This Amendment
No. 1 to the Preliminary Proxy Statement on Schedule 14A is being filed: (i) to make it clearer to the shareholders of record
of BTCS Inc. that the Series C-2 Preferred Stock has no voting rights with respect to any of the proposals being voted on at this
Annual Meeting and conforming changes within the Principal Shareholder Table on page 15, (ii) to include other information deemed
pertinent regarding Proposals 2, 4, and 5 and (iii) and other non-substantive changes.
OTHER
MATTERS
The
Company has no knowledge of any other matters that may come before the Annual Meeting and does not intend to present any other
matters. However, if any other matters shall properly come before the Meeting or any adjournment, the persons soliciting proxies
will have the discretion to vote as they see fit unless directed otherwise.
If
you do not plan to attend the Annual Meeting, in order that your shares may be represented and in order to assure the required
quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Annual Meeting, at your request,
the Company will cancel your previously submitted proxy.
ANNEX
A
2021
EQUITY INCENTIVE PLAN
2021
EQUITY INCENTIVE PLAN
BTCS
Inc. (the “Company”) hereby establishes this 2021 Equity Incentive Plan (the “Plan”), effective
January 1, 2021, (“Effective Date”).
1.
Purpose; Eligibility.
1.1
General Purpose. The purpose of the Plan is to (a) enable
the Company, and any Affiliate to attract and retain the types of Employees, Consultants and Directors who will contribute to
the Company’s long range success; (b) provide incentives that align the interests of Employees, Consultants and Directors
with those of the shareholders of the Company; and (c) promote the success of the Company’s business.
1.2
Eligible Award Recipients. The persons eligible to receive
Awards are the Employees, Consultants and Directors of the Company and its Affiliates and such other individuals designated by
the Committee who are reasonably expected to become Employees, Consultants and Directors after the receipt of Awards.
1.3
Available Awards. Awards that may be granted under the
Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards,
(e) Performance Share Awards, and (f) Performance Cash Awards.
2.
Definitions.
“Affiliate”
means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under
common control with, the Company. The Board will have the authority to designate the time or times at which an Affiliate’s
status is determined.
“Applicable
Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate
law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the shares of
Common Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under
the Plan.
“Award”
means any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation
Right, a Restricted Award, a Performance Share Award, or a Performance Cash Award.
“Award
Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and
conditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronically
to any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.
“Beneficial
Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act),
such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the
right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable
only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding
meaning.
“Board”
means the Board of Directors of the Company, as constituted at any time.
“Cause”
will have the meaning ascribed to such term in the applicable Award Agreement or, if no such definition is provided therein, in
any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term
means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of
any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States, any state thereof,
or any applicable foreign jurisdiction; (ii) such Participant’s attempted commission of, or participation in, a fraud or
act of dishonesty against the Company or any Affiliate; (iii) such Participant’s intentional, material violation of any
contract or agreement between the Participant and the Company or any Affiliate or of any statutory or common law duty owed to
the Company or any Affiliate; (iv) such Participant’s unauthorized use or disclosure of the Company’s or any Affiliate’s
confidential information or trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination
of the Participant’s Continuous Service is either for Cause or without Cause will be made by the Board or the Committee,
in its sole discretion. Any determination by the Board or Committee that the Continuous Service of a Participant was terminated
with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination
of the rights or obligations of the Company or such Participant for any other purpose.
With
respect to any Director, a determination by a majority of the disinterested Board members that the Director has engaged in any
of the following: (a) malfeasance in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing
the Director’s appointment; (d) willful conversion of corporate funds; or (e) repeated failure to participate in Board meetings
on a regular basis despite having received proper notice of the meetings in advance.
The
Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to whether a Participant
has been discharged for Cause.
“Change
in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more
of the following events: (i) any Exchange Act Person becomes the owner, directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger,
consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A) on account
of the acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of securities of
the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities
in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through
the issuance of equity securities, (C) on account of the acquisition of securities of the Company by any individual who is either
an executive officer or a Director; or (D) solely because the level of ownership held by any Exchange Act Person (the “Subject
Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of the conversion
of another stockholder’s voting securities or a repurchase or other acquisition of voting securities by the Company reducing
the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as
a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes
the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold, then
a Change in Control will be deemed to occur; (ii) there is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar transaction,
the stockholders of the Company immediately prior thereto do not own, directly or indirectly, either (A) outstanding voting securities
representing more than 50% of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar
transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving entity in such merger,
consolidation or similar transaction, in each case in substantially the same proportions as their ownership of the outstanding
voting securities of the Company immediately prior to such transaction. (iii) there is consummated a sale, lease, exclusive license
or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries
to an entity, more than 50% of the combined voting power of the voting securities of which are owned by stockholders of the Company
in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition; or (iv) individuals who, on the date the Plan is adopted by the Board, are
Incumbent Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members
of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member
was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will,
for purposes of this Plan, be considered as a member of the Incumbent Board. Notwithstanding the foregoing definition or any other
provision of the Plan, the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively
for the purpose of changing the domicile of the Company and the definition of Change in Control (or any analogous term) in an
individual written agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition
with respect to Awards subject to such agreement; provided, however, that if no definition of Change in Control or any
analogous term is set forth in such an individual written agreement, the foregoing definition will apply. To the extent required
for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction
is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of
a substantial portion of the assets of” the Company as determined under Treasury Regulations Section 1.409A-3(i)(5) (without
regard to any alternative definition thereunder). The Board may, in its sole discretion and without a Participant’s consent,
amend the definition of “Change in Control” to conform to the definition of “Change in Control” under
Section 409A of the Code, and the regulations thereunder.
“Code”
means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall
be deemed to include a reference to any regulations promulgated thereunder.
“Committee”
means a committee of two or more members of the Board appointed by the Board to administer the Plan in accordance with Section
3.3 and Section 3.4.
“Common
Stock” means the common stock, $0.001 par value per share, of the Company, or such other securities of the Company as
may be designated by the Committee from time to time in substitution thereof.
“Consultant”
means any person, including an advisor, who is (i) engaged by the Company or an Affiliate to render consulting or advisory services
and is compensated for such services, or (ii) serving as a member of the board of directors of an Affiliate and is compensated
for such services. However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be
considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant
under this Plan only if a registration statement on Form S-8 under the Securities Act is available to register either the offer
or the sale of the Company’s securities to such person.
“Continuous
Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director
or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service,
provided that there is no interruption or termination of the Participant’s service with the Company or an Affiliate, will
not terminate a Participant’s Continuous Service; provided, however, that if the entity for which a Participant is
rendering services ceases to qualify as an Affiliate, as determined by the Board, in its sole discretion, such Participant’s
Continuous Service will be considered to have terminated on the date such entity ceases to qualify as an Affiliate. To the extent
permitted by law, the Committee or the chief executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service will be considered interrupted in the case of (i) any leave of absence approved by the Committee or
chief executive officer, including sick leave, military leave or any other personal leave, or (ii) transfers between the Company,
an Affiliate, or their successors. Notwithstanding the foregoing, a leave of absence will be treated as Continuous Service for
purposes of vesting of an Award only to such extent as may be provided in the Company’s leave of absence policy, in the
written terms of any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law. In addition,
to the extent required for exemption from or compliance with Section 409A of the Code, the determination of whether there has
been a termination of Continuous Service will be made, and such term will be construed, in a manner that is consistent with the
definition of “separation from service” as defined under Treasury Regulation Section 1.409A-1(h) (without regard to
any alternative definition thereunder).
“Deferred
Stock Units (DSUs)” has the meaning set forth in Section 7.2 hereof.
“Director”
means a member of the Board.
“Disability”
means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section
6.10 hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of
whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations
where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10 hereof
within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled
for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant
participates.
“Disqualifying
Disposition” has the meaning set forth in Section 14.12.
“Effective
Date” shall mean the date as of which this Plan is adopted by the Board.
“Employee”
means any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, for purposes of determining
eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or a parent or subsidiary corporation
within the meaning of Section 424 of the Code. 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.
“Exchange
Act” means the Securities Exchange Act of 1934.
“Exchange
Act Person” means any natural person, entity or “group” (within the meaning of Section 13(d) or 14(d) of
the Exchange Act), except that “Exchange Act Person” will not include (i) the Company or any subsidiary of the Company,
(ii) any employee benefit plan of the Company or any subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the Company, (iii) an underwriter temporarily holding securities
pursuant to a registered public offering of such securities, (iv) an entity owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock of the Company; or (v) any natural person, entity
or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that is the owner, directly or indirectly,
of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.
“Fair
Market Value” means, as of the last trading day before the grant of the Award, the value of the Common Stock as determined
below. If the Common Stock is listed on any established stock exchange or a national market system, including without limitation,
the New York Stock Exchange, the NASDAQ Stock Market or the OTC Markets, the Fair Market Value shall be the closing price of a
share of Common Stock as quoted on such exchange or system. In the absence of an established market for the Common Stock, the
Fair Market Value shall be determined in good faith by the Committee and such determination shall be conclusive and binding on
all persons.
“Free
Standing Rights” has the meaning set forth in Section 7.1(a).
“Grant
Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting
an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution,
then such date as is set forth in such resolution.
“Incentive
Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of
the Code.
“Incumbent
Directors” means individuals who, on the Effective Date, constitute the Board, provided that any individual becoming
a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for Director without objection to such nomination) shall be an Incumbent
Director. No individual initially elected or nominated as a director of the Company as a result of an actual or threatened election
contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of
any person other than the Board shall be an Incumbent Director.
“Non-Employee
Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.
“Non-qualified
Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock
Option.
“Officer”
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
“Option”
means an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.
“Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Option.
“Option
Exercise Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.
“Participant”
means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Award.
“Performance
Cash Award” means an award of cash granted pursuant to the terms and conditions of Section 7.4.
“Performance
Criteria” means the one or more criteria that the Board or Committee (as applicable) will select for purposes of establishing
the Performance Goals for a Performance Period. The Performance Criteria that will be used to establish such Performance Goals
may be based on any one of, or combination of, the following as determined by the Board or Committee (as applicable): (i) earnings
(including earnings per share and net earnings); (ii) earnings before interest, taxes and depreciation; (iii) earnings before
interest, taxes, depreciation and amortization; (iv) earnings before interest, taxes, depreciation, amortization and legal settlements;
(v) earnings before interest, taxes, depreciation, amortization, legal settlements and other income (expense); (vi) earnings before
interest, taxes, depreciation, amortization, legal settlements, other income (expense) and stock-based compensation; (vii) earnings
before interest, taxes, depreciation, amortization, legal settlements, other income (expense), stock-based compensation and changes
in deferred revenue; (viii) total stockholder return; (ix) return on equity or average stockholder’s equity; (x) return
on assets, investment, or capital employed; (xi) stock price; (xii) margin (including gross margin); (xiii) income (before or
after taxes); (xiv) operating income; (xv) operating income after taxes; (xvi) pre-tax profit; (xvii) operating cash flow; (xviii)
sales or revenue targets; (xix) increases in revenue or product revenue; (xx) expenses and cost reduction goals; (xxi) improvement
in or attainment of working capital levels; (xxii) economic value added (or an equivalent metric); (xxiii) market share; (xxiv)
cash flow; (xxv) cash flow per share; (xxvi) share price performance; (xxvii) debt reduction; (xxviii) implementation or completion
of projects or processes; (xxix) stockholders’ equity; (xxx) capital expenditures; (xxxi) debt levels; (xxxii) operating
profit or net operating profit; (xxxiii) workforce diversity; (xxxiv) growth of net income or operating income; (xxxv) employee
retention; (xxxvi) client satisfaction; (xxxvii ) budget management; (xxxviii) entry into or completion of strategic partnerships
or transactions (including in-licensing and out-licensing of intellectual property); (xliiv) completion of acquisitions or business
expansion; (xliv) net assets calculated using the fair market value of digital assets; and (xlv) cash plus the fair market value
of digital assets.
“Performance
Goals” means, for a Performance Period, the one or more goals established by the Board or Committee (as applicable)
for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect
to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance
of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise (i) by the
Board or Committee (as applicable) (ii) in the Award Agreement at the time the Award is granted or (iii) in such other documented
agreement between the Company and the Participant setting forth the Performance Goals at the time the Performance Goals are established,
the Board or Committee (as applicable) may appropriately make adjustments in the method of calculating the attainment of Performance
Goals for a Performance Period, including without limitation as follows: (1) to exclude restructuring and/or other nonrecurring
charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes in the Company’s fiscal year, and changes
to tax laws, generally accepted accounting principles, or other laws and regulations affecting reported results; (4) to exclude
the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally
accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any
business divested by the Company achieved performance objectives at targeted levels during the balance of a Performance Period
following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of the Company by
reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends;
(9) to exclude the effects of stock-based compensation and the award of bonuses under the Company’s bonus plans, if any;
(10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under
generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required
to be recorded under generally accepted accounting principles; or (12) to exclude litigation or claim judgments or settlements.
In addition, the Board or Committee (as applicable) retains the discretion to reduce or eliminate the compensation or economic
benefit due upon attainment of Performance Goals and to define the manner of calculating the Performance Criteria it selects to
use for such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting corresponding
to the degree of achievement as specified in the Performance Share Award Agreement or the written terms of a Performance Cash
Award.
“Performance
Period” means the period of time selected by the Board or Committee (as applicable) over which the attainment of one
or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a
Performance Share Award or a Performance Cash Award. Performance Periods may be of varying and overlapping duration, at the sole
discretion of the Board or Committee (as applicable).
“Performance
Share Award” means any Award granted pursuant to Section 7.3 hereof.
“Performance
Share” means the grant of a right to receive a number of actual shares of Common Stock or share units based upon the
performance of the Company during a Performance Period, as determined by the Committee.
“Permitted
Transferee” means: (a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other
than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder)
own more than 50% of the voting interests; (b) third parties designated by the Committee in connection with a program established
and approved by the Committee pursuant to which Participants may receive a cash payment or other consideration in consideration
for the transfer of a Non-qualified Stock Option; and (c) such other transferees as may be permitted by the Committee in its sole
discretion.
“Plan”
means this 2021 Equity Incentive Plan, as amended and/or amended and restated from time to time.
“Related
Rights” has the meaning set forth in Section 7.1(a).
“Restricted
Award” means any Award granted pursuant to Section 7.2(a).
“Restricted
Period” has the meaning set forth in Section 7.2(a).
“Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to
time.
“Securities
Act” means the Securities Act of 1933.
“Stock
Appreciation Right” means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, an amount
payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied
by the excess of (a) the Fair Market Value of a share of Common Stock, over (b) the exercise price specified in the Stock Appreciation
Right Award Agreement.
“Stock
for Stock Exchange” has the meaning set forth in Section 6.4.
“Ten
Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.
3.
Administration.
3.1
Authority of Committee. The Plan shall be administered
by the Committee or, in the Board’s sole discretion, by the Board. Subject to the terms of the Plan, the Committee’s
charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee shall
have the authority:
(a)
to construe and interpret the Plan and apply its provisions;
(b)
to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
(c)
to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(d)
to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve “insiders”
within the meaning of Section 16 of the Exchange Act;
(e)
to determine when Awards are to be granted under the Plan and the applicable Grant Date;
(f)
from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall be granted;
(g)
to determine the number of shares of Common Stock to be made subject to each Award;
(h)
to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;
(i)
to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and
vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;
(j)
to determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, the performance measures
that will be used to establish the performance goals, the performance period(s) and the number of Performance Shares earned by
a Participant;
(l)
to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding
Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations
under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such
amendment shall also be subject to the Participant’s consent;
(m)
to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination
of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees
under the Company’s employment policies;
(n)
to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event
that triggers anti-dilution adjustments;
(o)
to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any
instrument or agreement relating to, or Award granted under, the Plan; and
(p)
to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration
of the Plan.
The
Committee also may modify the purchase price or the exercise price of any outstanding Award, provided that if the modification
effects a repricing, and the Company is listed on a nationally recognized stock exchange, then shareholder approval shall be required
before the repricing is effective.
3.2
Committee Decisions Final. All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions
are determined by a court having jurisdiction to be arbitrary and capricious.
3.3
Delegation. The Committee or, if no Committee has been
appointed, the Board may delegate administration of the Plan to a committee or committees of two or more members of the Board,
and the term “Committee” shall apply to any persons to whom such authority has been delegated. The Committee
shall have the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board
may abolish the Committee at any time and revest in the Board the administration of the Plan. The members of the Committee shall
be appointed by and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor,
and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to a vote of the majority of its members
or, in the case of a Committee comprised of only two members, the unanimous consent of its members, whether present or not, or
by the written consent of the majority of its members and minutes shall be kept of all of its meetings and copies thereof shall
be provided to the Board. Subject to the limitations prescribed by the Plan and the Board, the Committee may establish and follow
such rules and regulations for the conduct of its business as it may determine to be advisable.
3.4
Committee Composition. The Committee shall consist solely
of two or more Non-Employee Directors, unless determined otherwise by the Board. The Board shall have discretion to determine
whether or not it intends to comply with the exemption requirements of Rule 16b-3. However, if the Board intends to satisfy such
exemption requirements with respect to any insider subject to Section 16 of the Exchange Act, the Committee shall be a compensation
committee of the Board that at all times consists solely of two or more Non-Employee Directors. Within the scope of such authority,
the Board or the Committee may delegate to a committee of one or more members of the Board who are not Non-Employee Directors
the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall
create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation
committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.
3.5
Indemnification. In addition to such other rights of
indemnification as they may have as Directors or members of the Committee, and to the extent allowed by Applicable Laws, the Committee
shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection
with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of
any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts
paid by the Committee in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval
shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee did not
act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the
case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within
60 days after institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the opportunity
at its own expense to handle and defend such action, suit or proceeding.
4.
Shares Subject to the Plan.
4.1
Subject to adjustment in accordance with Section 11 and 4.2 below, Shares authorized for Awards granted under the Plan on and
after the Effective Date shall not exceed 20,000,000 shares. No more than 20,000,000 shares of Common Stock may be granted as
Incentive Stock Options. During the terms of the Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Awards. Shares of Common Stock available for distribution under the Plan may consist, in
whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner.
4.2
If any shares subject to an Award granted under the Plan are forfeited, an Award granted under the Plan expires or otherwise terminates
without issuance of shares, or an Award granted under the Plan is settled for cash (in whole or in part) or otherwise does not
result in the issuance of all or a portion of the shares subject to such Award (except as described below with respect to stock
settled Stock Appreciation Rights), such shares shall, to the extent of such forfeiture, expiration, termination, cash settlement
or non-issuance, again be available for grant under the Plan in accordance with Section 4.3 below. Notwithstanding anything to
the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery
under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company
to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that
were not issued upon the settlement of the Award.
4.3
Any shares that again become available for Awards under the Plan pursuant to this Section shall be added as one share for every
one share subject to the Awards.
5.
Eligibility.
5.1
Eligibility for Specific Awards. Incentive Stock Options
may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees, Consultants and Directors
and those individuals whom the Committee determines are reasonably expected to become Employees, Consultants and Directors following
the Grant Date.
5.2
Ten Percent Shareholders. Unless allowed by the Code
a Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the Option Exercise Price is at least 110% of
the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisable after the expiration of five years
from the Grant Date.
6.
Option Provisions. Each Option
granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted shall be subject to the conditions set
forth in this Section 6, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award
Agreement. All Options shall be separately designated Incentive Stock Options or Non-Qualified Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on
exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any
other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is determined
to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of
such Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical,
but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance
of each of the following provisions:
6.1
Term. Subject to the provisions of Section
5.2 regarding Ten Percent Shareholders, no Incentive Stock Option shall be exercisable after the expiration of 10 years from the
Grant Date. The term of a Non-qualified Stock Option granted under the Plan shall be determined by the Committee; provided, however,
no Non-qualified Stock Option shall be exercisable after the expiration of 10 years from the Grant Date.
6.2
Exercise Price of an Incentive Stock Option. Subject
to the provisions of Section 5.2 regarding Ten Percent Shareholders, the Option Exercise Price of each Incentive Stock Option
shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding
the foregoing, an Incentive Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions
of Section 424A of the Code.
6.3
Exercise Price of a Non-qualified Stock Option. The
Option Exercise Price of each Non-qualified Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock
subject to the Option on the Grant Date. Notwithstanding the foregoing, a Non-qualified Stock Option may be granted with an Option
Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 409A of the Code.
6.4
Consideration. The Option Exercise Price of Common Stock
acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in cash
or by certified or bank check at the time the Option is exercised or (b) in the discretion of the Committee, upon such terms as
the Committee shall approve, the Option Exercise Price may be paid by: (i) delivery to the Company of other Common Stock, duly
endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or
portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for
delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option
Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number
of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”);
(ii) a “cashless” exercise program established with a broker or performed directly with the Company; (iii) by reduction
in the number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the
aggregate Option Exercise Price at the time of exercise; (iv) any combination of the foregoing methods; or (v) in any other form
of legal consideration that may be acceptable to the Committee. Unless otherwise specifically provided in the Option, the exercise
price of Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other Common
Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six months (or such longer or shorter period of time required to avoid a charge to earnings for financial
accounting purposes). Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e., the
Common Stock is listed on any established stock exchange or a national market system) an exercise by a Director or Officer that
involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly
or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award
under this Plan.
6.5
Transferability of an Incentive Stock Option. An Incentive
Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during
the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of
the Optionholder, shall thereafter be entitled to exercise the Option.
6.6
Transferability of a Non-qualified Stock Option. A Non-qualified
Stock Option may, in the sole discretion of the Committee, be transferable to a Permitted Transferee, upon written approval by
the Committee to the extent provided in the Award Agreement. If the Non-qualified Stock Option does not provide for transferability,
then the Non-qualified Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder
may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event
of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.7
Vesting of Options. Each Option may, but need not, vest
and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria)
as the Committee may deem appropriate. The vesting provisions of individual Options may vary. No Option may be exercised for a
fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and
exercisability in the terms of any Award Agreement upon the occurrence of a specified event.
6.8
Termination of Continuous Service. Unless otherwise
provided in an Award Agreement or in an employment agreement the terms of which have been approved by the Committee, in the event
an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder
may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination)
but only within such period of time ending on the earlier of (a) the date three months (except for Non-qualified Stock Options
which shall be six months) following the termination of the Optionholder’s Continuous Service or (b) the expiration of the
term of the Option as set forth in the Award Agreement; provided that, if the termination of Continuous Service is by the Company
for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after
termination, the Optionholder does not exercise his or her Option within the time specified in the Award Agreement, the Option
shall terminate.
6.9
Extension of Termination Date. An Optionholder’s
Award Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous
Service for any reason would be prohibited at any time because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or
interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in
accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant’s Continuous Service
that is three months after the end of the period during which the exercise of the Option would be in violation of such registration
or other securities law requirements.
6.10
Disability of Optionholder. Unless otherwise provided
in an Award Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s
Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination), but only within such period of time ending on the one year anniversary of the termination
as a result of the Optionholder’s Disability. If, after termination, the Optionholder does not exercise his or her Option
within the time specified herein or in the Award Agreement, the Option shall terminate.
6.11
Death of Optionholder. Unless otherwise provided in
an Award Agreement, in the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s
death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of
death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the
one year anniversary of the Optionholder’s death. If, after the Optionholder’s death, the Option is not exercised
within the time specified herein or in the Award Agreement, the Option shall terminate.
6.12
Incentive Stock Option $100,000 Limitation. To the extent
that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates)
exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted)
shall be treated as Non-qualified Stock Options, unless otherwise allowed under the Code.
7.
Provisions of Awards Other Than Options.
7.1
Stock Appreciation Rights.
(a)
General. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation
Right so granted shall be subject to the conditions set forth in this Section 7.1, and to such other conditions not inconsistent
with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone (“Free
Standing Rights”) or in tandem with an Option (“Related Rights”) granted under the Plan.
(b)
Grant Requirements. Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the
Option is granted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates
to an Incentive Stock Option must be granted at the same time the Incentive Stock Option is granted.
(c)
Term of Stock Appreciation Rights. The term of a Stock Appreciation Right granted under the Plan shall be determined by
the Committee; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant
Date.
(d)
Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may, but need not, vest and therefore become exercisable
in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and
conditions on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual
Stock Appreciation Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The
Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock
Appreciation Right upon the occurrence of a specified event.
(e)
Exercise and Payment. Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company
an amount equal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied
by the excess of (i) the Fair Market Value of a share of Common Stock, over (ii) the exercise price specified in the Stock Appreciation
Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shall be made on the date of exercise.
Payment shall be made in the form of shares of Common Stock (with or without restrictions as to substantial risk of forfeiture
and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof, as determined by the
Committee.
(f)
Exercise Price. The exercise price of a Free Standing Right shall be determined by the Committee, but shall not be less
than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. A Related
Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative thereto
shall have the same exercise price as the related Option and shall be exercisable only to the same extent as the related Option;
provided, however, that a Stock Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value per share
of Common Stock subject to the Stock Appreciation Right and related Option exceeds the exercise price per share thereof and no
Stock Appreciation Rights may be granted in tandem with an Option unless the Committee determines that the requirements of Section
7.1(b) are satisfied.
(g)
Reduction in the Underlying Option Shares. Upon any exercise of a Related Right, the number of shares of Common Stock for
which any related Option shall be exercisable shall be reduced by the number of shares for which the Stock Appreciation Right
has been exercised. The number of shares of Common Stock for which a Related Right shall be exercisable shall be reduced upon
any exercise of any related Option by the number of shares of Common Stock for which such Option has been exercised.
(h)
Transferability of Stock Appreciation Rights. A Free Standing Right may, in the sole discretion of the Committee, be transferable
to a Permitted Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. If the Free Standing
Right does not provide for transferability, then the Free Standing Right shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. Notwithstanding
the foregoing, the Participant may, by delivering written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Participant, shall thereafter be entitled to exercise the Free Standing Right.
A Related Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternative
thereto shall be transferable only upon the same terms and conditions as the related Option.
7.2
Restricted Awards.
(a)
General. A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical
Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical
number of shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred
or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation
or for any other purpose for such period (the “Restricted Period”) as the Committee shall determine. Each Restricted
Award granted under the Plan shall be evidenced by an Award Agreement. Each Restricted Award so granted shall be subject to the
conditions set forth in this Section 7.2, and to such other conditions not inconsistent with the Plan as may be reflected in the
applicable Award Agreement.
(b)
Restricted Stock and Restricted Stock Units. Each Participant granted Restricted Stock shall execute and deliver to the
Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions
applicable to such Restricted Stock. If the Committee determines that the Restricted Stock shall be held by the Company or in
escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require
the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicable
and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If a Participant fails
to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, the Award
shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the rights and
privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive
dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld by the
Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate
and subject to such terms as determined by the Committee. The cash dividends or stock dividends so withheld by the Committee and
attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant
in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such
dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall
have no right to such dividends.
(i)
The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock
shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the
payment of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.
The Committee may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting
date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”).
At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock)
may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend
Equivalents”). Dividend Equivalents shall be paid currently (and in no case later than the end of the calendar year
in which the dividend is paid to the holders of the Common Stock or, if later, the 15th day of the third month following the date
the dividend is paid to holders of the Common Stock). Dividend Equivalents shall be withheld by the Company and credited to the
Participant’s account, and interest may be credited on the amount of cash Dividend Equivalents credited to the Participant’s
account at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to a Participant’s
account and attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and earnings thereon, if applicable)
shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal
to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted
Stock Unit or Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant shall
have no right to such Dividend Equivalents. Dividend Equivalents will be deemed re-invested in additional Restricted Stock Units
or Deferred Stock Units based on the Fair Market Value of a share of Common Stock on the applicable dividend payment date and
rounded down to the nearest whole share.
(c)
Restrictions.
(i)
Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted
Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement
is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions
on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the
applicable Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company,
and all rights of the Participant to such shares and as a shareholder with respect to such shares shall terminate without further
obligation on the part of the Company.
(ii)
Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration
of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the
applicable Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of
the Participant to such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part
of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.
(iii)
The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock, Restricted Stock Units
and Deferred Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances
arising after the date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.
(d)
Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at
the time or times set forth on a schedule established by the Committee in the applicable Award Agreement.
No
Restricted Award may be granted or settled for a fraction of a share of Common Stock. The Committee may, but shall not be required
to, provide for an acceleration of vesting in the terms of any Award Agreement upon the occurrence of a specified event.
(e)
Delivery of Restricted Stock and Settlement of Restricted Stock Units. Upon the expiration of the Restricted Period with
respect to any shares of Restricted Stock, the restrictions set forth in Section 7.2(c) and the applicable Award Agreement shall
be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge,
the stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the
Restricted Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Participant’s
account with respect to such Restricted Stock and the interest thereon, if any. Upon the expiration of the Restricted Period with
respect to any outstanding Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding
Deferred Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common
Stock for each such outstanding vested Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash
equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7.2(b)(i) hereof and
the interest thereon or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such
Dividend Equivalents and the interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award
Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering
only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount
of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed
in the case of Restricted Stock Units, or the delivery date in the case of Deferred Stock Units, with respect to each Vested Unit.
(f)
Stock Restrictions. Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form
as the Company deems appropriate.
7.3
Performance Share Awards.
(a)
Grant of Performance Share Awards. Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement.
Each Performance Share Award so granted shall be subject to the conditions set forth in this Section 7.3, and to such other conditions
not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee shall have the discretion
to determine: (i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted
to any Participant; (ii) the performance period applicable to any Award; (iii) the conditions that must be satisfied for a Participant
to earn an Award; and (iv) the other terms, conditions and restrictions of the Award.
(b)
Earning Performance Share Awards. The number of Performance Shares earned by a Participant will depend on the extent to
which the performance goals established by the Committee are attained within the applicable Performance Period, as determined
by the Committee. No payout shall be made with respect to any Performance Share Award except upon written certification by the
Committee that the minimum threshold performance goal(s) have been achieved.
7.4
Performance Cash Awards. A Performance Cash Award is a cash award that is payable contingent upon the attainment during
a Performance Period of certain Performance Goals. A Performance Cash Award may also require the completion of a specified period
of Continuous Service. At the time of grant of a Performance Cash Award, the length of any Performance Period, the Performance
Goals to be achieved during the Performance Period, and the measure of whether and to what degree such Performance Goals have
been attained will be conclusively determined by the Board or Committee, in its sole discretion. The Board may specify the form
of payment of Performance Cash Awards, which may be cash or other property, or may provide for a Participant to have the option
for his or her Performance Cash Award, or such portion thereof as the Board may specify, to be paid in whole or in part in cash
or other property.
8.
Securities Law Compliance.
Each Award Agreement shall provide that no shares of Common Stock shall be purchased or sold thereunder unless and until (a) any
then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction
of the Company and its counsel and (b) if required to do so by the Company, the Participant has executed and delivered to the
Company a letter of investment intent in such form and containing such provisions as the Committee may require. The Company shall
use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however,
that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock
issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such
Awards unless and until such authority is obtained.
9.
Use of Proceeds from Stock.
Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall constitute general funds of the Company.
10.
Miscellaneous.
10.1
Acceleration of Exercisability and Vesting. The Committee
shall have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any
part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may
first be exercised or the time during which it will vest.
10.2
Shareholder Rights. Except as provided in the Plan or
an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect
to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for exercise
of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock
certificate is issued, except as provided in Section 11 hereof.
10.3
No Employment or Other Service Rights. Nothing in the
Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve
the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company
or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause or (b) the service
of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable provisions of the corporate law of the
state in which the Company or the Affiliate is incorporated, as the case may be.
10.4
Transfer; Approved Leave of Absence. For purposes of
the Plan, no termination of employment by an Employee shall be deemed to result from either (a) a transfer of employment to the
Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another, or (b) an approved leave of absence
for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to reemployment
is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if
the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Section 409A of the Code
if the applicable Award is subject thereto.
10.5
Withholding Obligations. To the extent provided by the
terms of an Award Agreement and subject to the discretion of the Committee, 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: (a) tendering a cash payment; (b) 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 (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.
11.
Adjustments Upon Changes in Stock.
In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary
cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization,
merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the Grant Date of any
Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and Stock Appreciation Rights, the
maximum number of shares of Common Stock subject to all Awards stated in Section 4 and the maximum number of shares of Common
Stock with respect to which any one person may be granted Awards during any period stated in Section 4 will be equitably adjusted
or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the
extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to this Section 11, unless
the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee
shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification,
extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-qualified
Stock Options, ensure that any adjustments under this Section 11 will not constitute a modification of such Non-qualified Stock
Options within the meaning of Section 409A of the Code. Any adjustments made under this Section 11 shall be made in a manner which
does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give each Participant
notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
12.
Effect of Change in Control.
12.1
Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:
(a)
In the event of a Change in Control, all Options and Stock Appreciation Rights shall become immediately exercisable with respect
to 100% of the shares subject to such Options or Stock Appreciation Rights, and the Restricted Period shall expire immediately
with respect to 100% of the shares of Restricted Stock or Restricted Stock Units.
(b)
With respect to Performance Share Awards and Performance Cash Awards, in the event of a Change in Control, all incomplete Performance
Periods in respect of such Award in effect on the date the Change in Control occurs shall end on the date of such change and the
Committee shall (i) determine the extent to which Performance Goals with respect to each such Performance Period have been met
based upon such audited or unaudited financial information then available as it deems relevant and (ii) cause to be paid to the
applicable Participant partial or full Awards with respect to Performance Goals for each such Performance Period based upon the
Committee’s determination of the degree of attainment of Performance Goals or, if not determinable, assuming that the applicable
“target” levels of performance have been attained, or on such other basis determined by the Committee.
To
the extent practicable, any actions taken by the Committee under the immediately preceding clauses (a) and (b) shall occur in
a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect to
the shares of Common Stock subject to their Awards.
12.2
In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance
notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination
thereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders
of the Company in the event. In the case of any Option or Stock Appreciation Right with an exercise price (or SAR Exercise Price
in the case of a Stock Appreciation Right) that equals or exceeds the price paid for a share of Common Stock in connection with
the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.
12.3
The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to
all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.
13.
Amendment of the Plan and Awards.
13.1
Amendment of Plan. The Board at any time, and from time
to time, may amend or terminate the Plan. However, except as provided in Section 11 relating to adjustments upon changes in Common
Stock and Section 13.3, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder
approval is necessary to satisfy any Applicable Laws. At the time of such amendment, the Board shall determine, upon advice from
counsel, whether such amendment will be contingent on shareholder approval.
13.2
Shareholder Approval. The Board may, in its sole discretion,
submit any other amendment to the Plan for shareholder approval.
13.3
Contemplated Amendments. It is expressly contemplated
that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Consultants
and Directors with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the
Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.
13.4
No Impairment of Rights. Rights under any Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of
the Participant and (b) the Participant consents in writing.
13.5
Amendment of Awards. The Committee at any time, and
from time to time, may amend the terms of any one or more Awards; provided, however, that the Committee may not affect any amendment
which would otherwise constitute an impairment of the rights under any Award unless (a) the Company requests the consent of the
Participant and (b) the Participant consents in writing.
14.
General Provisions.
14.1
Forfeiture Events. Each Award and the Participant’s
rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon
the occurrence of the events described below, in addition to applicable vesting conditions of an Award. Such events include a
breach of a duty of confidentiality, competing with the Company, soliciting Company personnel after employment is terminated,
failure to assign any invention or technology to the Company if such assignment is a condition of employment or any other agreements
between the Company and the Participant, a termination of the Participant’s Continuous Service for Cause, violation of the
Company’s insider trading policy, or other conduct by the Participant that is detrimental to the business or reputation
of the Company and/or its Affiliates as determined by the Board.
14.2
Clawback. Notwithstanding any other provisions in this
Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will
be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock
exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange
listing requirement).
14.3
Other Compensation Arrangements. Nothing contained in
this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
14.4
Sub-plans. The Committee may from time to time establish
sub-plans under the Plan for purposes of satisfying blue sky, securities, tax or other laws of various jurisdictions in which
the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and conditions as the Committee
determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall apply only to
the Participants in the jurisdiction for which the sub-plan was designed.
14.5
Deferral of Awards. The Committee may establish one
or more programs under the Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon
exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant
to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may establish the election
procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on
amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee
deems advisable for the administration of any such deferral program.
14.6
Unfunded Plan. The Plan shall be unfunded. Neither the
Company, the Board nor the Committee shall be required to establish any special or separate fund or to segregate any assets to
assure the performance of its obligations under the Plan.
14.7
Recapitalizations. Each Award Agreement shall contain
provisions required to reflect the provisions of Section 11.
14.8
Delivery. Upon exercise of a right granted under this
Plan, the Company shall issue Common Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any
statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, 30 days shall be considered a reasonable
period of time.
14.9
No Fractional Shares. No fractional shares of Common
Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, additional Awards or other
securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should
be rounded, forfeited or otherwise eliminated.
14.10
Other Provisions. The Award Agreements authorized under
the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the
exercise of the Awards, as the Committee may deem advisable.
14.11
Section 409A. The Plan is intended to comply with Section
409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted
and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral
period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Laws require
otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax
penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided
pursuant to the Plan during the six (6) month period immediately following the Participant’s termination of Continuous Service
shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service
(or the Participant’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A
of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.
14.12
Disqualifying Dispositions. Any Participant who shall
make a “disposition” (as defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired
upon exercise of an Incentive Stock Option within two years from the Grant Date of such Incentive Stock Option or within one year
after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option (a “Disqualifying
Disposition”) shall be required to immediately advise the Company in writing as to the occurrence of the sale and the
price realized upon the sale of such shares of Common Stock.
14.13
Section 16. It is the intent of the Company that the
Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section
16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under
Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly,
if the operation of any provision of the Plan would conflict with the intent expressed in this Section 14.13, such provision to
the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.
14.14
[Reserved]
14.15
Beneficiary Designation. Each Participant under the
Plan may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in case of
such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form
reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the Company during
the Participant’s lifetime.
14.16
Expenses. The costs of administering the Plan shall
be paid by the Company.
14.17
Severability. If any of the provisions of the Plan or
any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part, such provision shall be deemed
modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions
shall not be affected thereby.
14.18
Plan Headings. The headings in the Plan are for purposes
of convenience only and are not intended to define or limit the construction of the provisions hereof.
14.19
Non-Uniform Treatment. The Committee’s determinations
under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or actually receive,
Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective
determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.
15.
Termination or Suspension of the Plan.
The Plan shall terminate automatically 10 years from the Effective Date. No Award shall be granted pursuant to the Plan after
such date, but Awards theretofore granted may extend beyond that date. The Board may suspend or terminate the Plan at any earlier
date pursuant to Section 13.1 hereof. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
16.
Choice of Law.
The law of the State of Nevada shall govern all questions concerning the construction, validity and interpretation of this Plan,
without regard to such state’s conflict of law rules.
As
adopted by the Board of Directors on January 1, 2021.
ANNEX
B
SERIES
C-2 CERTIFICATE OF DESIGNATION
(as
corrected)
CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE
SERIES
C-2 CONVERTIBLE PREFERRED STOCK OF
BTCS
INC.
The
undersigned, Charles Allen, the Chief Executive Officer of BTCS Inc. (the “Corporation”), a corporation organized
and existing under Chapter 78 of the Nevada Revised Statues (the “NRS”), hereby does certify:
That
pursuant to the authority expressly conferred upon the Board of Directors of the Corporation by the Corporation’s Articles
of Incorporation, as amended, and Section 78.315 of the NRS, the Board of Directors on January 1, 2021, adopted the following
resolution determining it desirable and in the best interests of the Corporation and its shareholders for the Corporation to create
a series of One Million One Hundred Thousand (1,100,000) shares of preferred stock designated as “Series C-2 Convertible
Preferred Stock”, none of which shares have been issued.
RESOLVED,
that the Board of Directors designates the Series C-2 Convertible Preferred Stock and the number of shares constituting such series,
and fixes the rights, powers, preferences, privileges and restrictions relating to such series in addition to any set forth in
the Articles of Incorporation as follows:
TERMS
OF SERIES C-2 CONVERTIBLE PREFERRED STOCK
1.
Certain Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings:
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(a)
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“1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
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(b)
|
“Anti-Dilution
Amount” means, as of the applicable date of determination, with respect to
each share of Series C-2, all additional amounts, as set forth in Section 6 hereto, subject
to adjustment for stock splits, stock dividends, recapitalizations, reorganizations,
reclassifications, combinations, subdivisions, or other similar events occurring after
the Initial Issuance Date with respect to the Series C-2.
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(c)
|
“Anti-Dilution
Event” shall have the meaning given to it in Section 6 hereto.
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(d)
|
“Certificate
of Designations” means this Certificate of Designations, Preferences and Rights
of the Series C-2 Convertible Preferred Stock of the Corporation.
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(e)
|
“Common
Stock” means (i) the Corporation’s shares of common stock, $0.001 par
value per share, and (ii) any capital stock into which such common stock shall have been
changed or any share capital resulting from a reclassification of such common stock.
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(f)
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“Common
Stock Equivalents” means any securities of the Company which would entitle
the holder thereof to acquire Common Stock at any time, including, without limitation,
any debt, preferred stock, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock. Provide, however, the Corporation’s issuance
of Common Stock or the issuances or grants of options to purchase Common Stock to employees,
and directors, pursuant to a plan, even if funds are received shall be excluded from
Common Stock Equivalents.
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(g)
|
“Conversion
Amount” shall have the meaning given to it in Section 5(c)(i) hereto.
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(h)
|
“Conversion
Date” shall have the meaning given to it in Section 5(d)(i) hereto.
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(i)
|
“Conversion
Notice” shall have the meaning given to it in Section 5(d)(i) hereto.
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(j)
|
“Conversion
Price” shall have the meaning given to it in Section 5(c)(ii) hereto.
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(k)
|
“Conversion
Rate” shall have the meaning given to it in Section 5(c) hereto.
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(l)
|
“Corporation”
shall have the meaning given to it in the preamble hereto.
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(m)
|
“Distributions”
shall have the meaning given to it in Section 12 hereto.
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(n)
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“DTC”
shall have the meaning given to it in Section 5(d)(i) hereto.
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(o)
|
“Holder”
or “Holders” means a holder of Series C-2.
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(p)
|
“Initial
Issuance Date” means the date the first share of Series C-2 is issued to any
Holder hereof.
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(q)
|
“Junior
Stock” shall have the meaning given to it in Section 3 hereto.
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(r)
|
“Liquidation
Event” means, whether in a single transaction or series of transactions, the
voluntary or involuntary liquidation, dissolution or winding up of the Corporation or
such Subsidiaries the assets of which constitute all or substantially all of the assets
of the business of the Corporation and its Subsidiaries, taken as a whole.
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(s)
|
“Liquidation
Funds” shall have the meaning given to it in Section 11 hereto.
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(t)
|
“NRS”
shall have the meaning given to it in the preamble hereto.
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(u)
|
“Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, any other entity or a government or any department
or agency thereof.
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(v)
|
“Principal
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global
Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, OTCPink, OTCQB, or
OTCQX and any successor markets thereto.
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(w)
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“Register”
shall have the meaning given to it in Section 5(d)(ii) hereto.
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(x)
|
“Registered
Series C-2” shall have the meaning given to it in Section 5(d)(ii) hereto.
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(y)
|
“Securities
Purchase Agreement” means that certain securities purchase agreement by and
among the Corporation and the Holders of Series C-2, dated as of the Subscription Date,
as may be amended from time in accordance with the terms thereof.
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(z)
|
“Series
C-2” shall have the meaning given to it in Section 2 hereto.
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(aa)
|
“Series
C-2 Certificates” shall have the meaning given to it in Section 5(d)(i) hereto.
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(bb)
|
“Share
Delivery Deadline” shall have the meaning given to it in Section 5(d)(i) hereto.
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(cc)
|
“Stated
Value” shall mean $1 per share of Series C-2, subject to adjustment for stock
splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations,
subdivisions, or other similar events occurring after the Initial Issuance Date with
respect to the Series C-2.
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(dd)
|
“Trading
Day” means any day on which the Common Stock is eligible to be traded on the
Principal Market or securities market on which the Common Stock is then traded, provided
that “Trading Day” shall not include any day on which the Common Stock is
scheduled to trade on such exchange or market for less than 4.5 hours or any day that
the Common Stock is suspended from trading during the final hour of trading on such exchange
or market (or if such exchange or market does not designate in advance the closing time
of trading on such exchange or market, then during the hour ending at 4:00 p.m., Eastern
time) unless such day is otherwise designated as a Trading Day in writing by the Holder.
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(ee)
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“Transfer
Agent” shall have the meaning given to it in Section 5(d)(i) hereto.
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2.
Designation and Number of Shares. There shall hereby be created and established a series of preferred stock of the Corporation
designated as “Series C-2 Convertible Preferred Stock” (the “Series C-2”). The authorized number
of Series C-2 shall be One Million One Hundred Thousand (1,100,000) shares. Each share of Series C-2 shall have a par value of
$0.001.
3.
Ranking. The Series C-2 shall rank senior to the Corporation’s Common Stock, and to all other classes and series
of equity securities of the Corporation which by their terms do not rank pari passu or senior to the Series C-2 (“Junior
Stock”). The Series C-2 shall be subordinate to and rank junior to all indebtedness of the Corporation now or hereafter
outstanding.
4.
Dividends and Distributions. Each Holder of Series C-2 shall be entitled to receive dividends or distributions on each
share of Series C-2 on an “as converted” into Common Stock basis as provided in Section 5 hereof when and if dividends
are declared on the Common Stock by the Board of Directors. Dividends shall be paid in cash or property, as determined by the
Board of Directors.
5.
Conversion. Except as provided for in Section 5(b), at any time on or after the two year anniversary of the Initial Issuance
Date, each share of Series C-2 shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock,
on the terms and conditions set forth in this Section 5.
(a)
Holder’s Conversion Right. At any time or times on or after the two year anniversary of the Initial Issuance Date,
each Holder shall be entitled to convert any portion of the outstanding Series C-2 held by such Holder into validly issued, fully
paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate (as defined below). The
Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance
of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of Common Stock up to the nearest
whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including
fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount (as defined below).
(b)
Automatic Conversion. On the earlier of: (i) the four year anniversary of the Initial Issuance Date, and (ii) simultaneous
with the Corporation’s Common Stock being listed on a national securities exchange, Holders of Series C-2 shall be converted
into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 5(c) at the Conversion Rate
(as defined below). The Corporation shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance
would result in the issuance of a fraction of a share of Common Stock, the Corporation shall round such fraction of a share of
Common Stock up to the nearest whole share. The Corporation shall pay any and all transfer, stamp, issuance and similar taxes,
costs and expenses (including fees and expenses of the Transfer Agent (as defined below)) that may be payable with respect to
the issuance and delivery of Common Stock upon conversion of any Conversion Amount (as defined below).
(c)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any share of Series C-2 pursuant to Section
5 shall be determined by dividing (x) the Conversion Amount of such share of Series C-2 by (y) the Conversion Price (the “Conversion
Rate”):
(i)
“Conversion Amount” means, with respect to each share of Series C-2, as of the applicable date of determination,
the sum of (1) the Stated Value thereof plus (2) the aggregate Anti-Dilution Amount thereof if any.
(ii)
“Conversion Price” means, $0.17 with respect to each share of Series C-2, as of any Conversion Date or other
date of determination.
(d)
Mechanics of Conversion. The conversion of each share of Series C-2 shall be conducted in the following manner:
(i)
Optional Conversion. The Holder may convert shares of Series C-2 into shares of Common Stock on any date on or after the
two year anniversary of the Initial Issuance Date (a “Conversion Date”), a Holder shall deliver, via electronic
mail or otherwise, for receipt on or prior to 11:59 p.m., Eastern time, on such date, a copy of an executed notice of conversion
of the share(s) of Series C-2 subject to such conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Corporation. If required by Section 5(d)(ii), within three Trading Days following a conversion of any
such Series C-2 as aforesaid, such Holder shall surrender to a nationally recognized overnight delivery service for delivery to
the Corporation the original certificates representing the Series C-2 (the “Series C-2 Certificates”) so converted
as aforesaid (or an indemnification undertaking with respect to the Series C-2 in the case of its loss, theft or destruction as
contemplated by Section 15). On or before the first Trading Day following the date of receipt of a Conversion Notice, the Corporation
shall transmit by electronic mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II,
of receipt of such Conversion Notice to such Holder and the Corporation’s transfer agent (the “Transfer Agent”),
which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with
the terms herein. On or before the second Trading Day following the date of receipt of a Conversion Notice (or such earlier date
as required pursuant to the 1934 Act or other applicable law, rule, regulation, Trading Market Rule or other customary applicable
policy for the settlement of a trade initiated on the applicable Conversion Date of such shares of Common Stock issuable pursuant
to such Conversion Notice) (the “Share Delivery Deadline”), the Corporation shall (1) provided that the Transfer
Agent is participating in The Depository Trust Corporation’s (“DTC”) Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) if the Transfer Agent
is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier)
to the address as specified in such Conversion Notice, a certificate, registered in the name of such Holder or its designee, for
the number of shares of Common Stock to which such Holder shall be entitled. If the number of Series C-2 represented by the Series
C-2 Certificate(s) submitted for conversion pursuant to Section 5(c)(ii) is greater than the number of Series C-2 being converted,
then the Corporation shall, as soon as practicable and in no event later than two Trading Days after receipt of the Series C-2
Certificate(s) and at its own expense, issue and deliver to such Holder (or its designee) a new Series C-2 Certificate (in accordance
with Section 15(d)) representing the number of Series C-2 not converted. The Person or Persons entitled to receive the shares
of Common Stock issuable upon a conversion of Series C-2 shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on the Conversion Date.
(ii)
Registration; Book-Entry. The Corporation shall maintain a register (the “Register”) for the recordation
of the names and addresses of the Holders of each share of Series C-2 and the Stated Value of the Series C-2 (the “Registered
Series C-2”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The
Corporation and each Holder of the Series C-2 shall treat each Person whose name is recorded in the Register as the owner of a
share of Series C-2 for all purposes (including the right to receive payments and dividends hereunder) notwithstanding notice
to the contrary. A registered share of Series C-2 may be assigned, transferred or sold only by registration of such assignment
or sale on the Register. Upon its receipt of a written request to assign, transfer or sell one or more Registered Series C-2 by
such Holder thereof, the Corporation shall record the information contained therein in the Register and issue one or more new
shares of Series C-2 in the same aggregate Stated Value as the Stated Value of the surrendered Series C-2 to the designated assignee
or transferee pursuant to Section 15, provided that if the Corporation does not so record an assignment, transfer or sale (as
the case may be) of such Series C-2 shares within two Trading Days of such a request, then the Register shall be automatically
deemed updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set
forth in this Section 5, following conversion of any Series C-2 in accordance with the terms hereof, the applicable Holder shall
not be required to physically surrender such Series C-2 to the Corporation unless (A) the full or remaining number of Series C-2
shares represented by the applicable Series C-2 Certificate are being converted (in which event such certificate(s) shall be delivered
to the Corporation as contemplated by this Section 5(c)(ii)) or (B) such Holder has provided the Corporation with prior written
notice (which notice may be included in a Conversion Notice) requesting reissuance of Series C-2 upon physical surrender of the
applicable Series C-2 Certificate. Each Holder and the Corporation shall maintain records showing the Stated Value and dividends
converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use
such other method, reasonably satisfactory to such Holder and the Corporation, so as not to require physical surrender of a Series
C-2 Certificate upon conversion. If the Corporation does not update the Register to record such Stated Value and dividends converted
and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) within two Trading Days
of such occurrence, then the Register shall be automatically deemed updated to reflect such occurrence. In the event of any dispute
or discrepancy, such records of such Holder establishing the number of Series C-2 to which the record holder is entitled shall
be controlling and determinative in the absence of manifest error. A Holder and any transferee or assignee, by acceptance of a
certificate, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of any Series C-2,
the number of Series C-2 represented by such certificate may be less than the number of Series C-2 stated on the face thereof.
Each Series C-2 Certificate shall bear the following legend:
ANY
TRANSFEREE OR ASSIGNEE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE CORPORATION’S CERTIFICATE OF DESIGNATIONS
RELATING TO THE SHARES OF SERIES C-2 CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE, INCLUDING SECTION 5(c)(ii) THEREOF.
THE NUMBER OF SHARES OF SERIES C-2 CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY BE LESS THAN THE NUMBER OF
SHARES OF SERIES C-2 CONVERTIBLE PREFERRED STOCK STATED ON THE FACE HEREOF PURSUANT TO SECTION 5(c)(ii) OF THE CERTIFICATE OF
DESIGNATIONS RELATING TO THE SHARES OF SERIES C-2 CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE.
6.
Anti-Dilution Events. The following event shall constitute an “Anti-Dilution Event”: If at any time
after the Initial Issuance Date, the Company raises capital equal to or in excess of $5 million by issuing Common Stock or Common
Stock Equivalents then the Anti-Dilution Amount per share of Series C-2 shall be the product of: (i) 0.0000004, and (ii) the aggregate
amount of all capital raised by the Corporation after the Initial Issuance Date (the “Capital Raised”). Provided;
further, for the determination of the Anti-Dilution Amount, the amount of Capital Raised shall be limited to $13 million, regardless
of how much capital the Corporation raises. In the event capital is raised simultaneous with a listing on a national securities
exchange and the automatic conversion of the Series C-2 then such funds shall be included in the Capital Raised for the purpose
of determining the Anti-Dilution Amount.
7.
Company Redemption Right. Within 180 days of the Initial Issuance Date, the Corporation shall call a special meeting of
stockholders seeking shareholder ratification of the issuance of the Series C-2. If the ratification of the issuance is not approved
prior to the twelve-month anniversary of the Initial Issuance Date (the “Vote Deadline”), the Series C-2 shall
be redeemed at a price equal to 107% of (i) the Stated Value per share plus (ii) all unpaid dividends thereon. Provided; further,
if the Corporation has filed a proxy with the SEC prior to the Vote Deadline and is unable to conduct a vote prior to the Vote
Deadline then the Vote Deadline shall be extended until such time as the vote is conducted. The Series C-2 shall not be entitled
to vote on the ratification.
8.
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Corporation at any time on or after
the Initial Issuance Date subdivides (by any stock split, stock dividend, recapitalization or other similar transaction) one or
more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced. Without limiting any provision of this Section 8, if the Corporation
at any time on or after the Initial Issuance Date combines (by any reverse split, recapitalization or other similar transaction)
one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 8 shall become
effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under
this Section 8 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion
Price shall be adjusted appropriately to reflect such event.
9.
Voting Rights. After such time as the issuance of the Series C-2 is ratified, each shares of Series C-2 shall vote on an
as converted basis with the Common Stock or other equity securities of the Company on a 2 vote per one share of Common Stock basis.
The Common Stock into which the Series C-2 is convertible shall, when issued, have all of the same voting rights as other issued
and outstanding Common Stock of the Company, and none of the rights of the Series C-2.
10.
Noncircumvention. The Corporation hereby covenants and agrees that the Corporation will not, by amendment of its Articles
of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Certificate of Designations, and will at all times in good faith carry out all the provisions of this Certificate
of Designations and take all action as may be required to protect the rights of the Holders. Without limiting the generality of
the foregoing or any other provision of this Certificate of Designations, the Corporation (a) shall not increase the par value
of any shares of Common Stock receivable upon the conversion of any Series C-2 above the Conversion Price then in effect, (b)
shall take all such actions as may be necessary or appropriate in order that the Corporation may validly and legally issue fully
paid and non-assessable shares of Common Stock upon the conversion of Series C-2 and (c) shall, so long as any Series C-2 are
outstanding, and upon the filing of an amendment to the Corporation’s Articles of Incorporation to increase the number of
shares of the Corporation’s Common Stock that the Corporation is authorized to issue with the Secretary of State of the
State of Nevada, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the Series C-2, the maximum number of shares of Common Stock as shall from
time to time be necessary to effect the conversion of the Series C-2 then outstanding (without regard to any limitations on conversion
contained herein).
11.
Liquidation, Dissolution, Winding-Up. In the event of a Liquidation Event, the Holders shall be entitled to receive in
cash out of the assets of the Corporation, whether from capital or from earnings available for distribution to its stockholders
(the “Liquidation Funds”), before any amount shall be paid to the holders of any of shares of Junior Stock,
an amount per share of Series C-2 equal to the amount per share such Holder would receive if such Holder converted such Series
C-2 into Common Stock immediately prior to the date of such payment. To the extent necessary, the Corporation shall cause such
actions to be taken by each of its Subsidiaries so as to enable, to the maximum extent permitted by law, the proceeds of a Liquidation
Event to be distributed to the Holders in accordance with this Section 11.
12.
Distribution of Assets. In addition to any adjustments pursuant to Section 8, if the Corporation shall declare or make
any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common
Stock, by way of return of capital or otherwise (including any distribution of cash, stock or other securities, property or options
by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(the “Distributions”), then each Holder, as holders of Series C-2, will be entitled to such Distributions as
if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of the Series C-2 (without taking
into account any limitations or restrictions on the convertibility of the Series C-2) immediately prior to the date on which a
record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common Stock
are to be determined for such Distributions.
13.
[Omitted]
14.
Transfer of Series C-2. A Holder may transfer some or all of its Series C-2 without the consent of the Corporation in accordance
with an exemption from Section 5 of the Securities Act of 1933.
15.
Reissuance of Preferred Certificates.
(a)
Transfer. If any Series C-2 are to be transferred, the applicable Holder shall surrender the applicable Series C-2 Certificate
to the Corporation, whereupon the Corporation will forthwith issue and deliver upon the order of such Holder a new Series C-2
Certificate (in accordance with Section 15(d)), registered as such Holder may request, representing the outstanding number of
Series C-2 being transferred by such Holder and, if less than the entire outstanding number of Series C-2 is being transferred,
a new Series C-2 Certificate (in accordance with Section 15(d)) to such Holder representing the outstanding number of Series C-2
not being transferred. Such Holder and any assignee, by acceptance of the Series C-2 Certificate, acknowledge and agree that,
by reason of the provisions of Section 5(d)(i) following conversion of any of the Series C-2, the outstanding number of Series
C-2 represented by the Series C-2 may be less than the number of Series C-2 stated on the face of the Series C-2.
(b)
Lost, Stolen or Mutilated Series C-2 Certificate. Upon receipt by the Corporation of evidence reasonably satisfactory to the Corporation
of the loss, theft, destruction or mutilation of a Series C-2 Certificate (as to which a written certification and the indemnification
contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking
by the applicable Holder to the Corporation in customary and reasonable form without the requirement to post a bond or other security
and, in the case of mutilation, upon surrender and cancellation of such Series C-2 Certificate, the Corporation shall execute
and deliver to such Holder a new Series C-2 Certificate (in accordance with Section 15(d)) representing the applicable outstanding
number of Series C-2.
(c)
Series C-2 Certificate Exchangeable for Different Denominations. Each Series C-2 Certificate is exchangeable, upon the surrender
hereof by the applicable Holder at the principal office of the Corporation, for a new Series C-2 Certificate or Series C-2 Certificate(s)
(in accordance with Section 15(d)) representing in the aggregate the outstanding number of the Series C-2 in the original Series
C-2 Certificate, and each such new certificate will represent such portion of such outstanding number of Series C-2 from the original
Series C-2 Certificate as is designated by such Holder at the time of such surrender.
(d)
Issuance of New Series C-2 Certificate. Whenever the Corporation is required to issue a new Series C-2 Certificate pursuant to
the terms of this Certificate of Designations, such new Series C-2 Certificate (i) shall represent, as indicated on the face of
such Series C-2 Certificate, the number of Series C-2 remaining outstanding (or in the case of a new Series C-2 Certificate being
issued pursuant to Section 15(a) or Section 15(c), the number of Series C-2 designated by such Holder which, when added to the
number of Series C-2 represented by the other new Series C-2 Certificates issued in connection with such issuance, does not exceed
the number of Series C-2 remaining outstanding under the original Series C-2 Certificate immediately prior to such issuance of
new Series C-2 Certificate), and (ii) shall have an issuance date, as indicated on the face of such new Series C-2 Certificate,
which is the same as the issuance date of the original Series C-2 Certificate.
(e)
Book Entry. If the Corporation’s Transfer Agent issues the Series C-2 in book entry format, all provisions of this Certificate
of Designations as to delivery of Series C-2 certificates shall be disregarded, and the Transfer Agent shall make entries in the
stock transfer records in connection with conversions and transfers, as appropriate.
16.
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Certificate
of Designations shall be cumulative and in addition to all other remedies available under this Certificate of Designations, at
law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit any
Holder’s right to pursue actual and consequential damages for any failure by the Corporation to comply with the terms of
this Certificate of Designations. The Corporation covenants to each Holder that there shall be no characterization concerning
this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received by a Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Corporation (or the performance thereof). The Corporation acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to the Holders and that the remedy at law for any
such breach may be inadequate. The Corporation therefore agrees that, in the event of any such breach or threatened breach, each
Holder shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity
of proving actual damages and without posting a bond or other security. The Corporation shall provide all information and documentation
to a Holder that is requested by such Holder to enable such Holder to confirm the Corporation’s compliance with the terms
and conditions of this Certificate of Designations.
17.
Attorneys Fees.
(a)
If (i) any shares of Series C-2 are placed in the hands of an attorney to enforce the provisions of this Certificate of Designations
or (ii) there occurs any bankruptcy, reorganization, receivership of the Corporation or other proceedings affecting Corporation
creditors’ rights and involving a claim under this Certificate of Designations, then the Corporation shall pay the costs
incurred by such Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership
or other proceeding, including attorneys’ fees and disbursements.
(b)
In addition to the obligations under Section 17(a), in connection with the removal of restrictive legends from shares of Series
C-2, the Corporation shall pay the reasonable attorney’s fees of counsel to any Holder in any amount not to exceed $750
per opinion of counsel. Such payment(s) shall be made within one Trading Day after receipt of a Conversion Notice or other notice
from a Holder.
18.
Construction; Headings. This Certificate of Designations shall be deemed to be jointly drafted by the Corporation and the
Holders and shall not be construed against any such Person as the drafter hereof. The headings of this Certificate of Designations
are for convenience of reference and shall not form part of, or affect the interpretation of, this Certificate of Designations.
Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms “including,” “includes,” “include” and words
of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Certificate of Designations instead
of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of
this Certificate of Designations.
19.
Failure or Indulgence Not Waiver. No failure or delay on the part of a Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party. This Certificate of Designations shall be deemed to be jointly
drafted by the Corporation and all Holders and shall not be construed against any Person as the drafter hereof. Notwithstanding
the foregoing, nothing contained in this Section 19 shall permit any waiver of any provision of Section 17.
20.
Notices. The Corporation shall provide each Holder of Series C-2 with prompt written notice of all actions taken pursuant
to the terms of this Certificate of Designations, including in reasonable detail a description of such action and the reason therefor.
Whenever notice is required to be given under this Certificate of Designations, unless otherwise provided herein, such notice
must be in writing and shall be given in accordance with the Securities Purchase Agreement or in accordance with any other instructions
provided by the Holder to the Corporation. The Corporation shall provide each Holder with prompt written notice of all actions
taken pursuant to this Certificate of Designations, including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the Corporation shall give written notice to each Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen days prior to the date on which the Corporation closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any options, convertible
securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any, dissolution or liquidation, provided in each case that such information shall
be made known to the public prior to or in conjunction with such notice being provided to such Holder. All notices shall be by
email or recognized overnight delivery service, next Trading Day delivery using the addresses of the Corporation as provided to
the Holders and the addresses of any Holder as provided by such Holder to the Corporation. The Corporation and the Holders may
change their addresses by notice by the Corporation to all Holders or any Holder to the Corporation.
21.
Governing Law; Exclusive Jurisdiction. This Certificate of Designations shall be construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and performance of this Certificate of Designations shall
be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Nevada. Except as otherwise required by this Certificate of Designations, the Corporation hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in New York County, New York, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein (i) shall be deemed or operate to preclude any Holder from bringing suit
or taking other legal action against the Corporation in any other jurisdiction to collect on the Corporation’s obligations
to such Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court
ruling in favor of such Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 19. The
Corporation hereby irrevocably waives any right it may have to, and agrees not to request, a jury trial for the adjudication of
any dispute hereunder or in connection with or arising out of this Certificate of Designations.
22.
Severability. If any provision of this Certificate of Designations is prohibited by law or otherwise determined to be invalid
or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable
shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of this Certificate of Designations so long as this
Certificate of Designations as so modified continues to express, without material change, the original intentions of the parties
as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does
not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of
the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace
the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible
to that of the prohibited, invalid or unenforceable provision(s).
23.
Amendment. This Certificate of Designations or any provision hereof may be modified or amended or the provisions hereof
waived with the written consent of the Corporation and the Holders of a majority of the Series C-2 currently outstanding. No waiver
shall be effective unless it is in writing and signed by an authorized representative of the waiving party.
*
* * * *
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Designations of Series C-2 Convertible Preferred Stock of BTCS
Inc. to be signed by its Chief Executive Officer on this 1st day of January, 2021.
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BTCS
INC.
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By:
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Charles
Allen, Chief Executive Officer
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BTCS
INC.
CONVERSION
NOTICE
Reference
is made to the Certificate of Designations, Preferences and Rights of the Series C-2 Convertible Preferred Stock of BTCS Inc.
(the “Certificate of Designations”). In accordance with and pursuant to the Certificate of Designations, the
undersigned hereby elects to convert the number of shares of Series C-2 Convertible Preferred Stock, $0.001 par value per share
(the “Series C-2”), of BTCS Inc., a Nevada corporation (the “Corporation”), indicated below
into shares of common stock, $0.001 par value per share (the “Common Stock”), of the Corporation, as of the
date specified below.
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Aggregate
number of Series C-2 shares to be converted:
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Stated
Value of such Series C-2 to be converted:
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Anti-Dilution
Amount of Series C-2
to
be converted:
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Conversion
Amount of Series C-2 to be converted:
(Stated
Value plus Anti-Dilution Amount)
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AGGREGATE
CONVERSION AMOUNT TO BE CONVERTED:
(Aggregate
number of Series C-2 x Aggregate Conversion Amount)
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Please
confirm the following information:
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Conversion
Price:
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$0.17
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Number
of shares of Common Stock to be issued:
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(Aggregate
Conversion Amount / Conversion Price)
Please
issue the Common Stock into which the applicable Series C-2 are being converted to Holder, or for its benefit, as follows:
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[ ]
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Check
here if requesting delivery as a certificate to the following name and to the following address:
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[ ]
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Check
here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
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DTC
Participant:
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DTC
Number:
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Account
Number:
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Date:
_____________ __, ______
Name
of Registered Holder
By:
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Name:
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Title:
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Tax
ID:
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Facsimile:
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E-mail
Address:
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ACKNOWLEDGMENT
The
Corporation hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number
of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Corporation and
acknowledged and agreed to by ________________________.
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BTCS
INC.
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By:
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Name:
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Title:
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BTCS
INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL
MEETING OF SHAREHOLDERS – March 31, 2021 AT 10:00 AM
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VOTING
INSTRUCTIONS
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If
you vote by phone or internet, please DO NOT mail your proxy card.
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MAIL:
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Please
mark, sign, date, and return this Proxy Card promptly using the enclosed envelope.
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PHONE:
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Call
1 (800) 690-6903
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INTERNET:
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Before
The Meeting – Go to www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time
on March 30, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records
and to create an electronic voting instruction form.
During
The Meeting – Go to
www.virtualshareholdermeeting.com/BTCS2021
You
may attend the meeting via the Internet and vote during the meeting. Have the information
that is printed in the box marked by the arrow available and follow instructions.
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Control
ID:
Proxy
ID:
Password:
MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING: [ ]
MARK
HERE FOR ADDRESS CHANGE ¨ New Address (if applicable):
IMPORTANT:
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.
Dated:
________________________, 2021
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(Print
Name of Shareholder and/or Joint Tenant)
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(Signature
of Shareholder)
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(Second
Signature if held jointly)
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The
shareholder(s) hereby appoints Charles Allen and Michal Handerhan or either of them, as proxies, each with the power
to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot,
all of the shares of voting stock of BTCS Inc. that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholder(s)
to be held on March 31, 2021 at 10:00 a.m., New York Time virtually via live webcast at www.virtualshareholdermeeting.com/BTCS2021,
and any adjournment or postponement thereof.
This
proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted
“FOR” all of the nominees in Proposal 1 and “FOR” Proposals 2, 3, 4, and 5. If any other business is presented
at the meeting, this proxy will be voted by the above-named proxies at the direction of the Board of Directors. At the present
time, the Board of Directors knows of no other business to be presented at the meeting.
Proposal:
1.
To elect three members to the Board of Directors.
Charles
Allen
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FOR
[ ]
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WITHHOLD
[ ]
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Michal
Handerhan
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FOR
[ ]
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WITHHOLD
[ ]
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David
Garrity
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FOR
[ ]
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WITHHOLD
[ ]
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2.
To approve the 2021 Equity Incentive Plan.
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FOR
[ ] AGAINST [ ] ABSTAIN [ ]
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3.
To ratify the appointment of RBSM LLP as the Company’s independent registered public accounting firm for fiscal
year 2021.
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FOR
[ ] AGAINST [ ] ABSTAIN [ ]
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4.
To ratify and approve the issuance of the Series C-2 Preferred Stock to Messrs. Charles Allen, Michal Handerhan and David Garrity,
executive officers and directors of BTCS.
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FOR
[ ] AGAINST [ ] ABSTAIN [ ]
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5.
To ratify and approve the issuance of a total of 2,750,000 shares of Restricted Stock Units and a total of 12,000,000 stock options
to Messrs. Charles Allen, Michal Handerhan and David Garrity, executive officers and directors of BTCS.
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FOR
[ ] AGAINST [ ] ABSTAIN [ ]
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