DESCRIBED
HEREIN. THIS INFORMATION STATEMENT IS BEING FURNISHED
TO
YOU SOLELY FOR THE PURPOSE OF INFORMING YOU OF THE MATTERS
DESCRIBED
HEREIN.
Dear
Stockholders:
We
are furnishing this notice and the accompanying Information Statement to the holders of shares of common stock of Trxade Group,
Inc., a Delaware corporation (the “Company”), for informational purposes only pursuant to Section 14(c) of
the Exchange Act, and the rules and regulations prescribed thereunder.
The purpose of this Information
Statement is to notify our stockholders that effective on October 15, 2019, the holders of 25,993,750 shares of
the Company’s common stock, representing 66.7% of the outstanding shares of the Company’s common stock as of
such date, executed a written consent in lieu of the 2019 annual meeting of stockholders (the “Majority Stockholder Consent”),
approving the following matters, which had previously been approved by the Board of directors of the Company on October 9,
2019, and recommended to be presented to the majority stockholders for their approval by the Board of Directors on the same
date:
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the
appointment of five members to our Board of Directors (the “Board”);
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the
adoption of the Trxade Group, Inc. 2019 Equity Incentive Plan;
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authority for our Board of Directors, without further
stockholder approval, to effect a reverse stock split of all of the outstanding common stock of the Company, by the filing
of an amendment to our Certificate of Incorporation with the Secretary of State of Delaware, in a ratio of between one-for-two
and one-for-ten, with the Company’s Board of Directors having the discretion as to whether or not the reverse split
is to be effected, and with the exact exchange ratio of any reverse split to be set at a whole number within the above range
as determined by the Board of Directors in its sole discretion, at any time before the earlier of (a) October 15, 2020;
and (b) the date of the Company’s 2020 annual meeting of stockholders;
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the
appointment of MaloneBailey, LLP as our independent registered public accounting firm for the fiscal year ended December 31,
2019;
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an
advisory vote on the frequency of an advisory vote on executive compensation; and
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an
advisory vote on executive compensation.
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This notice, the accompanying
Information Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, are being made available
on or about October 25, 2019 to all of our stockholders of record at the close of business on October 15, 2019.
In accordance with Rule
14c-2 of the Exchange Act, the corporate actions will be effective no earlier than twenty (20) days after this Information Statement
has been made available to our stockholders, which date we expect to be on or approximately November 14, 2019.
The
enclosed Information Statement is also available at http://materials.proxyvote.com/89846A. This website also includes
copies of the Information Statement and the Annual Report to stockholders for the year ended December 31, 2018. Stockholders may
also request a copy of the Information Statement and the Company’s Annual Report by contacting our main office at (800)
261-0281.
This
notice and the accompanying Information Statement shall constitute notice to you of the action by written consent in accordance
with Rule 14c-2 promulgated under the Exchange Act.
PLEASE
NOTE THAT THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED
HEREIN.
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By
Order of the Board of Directors
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/s/
Suren Ajjarapu
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Chairman
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Date:
October 25, 2019
INFORMATION
STATEMENT
TABLE
OF CONTENTS
Appendices:
FORWARD-LOOKING
STATEMENTS
This
Information Statement contains “forward-looking statements.” These statements are based on our current expectations
and involve risks and uncertainties which may cause results to differ materially from those set forth in the statements. The forward-looking
statements may include statements regarding actions to be taken in the future. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should
be evaluated together with the many uncertainties that affect our business, particularly those set forth in the section on forward-looking
statements and in the risk factors in Item 1.A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,
as filed with the Securities and Exchange Commission on March 22, 2019.
DEFINITIONS
Unless
the context otherwise requires, for the purposes of this Information Statement:
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“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended;
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“SEC”
or the “Commission” refers to the United States Securities and Exchange Commission; and
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“Securities
Act” refers to the Securities Act of 1933, as amended.
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TRXADE
GROUP, INC.
3840
Land O’ Lakes Blvd
Land
O’ Lakes, Florida 34639
Phone:
(800) 261-0281
INFORMATION
STATEMENT PURSUANT TO SECTION 14(c)
OF
THE SECURITIES EXCHANGE ACT OF 1934
GENERAL
INFORMATION
This
Information Statement is being mailed on or about October 25, 2019 to the holders of record at the close of business on
October 15, 2019 (the “Record Date”) of shares of the common stock of Trxade Group, Inc., a Delaware corporation,
in connection with actions taken by the holders of a majority of our outstanding common stock as follows:
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the
appointment of five members to our Board of Directors (the “Board”);
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the
adoption of the Trxade Group, Inc. 2019 Equity Incentive Plan;
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authority for our Board of Directors, without further
stockholder approval, to effect a reverse stock split of all of the outstanding common stock of the Company, by the filing
of an amendment to the Company’s Certificate of Incorporation with the Secretary of State of Delaware, in a ratio of
between one-for-two and one-for-ten, with the Company’s Board of Directors having the discretion as to whether or not
the reverse split is to be effected, and with the exact exchange ratio of any reverse split to be set at a whole number within
the above range as determined by the Board of Directors in its sole discretion, at any time before the earlier of (a) October
15, 2020; and (b) the date of the Company’s 2020 annual meeting of stockholders;
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the
appointment of MaloneBailey, LLP as our independent registered public accounting firm for the fiscal year ended December 31,
2019;
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an
advisory vote on the frequency of an advisory vote on executive compensation; and
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an
advisory vote on executive compensation.
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Our Chairman and Chief
Executive Officer, Suren Ajjarapu, and our Chief Operating Officer, President and director, Prashant Patel, significant stockholders
of the Company, and their spouses and affiliates trusts, which collectively own 25,993,750 shares of the Company’s
common stock, representing 66.7% of the outstanding shares of the Company’s common stock, have executed the Majority
Stockholder Consent approving the actions described above.
Each of the actions described
above, as approved by the majority stockholders pursuant to the Majority Stockholder Consent effective on October 15, 2019,
had previously been approved by the Board of Directors of the Company on October 9, 2019, and recommended to be presented
to the majority stockholders for their approval by the Board of Directors on the same date.
The
elimination of the need for a formal meeting of the stockholders to approve the actions is authorized by Section 228 of
Delaware General Corporation Law (the “Delaware Law”). This Section provides that any action required by Delaware
Law, to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted and delivered to the corporation. In order to eliminate the costs and management time involved
in holding an annual meeting and in order to effect the actions described above, the Board of Directors of the Company voted to
utilize the written consent of the majority stockholders of the Company and did in fact obtain, the written consent of the majority
stockholders to approve the actions described above, pursuant to the Majority Stockholder Consent.
This Information Statement
and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and
Exchange Commission on March 22, 2019 (the “Form 10-K”) are being mailed to stockholders as of the Record Date,
on or about October 25, 2019, pursuant to the requirements of Section 14(c) of the Exchange Act. The actions approved by
the majority stockholders will be effective no earlier than twenty (20) days after this Information Statement has been made available
to our stockholders, which date we expect to be on or approximately November 14, 2019.
The
entire cost of furnishing this Information Statement will be borne by us. We will request brokerage houses, nominees, custodians,
fiduciaries and other like parties to forward this Information Statement to the beneficial owners of our voting securities held
of record by them and we will reimburse such persons for out-of-pocket expenses incurred in forwarding such material.
Dissenters’
Right of Appraisal
No
dissenters’ or appraisal rights under Delaware Law are afforded to the Company’s stockholders as a result of the approval
of the actions set forth above.
Vote
Required
The number of votes cast
in favor of the actions described above had to exceed a majority of the Company’s outstanding shares of common stock in
order to approve the above actions, except for the election of directors, which required a plurality of the votes cast. As of
the Record Date, the Company had outstanding 38,986,459 shares of common stock, which each vote one (1) voting share on
stockholder matters, and no other voting shares. The majority stockholders voted 66.7% of our voting shares as of the Record
Date via the Majority Stockholder Consent, to approve the actions described above.
ELECTION
OF DIRECTORS
Pursuant
to the Majority Stockholder Consent, upon recommendation of the Board, all five of the members of our Board of Directors were
reelected to hold office until the next annual meeting of stockholders or until their successors have been duly elected and qualified.
The following is biographical information on the members of our Board of Directors:
Name
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Position
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Age
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Director/Officer
Since
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Suren
Ajjarapu
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Chairman,
Chief Executive Officer and Secretary
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49
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January
2014
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Prashant
Patel
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Director,
President and Chief Operating Officer
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45
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January
2014
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Donald
G. Fell
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Director
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73
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January
2014
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Michael
L. Peterson
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Director
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57
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August
2016
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Gary
Augusta
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Director*
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52
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October
2019
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*
Appointed as a member of the Board of Directors by the Board of Directors on October 11, 2019.
Suren
Ajjarapu (Age 49)
Mr.
Ajjarapu has served as Chairman of the Board, Chief Executive Officer and Secretary since our acquisition of Trxade Group, Inc.,
a Nevada corporation (“Trxade Nevada”) (our predecessor company) on January 8, 2014, and as the Chairman of
the Board, Chief Executive Officer and Secretary of Trxade Nevada since its inception. Mr. Ajjarapu has also served as Chairman
of the Board for Feeder Creek Group, Inc since March 2018. Feeder Creek Group, Inc. is a company involved in developing renewable
natural gas sites in Iowa. Mr. Ajjarapu was a Founder, CEO and Chairman of Sansur Renewable Energy, Inc., a company involved in
developing wind power sites in the Midwest, United States, from 2009 to 2012. Mr. Ajjarapu was a Founder, President and Director
of Aemetis, Inc., a biofuels company (AMTX.OB) and a Founder, Chairman and Chief Executive Officer of International Biofuels,
a subsidiary of Aemetis, Inc., from 2006 to 2009. Mr. Ajjarapu was Co-Founder, COO, and Director Global Information Technology,
Inc., an IT outsourcing and systems design company, headquartered in Tampa, Florida with major operations in India from 1995 to
2006. Mr. Ajjarapu holds an MS in Environmental engineering from South Dakota State University, Brookings, South Dakota, and an
MBA from the University of South Florida, specializing in International Finance and Management. Mr. Ajjarapu is also a graduate
of the Venture Capital and Private Equity program at Harvard University.
Director
Qualifications:
Our
Board of Directors believes that Mr. Ajjarapu’s history with our company, from both an operational standpoint and that of
a member of management, are vital to the Board’s collective knowledge of our day-to-day operations.
Prashant
Patel (Age 45)
Mr.
Patel has served as our full-time President and COO, and as a director, since our acquisition of Trxade Nevada on January 8, 2014,
and as the COO and President and as a director of Trxade Nevada since its inception. Mr. Patel is a registered pharmacist and
pharmaceutical consultant with over ten years of experience in retail pharmacy and pharmaceutical logistics and the founder of
several pharmacies in the Tampa Bay, Florida area. Mr. Patel has been a President and Member of the Board of Trxade Nevada since
August 2010. Since October 2008, Mr. Patel has been Managing Member of APAA LLC, a pharmacy. Since April 2007, Mr. Patel has been
a Vice President of Holiday Pharmacy, Inc., a pharmacy. Mr. Patel graduated from Nottingham University School of Pharmacy and
practiced in the United Kingdom before obtaining his masters in Transport, Trade and Finance from Cass Business School, City University,
United Kingdom.
Director
Qualifications:
Our
Board of Directors believes that Mr. Patel’s history with our company, from both an operational standpoint and that of a
member of management, are vital to the Board’s collective knowledge of our day-to-day operations.
Donald
G. Fell (Age 73)
Mr. Fell has served
as an Independent Director of our company since January 2014, as well as a director of Trxade Nevada since December. He is presently
Professor and Institute Director for the Davis, California-based Foundation for Teaching Economics and adjunct professor of economics
for the University of Colorado, Colorado Springs. From 1995 – 2012, Mr. Fell held positions with the University of South
Florida as a member of the Executive MBA faculty, Director of Executive and Professional Education and Senior Fellow of the Public
Policy Institute. He has also served as visiting professor of economics at the University of LaRochelle, France, and as adjunct
professor of economics at both Illinois State University and The Ohio State University. Mr. Fell holds undergraduate and graduate
degrees in economics from Indiana State University and is all but dissertation (ABD) in economics from Illinois State University.
Through his work with the Foundation for Teaching Economics and the University of Colorado, Colorado Springs he has conducted
graduate institutes on economic policy and environmental economics in 44 states, throughout Canada, the Islands and Eastern Europe.
Director
Qualifications:
Our
Board of Director’s believes that Mr. Fell’s extensive experience in the field of economics and business will provide
us with valuable insight as we seek to execute our business strategy.
Michael
L. Peterson (Age 57)
Mr.
Peterson has served as an independent Director of our company since August 2016. Since June 2018, Mr. Peterson has served as the
president of the Taipei Taiwan Mission of The Church of Jesus Christ of Latter-day Saints, in Taipei, Taiwan. Mr. Peterson served
as the CEO of Pedevco Corp. (NYSE American:PED), a public company engaged primarily in the acquisition, exploration, development
and production of oil and natural gas shale plays in the US from May 2016 to May 2018. Mr. Peterson served as CFO of Pedevco between
July 2012 and May 2016, and as Executive Vice President of Pacific Energy Development (Pedevco’s predecessor) from July
2012 to October 2014, and as Pedevco’s President from October 2014 to May 2018. Mr. Peterson joined Pacific Energy Development
as its Executive Vice President in September 2011, assumed the additional office of Chief Financial Officer in June 2012, and
served as a member of its board of directors from July 2012 to September 2013. Mr. Peterson formerly served as Interim President
and CEO (from June 2009 to December 2011) and as director (from May 2008 to December 2011) of Pacific Energy Development, as a
director (from May 2006 to July 2012) of Aemetis, Inc. (formerly AE Biofuels Inc.), a Cupertino, California-based global advanced
biofuels and renewable commodity chemicals company (AMTX.OB), and as Chairman and Chief Executive Officer of Nevo Energy, Inc.
(NEVE) (formerly Solargen Energy, Inc.), a Cupertino, California-based developer of utility-scale solar farms which he helped
form in December 2008 (from December 2008 to July 2012). From 2005 to 2006, Mr. Peterson served as a managing partner of American
Institutional Partners, a venture investment fund based in Salt Lake City. From 2000 to 2004, he served as a First Vice President
at Merrill Lynch, where he helped establish a new private client services division to work exclusively with high net worth investors.
From September 1989 to January 2000, Mr. Peterson was employed by Goldman Sachs & Co. in a variety of positions and roles,
including as a Vice President with the responsibility for a team of professionals that advised and managed over $7 billion in
assets. Mr. Peterson received his MBA at the Marriott School of Management and a BS in statistics/computer science from Brigham
Young University.
Director
Qualifications:
Our
Board of Directors believes that Mr. Peterson’s extensive experience with public companies is a significant addition
to the Board.
Gary
Augusta (Age 52)
Mr.
Augusta has over 25 years of experience in finance, healthcare, engineering, technology and other innovative sectors including
leadership roles in mergers and acquisitions, capital markets and investments, corporate development including strategic planning
and partnership development, and as a member of public company boards of directors. Mr. Augusta is currently on the Board of Directors
of First Choice Healthcare Solutions Inc. (OTC: FCHS) and was a Board Director, including Executive Chairman for over four years,
of Apollo Medical Holdings, Inc. (NASDAQ: AMEH) from 2012 to November 2018. Under Mr. Augusta’s leadership, Apollo grew
from less than $10M in annual revenue and under a $3M market capitalization to a NASDAQ uplist and a market capitalization of
over $1 Billion within 5 years. In addition to governance positions, Mr. Augusta was also President and lead of growth and capital
initiatives during his tenure. Mr. Augusta has served as President of Bedford Falls Capital LLC since September 2018, which company
invests in emerging growth companies, both public and private. Mr. Augusta also serves as President of Flacane Advisors focusing
on healthcare and technology capital investments, board roles and advisory services, a position he has held since January 2014.
From January 2010 to December 2014, Mr. Augusta was President of SpaGus Ventures and SpaGus Capital Partners focusing on healthcare
and technology investments and advisory services. From March 2004 to December 2009, Mr. Augusta was President and CEO of OCTANe,
an innovation development company. From March 2001 to January 2004, Mr. Augusta was a Corporate Officer at Fluor, Inc., a Fortune
500 company, focusing on Corporate Development and M&A. From June 1994 to March 2000, Mr. Augusta was a Consultant and Principal
with AT Kearney, a leading global consulting firm. Mr. Augusta earned a BS in Mechanical Engineering from the University of Rhode
Island and a Master of Science and Management (MSM) from Georgia Institute of Technology (Georgia Tech).
Director
Qualifications:
Our
Board of Directors believes that Mr. Augusta’s extensive experience with public companies is valuable to the Board.
THE
COMPANY’S 2019 EQUITY INCENTIVE PLAN
On
October 9, 2019, the Board of Directors adopted, subject to the ratification by the majority stockholders, which ratification
occurred pursuant to the Majority Stockholder Consent, effective on October 15, 2019, the Company’s 2019 Equity Incentive
Plan (the “Plan”) in the form of the attached Appendix A.
The
following is a summary of the material features of the Plan:
What
is the purpose of the Plan?
The
Plan is intended to secure for the Company the benefits arising from ownership of the Company’s common stock by the employees,
officers, directors and consultants of the Company, all of whom are and will be responsible for the Company’s future growth.
The Plan is designed to help attract and retain for the Company, qualified personnel for positions of exceptional responsibility,
to reward employees, officers, directors and consultants for their services to the Company and to motivate such individuals through
added incentives to further contribute to the success of the Company.
Who
is eligible to participate in the Plan?
The
Plan will provide an opportunity for any employee, officer, director or consultant of the Company, subject to any limitations
provided by federal or state securities laws, to receive (i) incentive stock options (to eligible employees only); (ii) nonqualified
stock options; (iii) restricted stock; (iv) stock awards; (v) shares in performance of services; or (vi) any combination of the
foregoing. In making such determinations, the Board of Directors (or the Compensation Committee) may take into account the nature
of the services rendered by such person, his or her present and potential future contribution to the Company’s success,
and such other factors as the Board of Directors (or the Compensation Committee) in its discretion shall deem relevant. Incentive
stock options granted under the Plan are intended to qualify as “incentive stock options” within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Nonqualified (non-statutory stock
options) granted under the Plan are not intended to qualify as incentive stock options under the Code. See “Federal Income
Tax Consequences” below for a discussion of the principal federal income tax consequences of awards under the Plan.
No awards can be issued to any person in consideration for services rendered where such services are in connection with the offer
or sale of securities in a capital-raising transaction, or they directly or indirectly promote or maintain a market for the Company’s
securities.
No
incentive stock option may be granted under the Plan to any person who, at the time of the grant, owns (or is deemed to own) stock
possessing more than 10% of the total combined voting power of our Company or any affiliate of our Company, unless the exercise
price is at least 110% of the fair market value of the stock subject to the option on the date of grant and the term of the option
does not exceed five years from the date of grant.
Who
will administer the Plan?
The
Plan shall be administered by the Board of Directors of the Company and/or the Company’s Compensation Committee (if one
is formed). The Board of Directors (or the Compensation Committee) shall have the exclusive right to interpret and construe the
Plan, to select the eligible persons who shall receive an award, and to act in all matters pertaining to the grant of an award
and the determination and interpretation of the provisions of the related award agreement, including, without limitation, the
determination of the number of shares subject to stock options and the option period(s) and option price(s) thereof, the number
of shares of restricted stock or shares subject to stock awards or performance shares subject to an award, the vesting periods
(if any) and the form, terms, conditions and duration of each award, and any amendment thereof consistent with the provisions
of the Plan.
How
much common stock is subject to the Plan?
Subject
to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of
common stock, or a reorganization or reclassification of the Company’s common stock, the maximum aggregate number of shares
of common stock which may be issued pursuant to awards under the Plan is six million 6,000,000 shares. Such shares
of common stock shall be made available from the authorized and unissued shares of the Company.
If
shares of common stock subject to an option or performance award granted under the Plan expire or otherwise terminate without
being exercised (or exercised in full), such shares shall become available again for grants under the Plan. If shares of restricted
stock awarded under the Plan are forfeited to us or repurchased by us, the number of shares forfeited or repurchased shall not
again be available under the Plan. Similarly, any shares cancelled in cashless exercises are not available for reissuance under
the Plan.
How
many securities have been granted pursuant to the Plan since its approval by the Board of Directors?
No
shares of common stock, options, or other securities have been issued under the Plan since approved by the Board of Directors.
Does
the Company have any present plans to grant or issue securities pursuant to the Plan?
The
Company cannot determine the amounts of awards that will be granted or allocated under the Plan or the benefits of any awards
to the executive officers and directors of the Company, or employees who are not executive officers as a group. Additionally,
the benefits or amounts which would have been received by, or allocated to, officers and directors of the Company for the last
completed fiscal year, if the Plan had been in effect, cannot be determined. Under the terms of the Plan, the number of awards
to be granted is within the discretion of the Board of Directors or the Compensation Committee.
The
Board of Directors or the Compensation Committee may issue Options, shares of restricted stock or other awards under the Plan
for such consideration as determined in their sole discretion, subject to applicable law.
What
will be the exercise price, vesting terms and expiration date of options and awards under the Plan?
The
Board of Directors, in its sole discretion, shall determine the exercise price of any Options granted under the Plan which exercise
price shall be set forth in the agreement evidencing the Option, provided however that at no time shall the exercise price be
less than $0.00001 par value per share of the Company’s common stock. Also, the exercise price of incentive stock options
may not be less than the fair market value of the common stock subject to the option on the date of the grant and, in some cases
(see “Who is eligible to participate in the Plan?” above), may not be less than 110% of such fair market value.
The exercise price of non-statutory options also may not be less than the fair market value of the common stock on the date of
grant. The exercise price of options granted under the Plan must be paid either in cash at the time the option is exercised or,
at the discretion of our Board of Directors, (i) by delivery of already-owned shares of our common stock, (ii) pursuant to a deferred
payment arrangement, (iii) pursuant to a net exercise arrangement, or (iv) pursuant to a cashless exercise as permitted under
applicable rules and regulations of the Securities and Exchange Commission.
Options
and other awards granted under the Plan may be exercisable in cumulative increments, or “vest,” as determined
by our Board of Directors or the Compensation Committee. Our Board of Directors and the Compensation Committee has the power to
accelerate the time as of which an option may vest or be exercised. Shares of restricted stock acquired under a restricted stock
purchase or grant agreement may, but need not, be subject to forfeiture to us or other restrictions that will lapse in accordance
with a vesting schedule to be determined by the Board of Directors or the Compensation Committee. In the event a recipient’s
employment or service with our Company terminates, any or all of the shares of common stock held by such recipient that have not
vested as of the date of termination under the terms of the restricted stock agreement may be forfeited to our Company in accordance
with such restricted stock agreement.
The
expiration date of Options and other awards granted under the Plan will be determined by our Board of Directors or the Compensation
Committee. The maximum term of options and performance shares under the Plan is ten years, except that in certain cases the maximum
term is five years.
What
equitable adjustments will be made in the event of certain corporate transactions?
Upon
the occurrence of:
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(i)
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the
adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which
the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock
of the surviving or resulting corporation;
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(ii)
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the
approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations
of the Company) of substantially all of the assets of the Company; or
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(iii)
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in
the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company’s
voting capital stock by any person within the meaning of Rule 13d-3 under the Exchange Act (other than the Company or a person
that directly or indirectly controls, is controlled by, or is under common control with, the Company);
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and
unless otherwise provided in the award agreement with respect to a particular award, all outstanding stock options shall become
immediately exercisable in full, subject to any appropriate adjustments, and shall remain exercisable for the remaining option
period, regardless of any provision in the related award agreement limiting the ability to exercise such stock option or any portion
thereof for any length of time. All outstanding performance shares with respect to which the applicable performance period has
not been completed shall be paid out as soon as practicable; and all outstanding shares of restricted stock with respect to which
the restrictions have not lapsed shall be deemed vested and all such restrictions shall be deemed lapsed and the restriction period
ended.
Additionally,
after the merger of one or more corporations into the Company, any merger of the Company into another corporation, any consolidation
of the Company and one or more corporations, or any other corporate reorganization of any form involving the Company as a party
thereto and involving any exchange, conversion, adjustment or other modification of the outstanding shares of the common stock,
each participant shall, at no additional cost, be entitled, upon any exercise of such participant’s stock option, to receive,
in lieu of the number of shares as to which such stock option shall then be so exercised, the number and class of shares of stock
or other securities or such other property to which such participant would have been entitled to pursuant to the terms of the
agreement of merger or consolidation or reorganization, if at the time of such merger or consolidation or reorganization, such
participant had been a holder of record of a number of shares of common stock equal to the number of shares as to which such stock
option shall then be so exercised.
What
happens to options upon termination of employment or other relationships?
The
incentive stock options shall lapse and cease to be exercisable upon the termination of service of an employee or director as
defined in the Plan, or within such period following a termination of service as shall have been determined by the Board of Directors
and set forth in the related award agreement; provided, further, that such period shall not exceed the period of time ending on
the date three (3) months following a termination of service. Non-incentive stock options are governed by the related award agreements.
Will
adjustments be made for tax withholding?
To
the extent provided by the terms of an option or other award, a participant may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option, or award by a cash payment upon exercise, or in the discretion of our Board
of Directors or Compensation Committee, by authorizing our Company to withhold a portion of the stock otherwise issuable to the
participant, by delivering already-owned shares of our common stock or by a combination of these means.
Federal
income tax consequences?
The
following is a summary of the principal United States federal income tax consequences to the recipient and our Company with respect
to participation in the Plan. This summary is not intended to be exhaustive, and does not discuss the income tax laws of any city,
state or foreign jurisdiction in which a participant may reside.
Incentive
Stock Options
There
will be no federal income tax consequences to either us or the recipient upon the grant of an incentive stock option. Upon exercise
of the option, the excess of the fair market value of the stock over the exercise price, or the “spread,” will
be added to the alternative minimum tax base of the recipient unless a disqualifying disposition is made in the year of exercise.
A disqualifying disposition is the sale of the stock prior to the expiration of two years from the date of grant and one year
from the date of exercise. If the shares of common stock are disposed of in a disqualifying disposition, the recipient will realize
taxable ordinary income in an amount equal to the spread at the time of exercise, and we will be entitled (subject to the requirement
of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation) to a federal
income tax deduction equal to such amount. If the recipient sells the shares of common stock after the specified periods, the
gain or loss on the sale of the shares will be long-term capital gain or loss and we will not be entitled to a federal income
tax deduction.
Non-statutory
Stock Options and Restricted Stock Awards
Non-statutory
stock options and restricted stock awards granted under the Plan generally have the following federal income tax consequences.
There
are no tax consequences to the participant or us by reason of the grant. Upon acquisition of the stock, the recipient will recognize
taxable ordinary income equal to the excess, if any, of the stock’s fair market value on the acquisition date over the purchase
price. However, to the extent the stock is subject to “a substantial risk of forfeiture” (as defined in Section
83 of the Code), the taxable event will be delayed until the forfeiture provision lapses unless the recipient elects to be taxed
on receipt of the stock by making a Section 83(b) election within 30 days of receipt of the stock. If such election is not made,
the recipient generally will recognize income as and when the forfeiture provision lapses, and the income recognized will be based
on the fair market value of the stock on such future date. On that date, the recipient’s holding period for purposes of
determining the long-term or short-term nature of any capital gain or loss recognized on a subsequent disposition of the stock
will begin. If a recipient makes a Section 83(b) election, the recipient will recognize ordinary income equal to the difference
between the stock’s fair market value and the purchase price, if any, as of the date of receipt and the holding period for
purposes of characterizing as long-term or short-term any subsequent gain or loss will begin at the date of receipt.
With
respect to employees, we are generally 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, we will generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the participant.
Upon
disposition of the 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 plus any amount recognized as ordinary income with respect to the stock. Such gain
or loss will be long-term or short-term depending on whether the stock has been held for more than one year.
Potential
Limitation on Company Deductions
Section
162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain senior executives of our
company (a “covered employee”) in a taxable year to the extent that compensation to such employees exceeds
$1,000,000. It is possible that compensation attributable to awards, when combined with all other types of compensation received
by a covered employee from our company, may cause this limitation to be exceeded in any particular year.
May
awards under the Plan be modified after they are granted?
Yes.
The Board of Directors (or Compensation Committee) may reprice any Stock Option without the approval of the stockholders of the
Company. For this purpose, “reprice” means (i) any of the following or any other action that has the same effect:
(A) lowering the exercise price of a Stock Option after it is granted, (B) any other action that is treated as a repricing under
U.S. generally accepted accounting principles (“GAAP”), or (C) cancelling a Stock Option at a time when its
exercise price exceeds the fair market value of the underlying common stock, in exchange for another Stock Option, restricted
stock or other equity, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other
similar corporate transaction; and (ii) any other action that is considered to be a repricing under formal or informal guidance
issued by exchange or market on which the Company’s common stock then trades or is quoted. In addition to, and without limiting
the above, the Board of Directors (or Compensation Committee) may permit the voluntary surrender of all or a portion of any Stock
Option granted under the Plan to be conditioned upon the granting to the participant of a new Stock Option for the same or a different
number of shares of common stock as the Stock Option surrendered, or may require such voluntary surrender as a condition precedent
to a grant of a new Stock Option to such participant. Subject to the provisions of the Plan, such new Stock Option shall be exercisable
at such Option Price, during such option period and on such other terms and conditions as are specified by the Board of Directors
(or Compensation Committee) at the time the new Stock Option is granted. Upon surrender, the Stock Options surrendered shall be
cancelled and the shares of common stock previously subject to them shall be available for the grant of other Stock Options.
May
the Plan be modified, amended or terminated?
The
Board of Directors may adopt, establish, amend and rescind such rules, regulations and procedures as it may deem appropriate for
the proper administration of the Plan, make all other determinations which are, in the Board of Directors’ judgment, necessary
or desirable for the proper administration of the Plan, amend the Plan or a stock award as provided in Article XI of the Plan,
and/or terminate or suspend the Plan as provided in Article XI thereof. Our Board of Directors may also amend the Plan at any
time, and from time to time. However, except as relates to adjustments upon changes in common stock, no amendment will be effective
unless approved by our stockholders to the extent stockholder approval is necessary to preserve incentive stock option treatment
for federal income tax purposes. Our Board of Directors may submit any other amendment to the Plan for stockholder approval if
it concludes that stockholder approval is otherwise advisable.
Unless
sooner terminated, the Plan will terminate ten years from the date of its adoption by our Board of Directors, i.e., in October
2029.
The
description of the Plan is qualified in all respects by the actual provisions of the Plan, which is attached to this Proxy Statement
as Appendix A.
REVERSE
STOCK SPLIT OF OUR OUTSTANDING COMMON STOCK
IN
A RATIO OF BETWEEN ONE-FOR-TWO AND ONE-FOR-TEN
Our
Board and the majority stockholders, pursuant to the Majority Stockholder Consent, have authorized our Board to effect a reverse
stock split of all of our outstanding common stock at a ratio of between one-for-two and one-for-ten (the “Exchange Ratio”),
with our Board having the discretion as to whether or not the reverse split is to be effected, and with the exact Exchange Ratio
of any reverse split to be set at a whole number within the above range as determined by our Board in its sole discretion (the
“Reverse Stock Split”). Our Board will have sole discretion to elect, at any time before the earlier of (a)
October 15, 2020; and (b) the date of our 2020 annual meeting of stockholders, as it determines to be in our best interest,
whether or not to effect the Reverse Stock Split, and, if so, the number of our shares of common stock within the Exchange Ratio
which will be combined into one share of our common stock.
The
determination as to whether to affect the Reverse Stock Split, and which Exchange Ratio will apply, will be based upon those market
or business factors deemed relevant by the Board of Directors at that time, including, but not limited to:
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listing
standards under the Nasdaq Capital Market and/or NYSE American;
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existing
and expected marketability and liquidity of the Company’s common stock;
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●
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prevailing
stock market conditions;
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●
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the
historical trading price and trading volume of our common stock;
|
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●
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the
then prevailing trading price and trading volume of our common stock and the anticipated impact of the reverse split on the
trading market for our common stock;
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●
|
the
anticipated impact of the reverse split on our ability to raise additional financing;
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●
|
business
developments affecting the Company;
|
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●
|
the
Company’s actual or forecasted results of operations; and
|
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●
|
the
likely effect on the market price of the Company’s common stock.
|
Our
Board believes that stockholder approval granting us discretion to set the actual exchange ratio within the range of the Exchange
Ratio, rather than stockholder approval of a specified exchange ratio, provides us with maximum flexibility to react to then-current
market conditions and volatility in the market price of our common stock in order to set an exchange ratio that is intended to
result in a stock price in excess of $3.00 or $4.00 per share, which will allow us, subject to the Company meeting the other listing
criteria, to uplist our common stock on the Nasdaq Capital Market or NYSE American. However, there can be no assurance that the
Reverse Stock Split will result in our common stock trading above $3.00 or $4.00 per share for any significant period of time
or that our common stock will be approved for listing on the Nasdaq Capital Market or NYSE American. If the Board determines to
implement the Reverse Stock Split, we intend to issue a press release announcing the terms and effective date of the Reverse Stock
Split before we file the Amendment (defined below) with the Secretary of State of the State of Delaware.
If
our Board determines that effecting the Reverse Stock Split is in our best interest, the Reverse Stock Split will become effective
upon the filing of an amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware. The
form of the proposed amendment to our Certificate of Incorporation to affect the Reverse Stock Split is attached to this Information
Statement as Appendix B (the “Amendment”). The Amendment filed thereby will set forth the number of
shares to be combined into one share of our common stock within the limits set forth above, but will not have any effect on the
number of shares of common stock or preferred stock currently authorized, the ability of our Board of Directors to designate preferred
stock, the par value of our common or preferred stock, or any series of preferred stock previously authorized (except to the extent
such Reverse Stock Split adjusts the conversion ratio of such preferred stock, provided that no shares of our preferred stock
are currently outstanding). The form of Amendment attached hereto shall be subject to technical, administrative or similar changes
and modifications as determined in the discretion of the officers of the Company, to the extent required to comply with Delaware
law or affect the timing of the Reverse Stock Split, to the extent such changes and modifications do not individually or in the
aggregate, adversely affect the rights of the stockholders of the Company.
Purpose
of the Reverse Stock Split
The
primary purpose of the Reverse Stock Split is to increase proportionately the per share trading price of our common stock in order
for us to meet the required listing standards of the NASDAQ Capital Market or the NYSE American, which require minimum trading
prices of at least $3.00 or $4.00 per share.
We
also believe that the increased market price of our common stock expected as a result of implementing the Reverse Stock Split
may improve the marketability and liquidity of our common stock and encourage interest and trading in our common stock. Because
of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal
policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers
from recommending low-priced stocks to their customers. Some of those policies and practices may function to make the processing
of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced
stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average
price per share of common stock can result in individual stockholders paying transaction costs representing a higher percentage
of their total share value than would be the case if the share price were substantially higher. Although it should be noted that
the liquidity of our common stock may be harmed by the Reverse Stock Split given the reduced number of shares that would be outstanding
after the Reverse Stock Split, our Board of Directors is hopeful that the anticipated higher market price will offset, to some
extent, the negative effects on the liquidity and marketability of our common stock inherent in some of the policies and practices
of institutional investors and brokerage houses described above.
Board
Discretion to Implement the Reverse Stock Split
The
Reverse Stock Split will be affected, if at all, only upon a determination by the Board of Directors that the Reverse Stock Split
is in the best interests of the Company and its stockholders. The Board of Directors’ determination as to whether the Reverse
Stock Split will be effected and, if so, at which Exchange Ratio, will be based upon certain factors, including existing and expected
marketability and liquidity of our common stock, prevailing stock market conditions, business developments affecting us, actual
or forecasted results of operations and the likely effect on the market price of our common stock, and the listing standards of
the NASDAQ Capital Market and NYSE American. If the Board does not act to implement the Reverse Stock Split prior to the earlier
of (a) October 15, 2020; and (b) the date of our 2020 annual meeting of stockholders, the authorization for the Reverse
Stock Split will be deemed withdrawn.
Effect
of the Reverse Stock Split
If
implemented by the Board of Directors, as of the effective time of the Amendment, each issued and outstanding share of our common
stock would immediately and automatically be reclassified and reduced into a fewer number of shares of our common stock, depending
upon the Exchange Ratio selected by the Board of Directors, which could range between one-for-two and one-for-ten, provided that
all fractional shares as a result of the split shall be automatically rounded up to the next whole share on a per stockholder
basis.
Except
to the extent that the Reverse Stock Split would result in any stockholder receiving an additional whole share of common stock
in connection with the rounding of fractional shares or any dilution to other stockholder in connection therewith, as described
below, the Reverse Stock Split will not:
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affect
any stockholder’s percentage ownership interest in us;
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affect
any stockholder’s proportionate voting power;
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substantially
affect the voting rights or other privileges of any stockholder; or
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●
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alter
the relative rights of stockholders, warrant holders or holders of equity compensation plan awards and options.
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Depending
upon the Exchange Ratio selected by the Board of Directors, the principal effects of the Reverse Stock Split are:
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the
number of shares of common stock issued and outstanding will be reduced by a factor ranging between two and ten;
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the
per share exercise price will be increased by a factor between two and ten, and the number of shares issuable upon exercise
shall be decreased by the same factor, for all outstanding options, warrants and other convertible or exercisable equity instruments
entitling the holders to purchase shares of our common stock; and
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the
number of shares authorized and reserved for issuance under our existing equity compensation plans (including the Plan) will
be reduced proportionately.
|
The
following table contains approximate information relating to our common stock, our outstanding warrants and the amount outstanding
under the Plan, under various exchange ratio options:*
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|
Pre-Reverse
Split
|
|
|
1
for 2
|
|
|
1
for 5
|
|
|
1
for 10
|
|
Authorized
Common Stock
|
|
|
100,000,000
|
|
|
|
100,000,000
|
|
|
|
100,000,000
|
|
|
|
100,000,000
|
|
Outstanding
Common Stock
|
|
|
38,986,459
|
|
|
|
19,493,230
|
|
|
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7,797,292
|
|
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|
3,898,646
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Reserved
for issuance in connection with the exercise of outstanding warrants to purchase shares of common stock
|
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3,163,475
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|
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1,581,738
|
|
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|
632,695
|
|
|
|
316,348
|
|
Reserved
for issuance in connection with the exercise of outstanding options to purchase shares of common stock
|
|
|
2,176,346
|
|
|
|
1,088,173
|
|
|
|
435,269
|
|
|
|
217,635
|
|
Reserved
for issuance under the 2014 Equity Incentive Plan and 2013 Equity Incentive Plan(1)
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2,000,000
|
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|
1,000,000
|
|
|
|
400,000
|
|
|
|
200,000
|
|
Reserved
for issuance under the 2019 Equity Incentive Plan
|
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|
6,000,000
|
|
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|
3,000,000
|
|
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|
1,200,000
|
|
|
|
600,000
|
|
Total
Outstanding and Reserved Shares
|
|
|
52,326,280
|
|
|
|
26,163,140
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|
|
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10,465,256
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|
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5,232,628
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|
Shares
available for future issuance
|
|
|
47,673,720
|
|
|
|
73,836,860
|
|
|
|
89,534,744
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94,767,372
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*
Does not take into account the rounding of fractional shares described below under “Fractional Shares”.
(1)
I.e., the 2014 Equity Incentive Plan (“2014 Stock Plan”) of the Company and the 2013 Equity Incentive
Plan of Trxade Group, Inc., a Nevada corporation and predecessor in interest to the Company.
Additionally,
the below table sets forth the weighted average exercise price of outstanding warrants and options, under various exchange ratio
options:
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Pre
Reverse-Split
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1
for 2
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1
for 5
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1
for 10
|
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Weighted
Average Exercise Price of Outstanding Warrants
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|
$
|
0.08
|
|
|
$
|
0.16
|
|
|
$
|
0.40
|
|
|
$
|
0.80
|
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Weighted Average
Exercise Price of Outstanding Options
|
|
$
|
0.73
|
|
|
$
|
1.46
|
|
|
$
|
3.65
|
|
|
$
|
7.30
|
|
If
the Reverse Stock Split is implemented, the Amendment will not reduce the number of shares of our common stock or preferred stock
authorized under our Certificate of Incorporation, as amended, the right of our Board of Directors to designate preferred stock,
the par value of our common or preferred stock, or otherwise effect our designated series of preferred stock (of which no shares
are outstanding).
Our
common stock is currently registered under Section 12(g) of the Exchange Act, and we are subject to the periodic reporting and
other requirements thereof. We presently do not have any intent to seek any change in our status as a reporting company under
the Exchange Act either before or after the Reverse Stock Split, if implemented, and the Reverse Stock Split, if implemented,
will not result in a going private transaction.
Additionally,
as of the date of this Information Statement, we do not have any current plans, agreements, or understandings with respect to
the authorized shares that will become available for issuance after the Reverse Stock Split has been implemented.
Fractional
Shares
Stockholders
will not receive fractional shares in connection with the Reverse Stock Split. Instead, stockholders otherwise entitled to fractional
shares will receive an additional whole share of our common stock. For example, if the Board of Directors’ effects a one-for-five
split, and you held 4 shares of our common stock immediately prior to the effective date of the Amendment, you would hold one
share of the Company’s common stock following the Reverse Stock Split.
Effective
Time and Implementation of the Reverse Stock Split
The
effective time for the Reverse Stock Split will be the date on which we file the Amendment with the office of the Secretary of
State of the State of Delaware or such later date and time as specified in the Amendment, provided that the effective date must
occur prior to the earlier of (a) October 15, 2020; and (b) the date of our 2020 annual meeting of stockholders.
As
soon as practicable after the effective date, stockholders will be notified that the reverse split has been affected. Our transfer
agent will act as exchange agent for purposes of implementing the exchange of stock certificates. No new certificates will be
issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s). Stockholders
should not destroy any stock certificate and should not submit any certificates until requested to do so.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNTIL THE REVERSE SPLIT IS EFFECTIVE,
IF AT ALL.
Accounting
Matters
The
Reverse Stock Split will not affect the par value of our common stock ($0.00001 per share). However, at the effective time of
the Reverse Stock Split, the stated capital attributable to common stock on our balance sheet will be reduced proportionately
based on the Exchange Ratio (including a retroactive adjustment of prior periods), and the additional paid-in capital account
will be credited with the amount by which the stated capital is reduced. Reported per share net income or loss would be expected
to be proportionally higher because there will be fewer shares of our common stock outstanding.
No
Appraisal Rights
Under
Delaware Law, our stockholders are not entitled to appraisal rights with respect to the Reverse Stock Split.
Certain
Risks Associated with the Reverse Stock Split
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The price per share of our common
stock after the Reverse Stock Split may not reflect the Exchange Ratio implemented by the Board of Directors and the price
per share following the effective time of the Reverse Stock Split may not be maintained for any period of time following the
Reverse Stock Split. For example, based on the closing price of our common stock on October 17, 2019 of $1.10
per share, if the Reverse Stock Split was implemented at an Exchange Ratio of 1-for-5, there can be no assurance that the
post-split trading price of the Company’s common stock would be $5.50, or even that it would remain above the
pre-split trading price. Accordingly, the total market capitalization of our common stock following a Reverse Stock Split
may be lower than before the Reverse Stock Split.
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Following
the Reverse Stock Split, we may still not meet the application listing standards of the Nasdaq Capital Market or NYSE American.
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Effecting
the Reverse Stock Split may not attract institutional or other potential investors, or result in a sustained market price
that is high enough to overcome the investor policies and practices, and other issues relating to investing in lower priced
stock described in “Purpose of the Reverse Stock Split” above.
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The
trading liquidity of our common stock could be adversely affected by the reduced number of shares outstanding after the Reverse
Stock Split.
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●
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If
a Reverse Stock Split is implemented by the Board of Directors, some stockholders may consequently own less than 100 shares
of our common stock. A purchase or sale of less than 100 shares (an “odd lot” transaction) may result in
incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore,
those stockholders who own fewer than 100 shares following the Reverse Stock Split may be required to pay higher transaction
costs if they should then determine to sell their shares of the Company’s common stock.
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A
stockholder who receives a “round up” from a fractional share to a
whole share, as discussed above, may have a tax event based on the value of the “rounded
up” share. The Company believes such tax event will be minimal or insignificant
for most stockholders.
|
Potential
Anti-Takeover Effect
The
increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover
effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the
composition of our Board or contemplating a tender offer or other transaction for our combination with another company). However,
the Reverse Stock Split was not approved in response to any effort of which we are aware to accumulate shares of our common stock
or obtain control of our Company, nor is it part of a plan by management to recommend a series of similar amendments to our Board
and stockholders.
Federal
Income Tax Consequences of the Reverse Stock Split
A
summary of the federal income tax consequences of the Reverse Stock Split to individual stockholders is set forth below. It is
based upon present federal income tax law, which is subject to change, possibly with retroactive effect. The discussion is not
intended to be, nor should it be relied on as, a comprehensive analysis of the tax issues arising from or relating to the Reverse
Stock Split. In addition, we have not requested and will not seek an opinion of counsel or a ruling from the Internal Revenue
Service regarding the federal income tax consequences of the Reverse Stock Split. Accordingly, stockholders are advised to
consult their own tax advisors for more detailed information regarding the effects of the Reverse Stock Split on them under applicable
federal, state, local and foreign income tax laws.
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We
believe that the Reverse Stock Split will be a tax-free recapitalization for federal income tax purposes. Accordingly, a stockholder
will generally not recognize any gain or loss as a result of the receipt of the post-reverse split common stock pursuant to
the Reverse Stock Split. However, a stockholder who receives a “round up” from a fractional share to a
whole share may have a tax event based on the value of the “rounded up” share provided to the stockholder.
The Company believes such tax event will be minimal or insignificant for most stockholders.
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The
shares of post-reverse split common stock in the hands of a stockholder will have an aggregate basis for computing gain or
loss equal to the aggregate basis of the shares of pre-reverse split common stock held by that stockholder immediately prior
to the Reverse Stock Split.
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A
stockholder’s holding period for the post-reverse split common stock will include the holding period of the pre-reverse
split common stock exchanged.
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RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The
Majority Stockholder Consent ratified the Board’s appointment of MaloneBailey, LLP as our independent registered public
accounting firm to audit our consolidated financial statements for the year ending December 31, 2019. Our Board may however, in
its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year
if the Board determines that such a change would be in our best interests.
The
following tables show the fees that were billed for the audit and other services provided by MaloneBailey, LLP for the years ended
December 31, 2018 and 2017.
|
|
2018
|
|
|
2017
|
|
Audit
Fees
|
|
$
|
69,000
|
|
|
$
|
29,000
|
|
All
Other Fees
|
|
|
15,000
|
|
|
|
15,000
|
|
Total
|
|
$
|
84,000
|
|
|
$
|
44,000
|
|
All
of the audit-related services and other services described in the above table were pre-approved by our Audit Committee. The Audit
Committee has adopted a pre-approval policy that provides for the pre-approval of all services performed for us by MaloneBailey,
LLP. The policy authorizes the Audit Committee to delegate to one or more of its members pre-approval authority with respect to
permitted services. Pursuant to this policy, the Audit Committee delegated such authority to the Chairman of the Audit Committee.
All pre-approval decisions must be reported to the Audit Committee at its next meeting.
In
order to assure continuing auditor independence, the Audit Committee periodically considers the independent auditor’s qualifications,
performance and independence and whether there should be a regular rotation of our independent external audit firm. We believe
the continued retention of MaloneBailey, LLP to serve as the Company’s independent auditor is in the best interests of the
Company and its stockholders.
ADVISORY
VOTE ON THE FREQUENCY OF AN ADVISORY VOTE
ON EXECUTIVE COMPENSATION
The
Majority Stockholder Consent fixed the frequency with which we will hold a non-binding advisory vote on the compensation of our
named executive officers. In considering this action, the majority stockholders considered their preference as to whether the
advisory vote on the compensation of our named executive officers should occur:
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once
every three years,
|
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|
|
●
|
once
every two years, or
|
|
|
|
|
●
|
once
every year.
|
The
majority stockholders, upon the recommendation of our Board of Directors, determined that the frequency of the stockholder vote
on the compensation of our named executive officers should be once every three years. The Board views the way it compensates our
named executive officers as an essential part of our strategy to maximize our performance. The Board believed that a vote every
three years will permit us to focus on developing compensation practices that are in the best long-term interests of our company
and our stockholders. The Board believed that a more frequent advisory vote may cause us to focus on the short-term impact of
our compensation practices to the possible detriment of our long-term performance. The majority stockholders concurred with the
Board’s views. Although the adoption of this action may impact how frequently we hold an advisory vote on executive compensation,
the adoption of this action is not binding on us. The Board of Directors may decide in the future that it is in the best interests
of our stockholders to hold the advisory vote on executive compensation on a different schedule than the option approved by the
Majority Stockholder Consent.
AVAILABILITY
OF ANNUAL REPORT ON FORM 10-K
As
required, we have filed our Form 10-K with the SEC. Stockholders may obtain, free of charge, a copy of the Form 10-K by writing
to us at 3840 Land O’ Lakes Blvd, Land O Lakes, Florida 34639, Attention: Corporate Secretary. The Form 10-K is also available
for download at: http://materials.proxyvote.com/89846A.
STOCKHOLDERS
SHARING THE SAME LAST NAME AND ADDRESS
The
SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy and
information statements with respect to two or more stockholders sharing the same address by delivering a single proxy or information
statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially
provides extra convenience for stockholders and cost savings for companies. We and some brokers household proxy materials, delivering
a single proxy or information statement to multiple stockholders sharing an address unless contrary instructions have been received
from the affected stockholders. Once you have received notice from your broker or us that they are or we will be householding
materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at
any time, you no longer wish to participate in householding and would prefer to receive a separate proxy or information statement,
or if you currently receive multiple proxy or information statements and would prefer to participate in householding, please notify
your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a
written request to Trxade Group, Inc., 3840 Land O’ Lakes Blvd, Land O Lakes, FL 34639, or by faxing a communication to
(800) 265-6932.
WHERE
YOU CAN FIND MORE INFORMATION
This
Information Statement refers to certain documents that are not presented herein or delivered herewith. Such documents are available
to any person, including any beneficial owner of our shares, to whom this Information Statement is delivered upon oral or written
request, without charge. Requests for such documents should be directed to Corporate Secretary, 3840 Land O’ Lakes Blvd,
Land O Lakes, Florida 34639.
We
file annual and special reports and other information with the SEC. Certain of our SEC filings are available over the Internet
at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public
reference facilities:
Public
Reference Room Office
100
F Street, N.E.
Room
1580
Washington,
D.C. 20549
You
may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. Callers in the United States can also call 1-202-551-8090 for further information on
the operations of the public reference facilities.
Dated:
October 25, 2019
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TRXADE
GROUP, INC.
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By:
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/s/
Suren Ajjarapu
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Suren
Ajjarapu
Chief
Executive Officer
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Appendix
A
TRXADE
GROUP, INC.
2019
EQUITY INCENTIVE PLAN
TABLE
OF CONTENTS
2019 Equity Incentive Plan
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Trxade
Group, Inc.
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TRXADE
GROUP, INC.
2019
EQUITY INCENTIVE PLAN
ARTICLE
I.
PREAMBLE
1.1.
This 2019 Equity Incentive Plan of Trxade Group, Inc. (the “Company”) is intended to secure for the
Company and its Affiliates the benefits arising from ownership of the Company’s Common Stock by the Employees, Officers,
Directors and Consultants of the Company and its Affiliates, all of whom are and will be responsible for the Company’s future
growth. The Plan is designed to help attract and retain for the Company and its Affiliates personnel of superior ability for positions
of exceptional responsibility, to reward Employees, Officers, Directors and Consultants for their services and to motivate such
individuals through added incentives to further contribute to the success of the Company and its Affiliates. With respect to persons
subject to Section 16 of the Act, transactions under this Plan are intended to satisfy the requirements of Rule 16b-3 of the Act.
1.2.
Awards under the Plan may be made to an Eligible Person in the form of (i) Incentive Stock Options (to Eligible Employees only);
(ii) Nonqualified Stock Options; (iii) Restricted Stock; (iv) Stock Awards; (v) Performance Shares; or (vi) any combination of
the foregoing.
1.3.
The Company’s Board of Directors adopted the Plan on October 9, 2019 (the “Effective Date”).
The grant of Incentive Stock Options is subject to approval by the Company’s stockholders within twelve (12) months of the
Effective Date. Stockholder approval is to be obtained in accordance with the Company’s Certificate of Incorporation and
Bylaws, each as amended, and applicable laws. The Administrator may grant Incentive Stock Options prior to stockholder approval,
but until the Company obtains this approval, a grantee shall not exercise them. If the Company does not timely obtain stockholder
approval (or a grantee desires to exercise such Incentive Stock Options prior to stockholder approval), a grantee may exercise
previously granted Incentive Stock Options as Nonqualified Stock Options. Unless sooner terminated as provided elsewhere in this
Plan, this Plan shall terminate upon the close of business on the day next preceding the tenth (10th) anniversary of the Effective
Date. Award Agreements outstanding on such date shall continue to have force and effect in accordance with the provisions thereof.
1.4.
The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions).
1.5.
Capitalized terms shall have the meaning provided in ARTICLE II unless otherwise provided in this Plan or any related Award
Agreement.
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ARTICLE
II.
DEFINITIONS
DEFINITIONS.
Except where the context otherwise indicates, the following definitions apply:
2.1.
“Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.2.
“Administrator” means the Board or a Committee.
2.3.
“Affiliate” means any parent corporation or subsidiary corporation of the Company, whether now or hereinafter
existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.
2.4.
“Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not
limited to, all applicable U.S. federal, state or local laws, any Stock Exchange rules or regulations and the applicable laws,
rules or regulations of any other country or jurisdiction where Awards are granted under the Plan or Participants reside or provide
services, as such laws, rules and regulations shall be in effect from time to time.
2.5.
“Available Shares” means 6,000,000 shares of Common Stock.
2.6.
“Award” means an award granted to a Participant in accordance with the provisions of the Plan, including,
but not limited to, Stock Options, Restricted Stock, Stock Awards, Performance Shares, or any combination of the foregoing.
2.7.
“Award Agreement” means the separate written agreement evidencing each Award granted to a Participant
under the Plan.
2.8.
“Board of Directors” or “Board” means the Board of Directors of the Company,
as constituted from time to time.
2.9.
“Bylaws” means the Company’s Bylaws as amended and restated from time to time.
2.10.
“Change of Control” means (i) the adoption of a plan of merger or consolidation of the Company with
any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would
receive less than 50% of the voting capital stock of the surviving or resulting corporation; (ii) the approval by the Board of
Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Company) of substantially
all the assets of the Company; or (iii) in the absence of a prior expression of approval by the Board of Directors, the acquisition
of more than 20% of the Company’s voting capital stock by any person within the meaning of Rule 13d-3 under the Act (other
than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company).
2.11.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations
promulgated thereunder.
2.12.
“Committee” means a committee of two or more members of the Board appointed by the Board in accordance
with Section 3.2 of the Plan. In the event the Company has not designated a Committee pursuant to Section 3.2 of
the Plan, “Committee” shall refer to the Compensation Committee of the Company (in the event the Compensation
Committee has authority to administer the Plan), if any, or the Board of Directors of the Company.
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2.13.
“Common Stock” means the Company’s common stock.
2.14.
“Company” means Trxade Group, Inc., a Delaware corporation.
2.15.
“Consultant” means any person, including an advisor engaged by the Company or an Affiliate to render
bona fide consulting or advisory services to the Company or an Affiliate, other than as an Employee, Director or Non-Employee
Director.
2.16.
“Continuous Service Status” means the absence of any interruption or termination of service as an Employee
or Consultant (unless otherwise provided for in the applicable Award Agreement), as determined by the Administrator in good faith
and subject to Applicable Laws. Subject to Applicable Laws, the Administrator shall determine whether a leave of absence, or absence
in military or government service, shall constitute an interruption of Continuous Service Status; provided, however, that, (i)
if an Employee is holding an Incentive Stock Option and such leave exceeds 3 months, then, for purposes of Incentive Stock Option
status only, such Employee’s service as an Employee shall be deemed terminated on the 1st day following such 3-month period,
and the Incentive Stock Option shall thereafter automatically become a Nonqualified Stock Option in accordance with Applicable
Laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to a written Company policy, and (ii) the Administrator shall not have any such discretion to the extent that the grant
of such discretion would cause any tax to become due under Section 409A of the Code. Also, Continuous Service Status as an Employee
or Consultant shall not be considered interrupted or terminated in the case of a transfer between locations of the Company or
between the Company, its subsidiaries or Affiliates, or their respective successors.
2.17.
“Director” means a member of the Board of Directors of the Company.
2.18.
“Disability” means the permanent and total disability of a person within the meaning of Section 22(e)(3)
of the Code.
2.19.
“Effective Date” shall be the date set forth in Section 1.3 of the Plan.
2.20.
“Eligible Employee” means an Eligible Person who is an Employee of the Company or any Affiliate.
2.21.
“Eligible Person” means any Employee, Officer, Director, Non-Employee Director or Consultant of the
Company or any Affiliate, except for instances where services are in connection with the offer or sale of securities in a capital-raising
transaction, or they directly or indirectly promote or maintain a market for the Company’s securities, subject to any other
limitations as may be provided by the Code, the Act, or the Administrator. In making such determinations, the Administrator may
take into account the nature of the services rendered by such person, his or her present and potential contribution to the Company’s
success, and such other factors as the Administrator in its discretion shall deem relevant.
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2.22.
“Employee” means an individual who is a common-law employee of the Company or an Affiliate including
employment as an Officer. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall
not be sufficient to constitute “employment” by the Company or an Affiliate.
2.23.
“ERISA” means the Employee Retirement Income Security Act of 1974, as now in effect or as hereafter
amended.
2.24.
“Fair Market Value” means, as of any date and unless the Administrator determines otherwise, the value
of Common Stock determined as follows:
2.24.1
If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the
NYSE American, Nasdaq National Market or The Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the
closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the
day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
2.24.2
If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported for the date in
question, or the Common Stock is quoted on an over-the-counter market, the Fair Market Value will be the mean between the high
bid and low asked prices for the Common Stock for the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable; or
2.24.3
In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.
2.24.4
The Administrator may also adopt a different methodology for determining Fair Market Value with respect to one or more Awards
if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular
Award(s) (for example, and without limitation, the Administrator may provide that Fair Market Value for purposes of one or more
Awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period
preceding the relevant date).
2.25.
“Grant Date” means, as to any Award, the latest of:
2.25.1
the date on which the Administrator authorizes the grant of the Award; or
2.25.2
the date the Participant receiving the Award becomes an Employee or a Director of the Company or its Affiliate, to the extent
employment status is a condition of the grant or a requirement of the Code or the Act; or
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2.25.3
such other date (later than the dates described in 2.21.1 and 2.21.2 above) as the Administrator may designate and
as set forth in the Participant’s Award Agreement.
2.26.
“Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive
relationships.
2.27.
“Incentive Stock Option” means a Stock Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and is granted under ARTICLE IV of the Plan and designated as an Incentive Stock
Option in a Participant’s Award Agreement.
2.28.
“Non-Employee Director” shall have the meaning set forth in Rule 16b-3 under the Act.
2.29.
“Nonqualified Stock Option” means a Stock Option not intended to qualify as an Incentive Stock Option
and is not so designated in the Participant’s Award Agreement.
2.30.
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Act.
2.31.
“Option Period” means the period during which a Stock Option may be exercised from time to time, as
established by the Administrator and set forth in the Award Agreement for each Participant who is granted a Stock Option.
2.32.
“Option Price” means the purchase price for a share of Common Stock subject to purchase pursuant to
a Stock Option, as established by the Administrator and set forth in the Award Agreement for each Participant who is granted a
Stock Option.
2.33.
“Outside Director” means a Director who either (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an “affiliated corporation” receiving compensation for prior services
(other than benefits under a tax qualified pension plan), was not an officer of the Company or an “affiliated corporation”
at any time and is not currently receiving direct or indirect remuneration from the Company or an “affiliated corporation”
for services in any capacity other than as a Director or (ii) is otherwise considered an “outside director”
for purposes of Section 162(m) of the Code.
2.34.
“Participant” means an Eligible Person to whom an Award has been granted and who has entered into an
Award Agreement evidencing the Award or, if applicable, such other person who holds an outstanding Award.
2.35.
“Performance Objectives” shall have the meaning set forth in ARTICLE IX of the Plan.
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2.36.
“Performance Period” shall have the meaning set forth in ARTICLE IX of the Plan.
2.37.
“Performance Share” means an Award under ARTICLE IX of the Plan of a unit valued by reference
to the Common Stock, the payout of which is subject to achievement of such Performance Objectives, measured during one or more
Performance Periods, as the Administrator, in its sole discretion, shall establish at the time of such Award and set forth in
a Participant’s Award Agreement.
2.38.
“Plan” means this Trxade Group, Inc. 2019 Equity Incentive Plan, as it may be amended from time to time.
2.39.
“Reporting Person” means a person required to file reports under Section 16(a) of the Act.
2.40.
“Restricted Stock” means an Award under ARTICLE VII of the Plan of shares of Common Stock that
are at the time of the Award subject to restrictions or limitations as to the Participant’s ability to sell, transfer, pledge
or assign such shares, which restrictions or limitations may lapse separately or in combination at such time or times, in installments
or otherwise, as the Administrator, in its sole discretion, shall determine at the time of such Award and set forth in a Participant’s
Award Agreement.
2.41.
“Restriction Period” means the period commencing on the Grant Date with respect to such shares of Restricted
Stock and ending on such date as the Administrator, in its sole discretion, shall establish and set forth in a Participant’s
Award Agreement.
2.42.
“Retirement” means retirement as determined under procedures established by the Administrator or in
any Award, as set forth in a Participant’s Award Agreement.
2.43.
“Rule 16b-3” means Rule 16b-3 promulgated under the Act or any successor to Rule 16b-3, as in effect
from time to time. Those provisions of the Plan which make express reference to Rule 16b-3, or which are required in order for
certain option transactions to qualify for exemption under Rule 16b-3, shall apply only to a Reporting Person.
2.44.
“Shares” means shares of Common Stock issued in connection with Awards granted under this Plan, including,
where applicable, upon exercise of Stock Options granted under this Plan.
2.45.
“Stock Exchange” means any stock exchange or consolidated stock price reporting system (including, but
not limited to Nasdaq) on which prices for the Common Stock are quoted at any given time.
2.46.
“Stock Award” means an Award of shares of Common Stock under ARTICLE VIII of the Plan.
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2.47.
“Stock Option” means an Award under ARTICLE IV or ARTICLE V of the Plan of an option to
purchase Common Stock. A Stock Option may be either an Incentive Stock Option or a Nonqualified Stock Option.
2.48.
“Ten Percent Stockholder” means an individual who owns (or is deemed to own pursuant to Section 424(d)
of the Code), at the time of grant, stock possessing more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or any of its Affiliates.
2.49.
“Termination of Service” means (i) in the case of an Eligible Employee, the discontinuance of employment
of such Participant with the Company or its Subsidiaries for any reason other than a transfer to another member of the group consisting
of the Company and its Affiliates and (ii) in the case of a Director who is not an Employee of the Company or any Affiliate, the
date such Participant ceases to serve as a Director. The determination of whether a Participant has discontinued service shall
be made by the Administrator in its sole discretion. In determining whether a Termination of Service has occurred, the Administrator
may provide that service as a Consultant or service with a business enterprise in which the Company has a significant ownership
interest shall be treated as employment with the Company.
ARTICLE
III.
ADMINISTRATION
3.1.
The Plan shall be administered by the Administrator and shall be administered, to the extent applicable, in accordance with Rule
16b-3. The Administrator shall have the exclusive right to interpret and construe the Plan, to select the Eligible Persons who
shall receive an Award, and to act in all matters pertaining to the grant of an Award and the determination and interpretation
of the provisions of the related Award Agreement, including, without limitation, the determination of the number of shares subject
to Stock Options and the Option Period(s) and Option Price(s) thereof, the number of shares of Restricted Stock or shares subject
to Stock Awards or Performance Shares subject to an Award, the vesting periods (if any) and the form, terms, conditions and duration
of each Award, and any amendment thereof consistent with the provisions of the Plan. The Administrator may adopt, establish, amend
and rescind such rules, regulations and procedures as it may deem appropriate for the proper administration of the Plan, make
all other determinations which are, in the Administrator’s judgment, necessary or desirable for the proper administration
of the Plan, amend the Plan or a Stock Award as provided in ARTICLE XI, and terminate or suspend the Plan as provided in
ARTICLE XI. All acts, determinations and decisions of the Administrator made or taken pursuant to the Plan or with respect
to any questions arising in connection with the administration and interpretation of the Plan or any Award Agreement, including
the severability of any and all of the provisions thereof, shall be conclusive, final and binding upon all persons. On or after
the date of grant of an Award under the Plan, the Administrator may (i) accelerate the date on which any such Award becomes vested,
exercisable or transferable, as the case may be, (ii) extend the term of any such Award, including, without limitation, extending
the period following a termination of a Participant’s employment during which any such Award may remain outstanding, or
(iii) waive any conditions to the vesting, exercisability or transferability, as the case may be, of any such Award; provided,
that the Administrator shall not have any such authority to the extent that the grant of such authority would cause any tax to
become due under Section 409A of the Code.
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3.2.
The Administrator may, to the full extent permitted by and consistent with Applicable Law and the Company’s Bylaws, and
subject to Subparagraph 3.2.1 herein below, delegate any or all of its powers with respect to the administration of the
Plan to the Company’s Compensation Committee or another Committee of the Company consisting of not fewer than two members
of the Board each of whom shall qualify (at the time of appointment to the Committee and during all periods of service on the
Committee) in all respects as a Non-Employee Director and as an Outside Director.
3.2.1
If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Administrator as set forth herein, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and references in the Plan to the Administrator shall thereafter
be to the Committee or subcommittee), subject, however, to such resolutions, not consistent with the provisions of the Plan, as
may be adopted from time to time by the Board.
3.2.2
The Board may abolish the Committee at any time and reassume all powers and authority previously delegated to the Committee.
3.2.3
In addition to, and not in limitation of, the right of Administrator, the full Board of Directors and/or the Company’s Compensation
Committee may from time to time grant Awards to Eligible Persons pursuant to the terms and conditions of this Plan, subject to
the requirements of the Code, Rule 16b-3 under the Act or any other Applicable Law, rule or regulation. In connection with any
such grants, the Board of Directors and/or the Company’s Compensation Committee shall have all of the power and authority
of the Administrator to determine the Eligible Persons to whom such Awards shall be granted and the other terms and conditions
of such Awards.
3.3.
Without limiting the provisions of this ARTICLE III, and subject to the provisions of ARTICLE X, the Administrator
is authorized to take such action as it determines to be necessary or advisable, and fair and equitable to Participants and to
the Company, with respect to an outstanding Award in the event of a Change of Control as described in ARTICLE X or other
similar event. Such action may include, but shall not be limited to, establishing, amending or waiving the form, terms, conditions
and duration of an Award and the related Award Agreement, so as to provide for earlier, later, extended or additional times for
exercise or payments, differing methods for calculating payments, alternate forms and amounts of payment, an accelerated release
of restrictions or other modifications. The Administrator may take such actions pursuant to this Section 3.3 by adopting
rules and regulations of general applicability to all Participants or to certain categories of Participants, by including, amending
or waiving terms and conditions in an Award and the related Award Agreement, or by taking action with respect to individual Participants
from time to time. In the event any Award is not evidenced by a written Award Agreement, such Award shall be governed by the terms
of this Plan and the terms and conditions of the grant of the Award as evidenced by the minutes of the Board (or any authorized
Committee thereof). For the sake of clarity, the failure of the Company to document an Award by way of a written Award Agreement
shall not affect the validity of such Award.
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3.4.
Subject to the provisions of Section 3.9 and this Section 3.4, the maximum aggregate number of shares of Common
Stock which may be issued pursuant to Awards under the Plan shall be the Available Shares. Such shares of Common Stock shall be
made available from authorized and unissued shares of the Company.
3.4.1
For all purposes under the Plan, each Performance Share awarded shall be counted as one share of Common Stock subject to an Award.
3.4.2
If, for any reason, any shares of Common Stock (including shares of Common Stock subject to Performance Shares) that have been
awarded or are subject to issuance or purchase pursuant to Awards outstanding under the Plan are not delivered or purchased, or
are reacquired by the Company, for any reason, including but not limited to a forfeiture of Restricted Stock or failure to earn
Performance Shares or the termination, expiration or cancellation of a Stock Option, or any other termination of an Award without
payment being made in the form of shares of Common Stock (whether or not Restricted Stock), such shares of Common Stock shall
not be charged against the aggregate number of shares of Common Stock available for Award under the Plan and shall again be available
for Awards under the Plan. In no event, however, may Common Stock that is surrendered or withheld to pay the exercise price of
a Stock Option or to satisfy tax withholding requirements be available for future grants under the Plan.
3.4.3
For purposes of clarifying the preceding paragraph, shares of Common Stock covered by Awards shall only be counted as used to
the extent they are actually issued and delivered to a Participant (or such Participant’s permitted transferees as described
in the Plan) pursuant to the Plan. In addition, shares of Common Stock related to Awards that expire, are forfeited or cancelled
or terminate for any reason without the issuance of shares shall not be treated as issued pursuant to the Plan.
3.4.4
The foregoing subsections 3.4.1 and 3.4.2 of this Section 3.4 shall be subject to any limitations provided
by the Code or by Rule 16b-3 under the Act or by any other Applicable Law, rule or regulation.
3.5.
Each Award granted under the Plan shall be evidenced by a written Award Agreement, which shall be subject to and shall incorporate
(by reference or otherwise) the applicable terms and conditions of the Plan and shall include any other terms and conditions (not
inconsistent with the Plan) required by the Administrator. In the event any Award is not evidenced by a written Award Agreement,
such Award shall be governed by the terms of this Plan and the terms and conditions of the grant of the Award as evidenced by
the minutes of the Administrator (or any authorized Committee thereof). For the sake of clarity, the failure of the Company to
document an Award by way of a written Award Agreement shall not affect the validity of such Award.
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3.5.1
In the event the Plan and/or the Common Stock issuable in connection with Awards hereunder are registered with the Securities
Exchange Commission (the “SEC”) under the Act, no free-trading shares of Common Stock shall be issuable
by the Company under the Plan and pursuant to such registration statement, (a) except to natural persons (as such term is interpreted
by the SEC); (b) in connection with services associated with the offer or sale of securities in a capital-raising transaction;
or (c) where the services directly or indirectly promote or maintain a market for the Company’s securities.
3.6.
The Administrator may require any Participant acquiring shares of Common Stock pursuant to any Award under the Plan to represent
to and agree with the Company in writing that such person is acquiring the shares of Common Stock for investment purposes and
without a view to resale or distribution thereof. Shares of Common Stock issued and delivered under the Plan shall also be subject
to such stop-transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any Stock Exchange upon which the Common Stock is then listed and any
applicable federal or state laws, and the Administrator may cause a legend or legends to be placed on the certificate or certificates
representing any such shares to make appropriate reference to any such restrictions. In making such determination, the Administrator
may rely upon an opinion of counsel for the Company.
3.7.
Except as otherwise expressly provided in the Plan or in an Award Agreement with respect to an Award, no Participant shall have
any right as a stockholder of the Company with respect to any shares of Common Stock subject to such Participant’s Award
except to the extent that, and until, one or more certificates representing such shares of Common Stock shall have been delivered
to the Participant. No shares shall be required to be issued, and no certificates shall be required to be delivered, under the
Plan unless and until all of the terms and conditions applicable to such Award shall have, in the sole discretion of the Administrator,
been satisfied in full and any restrictions shall have lapsed in full, and unless and until all of the requirements of law and
of all regulatory bodies having jurisdiction over the offer and sale, or issuance and delivery, of the shares shall have been
fully complied with.
3.8.
The total amount of shares with respect to which Awards may be granted under the Plan and rights of outstanding Awards (both as
to the number of shares subject to the outstanding Awards and the Option Price(s) or other purchase price(s) of such shares, as
applicable) shall be appropriately adjusted for any increase or decrease in the number of outstanding shares of Common Stock of
the Company resulting from payment of a stock dividend on the Common Stock, a stock split or subdivision or combination of shares
of the Common Stock, or a reorganization or reclassification of the Common Stock, or any other change in the structure of shares
of the Common Stock. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by
the Administrator in its sole discretion. Any such adjustment may provide for the elimination of any fractional shares which might
otherwise become subject to an Award. All adjustments made as a result of the foregoing in respect of each Incentive Stock Option
shall be made so that such Incentive Stock Option shall continue to be an Incentive Stock Option, as defined in Section 422 of
the Code.
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3.9.
No director or person acting pursuant to authority delegated by the Administrator shall be liable for any action or determination
under the Plan made in good faith. The members of the Administrator shall be entitled to indemnification by the Company in the
manner and to the extent set forth in the Company’s Articles of Incorporation, as amended, Bylaws or as otherwise provided
from time to time regarding indemnification of Directors.
3.10.
The Administrator shall be authorized to make adjustments in any performance based criteria or in the other terms and conditions
of outstanding Awards in recognition of unusual or nonrecurring events affecting the Company (or any Affiliate, if applicable)
or its financial statements or changes in Applicable Laws, regulations or accounting principles. The Administrator may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Agreement in the manner and to the extent
it shall deem necessary or desirable to reflect any such adjustment. In the event the Company (or any Affiliate, if applicable)
shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the
acquisition of another corporation or business entity, the Administrator may, in its sole discretion, make such adjustments in
the terms of outstanding Awards under the Plan as it shall deem appropriate.
3.11.
Subject to the express provisions of the Plan, the Administrator shall have full power and authority to determine whether, to
what extent and under what circumstances any outstanding Award shall be terminated, canceled, forfeited or suspended. Notwithstanding
the foregoing or any other provision of the Plan or an Award Agreement, all Awards to any Participant that are subject to any
restriction or have not been earned or exercised in full by the Participant shall be terminated and canceled if the Participant
is terminated for cause, as determined by the Administrator in its sole discretion.
ARTICLE
IV.
INCENTIVE STOCK OPTIONS
4.1.
The Administrator, in its sole discretion, may from time to time on or after the Effective Date grant Incentive Stock Options
to Eligible Employees, subject to the provisions of this ARTICLE IV and ARTICLE III and ARTICLE VI and subject
to the following conditions:
4.1.1
Incentive Stock Options shall be granted only to Eligible Employees, each of whom may be granted one or more of such Incentive
Stock Options at such time or times determined by the Administrator.
4.1.2
The Option Price per share of Common Stock for an Incentive Stock Option shall be set in the Award Agreement, but shall not be
less than (i) one hundred percent (100%) of the Fair Market Value of the Common Stock at the Grant Date, or (ii) in the case of
an Incentive Stock Option granted to a Ten Percent Stockholder, one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the Grant Date.
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4.1.3
An Incentive Stock Option may be exercised in full or in part from time to time within ten (10) years from the Grant Date, or
such shorter period as may be specified by the Administrator as the Option Period and set forth in the Award Agreement; provided,
however, that, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, such period shall not exceed five
(5) years from the Grant Date; and further, provided that, in any event, the Incentive Stock Option shall lapse and cease to be
exercisable upon a Termination of Service or within such period following a Termination of Service as shall have been determined
by the Administrator and set forth in the related Award Agreement; and provided, further, that such period shall not exceed the
period of time ending on the date three (3) months following a Termination of Service (except as otherwise provided in any employment
agreement approved by the Administrator), unless employment shall have terminated:
(i)
as a result of Disability, in which event such period shall not exceed the period of time ending on the date twelve (12) months
following a Termination of Service; or
(ii)
as a result of death, or if death shall have occurred following a Termination of Service (other than as a result of Disability)
and during the period that the Incentive Stock Option was still exercisable, in which event such period may not exceed the period
of time ending on the earlier of the date twelve (12) months after the date of death;
(iii)
and provided, further, that such period following a Termination of Service or death shall in no event extend beyond the original
Option Period of the Incentive Stock Option.
4.1.4
The aggregate Fair Market Value of the shares of Common Stock with respect to which any Incentive Stock Options (whether under
this Plan or any other plan established by the Company) are first exercisable during any calendar year by any Eligible Employee
shall not exceed one hundred thousand dollars ($100,000), determined based on the Fair Market Value(s) of such shares as of their
respective Grant Dates; provided, however, that to the extent permitted under Section 422 of the Code, if the aggregate Fair Market
Values of the shares of Common Stock with respect to which Stock Options intended to be Incentive Stock Options are first exercisable
by any Eligible Employee during any calendar year (whether such Stock Options are granted under this Plan or any other plan established
by the Company) exceed one hundred thousand dollars ($100,000), the Stock Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as Nonqualified Stock Options.
4.1.5
No Incentive Stock Options may be granted more than ten (10) years from the Effective Date.
4.1.6
The Award Agreement for each Incentive Stock Option shall provide that the Participant shall notify the Company if such Participant
sells or otherwise transfers any shares of Common Stock acquired upon exercise of the Incentive Stock Option within two (2) years
of the Grant Date of such Incentive Stock Option or within one (1) year of the date such shares were acquired upon the exercise
of such Incentive Stock Option.
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4.2.
Subject to the limitations of Section 3.4, the maximum aggregate number of shares of Common Stock subject to Incentive
Stock Option Awards shall be the maximum aggregate number of shares available for Awards under the Plan.
4.3.
The Administrator may provide for any other terms and conditions which it determines should be imposed for an Incentive Stock
Option to qualify under Section 422 of the Code, as well as any other terms and conditions not inconsistent with this ARTICLE
IV or ARTICLE III or ARTICLE VI, as determined in its sole discretion and set forth in the Award Agreement for
such Incentive Stock Option.
4.4.
Each provision of this ARTICLE IV and of each Incentive Stock Option granted hereunder shall be construed in accordance
with the provisions of Section 422 of the Code, and any provision hereof that cannot be so construed shall be disregarded.
ARTICLE
V.
NONQUALIFIED STOCK OPTIONS
5.1.
The Administrator, in its sole discretion, may from time to time on or after the Effective Date grant Nonqualified Stock Options
to Eligible Persons, subject to the provisions of this ARTICLE V and ARTICLE III or ARTICLE VI and subject
to the following conditions:
5.1.1
Nonqualified Stock Options may be granted to any Eligible Person, each of whom may be granted one or more of such Nonqualified
Stock Options, at such time or times determined by the Administrator.
5.1.2
The Option Price per share of Common Stock for a Nonqualified Stock Option shall be set in the Award Agreement and may be less
than one hundred percent (100%) of the Fair Market Value of the Common Stock at the Grant Date; provided, however, that the exercise
price of each Nonqualified Stock Option granted under the Plan shall in no event be less than the par value per share of the Company’s
Common Stock.
5.1.3
A Nonqualified Stock Option may be exercised in full or in part from time to time within the Option Period specified by the Administrator
and set forth in the Award Agreement; provided, however, that, in any event, the Nonqualified Stock Option shall lapse and cease
to be exercisable upon a Termination of Service or within such period following a Termination of Service as shall have been determined
by the Administrator and set forth in the related Award Agreement.
5.2.
The Administrator may provide for any other terms and conditions for a Nonqualified Stock Option not inconsistent with this ARTICLE
V or ARTICLE III or ARTICLE VI, as determined in its sole discretion and set forth in the Award Agreement for
such Nonqualified Stock Option.
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ARTICLE
VI.
INCIDENTS OF STOCK OPTIONS
6.1.
Each Stock Option shall be granted subject to such terms and conditions, if any, not inconsistent with this Plan, as shall be
determined by the Administrator and set forth in the related Award Agreement, including any provisions as to continued employment
as consideration for the grant or exercise of such Stock Option and any provisions which may be advisable to comply with Applicable
Laws, regulations or rulings of any governmental authority.
6.2.
Except as hereinafter described, a Stock Option shall not be transferable by the Participant other than by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of the Participant only by the Participant or the Participant’s
guardian or legal representative. In the event of the death of a Participant, any unexercised Stock Options may be exercised to
the extent otherwise provided herein or in such Participant’s Award Agreement by the executor or personal representative
of such Participant’s estate or by any person who acquired the right to exercise such Stock Options by bequest under the
Participant’s will or by inheritance. The Administrator, in its sole discretion, may at any time permit a Participant to
transfer a Nonqualified Stock Option for no consideration to or for the benefit of one or more members of the Participant’s
Immediate Family (including, without limitation, to a trust for the benefit of the Participant and/or one or more members of such
Participant’s Immediate Family or a corporation, partnership or limited liability company established and controlled by
the Participant and/or one or more members of such Participant’s Immediate Family), subject to such limits as the Administrator
may establish. The transferee of such Nonqualified Stock Option shall remain subject to all terms and conditions applicable to
such Nonqualified Stock Option prior to such transfer. The foregoing right to transfer the Nonqualified Stock Option, if granted
by the Administrator shall apply to the right to consent to amendments to the Award Agreement.
6.3.
Shares of Common Stock purchased upon exercise of a Stock Option shall be paid for in such amounts, at such times and upon such
terms as shall be determined by the Administrator, subject to limitations set forth in the Stock Option Award Agreement. The Administrator
may, in its sole discretion, permit the exercise of a Stock Option by payment in cash or by tendering shares of Common Stock (either
by actual delivery of such shares or by attestation), or any combination thereof, as determined by the Administrator. In the sole
discretion of the Administrator, payment in shares of Common Stock also may be made with shares received upon the exercise or
partial exercise of the Stock Option, whether or not involving a series of exercises or partial exercises and whether or not share
certificates for such shares surrendered have been delivered to the Participant. The Administrator also may, in its sole discretion,
permit the payment of the exercise price of a Stock Option by the voluntary surrender of all or a portion of the Stock Option.
Shares of Common Stock previously held by the Participant and surrendered in payment of the Option Price of a Stock Option shall
be valued for such purpose at the Fair Market Value thereof on the date the Stock Option is exercised.
6.4.
The holder of a Stock Option shall have no rights as a stockholder with respect to any shares covered by the Stock Option (including,
without limitation, any voting rights, the right to inspect or receive the Company’s balance sheets or financial statements
or any rights to receive dividends or non-cash distributions with respect to such shares) until such time as the holder has exercised
the Stock Option and then only with respect to the number of shares which are the subject of the exercise. No adjustment shall
be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
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6.5.
The Administrator may permit the voluntary surrender of all or a portion of any Stock Option granted under the Plan to be conditioned
upon the granting to the Participant of a new Stock Option for the same or a different number of shares of Common Stock as the
Stock Option surrendered, or may require such voluntary surrender as a condition precedent to a grant of a new Stock Option to
such Participant. Subject to the provisions of the Plan, such new Stock Option shall be exercisable at such Option Price, during
such Option Period and on such other terms and conditions as are specified by the Administrator at the time the new Stock Option
is granted. Upon surrender, the Stock Options surrendered shall be canceled and the shares of Common Stock previously subject
to them shall be available for the grant of other Stock Options.
6.6.
The Administrator may at any time offer to purchase a Participant’s outstanding Stock Option for a payment equal to the
value of such Stock Option payable in cash, shares of Common Stock or Restricted Stock or other property upon surrender of the
Participant’s Stock Option, based on such terms and conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made.
6.7.
The Administrator shall have the discretion, exercisable either at the time the Award is granted or at the time the Participant
discontinues employment, to establish as a provision applicable to the exercise of one or more Stock Options that, during a limited
period of exercisability following a Termination of Service, the Stock Option may be exercised not only with respect to the number
of shares of Common Stock for which it is exercisable at the time of the Termination of Service but also with respect to one or
more subsequent installments for which the Stock Option would have become exercisable had the Termination of Service not occurred.
6.8.
Notwithstanding anything to the contrary herein, the Company may reprice any Stock Option without the approval of the stockholders
of the Company. For this purpose, “reprice” means (i) any of the following or any other action that has the same effect:
(A) lowering the exercise price of a Stock Option after it is granted, (B) any other action that is treated as a repricing under
U.S. generally accepted accounting principles (“GAAP”), or (C) cancelling a Stock Option at a time when
its exercise price exceeds the Fair Market Value of the underlying Common Stock, in exchange for another Stock Option, restricted
stock or other equity, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other
similar corporate transaction; and (ii) any other action that is considered to be a repricing under formal or informal guidance
issued by exchange or market on which the Company’s Common Stock then trades or is quoted.
6.9.
In addition to, and without limiting the above Section 6.8, the Administrator may permit the voluntary surrender of all
or a portion of any Stock Option granted under the Plan to be conditioned upon the granting to the Participant of a new Stock
Option for the same or a different number of shares of Common Stock as the Stock Option surrendered, or may require such voluntary
surrender as a condition precedent to a grant of a new Stock Option to such Participant. Subject to the provisions of the Plan,
such new Stock Option shall be exercisable at such Option Price, during such Option Period and on such other terms and conditions
as are specified by the Administrator at the time the new Stock Option is granted. Upon surrender, the Stock Options surrendered
shall be canceled and the shares of Common Stock previously subject to them shall be available for the grant of other Stock Options.
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ARTICLE
VII.
RESTRICTED STOCK
7.1.
The Administrator, in its sole discretion, may from time to time on or after the Effective Date award shares of Restricted Stock
to Eligible Persons as a reward for past service and an incentive for the performance of future services that will contribute
materially to the successful operation of the Company and its Affiliates, subject to the terms and conditions set forth in this
ARTICLE VII.
7.2.
The Administrator shall determine the terms and conditions of any Award of Restricted Stock, which shall be set forth in the related
Award Agreement, including without limitation:
7.2.1
the purchase price, if any, to be paid for such Restricted Stock, which may be zero, subject to such minimum consideration as
may be required by Applicable Law;
7.2.2
the duration of the Restriction Period or Restriction Periods with respect to such Restricted Stock and whether any events may
accelerate or delay the end of such Restriction Period(s);
7.2.3
the circumstances upon which the restrictions or limitations shall lapse, and whether such restrictions or limitations shall lapse
as to all shares of Restricted Stock at the end of the Restriction Period or as to a portion of the shares of Restricted Stock
in installments during the Restriction Period by means of one or more vesting schedules;
7.2.4
whether such Restricted Stock is subject to repurchase by the Company or to a right of first refusal at a predetermined price
or if the Restricted Stock may be forfeited entirely under certain conditions;
7.2.5
whether any performance goals may apply to a Restriction Period to shorten or lengthen such period; and
7.2.6
whether dividends and other distributions with respect to such Restricted Stock are to be paid currently to the Participant or
withheld by the Company for the account of the Participant.
7.3.
Awards of Restricted Stock must be accepted within a period of thirty (30) days after the Grant Date (or such shorter or longer
period as the Administrator may specify at such time) by executing an Award Agreement with respect to such Restricted Stock and
tendering the purchase price, if any. A prospective recipient of an Award of Restricted Stock shall not have any rights with respect
to such Award, unless such recipient has executed an Award Agreement with respect to such Restricted Stock, has delivered a fully
executed copy thereof to the Administrator and has otherwise complied with the applicable terms and conditions of such Award.
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7.4.
In the sole discretion of the Administrator and as set forth in the Award Agreement for an Award of Restricted Stock, all shares
of Restricted Stock held by a Participant and still subject to restrictions shall be forfeited by the Participant upon the Participant’s
Termination of Service and shall be reacquired, canceled and retired by the Company. Notwithstanding the foregoing, unless otherwise
provided in an Award Agreement with respect to an Award of Restricted Stock, in the event of the death, Disability or Retirement
of a Participant during the Restriction Period, or in other cases of special circumstances (including hardship or other special
circumstances of a Participant whose employment is involuntarily terminated), the Administrator may elect to waive in whole or
in part any remaining restrictions with respect to all or any part of such Participant’s Restricted Stock, if it finds that
a waiver would be appropriate.
7.5.
Except as otherwise provided in this ARTICLE VII, no shares of Restricted Stock received by a Participant shall be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period.
7.6.
Upon an Award of Restricted Stock to a Participant, a certificate or certificates representing the shares of such Restricted Stock
will be issued to and registered in the name of the Participant. Unless otherwise determined by the Administrator, such certificate
or certificates will be held in custody by the Company until (i) the Restriction Period expires and the restrictions or limitations
lapse, in which case one or more certificates representing such shares of Restricted Stock that do not bear a restrictive legend
(other than any legend as required under applicable federal or state securities laws) shall be delivered to the Participant, or
(ii) a prior forfeiture by the Participant of the shares of Restricted Stock subject to such Restriction Period, in which case
the Company shall cause such certificate or certificates to be canceled and the shares represented thereby to be retired, all
as set forth in the Participant’s Award Agreement. It shall be a condition of an Award of Restricted Stock that the Participant
deliver to the Company a stock power endorsed in blank relating to the shares of Restricted Stock to be held in custody by the
Company.
7.7.
Except as provided in this ARTICLE VII or in the related Award Agreement, a Participant receiving an Award of shares of
Restricted Stock Award shall have, with respect to such shares, all rights of a stockholder of the Company, including the right
to vote the shares and the right to receive any distributions, unless and until such shares are otherwise forfeited by such Participant;
provided, however, the Administrator may require that any cash dividends with respect to such shares of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock subject to the same restrictions as the underlying Award, or may require that
cash dividends and other distributions on Restricted Stock be withheld by the Company or its Affiliates for the account of the
Participant. The Administrator shall determine whether interest shall be paid on amounts withheld, the rate of any such interest,
and the other terms applicable to such withheld amounts.
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ARTICLE
VIII.
STOCK AWARDS
8.1.
The Administrator, in its sole discretion, may from time to time on or after the Effective Date grant Stock Awards to Eligible
Persons in payment of compensation that has been earned or as compensation to be earned, including without limitation compensation
awarded or earned concurrently with or prior to the grant of the Stock Award, subject to the terms and conditions set forth in
this ARTICLE VIII.
8.2.
For the purposes of this Plan, in determining the value of a Stock Award, all shares of Common Stock subject to such Stock Award
shall be set in the Award Agreement and may be less than one hundred percent (100%) of the Fair Market Value of the Common Stock
at the Grant Date.
8.3.
Unless otherwise determined by the Administrator and set forth in the related Award Agreement, shares of Common Stock subject
to a Stock Award will be issued, and one or more certificates representing such shares will be delivered, to the Participant as
soon as practicable following the Grant Date of such Stock Award. Upon the issuance of such shares and the delivery of one or
more certificates representing such shares to the Participant, such Participant shall be and become a stockholder of the Company
fully entitled to receive dividends, to vote and to exercise all other rights of a stockholder of the Company. Notwithstanding
any other provision of this Plan, unless the Administrator expressly provides otherwise with respect to a Stock Award, as set
forth in the related Award Agreement, no Stock Award shall be deemed to be an outstanding Award for purposes of the Plan.
ARTICLE
IX.
PERFORMANCE SHARES
9.1.
The Administrator, in its sole discretion, may from time to time on or after the Effective Date award Performance Shares to Eligible
Persons as an incentive for the performance of future services that will contribute materially to the successful operation of
the Company and its Affiliates, subject to the terms and conditions set forth in this ARTICLE IX.
9.2.
The Administrator shall determine the terms and conditions of any Award of Performance Shares, which shall be set forth in the
related Award Agreement, including without limitation:
9.2.1
the purchase price, if any, to be paid for such Performance Shares, which may be zero, subject to such minimum consideration as
may be required by Applicable Law;
9.2.2
the performance period (the “Performance Period”) and/or performance objectives (the “Performance
Objectives”) applicable to such Awards;
9.2.3
the number of Performance Shares that shall be paid to the Participant if the applicable Performance Objectives are exceeded or
met in whole or in part; and
9.2.4
the form of settlement of a Performance Share.
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9.3.
At any date, each Performance Share shall have a value equal to the Fair Market Value of a share of Common Stock.
9.4.
Performance Periods may overlap, and Participants may participate simultaneously with respect to Performance Shares for which
different Performance Periods are prescribed.
9.5.
Performance Objectives may vary from Participant to Participant and between Awards and shall be based upon such performance criteria
or combination of factors as the Administrator may deem appropriate, including, but not limited to, minimum earnings per share
or return on equity. If during the course of a Performance Period there shall occur significant events which the Administrator
expects to have a substantial effect on the applicable Performance Objectives during such period, the Administrator may revise
such Performance Objectives.
9.6.
In the sole discretion of the Administrator and as set forth in the Award Agreement for an Award of Performance Shares, all Performance
Shares held by a Participant and not earned shall be forfeited by the Participant upon the Participant’s Termination of
Service. Notwithstanding the foregoing, unless otherwise provided in an Award Agreement with respect to an Award of Performance
Shares, in the event of the death, Disability or Retirement of a Participant during the applicable Performance Period, or in other
cases of special circumstances (including hardship or other special circumstances of a Participant whose employment is involuntarily
terminated), the Administrator may determine to make a payment in settlement of such Performance Shares at the end of the Performance
Period, based upon the extent to which the Performance Objectives were satisfied at the end of such period and pro-rated for the
portion of the Performance Period during which the Participant was employed by the Company or an Affiliate; provided, however,
that the Administrator may provide for an earlier payment in settlement of such Performance Shares in such amount and under such
terms and conditions as the Administrator deems appropriate or desirable.
9.7.
The settlement of a Performance Share shall be made in cash, whole shares of Common Stock or a combination thereof and shall be
made as soon as practicable after the end of the applicable Performance Period. Notwithstanding the foregoing, the Administrator
in its sole discretion may allow a Participant to defer payment in settlement of Performance Shares on terms and conditions approved
by the Administrator and set forth in the related Award Agreement entered into in advance of the time of receipt or constructive
receipt of payment by the Participant.
9.8.
Performance Shares shall not be transferable by the Participant. The Administrator shall have the authority to place additional
restrictions on the Performance Shares including, but not limited to, restrictions on transfer of any shares of Common Stock that
are delivered to a Participant in settlement of any Performance Shares.
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ARTICLE
X.
CHANGES OF CONTROL OR OTHER FUNDAMENTAL CHANGES
10.1.
Upon the occurrence of a Change of Control and unless otherwise provided in the Award Agreement with respect to a particular Award:
10.1.1
all outstanding Stock Options shall become immediately exercisable in full, subject to any appropriate adjustments in the number
of shares subject to the Stock Option and the Option Price, and shall remain exercisable for the remaining Option Period, regardless
of any provision in the related Award Agreement limiting the exercisability of such Stock Option or any portion thereof for any
length of time;
10.1.2
all outstanding Performance Shares with respect to which the applicable Performance Period has not been completed shall be paid
out as soon as practicable as follows:
(i)
all Performance Objectives applicable to the Award of Performance Shares shall be deemed to have been satisfied to the extent
necessary to earn one hundred percent (100%) of the Performance Shares covered by the Award;
(ii)
the applicable Performance Period shall be deemed to have been completed upon occurrence of the Change of Control;
(iii)
the payment to the Participant in settlement of the Performance Shares shall be the amount determined by the Administrator, in
its sole discretion, or in the manner stated in the Award Agreement, as multiplied by a fraction, the numerator of which is the
number of full calendar months of the applicable Performance Period that have elapsed prior to occurrence of the Change of Control,
and the denominator of which is the total number of months in the original Performance Period; and
(iv)
upon the making of any such payment, the Award Agreement as to which it relates shall be deemed terminated and of no further force
and effect; and
10.1.3
all outstanding shares of Restricted Stock with respect to which the restrictions have not lapsed shall be deemed vested, and
all such restrictions shall be deemed lapsed and the Restriction Period ended.
10.2.
Anything contained herein to the contrary notwithstanding, upon the dissolution or liquidation of the Company, each Award granted
under the Plan and then outstanding shall terminate; provided, however, that following the adoption of a plan of dissolution or
liquidation, and in any event prior to the effective date of such dissolution or liquidation, each such outstanding Award granted
hereunder shall be exercisable in full and all restrictions shall lapse, to the extent set forth in Section 10.1.1, 10.1.2
and 10.1.3 above.
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10.3.
After the merger of one or more corporations into the Company or any Affiliate, any merger of the Company into another corporation,
any consolidation of the Company or any Affiliate of the Company and one or more corporations, or any other corporate reorganization
of any form involving the Company as a party thereto and involving any exchange, conversion, adjustment or other modification
of the outstanding shares of the Common Stock, each Participant shall, at no additional cost, be entitled, upon any exercise of
such Participant’s Stock Option, to receive, in lieu of the number of shares as to which such Stock Option shall then be
so exercised, the number and class of shares of stock or other securities or such other property to which such Participant would
have been entitled to pursuant to the terms of the agreement of merger or consolidation or reorganization, if at the time of such
merger or consolidation or reorganization, such Participant had been a holder of record of a number of shares of Common Stock
equal to the number of shares as to which such Stock Option shall then be so exercised. Comparable rights shall accrue to each
Participant in the event of successive mergers, consolidations or reorganizations of the character described above. The Administrator
may, in its sole discretion, provide for similar adjustments upon the occurrence of such events with regard to other outstanding
Awards under this Plan. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined
by the Administrator in its sole discretion. Any such adjustment may provide for the elimination of any fractional shares which
might otherwise become subject to an Award. All adjustments made as the result of the foregoing in respect of each Incentive Stock
Option shall be made so that such Incentive Stock Option shall continue to be an Incentive Stock Option, as defined in Section
422 of the Code.
ARTICLE
XI.
AMENDMENT AND TERMINATION
11.1.
Subject to the provisions of Section 11.2, the Board of Directors at any time and from time to time may amend or terminate
the Plan as may be necessary or desirable to implement or discontinue the Plan or any provision hereof, to the extent required
by the Act or the Code, or rules and regulations of the Stock Exchange and/or such other securities exchanges, if any, which the
Company’s Common Stock is then subject to, however, no amendment, without approval by the Company’s stockholders,
shall:
11.1.1
materially alter the group of persons eligible to participate in the Plan;
11.1.2
except as provided in Section 3.4, change the maximum aggregate number of shares of Common Stock that are available for
Awards under the Plan; or
11.1.3
alter the class of individuals eligible to receive an Incentive Stock Option or increase the limit on Incentive Stock Options
set forth in Section 4.1.4 or the value of shares of Common Stock for which an Eligible Employee may be granted an Incentive
Stock Option.
11.2.
No amendment to or discontinuance of the Plan or any provision hereof by the Board of Directors or the stockholders of the Company
shall, without the written consent of the Participant, adversely affect (in the sole discretion of the Administrator) any Award
theretofore granted to such Participant under this Plan; provided, however, that the Administrator retains the right and power
to:
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11.2.1
annul any Award if the Participant is terminated for cause as determined by the Administrator; and
11.2.2
convert any outstanding Incentive Stock Option to a Nonqualified Stock Option.
11.3.
If a Change of Control has occurred, no amendment or termination shall impair the rights of any person with respect to an outstanding
Award as provided in ARTICLE X.
ARTICLE
XII.
SECURITIES MATTERS AND REGULATIONS
12.1.
Notwithstanding anything herein to the contrary, the obligation of the Company to sell or deliver Shares with respect to any Award
granted under the Plan shall be subject to all Applicable Laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by
the Administrator. The Administrator may require, as a condition of the issuance and delivery of certificates evidencing shares
of Common 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 Administrator, in its sole discretion, deems necessary or advisable.
12.2.
Each Award is subject to the requirement that, if at any time the Administrator determines that the listing, registration or qualification
of Shares is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Shares,
no such Award shall be granted or payment made or Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not acceptable to the Administrator.
12.3.
In the event that the disposition of Shares acquired pursuant to the Plan is not covered by a then current registration statement
under the Securities Act and is not otherwise exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act or regulations thereunder, and the Administrator may require a Participant receiving
Common Stock pursuant to the Plan, as a condition precedent to receipt of such Common Stock, to represent to the Company in writing
that the Common Stock acquired by such Participant is acquired for investment only and not with a view to distribution.
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ARTICLE
XIII.
SECTION 409A OF THE CODE
13.1.
Unless otherwise expressly provided for in an Award Agreement, the Plan and each Award Agreement will be interpreted to the greatest
extent possible in a manner that makes the Plan and the Awards granted hereunder exempt from Section 409A of the Code, and, to
the extent not so exempt, in compliance with Section 409A of the Code. If the Administrator determines that any Award granted
hereunder is not exempt from and is therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award will
incorporate the terms and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the
extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the
Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise),
if the Shares are publicly traded, and if a Participant holding an Award that constitutes “deferred compensation”
under Section 409A of the Code is a “specified employee” for purposes of Section 409A of the Code, no
distribution or payment of any amount that is due because of a “separation from service” (as defined
in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid before the date that
is six months following the date of such Participant’s “separation from service” (as defined in
Section 409A of the Code without regard to alternative definitions thereunder) or, if earlier, the date of the Participant’s
death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts
so deferred will be paid in a lump sum on the day after such six month period elapses, with the balance paid thereafter on the
original schedule.
13.2.
With respect to any Award that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code,
termination of a Participant’s Continuous Service Status shall mean a separation from service within the meaning of Section
409A of the Code, unless the Participant was an Employee immediately prior to such termination and is then contemporaneously retained
as a Consultant pursuant to a written agreement and such agreement provides otherwise. The Continuous Service Status of a Participant
shall be deemed to have terminated for all purposes of the Plan if such person is employed by or provides services to a subsidiary
and such subsidiary ceases to be a subsidiary, unless the Administrator determines otherwise. To the extent permitted by Section
409A of the Code, a Participant who ceases to be an Employee of the Company but continues, or simultaneously commences, services
as a Director of the Company shall be deemed to have had a termination of Continuous Service Status for purposes of the Plan.
ARTICLE
XIV.
MISCELLANEOUS PROVISIONS
14.1.
Nothing in the Plan or any Award granted hereunder shall confer upon any Participant any right to continue in the employ of the
Company or its Affiliates or to serve as a Director or shall interfere in any way with the right of the Company or its Affiliates
or the stockholders of the Company, as applicable, to terminate the employment of a Participant or to release or remove a Director
at any time. Unless specifically provided otherwise, no Award granted under the Plan shall be deemed salary or compensation for
the purpose of computing benefits under any employee benefit plan or other arrangement of the Company or its Affiliates for the
benefit of their respective employees unless the Company shall determine otherwise. No Participant shall have any claim to an
Award until it is actually granted under the Plan and an Award Agreement has been executed and delivered to the Company. To the
extent that any person acquires a right to receive payments from the Company under the Plan, such right shall, except as otherwise
provided by the Administrator, be no greater than the right of an unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the Company, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts, except as provided in ARTICLE VII with respect to
Restricted Stock and except as otherwise provided by the Administrator.
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14.2.
The Plan and the grant of Awards shall be subject to all applicable federal and state laws, rules, and regulations and to such
approvals by any government or regulatory agency as may be required. Any provision herein relating to compliance with Rule 16b-3
under the Act shall not be applicable with respect to participation in the Plan by Participants who are not subject to Section
16 of the Act.
14.3.
The terms of the Plan shall be binding upon the Company, its successors and assigns.
14.4.
Neither a Stock Option nor any other type of equity-based compensation provided for hereunder shall be transferable except as
provided for in Section 6.2. In addition to the transfer restrictions otherwise contained herein, additional transfer restrictions
shall apply to the extent required by federal or state securities laws. If any Participant makes such a transfer in violation
hereof, any obligation hereunder of the Company to such Participant shall terminate immediately.
14.5.
This Plan and all actions taken hereunder shall be governed by the laws of the State of Delaware.
14.6.
Each Participant exercising an Award hereunder agrees to give the Administrator prompt written notice of any election made by
such Participant under Section 83(b) of the Code, or any similar provision thereof, as applicable.
14.7.
If any provision of this Plan or an Award Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction,
or would disqualify the Plan or any Award Agreement under any law deemed applicable by the Administrator, such provision shall
be construed or deemed amended to conform to Applicable Laws, or if it cannot be construed or deemed amended without, in the determination
of the Administrator, materially altering the intent of the Plan or the Award Agreement, it shall be stricken, and the remainder
of the Plan or the Award Agreement shall remain in full force and effect.
14.8.
The grant of an Award pursuant to this Plan shall not affect in any way the right or power of the Company or any of its Affiliates
to make adjustments, reclassification, reorganizations, or changes of its capital or business structure, or to merge or consolidate,
or to dissolve, liquidate or sell, or to transfer all or part of its business or assets.
14.9.
The Plan is not subject to the provisions of ERISA or qualified under Section 401(a) of the Code.
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14.10.
If a Participant is required to pay to the Company an amount with respect to income and employment tax withholding obligations
in connection with (i) the exercise of a Nonqualified Stock Option, (ii) certain dispositions of Common Stock acquired upon the
exercise of an Incentive Stock Option, or (iii) the receipt of Common Stock pursuant to any other Award, then the issuance of
Common Stock to such Participant shall not be made (or the transfer of shares by such Participant shall not be required to be
effected, as applicable) unless such withholding tax or other withholding liabilities shall have been satisfied in a manner acceptable
to the Company. To the extent provided by the terms of an Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means
(in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination
of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award,
provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be
withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock.
14.11.
Compliance with other laws.
14.11.1
For Reporting Persons:
(i)
the Plan is intended to satisfy the provisions of Rule 16b-3;
(ii)
all transactions involving Participants who are subject to Section 16(b) of the Act are subject to the provisions of Rule 16b-3
regardless of whether they are set forth in the Plan; and
(iii)
any provision of the Plan that conflicts with Rule 16b-3 does not apply to the extent of the conflict.
14.11.2
If any provision of the Plan, any Award, or Award Agreement conflicts with the requirements of Code Section 162(m) or 422 for
Awards subject to these requirements, then that provision does not apply to the extent of the conflict.
14.11.3
Notwithstanding any other provision of the Plan, if, for an Employee of a parent company, the conversion of an Incentive Stock
Option to a Nonqualified Stock Option or the treatment of an Incentive Stock Option as a Nonqualified Stock Option would not satisfy
the requirements of Code Section 409A or an exemption thereto, as determined by the Administrator in its exclusive discretion,
then the Incentive Stock Option shall terminate on the date that it would no longer qualify as an Incentive Stock Option as determined
by the Administrator in its exclusive discretion.
14.12.
In addition to the remedies of the Company elsewhere provided for herein, failure by a Participant to comply with any of the terms
and conditions of the Plan or any Award Agreement, unless such failure is remedied by such Participant within ten days after having
been notified of such failure by the Administrator, shall be grounds for the cancellation and forfeiture of such Award, in whole
or in part, as the Administrator, in its sole discretion, may determine.
14.13.
Any reference in the Plan to a written document includes any document delivered electronically or posted on the Company’s
intranet.
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14.14.
The headings and captions in the Plan are inserted as a matter of convenience for organizational purposes, and do not construe,
define, extend, interpret, or limit any provision of the Plan.
14.15.
Whenever the context may require, any pronoun includes the corresponding masculine, feminine, or neuter form, and the singular
includes the plural and vice versa.
14.16.
Any reference in the Plan to a statutory or regulatory provision includes corresponding successor provisions.
14.17.
The proceeds from the sale of shares pursuant to Awards granted under the Plan shall constitute general funds of the Company.
14.18.
A Participant’s electronic signature of an Award Agreement shall have the same validity and effect as a signature affixed
by hand.
14.19.
Notwithstanding anything in the Plan or in any Award Agreement to the contrary, the Company will be entitled to the extent permitted
or required by Applicable Law, Company policy and/or the requirements of a Stock Exchange on which the Shares are listed for trading,
in each case, as in effect from time to time, to recoup compensation of whatever kind paid by the Company at any time to a Participant
under this Plan. No such recoupment of compensation will be an event giving rise to a right to resign for “good reason”
or “constructive termination” (or similar term) under any agreement between any Participant and the
Company.
14.20.
Corporate action constituting a grant by the Company of an Award to any Participant shall be deemed completed as of the date of
such corporate action, unless otherwise determined by the Administrator, regardless of when the instrument, certificate, or letter
evidencing the Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate
records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g.,
exercise price, vesting schedule or number of Shares) that are inconsistent with those in the Award Agreement or related grant
documents as a result of a clerical error in the preparation of the Award Agreement or related grant documentation, the corporate
records will control, and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related
grant documentation.
14.21.
Nothing contained in the Plan or in any Award agreement executed pursuant hereto shall be deemed to confer upon any individual
or entity to whom an Award is or may be granted hereunder any right to remain in the employ or service of the Company or a parent
or subsidiary of the Company or any entitlement to any remuneration or other benefit pursuant to any consulting or advisory arrangement.
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Appendix
B
STATE
OF DELAWARE
CERTIFICATE
OF AMENDMENT TO
SECOND
AMENDED AND RESTATED
CERTIFICATE
OF INCORPORATION OF
TRXADE
GROUP, INC.
The
corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST:
That at a meeting of the Board of Directors of Trxade Group, Inc., resolutions were duly adopted setting forth a proposed amendment
to the Second Amended and Restated Certificate of Incorporation of said corporation (the “Certificate of Incorporation”),
subject to the approval for such amendment, by the stockholders of the corporation.
The
resolution setting forth the proposed amendment is as follows:
RESOLVED,
that the Certificate of Incorporation of this corporation be amended by amending and restating Articles IV and V
thereof to read as follows:
“ARTICLE
IV
This
Corporation is authorized to issue two (2) classes of stock, designated “Common Stock” and “Preferred Stock.”
The total number of shares of Common Stock authorized to be issued is One Hundred Million (100,000,000) shares, $0.00001 par value
per share. The total number of shares of Preferred Stock authorized to be issued is Ten Million (10,000,000) shares, $0.00001
par value per share, all of which shall initially be undesignated Preferred Stock.
The
undesignated Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized,
to fix or alter the rights, preferences, privileges and restrictions of any wholly unissued series of Preferred Stock, and the
number of shares constituting any such series or the designation thereof and to increase or decrease the number of shares of any
such series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall so be decreased, the shares constituting such decrease shall resume the status
that they had prior to the adoption of the resolution originally fixing the number of such series.
ARTICLE
V
1.
COMMON STOCK
1.1 General.
Each share of Common Stock of the Corporation shall have identical rights and privileges in every respect. The Common Stock shall
be subject to the express terms of the Preferred Stock and any series thereof.
1.2 Voting.
Each registered holder of Common Stock shall be entitled to one vote for each share of such Common Stock held by such holder on
each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as
otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Second Amended and Restated
Certificate of Incorporation (including any Preferred Stock Designation) that relates solely to the terms of one or more outstanding
series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the
holders of one or more other such series, to vote thereon by law or pursuant to this Second Amended and Restated Certificate of
Incorporation (including any Preferred Stock Designation). There shall be no cumulative voting. The number of authorized shares
of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of shares of stock of the Corporation representing a majority of the votes represented by all outstanding
shares of stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.
Except
as required by law and subject to the rights of the holders of any series of Preferred Stock, (a) Holders of Common Stock shall
be entitled to elect directors of the Corporation; and (b) Holders of Common Stock shall be entitled to vote on all other matters
properly submitted to a vote of stockholders of the Corporation.
1.3 Dividends.
Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock or any series thereof, the holders
of shares of the Common Stock shall be entitled to receive ratably such dividends (payable in cash, stock or otherwise), if any,
as may be declared thereon by the Board at any time and from time to time out of any funds of the Corporation legally available
therefor.
1.4 Liquidation.
In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, either voluntary or involuntary,
after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock
or any class or series thereof, the holders of shares of the Common Stock shall be entitled to receive all of the remaining assets
of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of the Common
Stock held by them. For purposes of this Section 1.4, the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially all of the assets of the Corporation or a consolidation or
merger of the Corporation with one or more other corporations or other entities (whether or not the Corporation is the corporation
surviving such consolidation or merger) shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary.
If any assets of the Corporation distributed to stockholders in connection with any liquidation, dissolution, or winding up of
the Corporation are other than cash, then the value of such assets shall be their fair market value as determined in good faith
by the Board of Directors. In the event of a merger or other acquisition of the Corporation by another entity, the distribution
date shall be deemed to be the date such transaction closes.
2. PREFERRED
STOCK
2.1 Issuance
and Reissuance. Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class
or series to consist of such number of shares and to have such terms, rights, powers and preferences, and the qualifications and
limitations with respect thereto, as stated or expressed herein and in the resolution or resolutions providing for the issue of
such series adopted by the Board as hereinafter provided (a “Preferred Stock Designation”).
2.2 Blank
Check Preferred. Subject to any vote expressly required by this Second Amended and Restated Certificate of Incorporation,
authority is hereby expressly granted to the Board from time to time to authorize the issuance of the Preferred Stock in one or
more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the
shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including,
but not limited to, the following:
(a)
whether or not the class or series is to have voting rights, in addition to the voting rights provided by law, and, if so, the
terms of such voting rights;
(b) the
number of shares to constitute the class or series and the designations thereof;
(c)
the preferences, and relative, participating, optional or other special rights, if any, and the qualifications, limitations or
restrictions thereof, if any, with respect to any class or series;
(d) whether
or not the shares of any class or series shall be redeemable at the option of the Corporation or the holders thereof or upon the
happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash,
notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares shall
be redeemable and the manner of redemption;
(e) whether
or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase
or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual
amount thereof, and the terms and provisions relative to the operation thereof;
(f) the
dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and
the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other
class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the
date or dates from which such dividends shall accumulate;
(g) the
preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon
the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;
(h) whether
or not the shares of any class or series, at the option of the Corporation or the holder thereof or upon the happening of any
specified event, shall be convertible into or exchangeable for, the shares of any other class or classes or of any other series
of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or
prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be
stated and expressed or provided for in such resolution or resolutions; and
(i) such
other special rights and protective provisions with respect to any class or series as the Board may determine are advisable.
2.3 Number
of Shares. The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series
thereof in any or all of the foregoing respects. The Board may increase the number of shares of the Preferred Stock designated
for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board may decrease the number of shares of the Preferred Stock designated
for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred
Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued, and undesignated
shares of the Preferred Stock.
Reverse
Stock Split of Outstanding Common Stock
Effective
as of the effective date of such Amendment as set forth below (the “Effective Time”), every [2 to 10, depending
on the final ratio approved by the Board of Directors] shares of the Corporation’s Common Stock, issued and outstanding
immediately prior to the Effective Time, or held in treasury prior to the Effective Time (collectively the “Old Capital
Stock”), shall be automatically reclassified and combined into One (1) share of Common Stock (the “Reverse
Stock Split”). Any stock certificate that, immediately prior to the Effective Time, represented shares of Old Capital
Stock will, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent
the number of shares as equals the quotient obtained by dividing the number of shares of Old Capital Stock represented by such
certificate immediately prior to the Effective Time by [2 to 10, depending on the final ratio approved by the Board of Directors],
subject to any adjustments for fractional shares as set forth below; provided, however, that each person holding of record a stock
certificate or certificates that represented shares of Old Capital Stock shall receive, upon surrender of such certificate or
certificates, a new certificate or certificates evidencing and representing the number of shares of capital stock to which such
person is entitled under the foregoing reclassification. No fractional shares of capital stock shall be issued as a result of
the Reverse Stock Split. In lieu of any fractional share of capital stock to which a stockholder would otherwise be entitled,
the Corporation shall issue that number of shares of capital stock as rounded up to the nearest whole share. The Reverse Stock
Split shall have no effect on the number of authorized shares of capital stock, previously designated series of preferred stock
or the par value thereof as set forth above in the preceding paragraphs.”
SECOND:
That said amendment was duly adopted by the written consent of the stockholders of the Corporation in accordance with the provisions
of Sections 228 of the General Corporation Law of the State of Delaware, pursuant to which written consent, the necessary
number of shares as required by statute were voted in favor of the amendment.
THIRD:
That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
FOURTH:
That said amendment shall be effective for all purposes as of [____________].
I,
the undersigned, as the Secretary of the Corporation, have signed this Certificate of Amendment to Certificate of Incorporation
on [ ].