SMGI SMG Industries Inc (CE)

Pay Versus Performance Table

The following table sets forth additional compensation information of our Chief Executive Officers and our other named executive officers (averaged) along with total shareholder return, and net income (loss) performance results for our fiscal years ending in 2021 and 2022:

(1)

(a)            From December 18, 2020 to August 23, 2021, Jeffrey Martini (CEO #1) served as our Chief Executive Officer. Allen Parrott was our Acting Chief Executive Officer (CEO #2) from August 24, 2021 to April 14, 2022. Our current Interim Chief Executive Officer is Matthew Flemming (CEO #3).

(2)            None of our named executive officers participates in a pension plan; therefore, no adjustment from the Summary Compensation total related to pension value was made. Mr. Flemming was the only named executive officer for 2021 or 2022 with an outstanding equity award. None of the named executive officers received an equity award in 2021 or 2022. A reconciliation of Total Compensation from the Summary Compensation Table to Compensation Actually Paid to Mr. Flemming is shown below:

(3)            Total shareholder return as calculated based on a fixed investment of one hundred dollars measured from the market close on December 31, 2020 (the last trading day of 2020) through and including the end of the fiscal year for each year reported in the table.

Relationship between Pay and Performance

The charts shown below present a graphical comparison of Compensation Actually Paid to our CEOs and the average Compensation Actually Paid to our Other NEOs set forth in the Pay Versus Performance Table above, as compared against the following performance measures: our (1) total shareholder return (TSR) and (2) net income (loss).

Compensation Actually Paid versus TSR

Compensation Actually Paid versus Net Income (Loss)

Director Compensation

Director Compensation Table

During the year ended December 31, 2022, none of our non-executive independent directors received compensation for their Board service.

Cash Compensation of Directors

Members of our Board do not currently receive cash compensation for their services, however, the Board may in the future determine to compensate its members through the payment of cash compensation. We reimburse our non-employee directors for out-of-pocket expenses for attending such meeting.

Equity Compensation of Directors

Our independent directors are eligible to participate in our Option Plan. During 2022, no members of our Board received any cash or equity consideration for their services.

Outstanding Equity Awards at 2022 Year End

Other than 1,000,000 options to purchase shares of our common stock held by Mr. Flemming at an exercise price of $0.30 per share, of which 944,444 were exercisable as of December 31, 2022, there are no outstanding unexercised options, unvested stock and equity incentive plan awards held by any of our executive officers as of December 31, 2022. The Company granted such options to Mr. Flemming on February 28, 2020, and 1/36 of the options vest monthly thereafter.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of May 8, 2023, information regarding the beneficial ownership of our Common Stock based upon the most recent information available to us for: (i) each person known by us to own beneficially five percent (5%) or more of our outstanding Common Stock, (ii) each of our named executive officers and directors, and (iii) all of our current executive officers and directors as a group. Unless otherwise indicated, each of the persons listed below has sole voting and investment power with respect to the shares beneficially owned by them. As of May 8, 2023, there were 47,739,284 shares of our Common Stock issued and outstanding. Except as otherwise listed below, the address of each person is 20475 State Hwy 249, Suite 450, Houston Texas 77070.

*less than one percent

Interest of Certain Persons in or Opposition to Matters to be Acted Upon

No officer, director or director nominee of the Company has any substantial interest in the matters acted upon, other than his role as an officer, director or stockholder of the Company. No director of the Company informed the Company that such director opposed any of the actions as set forth in this Information Statement.

DELIVERY OF DOCUMENTS TO SECURITY
HOLDERS SHARING AN ADDRESS

Only one copy of this Information Statement is being delivered to multiple stockholders sharing an address, unless the Company has received contrary instructions from one or more of the stockholders. The Company will deliver promptly, upon written or oral request, a separate copy of this Information Statement to a stockholder at a shared address to which a single copy of this document was delivered. A stockholder may mail a written request to SMG Industries Inc., Attention: Secretary, 20475 State Hwy 249, Suite 450, Houston Texas 77070, or call (713) 955-3497, to request:

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information, including annual and quarterly reports on Form 10-K and 10-Q and current reports on Form 8-K, with the SEC. The SEC maintains a website on the Internet (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including the Company.

The entire cost of furnishing this Information Statement will be borne by the Company. The Company will request brokerage houses, nominees, custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners of the Common Stock held of record by them and will reimburse such persons for their reasonable charges and expenses in connection therewith. The close of business on May 25, 2023 is the Record Date for the determination of stockholders who are entitled to receive this Information Statement.

You are being provided with this Information Statement pursuant to Section 14(c) of the Exchange Act and Regulation 14C and Schedule 14C thereunder, and, in accordance therewith, none of the actions described above will become effective until at least 20 calendar days after the mailing of this Information Statement.

This Information Statement is expected to be mailed on or about June 2, 2023 to all stockholders of record at the close of business on the Record Date.

Exhibit A

PROPOSED AMENDMENT 

TO THE 

AMENDED AND RESTATED 

CERTIFICATE OF INCORPORATION 

OF 

SMG INDUSTRIES INC.

INCREASE IN AUTHORIZED SHARES OF COMMON STOCK

The amendment would provide that Article Fourth of the Amended and Restated Certificate of Incorporation be amended to read in its entirety as follows:

“FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have the authority to issue is 501,000,000 shares, consisting of 500,000,000 shares of Common Stock with a par value of $.001 per share (the “Common Stock”) and 1,000,000 shares of Preferred Stock with a par value of $.001 per share (the “Preferred Stock”).

A description of the respective classes of stock and a statement of the designations, preferences, voting powers (or no voting powers), relative, participating, optional or other special rights and privileges and the qualifications, limitations and restrictions of the Preferred Stock and Common Stock are as follows:

The Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Corporation’s Board of Directors may determine.  Each series of Preferred Stock shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.  Except as otherwise provided in this Certificate of Incorporation, different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by classes.

The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more series, each with such designations, preferences, voting powers (or no voting powers), relative, participating, optional or other special rights and privileges and such qualifications, limitations or restrictions thereof as shall be stated in the resolution or resolutions adopted by the Board of Directors to create such series, and a certificate of said resolution or resolutions shall be filed in accordance with the General Corporation Law of the State of Delaware.  The authority of the Board of Directors with respect to each such series shall include, without limitation of the foregoing, the right to provide that the shares of each such series may: (i) have such distinctive designation and consist of such number of shares; (ii) be subject to redemption at such time or times and at such price or prices; (iii) be entitled to the benefit of a retirement or sinking fund for the redemption of such series on such terms and in such amounts; (iv) be entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series of stock; (v) be entitled to such rights upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs, or upon any distribution of the assets of the Corporation in preference to, or in such relation to, any other class or classes or any other series of stock; (vi) be convertible into, or exchangeable for, shares of any other class or classes or any other series of stock at such price or prices or at such rates of exchange and with such adjustments, if any; (vii) be entitled to the benefit of such conditions, limitations or restrictions, if any, on the creation of indebtedness, the issuance of additional shares of such series or shares of any other series of Preferred Stock, the amendment of this Certification of Incorporation or the Corporation’s By-Laws, the payment of dividends or the making of other distributions on, or the purchase, redemption or other acquisition by the Corporation of, any other class or classes or series of stock, or any other corporate action; or (viii) be entitled to such other preferences, powers, qualifications, rights and privileges, all as the Board of Directors may deem advisable and as are not inconsistent with law and the provisions of this Certificate of Incorporation.

1. Relative Rights of Preferred Stock and Common Stock.  All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Stock are expressly made subject and subordinate to those that may be fixed with respect to any shares of the Preferred Stock.

2. Voting Rights.  Except as otherwise required by law or this Certificate of Incorporation, each holder of Common Stock shall have one vote in respect of each share of stock held by him of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation.

3. Dividends.  Subject to the preferential rights of the Preferred Stock, if any, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock.

4. Dissolution, Liquidation or Winding Up.  In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock, holders of Common Stock shall be entitled, unless otherwise provided by law or this Certificate of Incorporation, to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively.”

Exhibit B

PROPOSED AMENDMENT 

TO THE 

AMENDED AND RESTATED 

CERTIFICATE OF INCORPORATION 

OF 

SMG INDUSTRIES INC.

REVERSE STOCK SPLIT

The amendment would add a new Subsection 5 to Section B of Article Fourth of the Amended and Restated Certificate of Incorporation as follows:

5. “Upon the filing and effectiveness (the “Reverse Stock Split Effective Time”) pursuant to the GCL of the State of Delaware of the Certificate of Amendment to these Articles of Incorporation of the Corporation, each [number between and including 5 and 50] shares of Common Stock issued and outstanding immediately prior to the Reverse Stock Split Effective Time shall, automatically and without any further action on the part of the Corporation or any of the respective holders thereof, be reclassified, combined and converted into one (1) fully paid and nonassessable share of Common Stock (the “Reverse Stock Split”), subject to the treatment of fractional share interests as described below. The reclassification of the Common Stock will be deemed to occur at the Reverse Stock Split Effective Time. From and after the Reverse Stock Split Effective Time, certificates representing Common Stock prior to such reclassification shall represent the number of shares of Common Stock into which such Common Stock prior to such reclassification shall have been reclassified pursuant to the Certificate of Amendment. No fractional shares shall be issued in connection with the Reverse Stock Split and, in lieu thereof, the number of shares to be received by a stockholder shall be rounded up to the nearest whole number of shares in the event that such stockholder would otherwise be entitled to receive a fractional share upon the Reverse Stock Split.”

Exhibit C

AMENDED AND RESTATED 

2018 STOCK OPTION PLAN 

OF 

SMG INDIUM RESOURCES LTDINDUSTRIES INC.

The purposes of the Amended and Restated 2018 Stock Option Plan (the “Plan”) of SMG Indium Resources, LtdIndustries Inc., a Delaware corporation (the “Company”), are to:

(a)                 Encourage selected employees, directors and consultants to improve operations and increase profits of the Company;

(b)                 Encourage selected employees, directors and consultants to accept or continue employment or association with the Company or its Affiliates; and

(c)                 Increase the interest of selected employees, directors and consultants in the Company's welfare through participation in the growth in value of the common stock of the Company (the “Shares”).

Options granted under this Plan (“Options”) may be “incentive stock options” (“ISOs”) intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”), or “non-qualified stock options” (“NQSOs”).

Every person who at the date of grant of an Option is an employee of the Company or of any Affiliate (as defined below) of the Company is eligible to receive NQSOs or ISOs under this Plan.  Every person who at the date of grant is a consultant to, or non-employee director of, the Company or any Affiliate (as defined below) of the Company is eligible to receive NQSOs under this Plan.  The term “Affiliate” as used in the Plan means a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Code.  The term “employee” (within the meaning of Section 3401(c) of the Code) includes an officer or director who is an employee of the Company.  The term “consultant” includes persons employed by, or otherwise affiliated with, a consultant.

Subject to the provisions of Section 6.1.1 of the Plan, the total number of Shares which may be issued under Options granted pursuant to this Plan shall not exceed twoten million (2,000,00010,000,000) Shares. The Shares covered by the portion of any grant under the Plan which expires unexercised shall become available again for grants under the Plan.

(a)                 The Plan shall be administered by either the Board of Directors of the Company (the “Board”) or by a committee (the “Committee”) to which administration of the Plan, or of part of the Plan, may be delegated by the Board (in either case, the “Administrator”).  The Board shall appoint and remove members of such Committee, if any, in its discretion in accordance with applicable laws. If necessary in order to comply with Rule 16b-3 under the Securities Exchange Act and Section 162(m) of the Codeof 1934, as amended (the “Exchange Act”), the Committee shall, in the Board's discretion, be comprised solely of “non-employee directors” within the meaning of said Rule 16b-3 and “outside directors” within the meaning of Section 162(m) of the Code. The foregoing notwithstanding, the Administrator may delegate nondiscretionary administrative duties to such employees of the Company as it deems proper and the Board, in its absolute discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under the Plan.

(b)                 Subject to the other provisions of this Plan, the Administrator shall have the authority, in its discretion: (i) to grant Options; (ii) to determine the fFair mMarket vValue of the Shares subject to Options; (iii) to determine the exercise price of Options granted; (iv) to determine the persons to whom, and the time or times at which, Options shall be granted, and the number of shares subject to each Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind rules and regulations relating to this Plan; (vii) to determine the terms and provisions of each Option granted (which need not be identical), including but not limited to, the time or times at which Options shall be exercisable; (viii) with the consent of the optionee, to modify or amend any Option; (ix) to defer (with the consent of the optionee) the exercise date of any Option; (x) to authorize any person to execute on behalf of the Company any instrument evidencing the grant of an Option; and (xi) to make all other determinations deemed necessary or advisable for the administration of this Plan.  The Administrator may delegate nondiscretionary administrative duties to such employees of the Company as it deems proper.

(c)                 All questions of interpretation, implementation, and application of this Plan shall be determined by the Administrator.  Such determinations shall be final and binding on all persons.

(a)                 No Options shall be granted under this Plan after 10 years from the date of adoption of this Plan has expired or been terminated by the Board.

(b)                 Each Option shall be evidenced by a written stock option agreement, in form satisfactory to the Administrator, executed by the Company and the person to whom such Option is granted.

(c)                 The stock option agreement shall specify whether each Option it evidences is an NQSO or an ISO.

(d)                 Subject to Section 6.3.36.2.3 with respect to ISOs, the Administrator may approve the grant of Options under this Plan to persons who are expected to become employees, directors or consultants of the Company, but are not employees, directors or consultants at the date of approval, and the date of approval shall be deemed to be the date of grant unless otherwise specified by the Administrator.

Each Option granted under this Plan shall be subject to the terms and conditions set forth in Section 6.1.   NQSOs shall also be subject to the terms and conditions set forth in Section 6.2, but not those set forth in Section 6.36.2. ISOs shall also be subject to the terms and conditions set forth in Section 6.3, but not those set forth in Section 6.2.

6.1                 Terms and Conditions to Which All Options Are Subject.  All Options granted under this Plan shall be subject to the following terms and conditions:

6.1.1                    Changes in Capital Structure.  Subject to Section 6.1.2, if the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, or recapitalization, combination or reclassification, appropriate adjustments shall be made by the Board in (a) the number and class of shares of stock subject to this Plan and each Option outstanding under this Plan, and (b) the exercise price of each outstanding Option; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustments, and may round any fractional Shares up or down. No adjustment shall be made pursuant to this Section 6.1.1 in a manner that would cause ISOs to violate Section 422(b) of the Code or cause any Option to be subject to adverse tax consequences under Code Section 409A. Each such adjustment shall be subject to approval by the Board in its sole discretion.

6.1.2                    Corporate Transactions.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each optionee at least 30 days prior to such proposed action.  To the extent not previously exercised, all Options will terminate immediately prior to the consummation of such proposed action; provided, however, that the Administrator, in the exercise of its sole discretion, may permit exercise of any Options prior to their termination, even if such Options were not otherwise exercisable.  In the event of a merger or consolidation of the Company with or into another corporation or entity in which the Company does not survive, or in the event of a sale of all or substantially all of the assets of the Company in which the shareholders of the Company receive securities of the acquiring entity or an affiliate thereof, all Options shall be assumed or equivalent options shall be substituted by the successor corporation (or other entity) or a parent or subsidiary of such successor corporation (or other entity); provided, however, that if such successor does not agree to assume the Options or to substitute equivalent options therefor, the Administrator, in the exercise of its sole discretion, may permit the exercise of any of the Options prior to consummation of such event, even if such Options were not otherwise exercisable. Any adjustment of the number of Options or exercise price of such Options must be in a manner consistent with Code Section 409A (and Code Section 424 if the Option is an ISO).

6.1.3                    Time of Option Exercise.  Subject to Section 5 and Section 6.3.46.2.4, Options granted under this Plan shall be exercisable (a) immediately as of the effective date of the stock option agreement granting the Option, or (b) in accordance with a schedule as may be set by the Administrator (each such date on such schedule, the “Vesting Base Date”) and specified in the written stock option agreement relating to such Option. In any case, no Option shall be exercisable until a written stock option agreement in form satisfactory to the Company is executed by the Company and the optionee.

6.1.4                    Option Grant Date.  The date of grant of an Option under this Plan shall be the date as of which the Administrator approves the grant.

6.1.5                    Nontransferability of Option Rights.  Except with the express written approval of the Administrator which approval the Administrator is authorized to give only with respect to NQSOs, no Option granted under this Plan shall be assignable or otherwise transferable by the optionee except by will, by the laws of descent and distribution or pursuant to a qualified domestic relations order.  During the life of the optionee, an Option shall be exercisable only by the optionee.

6.1.6                    Payment.  Except as provided below, payment in full, in cash, shall be made for all stock purchased at the time written notice of exercise of an Option is given to the Company, and proceeds of any payment shall constitute general funds of the Company.  The Administrator, in the exercise of its absolute discretion, may authorize any one or more of the following additional methods of payment:

(a)      Subject to the discretion of the Administrator and the terms of the stock option agreement granting the Option, delivery by the optionee of Shares already owned by the optionee for all or part of the Optionexercise price, provided the fFair mMarket vValue (determined as set forth in Section 6.1.10) of such Shares being delivered is equal on the date of exercise to the Optionexercise price, or such portion thereof as the optionee is authorized to pay by delivery of such stock; and

(b)      Subject to the discretion of the Administrator, through the surrender of Shares then issuable upon exercise of the Option, provided the fFair mMarket vValue (determined as set forth in Section 6.1.10) of such Shares is equal on the date of exercise to the Optionexercise price, or such portion thereof as the optionee is authorized to pay by surrender of such stock.

6.1.7                    Termination of Employment.  If for any reason other than death or permanent and total disability, an optionee ceases to be employed by the Company or any of its Affiliates (such event being called a “Termination”), Options held at the date of Termination (to the extent then exercisable) may be exercised in whole or in part at any time within three months of the date of such Termination, or such other period of not less than 30 days after the date of such Termination as is specified in the Option Agreement or by amendment thereof (but in no event after the Expiration Date); provided, however, that if such exercise of the Option would result in liability for the optionee under Section 16(b) of the Exchange Act, then such three-month period automatically shall be extended until the tenth day following the last date upon which optionee has any liability under Section 16(b) (but in no event after the Expiration Date).  If an optionee dies or becomes permanently and totally disabled (within the meaning of Section 22(e)(3) of the Code) while employed by the Company or an Affiliate or within the period that the Option remains exercisable after Termination, Options then held (to the extent then exercisable) may be exercised, in whole or in part, by the optionee, by the optionee's personal representative or by the person to whom the Option is transferred by devise or the laws of descent and distribution, at any time within twelve months after the death or twelve months after the permanent and total disability of the optionee or any longer period specified in the Option Agreement or by amendment thereof (but in no event after the Expiration Date). For purposes of this Section 6.1.7, “employment” includes service as a director or as a consultant.  For purposes of this Section 6.1.7, an optionee's employment shall not be deemed to terminate by reason of sick leave, military leave or other leave of absence approved by the Administrator, if the period of any such leave does not exceed 90 days or, if longer, if the optionee's right to reemployment by the Company or any Affiliate is guaranteed either contractually or by statute.

6.1.8                    Withholding and Employment Taxes.  At the time of exercise of an Option and as a condition thereto, or at such other time as the amount of such obligations becomes determinable (the “Tax Date”), the optionee shall remit to the Company in cash all applicable federal and state withholding and employment taxes.  Such obligation to remit may be satisfied, if authorized by the Administrator in its sole discretion, after considering any tax, accounting and financial consequences, by the optionee's (i) delivery of a promissory note in the required amount on such terms as the Administrator deems appropriate, (ii) tendering to the Company previously owned Shares or other securities of the Company with a fFair mMarket vValue equal to the required amount, or (iii) agreeing to have Shares (with a fFair mMarket vValue equal to the required amount) which are acquired upon exercise of the Option withheld by the Company. It is intended that all Options granted under the Plan will be exempt from Code Section 409A, and Options shall be structured and the Plan administered and interpreted in accordance with this intent.

6.1.9                    Other Provisions.  Each Option granted under this Plan may contain such other terms, provisions, and conditions not inconsistent with this Plan as may be determined by the Administrator, and each ISO granted under this Plan shall include such provisions and conditions as are necessary to qualify the Option as an “incentive stock option” within the meaning of Section 422 of the Code.

6.1.10                  Determination of Fair Market Value.  For purposes of the Plan, the “fFair mMarket vValue” of Shares or other securities of the Company shall be determined as follows:

(a)       Fair market value shall be the closing price of such stock on the date before the date the value is to be determined on the principal recognized securities exchange or recognized securities market or quotation service on which such stock is reported or quoted, but if selling prices are not reported or quoted, its fair market value shall be the mean between the high bid and low asked prices for such stock on the date before the date the value is to be determined (or if there are no quoted prices for such date, then for the last preceding business day on which there were quoted prices). 

(a)       If the Shares are readily tradable on an established securities market (as determined under Code Section 409A), then Fair Market Value will be the closing or last sales price for a Share on the principal securities market on which it trades on the trading day prior to the date the value is to be determined, but if selling prices are not reported or quoted, its Fair Market Value shall be the mean between the high bid and low asked prices for such stock on the trading date before the date the value is to be determined, or if there are no quoted prices for such date, then the Fair Market Value will be based on the last sale made prior to the date the value is to be determined, as reported in The Wall Street Journal or such other source as the Administrator deems reliable

(b)       InIf the absence ofShares are not then readily tradable on an established market for the stocksecurities market (as determined under Code Section 409A), then fFair mMarket vValue thereof shallwill be determined in good faith by the Administrator, with reference to the Company's net worth, prospective earning power, dividend-paying capacity, and other relevant factors, including the goodwill of the Company, the economic outlook in the Company's industry, the Company's position in the industry, the Company's management, and the values of stock of other corporations in the same or similar line of business. as the result of a reasonable application of a reasonable valuation method that satisfies the requirements of Code Section 409A.

“Code Section 409A” means Section 409A of the Code, as amended, and the regulations and guidance promulgated thereunder.

6.1.11                  Option Term.  Subject to Section 6.3.46.2.4, no Option shall be exercisable more than 10 years after the date of grant, or such lesser period of time as is set forth in the stock option agreement (the end of the maximum exercise period stated in the stock option agreement is referred to in this Plan as the “Expiration Date”).

6.2                 Terms and Conditions to Which Only NQSOs Are Subject.  Options granted under this Plan which are designated as NQSOs shall be subject to the following terms and conditions: 

6.2.1                        6.1.12                  Exercise Price.

(a)        Except as set forth in Section 6.2.1(b), the exercise price of an NQSOOption shall be not less than 85100% of the fFair mMarket vValue (determined in accordance with Section 6.1.10) of the stockShare subject to the Option on the date of grant.

6.2                 Terms and Conditions to Which Only ISOs Are Subject. Options granted under this Plan which are designated as ISOs shall be subject to the following terms and conditions:

(b)       To the extent required by applicable laws, rules and regulations, the6.2.1                    Exercise Price.  The exercise price of aan NQISO granted to any person who owns, directly or by attribution under the Code (currently Section 424(d)), stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or of any Affiliate (a “Ten Percent Shareholder”) shall in no event be less than 110% of the fFair mMarket vValue (determined in accordance with Section 6.1.10) of the stockShares covered by the Option at the time the Option is granted.

6.3                 Terms and Conditions to Which Only ISOs Are Subject. Options granted under this Plan which are designated as ISOs shall be subject to the following terms and conditions:

6.3.1                    Exercise Price.

(a)       Except as set forth in Section 6.3.1(b), the exercise price of an ISO shall be determined in accordance with the applicable provisions of the Code and shall in no event be less than the fair market value (determined in accordance with Section 6.1.10) of the stock covered by the Option at the time the Option is granted.

(b)       The exercise price of an ISO granted to any Ten Percent Shareholder shall in no event be less than 110% of the fair market value (determined in accordance with Section 6.1.10) of the stock covered by the Option at the time the Option is granted.

6.3.26.2.2             Disqualifying Dispositions.  If stock acquired by exercise of an ISO granted pursuant to this Plan is disposed of in a “disqualifying disposition” within the meaning of Section 422 of the Code (a disposition within two years from the date of grant of the Option or within one year after the transfer such stock on exercise of the Option), the holder of the stock immediately before the disposition shall promptly notify the Company in writing of the date and terms of the disposition and shall provide such other information regarding the Option as the Company may reasonably require.

6.3.36.2.3             Grant Date.  If an ISO is granted in anticipation of employment as provided in Section 5(d), the Option shall be deemed granted, without further approval, on the date the grantee assumes the employment relationship forming the basis for such grant, and, in addition, satisfies all requirements of this Plan for Options granted on that date.

6.3.46.2.4             Term.  Notwithstanding Section 6.1.11, no ISO granted to any Ten Percent Shareholder shall be exercisable more than five years after the date of grant.

6.2.5                     Limits. An Option will constitute an ISO only if the Optionee receiving the Option is an employee, and only to the extent that (i) it is so designated in the applicable stock option agreement and (ii) the aggregate Fair Market Value (determined as of the Option grant date) of the Shares with respect to which ISOs held by the Optionee first become exercisable in any calendar year (under the Plan and all other plans of the Company and its Affiliates) does not exceed $100,000. To the extent an Option does not meet the requirements to be considered an ISO under the Code, the Option shall be treated as a NQSO.

(a)                 An optionee wishing to exercise an Option shall give written notice to the Company at its principal executive office, to the attention of the officer of the Company designated by the Administrator, accompanied by payment of the exercise price and withholding taxes as provided in Sections 6.1.6 and 6.1.8. The date the Company receives written notice of an exercise hereunder accompanied by payment of the exercise price will be considered as the date such Option was exercised.

(b)                 Promptly after receipt of written notice of exercise of an Option and the payments called for by Section 7(a), the Company shall, without stock issue or transfer taxes to the optionee or other person entitled to exercise the Option, deliver to the optionee or such other person a certificate or certificates for the requisite number of shares of stock.  An optionee or permitted transferee of the Option shall not have any privileges as a shareholder with respect to any shares of stock covered by the Option until the date of issuance (as evidenced by the appropriate entry on the books of the Company or a duly authorized transfer agent) of such shares.

Nothing in this Plan or any Option granted hereunder shall interfere with or limit in any way the right of the Company or of any of its Affiliates to terminate any optionee's employment or consulting at any time, nor confer upon any optionee any right to continue in the employ of, or consult with, the Company or any of its Affiliates.

Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended (the “Securities Act”).

The adoption of the Plan shall not be construed as creating any limitations on the power of the Company to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options other than under the Plan.

The Board may at any time amend, alter, suspend or discontinue this Plan. Without the consent of an optionee, no amendment, alteration, suspension or discontinuance may adversely affect outstanding Options except to conform this Plan and ISOs granted under this Plan to the requirements of federal or other tax laws relating to incentive stock optionsif such action is necessary to comply with applicable law or stock exchange rules, or if a the Administrator, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Optionee’s rights. No amendment, alteration, suspension or discontinuance shall require shareholder approval unless (a) shareholder approval is required to preserve incentive stock option treatment for federal income tax purposes or (b) the Board otherwise concludes that shareholder approval is advisable.

This Plan iswas originally effective as of January 24, 2018, and is hereby amended and restated upon its adoption by the Board; provided, however, that no Option granted under the amended and restated Plan shall be exercisable unless and until written consent of the shareholders of the Company, or approval of the shareholders of the Company voting at a validly called shareholders' meeting or by majority written consent of the shareholders of the Company, is obtained within twelve months after adoption by the Board.  If such shareholder approval is not obtained within such time, Options granted hereunder shall be of the same force and effect as if such approval was obtained except that all ISOs granted hereunderunder the amended and restated Plan shall be treated as NQSOs. Options may be granted and exercised under this Plan only after there has been compliance with all applicable federal and state securities laws.  This Plan shall terminate withinon then yearstenth anniversary from the date of itsthe adoption of the amended and restated Plan by the Board.

13.            Forfeiture and Compensation Recovery.

Options and any compensation associated therewith is subject to forfeiture, recovery by the Company or other action pursuant to any compensation recovery policy adopted by the Board or the Administrator at any time, and as amended from time to time, which includes but is not limited to any compensation recovery policy adopted by the Board or the Administrator in response to the requirements of Section 10D of the Exchange Act, the Securities and Exchange Commission’s final rules thereunder (Listing Standards for Recovery of Erroneously Awarded Compensation, 87 Fed. Reg. 73076-73142) and any applicable listing rules or other rules and regulations implementing the foregoing, or as otherwise required by law. Any Option may be unilaterally amended by the Administrator to comply with any such compensation recovery policy.