Notwithstanding the above, with respect to any Participant who is a
party to an employment agreement with the Company, Cause shall have
the meaning set forth in such employment agreement.
(f)
“Change in
Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have
occurred:
(i)
any Person is or
becomes the “Beneficial Owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly
from the Company) representing 30% or more of the Company’s
then outstanding securities, excluding any Person who becomes such
a Beneficial Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or
(ii)
the following
individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the Effective
Date, constitute the Board of Directors and any new director (other
than a director whose initial assumption of office is in connection
with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the
Board of Directors or nomination for election by the
Company’s stockholders was approved or recommended by a vote
of at least a two-thirds of the directors then still in office who
either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii)
there is
consummated a merger or consolidation of the Company with any other
corporation other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a
re-capitalization of the Company (or similar transaction) in which
no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities
acquired directly from the Company) representing 30% or more of the
combined voting power of the Company’s then outstanding
securities; or
(iv)
the stockholders of
the Company approve a plan of complete liquidation or dissolution
of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the
Company of all or substantially all of the Company’s assets
to an entity at least 75% of the combined voting power of the
voting securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company immediately
prior to such sale.
(g)
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder. References in
the Plan to specific sections of the Code shall be deemed to
include any successor provisions thereto.
(h)
“Committee”
shall mean, at the discretion of the Board of Directors, a
Committee of the Board of Directors, which shall consist of two or
more persons, each of whom, unless otherwise determined by the
Board of Directors, is an “outside director” within the
meaning of Section 162(m) of the Code and a “nonemployee
director” within the meaning of Rule 16b-3.
(i)
“Company”
shall mean Youngevity International, Inc., a Delaware corporation,
and, where appropriate, each of its Subsidiaries.
(j)
“Company
Stock” shall mean the common stock of the Company, par value
$0.001 per share.
(k)
“Disability”
shall mean permanent disability as determined pursuant to the
Company’s long-term disability plan or policy, in effect at
the time of such disability.
(l)
“Effective
Date” shall mean the date as of which this Plan is adopted by
the Board of Directors.
(m)
Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(n)
The
“Fair Market Value” of a share of Company Stock, as of
a date of determination, shall mean (1) the closing sales price per
share of Company Stock on the national securities exchange on which
such stock is principally traded on the date of the grant of such
Award, or (2) if the shares of Company Stock are not listed or
admitted to trading on any such exchange and if the Common Stock is
regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a share of Common
Stock will be the mean between the high bid and low asked prices
for the Common Stock on the day of determination (or, if no bids
and asks were reported on that date, as applicable, on the last
trading date such bids and asks were reported), as reported in The
Wall Street Journal or such other source as the Committee deems
reliable, or (3) if the shares of Company Stock are not then listed
on a national securities exchange or traded in an over-the-counter
market or the value of such shares is not otherwise determinable,
such value as determined by the Committee in good faith upon the
advice of a qualified valuation expert. In no event shall the fair
market value of any share of Company Stock, the Option exercise
price of any Option, the appreciation base per share of Company
Stock under any Stock Appreciation Right, or the amount payable per
share of Company Stock under any other Award, be less than the par
value per share of Company Stock.
(o)
“Full
Value Award” means any Award, other than an Option or a Stock
Appreciation Right, which Award is settled in Stock.
(p)
“Incentive
Stock Option” shall mean an Option that is an
“incentive stock option” within the meaning of Section
422 of the Code, or any successor provision, and that is designated
by the Committee as an Incentive Stock Option.
(q)
“Long
Term Incentive Award” shall mean an Award described in
Section 6(g) hereof that is based upon a period in excess of one
year.
(r)
“Nonemployee
Director” shall mean a member of the Board of Directors who
is not an employee of the Company.
(s)
“Nonqualified
Stock Option” shall mean an Option other than an Incentive
Stock Option.
(t)
“Option”
shall mean an option to purchase shares of Company Stock granted
pursuant to Section 6(b).
(u)
“Other
Cash-Based Award” shall mean a right or other interest
granted to a Participant pursuant to Section 6(g) hereof other than
an Other Stock-Based Award.
(v)
“Other
Stock-Based Award” shall mean a right or other interest
granted to a Participant, valued in whole or in part by reference
to, or otherwise based on, or related to, Company Stock pursuant to
Section 6(g) hereof, including but not limited to (i) unrestricted
Company Stock awarded as a bonus or upon the attainment of
performance goals or otherwise as permitted under the Plan, and
(ii) a right granted to a Participant to acquire Company Stock from
the Company containing terms and conditions prescribed by the
Committee.
(w)
“Participant”
shall mean an employee, consultant or director of the Company to
whom an Award is granted pursuant to the Plan, and, upon the death
of the employee, consultant or director, his or her successors,
heirs, executors and administrators, as the case may
be.
(x)
“Performance
Award” shall mean an Award granted to a Participant pursuant
to Section 6(f) hereof.
(y)
“Person”
shall have the meaning set forth in Section 3(a)(9) of the Exchange
Act, except that such term shall not include (1) the Company, (2) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company.
(z)
“Restricted
Stock” shall mean a share of Company Stock which is granted
pursuant to the terms of Section 6(e) hereof.
(aa)
“Retirement”
shall mean, in the case of employees, the termination of employment
with the Company (other than for Cause) during or after the
calendar year in which a Participant has or will reach (i) age 55
with ten years of service with the Company, or (ii) age 60 with
five years of service with the Company. “Retirement”
shall mean, in the case of directors, the termination of service
with the Company (other than for Cause) during or after the
calendar year in which a Participant has or will reach age 75 with
five years of service with the Company.
(bb)
“Rule
16b-3” shall mean the Rule 16b-3 promulgated under the
Exchange Act, as amended from time to time.
(cc)
“Securities
Act” shall mean the Securities Act of 1933, as amended from
time to time.
(dd)
“Stock
Appreciation Right” shall mean the right, granted to a
Participant under Section 6(d), to be paid an amount measured by
the appreciation in the Fair Market Value of a share of Company
Stock from the date of grant to the date of exercise of the right,
with payment to be made in cash and/or a share of Company Stock, as
specified in the Award or determined by the Committee.
(ee)
“Stock
Bonus” shall mean a bonus payable in shares of Company Stock
granted pursuant to Section 6(e) hereof.
(ff)
“Subsidiary”
shall mean a “subsidiary corporation” within the
meaning of Section 424(f) of the Code.
4.
Stock Subject to the
Plan.
(a)
Shares Available for Awards
.
The maximum number of shares of Company Stock reserved for issuance
under the Plan (all of which may be granted as Incentive Stock
Options) shall be Nine Million (9,000,000) shares. Notwithstanding
the foregoing, of the Nine Million (9,000,000) shares reserved for
issuance under this Plan, no more than Two Million Two Hundred
Fiffty Thousand 2,250,000 of such shares shall be issued as Full
Value Awards. Shares reserved under the Plan may be authorized but
unissued Company Stock or authorized and issued Company Stock held
in the Company’s treasury. The Committee may direct that any
stock certificate evidencing shares issued pursuant to the Plan
shall bear a legend setting forth such restrictions on
transferability as may apply to such shares pursuant to the
Plan.
(b)
Individual Limitation
. To the
extent required by Section 162(m) of the Code, the total
number of shares of Company Stock subject to Awards awarded to any
one Participant during any tax year of the Company, shall not
exceed Five Million 5,000,000 shares (subject to adjustment as
provided herein).
(c)
Adjustment for Change in
Capitalization
. In the event that the Committee shall
determine that any dividend or other distribution (whether in the
form of cash, Company Stock, or other property), recapitalization,
Company Stock split, reverse Company Stock split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or share
exchange, or other similar corporate transaction or event, makes an
adjustment appropriate in order to prevent dilution or enlargement
of the rights of Participants under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems
necessary or appropriate to any or all of (1) the number and
kind of shares of Company Stock which may thereafter be issued in
connection with Awards, (2) the number and kind of shares of
Company Stock, securities or other property (including cash) issued
or issuable in respect of outstanding Awards, (3) the exercise
price, grant price or purchase price relating to any Award, and
(4) the maximum number of shares subject to Awards which may
be awarded to any employee during any tax year of the Company;
provided that, with respect to Incentive Stock Options, any such
adjustment shall be made in accordance with Section 424 of the
Code; and provided further that, no such adjustment shall cause any
Award hereunder which is or could be subject to Section 409A
of the Code to fail to comply with the requirements of such
section.
(d)
Reuse of Shares
. Except as set
forth below, if any shares subject to an Award are forfeited,
cancelled, exchanged or surrendered, or if an Award terminates or
expires without a distribution of shares to the Participant, the
shares of stock with respect to such Award shall, to the extent of
any such forfeiture, cancellation, exchange, surrender,
withholding, termination or expiration, again be available for
Awards under the Plan. Notwithstanding the foregoing, upon the
exercise of any Award granted in tandem with any other Awards, such
related Awards shall be cancelled to the extent of the number of
shares of Company Stock as to which the Award is exercised and such
number of shares shall no longer be available for Awards under the
Plan. In addition, notwithstanding the forgoing, the shares of
stock surrendered or withheld as payment of either the exercise
price of an Option (including shares of stock otherwise underlying
an Award of a Stock Appreciation Right that are retained by the
Company to account for the appreciation base of such Stock
Appreciation Right) and/or withholding taxes in respect of an Award
shall no longer be available for Awards under the
Plan.
5.
Eligibility
.
The persons who
shall be eligible to receive Awards pursuant to the Plan shall be
the individuals the Committee shall select from time to time, who
are employees (including officers of the Company and its
Subsidiaries, whether or not they are directors of the Company or
its Subsidiaries), Nonemployee Directors, and consultants of the
Company and its Subsidiaries; provided, that Incentive Stock
Options shall be granted only to employees (including officers and
directors who are also employees) of the Company or its
Subsidiaries.
6.
Awards Under the
Plan
.
(a)
Agreement
. The
Committee may grant Awards in such amounts and with such terms and
conditions as the Committee shall determine in its sole discretion,
subject to the terms and provisions of the Plan. Each Award granted
under the Plan (except an unconditional Stock Bonus) shall be
evidenced by an Agreement as the Committee may in its sole
discretion deem necessary or desirable and unless the Committee
determines otherwise, such Agreement must be signed, acknowledged
and returned by the Participant to the Company. Unless the
Committee determines otherwise, any failure by the Participant to
sign and return the Agreement within such period of time following
the granting of the Award as the Committee shall prescribe shall
cause such Award to the Participant to be null and void. By
accepting an Award or other benefits under the Plan (including
participation in the Plan), each Participant, shall be conclusively
deemed to have indicated acceptance and ratification of, and
consent to, all provisions of the Plan and the
Agreement.
(b)
Stock Options.
(i)
Grant of Stock Options
. The
Committee may grant Options under the Plan to purchase shares of
Company Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time determine in
its sole discretion, subject to the terms and provisions of the
Plan. The exercise price of the share purchasable under an Option
shall be determined by the Committee, but in no event shall the
exercise price be less than the Fair Market Value per share on the
grant date of such Option. The date as of which the Committee
adopts a resolution granting an Option shall be considered the day
on which such Option is granted unless such resolution specifies a
later date.
(ii)
Identification
. Each Option
shall be clearly identified in the applicable Agreement as either
an Incentive Stock Option or a Nonqualified Stock Option and shall
state the number of shares of Company Stock to which the Option
(and/or each type of Option) relates.
(c)
Special Requirements for Incentive
Stock Options.
(i)
To the extent that
the aggregate Fair Market Value of shares of Company Stock with
respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year under the Plan
and any other stock option plan of the Company shall exceed
$100,000, such Options shall be treated as Nonqualified Stock
Options. Such Fair Market Value shall be determined as of the date
on which each such Incentive Stock Option is granted.
(ii)
No Incentive Stock
Option may be granted to an individual if, at the time of the
proposed grant, such individual owns (or is deemed to own under the
Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company unless (A) the
exercise price of such Incentive Stock Option is at least 110% of
the Fair Market Value of a share of Company Stock at the time such
Incentive Stock Option is granted and (B) such Incentive Stock
Option is not exercisable after the expiration of five years from
the date such Incentive Stock Option is granted.
(d)
Stock Appreciation
Rights.
(i)
The Committee may
grant a related Stock Appreciation Right in connection with all or
any part of an Option granted under the Plan, either at the time
such Option is granted or at any time thereafter prior to the
exercise, termination or cancellation of such Option, and subject
to such terms and conditions as the Committee shall from time to
time determine in its sole discretion, consistent with the terms
and provisions of the Plan, provided, however, that in no event
shall the appreciation base of the shares of Company Stock subject
to the Stock Appreciation Right be less than the Fair Market Value
per share on the grant date of such Stock Appreciation Right. The
holder of a related Stock Appreciation Right shall, subject to the
terms and conditions of the Plan and the applicable Agreement, have
the right by exercise thereof to surrender to the Company for
cancellation all or a portion of such related Stock Appreciation
Right, but only to the extent that the related Option is then
exercisable, and to be paid therefor an amount equal to the excess
(if any) of (i) the aggregate Fair Market Value of the shares
of Company Stock subject to the related Stock Appreciation Right or
portion thereof surrendered (determined as of the exercise date),
over (ii) the aggregate appreciation base of the shares of
Company Stock subject to the Stock Appreciation Right or portion
thereof surrendered. Upon any exercise of a related Stock
Appreciation Right or any portion thereof, the number of shares of
Company Stock subject to the related Option shall be reduced by the
number of shares of Company Stock in respect of which such Stock
Appreciation Right shall have been exercised.
(ii)
The Committee may
grant unrelated Stock Appreciation Rights in such amount and
subject to such terms and conditions, as the Committee shall from
time to time determine in its sole discretion, subject to the terms
and provisions of the Plan, provided, however, that in no event
shall the appreciation base of the shares of Company Stock subject
to the Stock Appreciation Right be less than the Fair Market Value
per share on the grant date of such Stock Appreciation Right. The
holder of an unrelated Stock Appreciation Right shall, subject to
the terms and conditions of the Plan and the applicable Agreement,
have the right to surrender to the Company for cancellation all or
a portion of such Stock Appreciation Right, but only to the extent
that such Stock Appreciation Right is then exercisable, and to be
paid therefor an amount equal to the excess (if any) of
(x) the aggregate Fair Market Value of the shares of Company
Stock subject to the Stock Appreciation Right or portion thereof
surrendered (determined as of the exercise date), over (y) the
aggregate appreciation base of the shares of Company Stock subject
to the Stock Appreciation Right or portion thereof
surrendered.
(iii)
The grant or
exercisability of any Stock Appreciation Right shall be subject to
such conditions as the Committee, in its sole discretion, shall
determine.
(e)
Restricted Stock and Stock
Bonus.
(i)
The Committee may
grant Restricted Stock awards, alone or in tandem with other Awards
under the Plan, subject to such restrictions, terms and conditions,
as the Committee shall determine in its sole discretion and as
shall be evidenced by the applicable Agreements. The vesting of a
Restricted Stock award granted under the Plan may be conditioned
upon the completion of a specified period of employment or service
with the Company or any Subsidiary, upon the attainment of
specified performance goals, and/or upon such other criteria as the
Committee may determine in its sole discretion.
(ii)
Each Agreement with
respect to a Restricted Stock award shall set forth the amount (if
any) to be paid by the Participant with respect to such Award and
when and under what circumstances such payment is required to be
made.
(iii)
The Committee may,
upon such terms and conditions as the Committee determines in its
sole discretion, provide that a certificate or certificates
representing the shares underlying a Restricted Stock award shall
be registered in the Participant’s name and bear an
appropriate legend specifying that such shares are not transferable
and are subject to the provisions of the Plan and the restrictions,
terms and conditions set forth in the applicable Agreement, or that
such certificate or certificates shall be held in escrow by the
Company on behalf of the Participant until such shares become
vested or are forfeited. Except as provided in the applicable
Agreement, no shares underlying a Restricted Stock award may be
assigned, transferred, or otherwise encumbered or disposed of by
the Participant until such shares have vested in accordance with
the terms of such Award.
(iv)
If
and to the extent
that the applicable Agreement may so provide, a Participant shall
have the right to vote and receive dividends on the shares
underlying a Restricted Stock award granted under the Plan. Unless
otherwise provided in the applicable Agreement, any stock received
as a dividend on or in connection with a stock split of the shares
underlying a Restricted Stock award shall be subject to the same
restrictions as the shares underlying such Restricted Stock
award.
(v)
The Committee may
grant Stock Bonus awards, alone or in tandem with other Awards
under the Plan, subject to such terms and conditions as the
Committee shall determine in its sole discretion and as may be
evidenced by the applicable Agreement.
(f)
Performance
Awards.
(i)
The Committee may
grant Performance Awards, alone or in tandem with other Awards
under the Plan, to acquire shares of Company Stock in such amounts
and subject to such terms and conditions as the Committee shall
from time to time in its sole discretion determine, subject to the
terms of the Plan. To the extent necessary to satisfy the
short-term deferral exception to Section 409A of the Code,
unless the Committee shall determine otherwise, the Performance
Awards shall provide that payment shall be made within 2 1/2
months after the end of the year in which the Participant has a
legally binding vested right to such award.
(ii)
In the event that
the Committee grants a Performance Award or other Award (other than
Nonqualified Stock Option or Incentive Stock Option or a Stock
Appreciation Right) that is intended to constitute qualified
performance-based compensation within the meaning
Section 162(m) of the Code, the following rules shall apply
(as such rules may be modified by the Committee to conform with
Section 162(m) of the Code and the Treasury Regulations
thereunder as may be in effect from time to time, and any
amendments, revisions or successor provisions thereto): (a)
payments under the Performance Award shall be made solely on
account of the attainment of one or more objective performance
goals established in writing by the Committee not later than 90
days after the commencement of the period of service to which the
Performance Award relates (but in no event after 25% of the period
of service has elapsed); (b) the performance goal(s) to which
the Performance Award relates shall be based on one or more of the
following business criteria applied to the Participant and/or a
business unit or the Company and/or a Subsidiary: (1) business
development progress, (2) sales, (3) sales growth, (4) earnings
growth, (5) cash flow or cash position, (6) gross margins, (7)
stock price, (8) financings (issuance of debt or equity), (9)
market share, (10) total stockholder return, (11) net
revenues, (12) earnings per share of Company Stock;
(13) net income (before or after taxes), (14) return on
assets, (15) return on sales, (16) return on assets, (17) equity or
investment, (18) improvement of financial ratings, (19) achievement
of balance sheet or income statement objectives, (20) total
stockholder return, (21) earnings from continuing operations;
levels of expense, cost or liability, (22) earnings before all
or any interest, taxes, depreciation and/or amortization
(“EBIT”, “EBITA” or “EBITDA”),
(23) cost reduction goals, (24) business development goals
(including without limitation product launches and other business
development-related opportunities), (25) identification or
consummation of investment opportunities or completion of specified
projects in accordance with corporate business plans, including
strategic mergers, acquisitions or divestitures, (26) meeting
specified market penetration or value added goals, (27) any
combination of, or a specified increase or decrease of one or more
of the foregoing over a specified period, and (28) such other
criteria as the stockholders of the Company may approve; in each
case as applicable, as determined in accordance with generally
accepted accounting principles; and (c) once granted, the
Committee may not have discretion to increase the amount payable
under such Award, provided, however, that whether or not an Award
is intended to constitute qualified performance-based compensation
within the meaning of Section 162(m) of the Code, the
Committee, to the extent provided by the Committee at the time the
Award is granted or as otherwise permitted under
Section 162(m) of the Code, shall have the authority to make
appropriate adjustments in performance goals under an Award to
reflect the impact of extraordinary items not reflected in such
goals. For purposes of the Plan, extraordinary items shall be
defined as (1) any profit or loss attributable to acquisitions
or dispositions of stock or assets, (2) any changes in
accounting standards that may be required or permitted by the
Financial Accounting Standards Board or adopted by the Company
after the goal is established, (3) all items of gain, loss or
expense for the year related to restructuring charges for the
Company, (4) all items of gain, loss or expense for the year
determined to be extraordinary or unusual in nature or infrequent
in occurrence or related to the disposal of a segment of a
business, (5) all items of gain, loss or expense for the year
related to discontinued operations that do not qualify as a segment
of a business as defined in APB Opinion No. 30, and
(6) such other items as may be prescribed by
Section 162(m) of the Code and the Treasury Regulations
thereunder as may be in effect from time to time, and any
amendments, revisions or successor provisions and any changes
thereto. The Committee shall, prior to making payment under any
award under this Section 6(f), certify in writing that all
applicable performance goals have been attained. Notwithstanding
anything to the contrary contained in the Plan or in any applicable
Agreement, no dividends or dividend equivalents will be paid with
respect to unvested Performance Awards.
(g)
Other Stock- or Cash-Based
Awards.
(i)
The Committee is
authorized to grant Awards to Participants in the form of Other
Stock-Based Awards or Other Cash-Based Awards, including restricted
stock units, as deemed by the Committee to be consistent with the
purposes of the Plan. To the extent necessary to satisfy the
short-term deferral exception to Section 409A of the Code,
unless the Committee shall determine otherwise, the awards shall
provide that payment shall be made within 2½ months after the
end of the year in which the Participant has a legally binding
vested right to such award. With respect to Other Cash-Based Awards
intended to qualify as performance based compensation under
Section 162(m) of the Code, (i) the maximum value of the
aggregate payment that any Participant may receive with respect to
any such Other Cash-Based Award that is an Annual Incentive Award
is $3,000,000, (ii) the maximum value of the aggregate payment
that any Participant may receive with respect to any such Other
Cash-Based Award that is a Long Term Incentive Award is the amount
set forth in clause (i) above multiplied by a fraction, the
numerator of which is the number of months in the performance
period and the denominator of which is twelve, and (iii) such
additional rules set forth in Section 6(f) applicable to
Awards intended to qualify as performance-based compensation under
Section 162(m) shall apply. The Committee may establish such
other rules applicable to the Other Stock- or Cash-Based Awards to
the extent not inconsistent with Section 162(m) of the
Code.
(h)
Exercisability of Awards; Cancellation
of Awards in Certain Cases.
(i)
Except as
hereinafter provided, each Agreement with respect to an Option or
Stock Appreciation Right shall set forth the period during which
and the conditions subject to which the Option or Stock
Appreciation Right evidenced thereby shall be exercisable, and each
Agreement with respect to a Restricted Stock award, Stock Bonus
award, Performance Award or other Award shall set forth the period
after which and the conditions subject to which amounts underlying
such Award shall vest or be deliverable, all such periods and
conditions to be determined by the Committee in its sole
discretion.
(ii)
Except as provided
in Section 7(d) hereof, no Option or Stock Appreciation Right
may be exercised and no shares of Company Stock underlying any
other Award under the Plan may vest or become deliverable more than
ten years after the date of grant (the “Stated Expiration
Date”).
(iii)
Except as provided
in Section 7 hereof, no Option or Stock Appreciation Right may
be exercised and no shares of common stock underlying any other
Award under the Plan may vest or become deliverable unless the
Participant is at such time in the employ (for Participants who are
employees) or service (for Participants who are Nonemployee
Directors or consultants) of the Company or a Subsidiary (or a
company, or a parent or subsidiary company of such company, issuing
or assuming the relevant right or award in a Change in Control) and
has remained continuously so employed or in service since the
relevant date of grant of the Award.
(iv)
An Option or Stock
Appreciation Right shall be exercisable by the filing of a written
notice of exercise or a notice of exercise in such other manner
with the Company, on such form and in such manner as the Committee
shall in its sole discretion prescribe, and by payment in
accordance with Section 6(i) hereof.
(v)
Unless the
applicable Agreement provides otherwise, the “Option exercise
date” and the “Stock Appreciation Right exercise
date” shall be the date that the written notice of exercise,
together with payment, are received by the Company.
(i)
Payment of Award
Price.
(i)
Unless the
applicable Agreement provides otherwise or the Committee in its
sole discretion otherwise determines, any written notice of
exercise of an Option or Stock Appreciation Right must be
accompanied by payment of the full Option or Stock Appreciation
Right exercise price.
(ii)
Payment of the
Option exercise price and of any other payment required by the
Agreement to be made pursuant to any other Award shall be made in
any combination of the following: (a) by certified or official
bank check payable to the Company (or the equivalent thereof
acceptable to the Committee), (b) with the consent of the
Committee in its sole discretion, by personal check (subject to
collection) which may in the Committee’s discretion be deemed
conditional, (c) unless otherwise provided in the applicable
Agreement, and as permitted by the Committee, by delivery of
previously-acquired shares of common stock owned by the Participant
having a Fair Market Value (determined as of the Option exercise
date, in the case of Options, or other relevant payment date as
determined by the Committee, in the case of other Awards) equal to
the portion of the exercise price being paid thereby; and/or
(d) unless otherwise provided in applicable agreement, and as
permitted by the Committee, on a net-settlement basis with the
Company withholding the amount of common stock sufficient to cover
the exercise price and tax withholding obligation. Payment in
accordance with clause (a) of this Section 6(i)(ii) may
be deemed to be satisfied, if and to the extent that the applicable
Agreement so provides or the Committee permits, by delivery to the
Company of an assignment of a sufficient amount of the proceeds
from the sale of Company Stock to be acquired pursuant to the Award
to pay for all of the Company Stock to be acquired pursuant to the
Award and an authorization to the broker or selling agent to pay
that amount to the Company and to effect such sale at the time of
exercise or other delivery of shares of Company Stock.
7.
Termination of
Employment.
(a)
Unless the
applicable Agreement provides otherwise or the Committee in its
sole discretion determines otherwise, upon termination of a
Participant’s employment or service with the Company and its
Subsidiaries by the Company or its Subsidiary for Cause (or in the
case of a Nonemployee Director upon such Nonemployee
Director’s failure to be renominated as Nonemployee Director
of the Company), the portions of outstanding Options and Stock
Appreciation Rights granted to such Participant that are
exercisable as of the date of such termination of employment or
service shall remain exercisable, and any payment or notice
provided for under the terms of any other outstanding Award as
respects the portion thereof that is vested as of the date of such
termination of employment or service, may be given, for a period of
thirty (30) days from and including the date of termination of
employment or service (and shall thereafter terminate). All
portions of outstanding Options or Stock Appreciation Rights
granted to such Participant which are not exercisable as of the
date of such termination of employment or service, and any other
outstanding Award which is not vested as of the date of such
termination of employment or service shall terminate upon the date
of such termination of employment or service.
(b)
Unless the
applicable Agreement provides otherwise or the Committee in its
sole discretion determines otherwise, upon termination of the
Participant’s employment or service with the Company and its
Subsidiaries for any reason other than as described in subsection
(a), (c), (d) or (e) hereof, the portions of outstanding
Options and Stock Appreciation Rights granted to such Participant
that are exercisable as of the date of such termination of
employment or service shall remain exercisable for a period of
ninety (90) days (and shall terminate thereafter), and any
payment or notice provided for under the terms of any other
outstanding Award as respects the portion thereof vested as of the
date of termination of employment or service may be given, for a
period of ninety (90) days from and including the date of
termination of employment or service (and shall terminate
thereafter). All additional portions of outstanding Options or
Stock Appreciation Rights granted to such Participant which are not
exercisable as of the date of such termination of employment or
service, and any other outstanding Award which is not vested as of
the date of such termination of employment or service shall
terminate upon the date of such termination of employment or
service.
(c)
Unless the
applicable Agreement provides otherwise or the Committee in its
sole discretion determines otherwise, if the Participant
voluntarily Retires with the consent of the Company or the
Participant’s employment or service terminates due to
Disability, all outstanding Options, Stock Appreciation Rights and
all other outstanding Awards (except, in the event a Participant
voluntarily Retires, with respect to Awards (other than Options and
Stock Appreciation Rights) intended to qualify as performance-based
compensation within the meaning of Section 162(m) of the Code)
granted to such Participant shall continue to vest in accordance
with the terms of the applicable Agreements. The Participant shall
be entitled to exercise each such Option or Stock Appreciation
Right and to make any payment, give any notice or to satisfy other
condition under each such other Award, in each case, for a period
of six months from and including the later of (i) date such
entire Award becomes vested or exercisable in accordance with the
terms of such Award and (ii) the date of Retirement, and
thereafter such Awards or parts thereof shall be canceled.
Notwithstanding the foregoing, the Committee may in its sole
discretion provide for a longer or shorter period for exercise of
an Option or Stock Appreciation Right or may permit a Participant
to continue vesting under an Option, Stock Appreciation Right or
Restricted Stock award or to make any payment, give any notice or
to satisfy other condition under any other Award. The Committee may
in its sole discretion, and in accordance with Section 409A of
the Code, determine (i) for purposes of the Plan, whether any
termination of employment or service is a voluntary Retirement with
the Company’s consent or is due to Disability for purposes of
the Plan, (ii) whether any leave of absence (including any
short-term or long-term Disability or medical leave) constitutes a
termination of employment or service, or a failure to have remained
continuously employed or in service, for purposes of the Plan
(regardless of whether such leave or status would constitute such a
termination or failure for purposes of employment law),
(iii) the applicable date of any such termination of
employment or service, and (iv) the impact, if any, of any of
the foregoing on Awards under the Plan.
(d)
Unless the
applicable Agreement provides otherwise or the Committee in its
sole discretion determines otherwise, if the Participant’s
employment or service terminates by reason of death, or if the
Participant’s employment or service terminates under
circumstances providing for continued rights under subsection (b),
(c) or (e) of this Section 7 and during the period
of continued rights described in subsection (b), (c) or
(e) the Participant dies, all outstanding Options, Restricted
Stock and Stock Appreciation Rights granted to such Participant
shall vest and become fully exercisable, and any payment or notice
provided for under the terms of any other outstanding Award may be
immediately paid or given and any condition may be satisfied, by
the person to whom such rights have passed under the
Participant’s will (or if applicable, pursuant to the laws of
descent and distribution) for a period of one year from and
including the date of the Participant’s death and thereafter
all such Awards or parts thereof shall be canceled.
(e)
Unless the
applicable Agreement provides otherwise or the Committee in its
sole discretion determines otherwise, upon termination of a
Participant’s employment or service with the Company and its
Subsidiaries (i) by the Company or its Subsidiaries without
Cause (including, in case of a Nonemployee Director, the failure to
be elected as a Nonemployee Director) or (ii) by the
Participant for “good reason” or any like term as
defined under any employment agreement with the Company or a
Subsidiary to which a Participant may be a party to, the portions
of outstanding Options and Stock Appreciation Rights granted to
such Participant which are exercisable as of the date of
termination of employment or service of such Participant shall
remain exercisable, and any payment or notice provided for under
the terms of any other outstanding Award as respects the portion
thereof vested as of the date of termination of employment or
service may be given, for a period of three (3) months from and
including the date of termination of employment or service and
shall terminate thereafter. Unless the applicable Agreement
provides otherwise or the Committee in its sole discretion
determines otherwise, any other outstanding Award shall terminate
as of the date of such termination of employment or
service.
(f)
Notwithstanding
anything in this Section 7 to the contrary, no Option or Stock
Appreciation Right may be exercised and no shares of Company Stock
underlying any other Award under the Plan may vest or become
deliverable past the Stated Expiration Date.
8.
Effect of Change in
Control
.
Unless otherwise
determined in an Award Agreement, in the event of a Change in
Control:
(a)
With respect to
each outstanding Award that is assumed or substituted in connection
with a Change in Control, in the event of a termination of a
Participant’s employment or service by the Company without
Cause during the 24-month period following such Change in Control,
on the date of such termination (i) such Award shall become
fully vested and, if applicable, exercisable, (ii) the
restrictions, payment conditions, and forfeiture conditions
applicable to any such Award granted shall lapse, and
(iii) any performance conditions imposed with respect to
Awards shall be deemed to be fully achieved at target
levels.
(b)
With respect to
each outstanding Award that is not assumed or substituted in
connection with a Change in Control, immediately upon the
occurrence of the Change in Control, (i) such Award shall
become fully vested and, if applicable, exercisable, (ii) the
restrictions, payment conditions, and forfeiture conditions
applicable to any such Award granted shall lapse, and
(iii) any performance conditions imposed with respect to
Awards shall be deemed to be fully achieved at target
levels.
(c)
For purposes of
this Section 8, an Award shall be considered assumed or
substituted for if, following the Change in Control, the Award
remains subject to the same terms and conditions that were
applicable to the Award immediately prior to the Change in Control
except that, if the Award related to Shares, the Award instead
confers the right to receive common stock of the acquiring
entity.
(d)
Notwithstanding
any other provision of the Plan: (i) in the event of a Change
in Control, except as would otherwise result in adverse tax
consequences under Section 409A of the Code, the Board may, in
its sole discretion, provide that each Award shall, immediately
upon the occurrence of a Change in Control, be cancelled in
exchange for a payment in cash or securities in an amount equal to
(x) the excess of the consideration paid per Share in the
Change in Control over the exercise or purchase price (if any) per
Share subject to the Award multiplied by (y) the number of
Shares granted under the Award and (ii) with respect to any
Award that constitutes a deferral of compensation subject to
Section 409A of the Code, in the event of a Change in Control
that does not constitute a change in the ownership or effective
control of the Company or in the ownership of a substantial portion
of the assets of the Company under Section 409A(a)(2)(A)(v) of
the Code and regulations thereunder, such Award shall be settled in
accordance with its original terms or at such earlier time as
permitted by Section 409A of the Code.
9.
Miscellaneous.
(a)
Agreements
evidencing Awards under the Plan shall contain such other terms and
conditions, not inconsistent with the Plan, as the Committee may
determine in its sole discretion, including penalties for the
commission of competitive acts or other actions detrimental to the
Company. Notwithstanding any other provision hereof, the Committee
shall have the right at any time to deny or delay a
Participant’s exercise of Options if such Participant is
reasonably believed by the Committee (i) to be engaged in
material conduct adversely affecting the Company or (ii) to be
contemplating such conduct, unless and until the Committee shall
have received reasonable assurance that the Participant is not
engaged in, and is not contemplating, such material conduct adverse
to the interests of the Company.
(b)
participants are
and at all times shall remain subject to the trading window
policies adopted by the Company from time to time throughout the
period of time during which they may exercise Options, Stock
Appreciation Rights or sell shares of Company Stock acquired
pursuant to the Plan.
10.
No Special Employment Rights, No Right
to Award
.
(a)
Nothing contained
in the Plan or any Agreement shall confer upon any Participant any
right with respect to the continuation of employment or service by
the Company or interfere in any way with the right of the Company,
subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or service or to
increase or decrease the compensation of the
Participant.
(b)
No person shall
have any claim or right to receive an Award hereunder. The
Committee’s granting of an Award to a Participant at any time
shall neither require the Committee to grant any other Award to
such Participant or other person at any time or preclude the
Committee from making subsequent grants to such Participant or any
other person.
11.
Securities Matters
.
(a)
The Company shall
be under no obligation to effect the registration pursuant to the
Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar
compliance under any state laws. Notwithstanding anything herein to
the contrary, the Company shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of Company
Stock pursuant to the Plan unless and until the Company is advised
by its counsel that the issuance and delivery of such certificates
is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities
exchange on which shares of Company Stock are traded. The Committee
may require, as a condition of the issuance and delivery of
certificates evidencing shares of Company Stock pursuant to the
terms hereof, that the recipient of such shares make such
agreements and representations, and that such certificates bear
such legends, as the Committee, in its sole discretion, deems
necessary or desirable.
(b)
The transfer of any
shares of Company Stock hereunder shall be effective only at such
time as counsel to the Company shall have determined that the
issuance and delivery of such shares is in compliance with all
applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Company
Stock are traded. The Committee may, in its sole discretion, defer
the effectiveness of any transfer of shares of Company Stock
hereunder in order to allow the issuance of such shares to be made
pursuant to registration or an exemption from registration or other
methods for compliance available under federal or state securities
laws. The Committee shall inform the Participant in writing of its
decision to defer the effectiveness of a transfer. During the
period of such deferral in connection with the exercise of an
Award, the Participant may, by written notice, withdraw such
exercise and obtain the refund of any amount paid with respect
thereto.
12.
Withholding Taxes
.
(a)
Whenever cash is to
be paid pursuant to an Award, the Company shall have the right to
deduct therefrom an amount sufficient to satisfy any federal, state
and local withholding tax requirements related
thereto.
(b)
Whenever shares of
Company Stock are to be delivered pursuant to an Award, the Company
shall have the right to require the Participant to remit to the
Company in cash an amount sufficient to satisfy any federal, state
and local withholding tax requirements related thereto. With the
approval of the Committee, a Participant may satisfy the foregoing
requirement by electing to have the Company withhold from delivery
shares of Company Stock having a value equal to the minimum amount
of tax required to be withheld. Such shares shall be valued at
their Fair Market Value on the date of which the amount of tax to
be withheld is determined. Fractional share amounts shall be
settled in cash. Such a withholding election may be made with
respect to all or any portion of the shares to be delivered
pursuant to an Award.
13.
Non-Competition and
Confidentiality
.
By accepting Awards
and as a condition to the exercise of Awards and the enjoyment of
any benefits of the Plan, including participation therein, each
Participant agrees to be bound by and subject to non-competition,
confidentiality and invention ownership agreements acceptable to
the Committee or any officer or director to whom the Committee
elects to delegate such authority.
14.
Notification of Election Under Section
83(b) of the Code
.
If any Participant
shall, in connection with the acquisition of shares of Company
Stock under the Plan, make the election permitted under
Section 83(b) of the Code, such Participant shall notify the
Company of such election within 10 days of filing notice of the
election with the Internal Revenue Service.
15.
Amendment or Termination of the
Plan
.
The Board of
Directors or the Committee may, at any time, suspend or terminate
the Plan or revise or amend it in any respect whatsoever; provided,
however, that the requisite stockholder approval shall be required
if and to the extent the Board of Directors or Committee determines
that such approval is appropriate or necessary for purposes of
satisfying Sections 162(m) or 422 of the Code or Rule 16b-3 or
other applicable law. Awards may be granted under the Plan prior to
the receipt of such stockholder approval of the Plan but each such
grant shall be subject in its entirety to such approval and no
Award may be exercised, vested or otherwise satisfied prior to the
receipt of such approval. No amendment or termination of the Plan
may, without the consent of a Participant, adversely affect the
Participant’s rights under any outstanding
Award.
16.
Transfers Upon Death;
Nonassignability
.
(a)
A Participant may
file with the Committee a written designation of a beneficiary on
such form as may be prescribed by the Committee and may, from time
to time, amend or revoke such designation. If no designated
beneficiary survives the Participant, upon the death of a
Participant, outstanding Awards granted to such Participant may be
exercised only by the executor or administrator of the
Participant’s estate or by a person who shall have acquired
the right to such exercise by will or by the laws of descent and
distribution. No transfer of an Award by will or the laws of
descent and distribution shall be effective to bind the Company
unless the Committee shall have been furnished with written notice
thereof and with a copy of the will and/or such evidence as the
Committee may deem necessary to establish the validity of the
transfer and an agreement by the transferee to comply with all the
terms and conditions of the Award that are or would have been
applicable to the Participant and to be bound by the
acknowledgments made by the Participant in connection with the
grant of the Award.
(b)
During a
Participant’s lifetime, the Committee may, in its discretion,
pursuant to the provisions set forth in this clause (b), permit the
transfer, assignment or other encumbrance of an outstanding Option
unless such Option is an Incentive Stock Option and the Committee
and the Participant intends that it shall retain such status.
Subject to the approval of the Committee and to any conditions that
the Committee may prescribe, a Participant may, upon providing
written notice to the General Counsel of the Company, elect to
transfer any or all Options granted to such Participant pursuant to
the Plan to members of his or her immediate family, including, but
not limited to, children, grandchildren and spouse or to trusts for
the benefit of such immediate family members or to partnerships in
which such family members are the only partners; provided, however,
that no such transfer by any Participant may be made in exchange
for consideration. Any such transferee must agree, in writing, to
be bound by all provisions of the Plan.
17.
Effective Date and Term of
Plan
.
The Plan was
adopted by the Board on May 16, 2012 (the “Effective
Date”). The Plan was amended on February 23, 2017 to increase
by 2,00,000 (post stock split) the number of shares of the Company
Stock that may be granted under the Plan. The Plan was further
amended on January 9, 2019, to increase the number of shares of the
Conpany Stock that may be granted pursuant to awards under the Plan
by 5,000,000 (post reverse stock split) shares of Company Stock,
subject to approval by the Company’s stockholders. All awards
under the Plan prior to such stockholder approval were subject in
their entirety to such approval. If such approval is not obtained
prior to the first anniversary of the date of adoption of the Plan,
the Plan and all awards thereunder shall terminate on that date.
Unless earlier terminated by the Board of Directors, the right to
grant Awards under the Plan shall terminate on the tenth
anniversary of the Effective Date. Awards outstanding at Plan
termination shall remain in effect according to their terms and the
provisions of the Plan.
18.
Applicable Law
.
Except to the
extent preempted by any applicable federal law, the Plan shall be
construed and administered in accordance with the laws of the State
of Delaware, without reference to its principles of conflicts of
law.
19.
Participant Rights
.
(a)
No
Participant shall have any claim to be granted any award under the
Plan, and there is no obligation for uniformity of treatment for
Participants. Except as provided specifically herein, a Participant
or a transferee of an Award shall have no rights as a stockholder
with respect to any shares covered by any award until the date of
the issuance of a Company Stock certificate to him or her for such
shares.
(b)
Determinations by the Committee under the Plan relating to the
form, amount and terms and conditions of grants and Awards need not
be uniform, and may be made selectively among persons who receive
or are eligible to receive grants and awards under the Plan,
whether or not such persons are similarly situated.
20.
Unfunded Status of Awards
.
The Plan is
intended to constitute an “unfunded” plan for incentive
and deferred compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in
the Plan or any Agreement shall give any such Participant any
rights that are greater than those of a general creditor of the
Company.
21.
No Fractional Shares
.
No fractional
shares of Company Stock shall be issued or delivered pursuant to
the Plan. The Committee shall determine whether cash, other Awards,
or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
22.
Interpretation
. The Plan is
designed and intended to the extent applicable, to comply with
Section 162(m) of the Code, and to provide for grants and
other transactions which are exempt under Rule 16b-3, and all
provisions hereof shall be construed in a manner to so comply.
Awards under the Plan are intended to comply with Code
Section 409A to the extent subject thereto and the Plan and
all Awards shall be interpreted in accordance with Code
Section 409A and Department of Treasury regulations and other
interpretive guidance issued thereunder, including without
limitation any such regulations or other guidance that may be
issued after the effective date of the Plan. Notwithstanding any
provision in the Plan to the contrary, no payment or distribution
under this Plan that constitutes an item of deferred compensation
under Code Section 409A and becomes payable by reason of a
Participant’s termination of employment or service with the
Company will be made to such Participant until such
Participant’s termination of employment or service
constitutes a “separation from service” (as defined in
Code Section 409A). For purposes of this Plan, each amount to
be paid or benefit to be provided shall be construed as a separate
identified payment for purposes of Code Section 409A. If a
participant is a “specified employee” (as defined in
Code Section 409A), then to the extent necessary to avoid the
imposition of taxes under Code Section 409A, such Participant
shall not be entitled to any payments upon a termination of his or
her employment or service until the earlier of: (i) the
expiration of the six (6)-month period measured from the date of
such Participant’s “separation from service” or
(ii) the date of such Participant’s death. Upon the
expiration of the applicable waiting period set forth in the
preceding sentence, all payments and benefits deferred pursuant to
this Section 22 (whether they would have otherwise been
payable in a single lump sum or in installments in the absence of
such deferral) shall be paid to such Participant in a lump sum as
soon as practicable, but in no event later than sixty
(60) calendar days, following such expired period, and any
remaining payments due under this Plan will be paid in accordance
with the normal payment dates specified for them
herein.
********
Approved and
adopted by the Board of Directors on this 9th day of January
2019.
Youngevity (NASDAQ:YGYI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Youngevity (NASDAQ:YGYI)
Historical Stock Chart
From Apr 2023 to Apr 2024
