SCHEDULE 14C INFORMATION

 

Information Statement Pursuant to Section 14(c) of
the Securities Exchange Act of 1934

 

Check the appropriate box:
¨   Preliminary Information Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
x   Definitive Information Statement

 

QPAGOS

(Name of Registrant As Specified In Its Charter)

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QPAGOS 

Paseo del la Reforma 404 Piso 15 PH
Juarez, Del. Cuauhtemoc, Mexico, D.F. C.P. 06600

 

NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT

 

To the Stockholders of QPAGOS

 

This Information Statement is furnished to the stockholders of QPAGOS, a Nevada corporation (the “Corporation”, “we”, “our”, or “us”), in connection with our prior receipt of approval by a written consent, in lieu of a special meeting, of the holders of a majority of our outstanding shares of common stock, which represents a majority of our voting power (see attached Exhibit A) of our new 2018 Stock Incentive Plan (the “Plan”). The affirmative vote of the holders of a majority of our outstanding shares of common stock is required to approve the Plan. On April 27, 2018, the Corporation obtained the approval of the Plan by written consent of several stockholders that together are the record holders of 41,774,506 shares of the Corporation’s common stock, representing approximately 50.62% of the voting power of the Corporation as of April 27, 2018. The Plan cannot be effectuated until 20 days after the mailing of this Information Statement. A copy of the Plan is attached to this Information Statement as Exhibit B.

 

THE CORPORATION IS NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED TO NOT SEND A PROXY. Because the written consent of the holders of a majority of our voting power satisfies all applicable stockholder voting requirements, we are not asking for a proxy: please do not send us one.

 

Only holders of our common stock at the close of business on April 27, 2018 shall be given a copy of the Information Statement. The date on which this Information Statement will be sent to stockholders will be on or about May 17, 2018.

 

The accompanying information statement is for information purposes only. Please read it carefully.

 

The Information Statement serves as notice of the foregoing action pursuant to the Written Consent in accordance with Section 78.320 of the Nevada Law. The close of business on April 27, 2018 is the record date (the “Record Date”) for the determination of the holders of our common stock entitled to receive the Information Statement. As of April 27, 2018, we had 500,000,000 shares of our common stock authorized and 82,519,575 shares of our common stock outstanding and entitled to vote. Each share of our common stock entitles the holder thereof to one vote on matters submitted for approval to the holders of our common stock.

 

By Order of the Board  
   
Very truly yours,  
   
QPAGOS  

 

By: /s/ Gaston Pereira  
  Name: Gaston Pereira  
  Title: Chief Executive Officer  

 

May 14, 2018

 

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QPAGOS 

Paseo del la Reforma 404 Piso 15 PH
Juarez, Del. Cuauhtemoc, Mexico, D.F. C.P. 06600
Telephone: +52 (55) 55-110-110

 

This Information Statement is furnished to the stockholders of QPAGOS, a Nevada corporation (the “Corporation”), in connection with our prior receipt of approval by a written consent, in lieu of a special meeting, of the holders of a majority of our shares of voting stock (the “Majority Stockholders”) of our 2018 Stock Incentive Plan (the “Plan”). On April 27, 2018, we obtained the approval of the Plan by written consent of the Majority Stockholders that are the record holders of 41,774,506 shares of our common stock, representing approximately 50.62% of the voting power of our Corporation as of April 27, 2018.

 

The Plan cannot be effectuated until 20 days after the mailing of this Information Statement. A copy of the Plan is attached to this information statement as Exhibit B.

 

The date on which this Information Statement will be sent to stockholders will be on or about May 17, 2018, and this Information Statement is being furnished to all holders of the common stock of the Corporation on record as of April 27, 2018 (the “Record Date”).

 

Our Board of Directors, and the owner of a majority of our outstanding voting securities, have unanimously adopted, ratified and approved the proposed actions by us. No other votes are required or necessary.

 

Vote Required

 

Pursuant to QPAGOS’ Bylaws and the Nevada Law, a vote by the holders of at least a majority of the Company’s outstanding votes is required to approve the Plan. The Company’s Articles of Incorporation does not authorize cumulative voting. As of the record date, the Company had 82,519,575 voting shares of common stock issued. The common stock was entitled to one vote per share or 82,519,575 votes. An aggregate of 41,774,506 votes are required to approve the Plan. The consenting stockholders are entitled to 41,774,506 votes, which represents approximately 50.62% of the issued and outstanding votes with respect to the Company’s shares of common stock and preferred stock. The consenting stockholders voted in favor of the Plan described herein in a written consent, dated April 27, 2018.

 

Interests of Certain Parties in the Matters to be Acted Upon

 

Gaston Pereira, Andrey Novikov, and James Fuller, as individuals and/or as individuals controlling certain of the entities included among the Majority Stockholders, are all members of our Board of Directors. The Majority Stockholders have the ability to determine all matters submitted to the vote of our stockholders, including the election of directors.

 

All of our directors, officers and employees are eligible to participate in, and receive awards under the Plan.

 

Record Date

 

The Board has fixed the close of business on April 27, 2018 as the Record Date for the determination of stockholders who are entitled to receive this Information Statement.

 

Effective Date

 

Under applicable federal securities laws, awards under the Plan cannot be issued until at least 20 calendar days following the date that this Information Statement has been mailed to our stockholders. This Information Statement is first being mailed by us to our stockholders on or about May 17, 2018.

 

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PROPOSAL

 

On April 16, 2018, our Board of Directors adopted, subject to stockholder approval, the Plan.

 

The principal provisions of the Plan are summarized below, a copy of which is attached hereto as Exhibit B. The following discussion is qualified in its entirety by reference to the Plan.

 

Purpose of the 2018 Stock Incentive Plan

 

The Board of Directors believes that the Plan is necessary for us to attract, retain and motivate our employees, directors and consultants through the grant of stock options, stock appreciation rights, restricted stock and restricted stock units. We believe that the Plan is best designed to provide the proper incentives for our employees, directors and consultants, ensures our ability to make performance-based awards, and meets the requirements of applicable law. There are currently six (6) individuals that would be eligible to participate in the Plan, of which three (3) are directors or executive officers and three (3) are consultants.

 

Administration

 

The Plan generally will be administered by the Plan Administrator, which is currently our entire Board of Directors; however, in the future, the Plan Administrator may be a Committee of the Board, such as a Compensation Committee. The Board of Directors does not currently have a Compensation Committee. The Plan Administrator will have full authority to establish rules and regulations for the proper administration of the Plan, to select the employees, directors and consultants to whom awards are granted, and to set the date of grant, the type of award and the other terms and conditions of the awards, consistent with the terms of the Plan.

 

Limitation on Awards and Shares Available

 

We have received the approval of our stockholders to allow us to grant up to 8,000,000 shares of our common stock that may be delivered pursuant to awards granted during the life of the Plan.

 

Eligibility

 

Persons eligible to participate in the Plan include all of our employees, directors and consultants.

 

Awards

 

The Plan provides for the grant of: (i) incentive stock options; (ii) nonqualified stock options; (iii) stock appreciation rights; (iv) restricted stock; (v) restricted stock units; and (vi) other stock-based and cash-based awards to eligible individuals. The terms of the awards will be set forth in an award agreement, consistent with the terms of the Plan. No stock option will be exercisable later than ten years after the date it is granted.

 

The Plan Administrator is authorized to grant awards under the Plan intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). If the Plan Administrator is a Committee of the Board, any awards authorized under the Plan intended to qualify as “performance-based compensation” under Section 162(m) of the Code may be subject to approval by the Board of Directors as specified in the charter (the “Charter”) established by the Board of Directors for such Committee.

 

Stock Options. The Plan Administrator may grant incentive stock options as defined in Section 422 of the Code and nonqualified stock options. If the Plan Administrator is a Committee of the Board, a grant of stock options may be subject to approval by the Board of Directors as specified in the Charter established by the Board of Directors for such Committee. Options shall be exercisable for such prices, shall expire at such times, and shall have such other terms and conditions as the Plan Administrator may determine at the time of grant and as set forth in the award agreement; however, the exercise price must be at least equal to 100% of the fair market value at the date of grant. The option price is payable in cash or other consideration acceptable to us.

 

Stock Appreciation Rights. The Plan Administrator may grant stock appreciation rights with such terms and conditions as the Plan Administrator may determine at the time of grant and as set forth in the award agreement. If the Plan Administrator is a Committee of the Board, a grant of stock appreciation rights may be subject to approval by the Board of Directors as specified in the Charter established by the Board of Directors for such Committee. The grant price of a stock appreciation right shall be determined by the Plan Administrator and shall be specified in the award agreement; however, the grant price must be at least equal to 100% of the fair market value of a share on the date of grant. Stock appreciation rights may be exercised upon such terms and conditions as are imposed by the Plan Administrator and as set forth in the stock appreciation right award agreement.

 

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Restricted Stock. Restricted stock may be granted in such amounts and subject to the terms and conditions as determined by the Plan Administrator at the time of grant and as set forth in the award agreement. If the Plan Administrator is a Committee of the Board, a grant of restricted stock may be subject to approval by the Board of Directors as specified in the Charter established by the Board of Directors for such Committee. The Plan Administrator may impose performance goals for restricted stock awards. The Plan Administrator may authorize the payment of dividends on the restricted stock during the restricted period.

 

Restricted Stock Units. Restricted stock units may be granted in such amounts and subject to the terms and conditions as determined by the Plan Administrator at the time of grant and as set forth in the award agreement. If the Plan Administrator is a Committee of the Board, a grant of restricted stock units may be subject to approval by the Board of Directors as specified in the Charter established by such Committee. Restricted stock unit units represent a contingent right to receive one share of our common stock or, in the Plan Administrator’s discretion, the payment of cash for each unit in an amount equal to our share price. The Plan Administrator may impose performance goals for restricted stock units. The Plan Administrator may authorize the payment of dividend equivalents on the restricted stock units during the restricted period.

 

Other Awards. The Plan Administrator may grant other types of equity-based or equity-related awards not otherwise described by the terms of the Plan, in such amounts and subject to such terms and conditions, as the Plan Administrator. Such awards may be based upon attainment of performance goals established by the Board of Directors and may involve the transfer of actual shares to participants, or payment in cash or otherwise of amounts based on the value of shares.

 

Amendment and Termination

 

Our Board of Directors may amend the Plan at any time, subject to stockholder approval to the extent required by applicable law or regulation or the listing standards of any market or stock exchange on which the common stock is at the time primarily traded. Additionally, stockholder approval will be specifically required to increase the number of shares available for issuance under the Plan.

 

Our Board of Directors may terminate the Plan at any time. Unless sooner terminated by the Board, the Plan will terminate on the close of business on April 16, 2028.

 

Miscellaneous

 

The Plan also contains provisions with respect to payment of exercise prices, vesting and expiration of awards, treatment of awards upon our sale, transferability of awards, and tax withholding requirements. Various other terms, conditions, and limitations apply, as further described in the 2018 Stock Incentive Plan.

 

Federal Income Tax Consequences

 

The following is a brief description of the principal federal income tax consequences, as of the date of this proxy statement, associated with the grant of awards under the Plan. This summary is based on our understanding of present United States federal income tax law and regulations. The summary does not purport to be complete or applicable to every specific situation. Furthermore, the following discussion does not address state or local tax consequences.

 

Options

 

Grant. There is no federal income tax consequence to the participant solely by reason of the grant of incentive stock options or nonqualified stock options under the Plan.

 

Exercise. The exercise of an incentive stock option is not a taxable event for regular federal income tax purposes if certain requirements are satisfied, including the requirement that the participant generally must exercise the incentive stock option no later than ninety days following the termination of the participant’s employment with us. However, such exercise may give rise to alternative minimum tax liability (see “Alternative Minimum Tax” below).

 

Upon the exercise of a nonqualified stock option, the participant will generally recognize ordinary income in an amount equal to the excess of the fair market value of the shares at the time of exercise over the amount paid by the participant as the exercise price. The ordinary income recognized in connection with the exercise by a participant of a nonqualified stock option will be subject to both wage and employment tax withholding.

 

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The participant’s tax basis in the shares acquired pursuant to the exercise of an option will be the amount paid upon exercise plus, in the case of a nonqualified stock option, the amount of ordinary income, if any, recognized by the participant upon exercise thereof.

 

Qualifying Disposition. If a participant disposes of shares of our common stock acquired upon exercise of an incentive stock option in a taxable transaction, and such disposition occurs more than two years from the date on which the option was granted and more than one year after the date on which the shares were transferred to the participant pursuant to the exercise of the incentive stock option, the participant will realize long-term capital gain or loss equal to the difference between the amount realized upon such disposition and the participant’s adjusted basis in such shares (generally the option exercise price).

 

Disqualifying Disposition. If the participant disposes of shares of our common stock acquired upon the exercise of an incentive stock option (other than in certain tax free transactions) within two years from the date on which the incentive stock option was granted or within one year after the transfer of shares to the participant pursuant to the exercise of the incentive stock option, at the time of disposition the participant will generally recognize ordinary income equal to the lesser of (i) the excess of each such share’s fair market value on the date of exercise over the exercise price paid by the participant, or (ii) the participant’s actual gain. If the total amount realized on a taxable disposition (including return on capital and capital gain) exceeds the fair market value on the date of exercise of the shares of our common stock purchased by the participant under the option, the participant will recognize a capital gain in the amount of the excess. If the participant incurs a loss on the disposition (the total amount realized is less than the exercise price paid by the participant), the loss will be a capital loss.

 

Other Disposition. If a participant disposes of shares of our common stock acquired upon exercise of a nonqualified stock option in a taxable transaction, the participant will recognize capital gain or loss in an amount equal to the difference between the participant’s basis (as discussed above) in the shares sold and the total amount realized upon disposition. Any such capital gain or loss (and any capital gain or loss recognized on a disqualifying disposition of shares of our common stock acquired upon exercise of incentive stock options as discussed above) will be short-term or long-term depending on whether the shares of our common stock were held for more than one year from the date such shares were transferred to the participant.

 

Alternative Minimum Tax. Alternative minimum tax is payable if and to the extent the amount thereof exceeds the amount of the taxpayer’s regular tax liability, and any alternative minimum tax paid generally may be credited against future regular tax liability (but not future alternative minimum tax liability). Alternative minimum tax applies to alternative minimum taxable income. Generally, regular taxable income as adjusted for tax preferences and other items is treated differently under the alternative minimum tax.

 

For alternative minimum tax purposes, the spread upon exercise of an incentive stock option (but not a nonqualified stock option) will be included in alternative minimum taxable income, and the taxpayer will receive a tax basis equal to the fair market value of the shares of our common stock at such time for subsequent alternative minimum tax purposes. However, if the participant disposes of the incentive stock option shares in the year of exercise, the alternative minimum tax income cannot exceed the gain recognized for regular tax purposes, provided that the disposition meets certain third party requirements for limiting the gain on a disqualifying disposition. If there is a disqualifying disposition in a year other than the year of exercise, the income on the disqualifying disposition is not considered alternative minimum taxable income.

 

There are no federal income tax consequences to us by reason of the grant of incentive stock options or nonqualified stock options or the exercise of an incentive stock option (other than disqualifying dispositions). At the time the participant recognizes ordinary income from the exercise of a nonqualified stock option, we will be entitled to a federal income tax deduction in the amount of the ordinary income so recognized (as described above), provided that we satisfy our reporting obligations described below. To the extent the participant recognizes ordinary income by reason of a disqualifying disposition of the stock acquired upon exercise of an incentive stock option, and subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation, we generally will be entitled to a corresponding deduction in the year in which the disposition occurs. We are required to report to the Internal Revenue Service any ordinary income recognized by any participant by reason of the exercise of a nonqualified stock option. We are required to withhold income and employment taxes (and pay the employer’s share of the employment taxes) with respect to ordinary income recognized by the participant upon exercise of nonqualified stock options.

 

Stock Appreciation Rights

 

There are no tax consequences to the participant or us by reason of the grant of stock appreciation rights. In general, upon exercise of a stock appreciation rights award, the participant will recognize taxable ordinary income equal to the excess of the stock’s fair market value on the date of exercise over the stock appreciation rights’ base price, or the amount payable. Generally, with respect to employees, we are required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation, we generally will be entitled to a business expense deduction equal to the taxable ordinary income realized by the participant.

 

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Restricted Stock

 

Unless a participant makes a Section 83(b) election, as described below, with respect to restricted stock granted under the Plan, a participant receiving such an award will not recognize income and we will not be allowed a deduction at the time such award is granted. While an award remains unvested or otherwise subject to a substantial risk of forfeiture, a participant will recognize compensation income equal to the amount of any dividends received and we will be allowed a deduction in a like amount. When an award vests or otherwise ceases to be subject to a substantial risk of forfeiture, the excess of the fair market value of the award on the date of vesting or the cessation of the substantial risk of forfeiture over the amount paid, if any, by the participant for the award will be ordinary income to the participant and will be claimed as a deduction for federal income tax purposes by us. Upon disposition of the shares received, the gain or loss recognized by the participant will be treated as capital gain or loss, and the capital gain or loss will be short-term or long-term depending upon whether the participant held the shares for more than one year following the vesting or cessation of the substantial risk of forfeiture.

 

However, by filing a Section 83(b) election with the Internal Revenue Service within 30 days after the date of grant, a participant’s ordinary income and commencement of holding period and the deduction will be determined as of the date of grant. In such a case, the amount of ordinary income recognized by such a participant and deductible by us will be equal to the excess of the fair market value of the award as of the date of grant over the amount paid, if any, by the participant for the award. If such election is made and a participant thereafter forfeits his or her award, no refund or deduction will be allowed for the amount previously included in such participant’s income.

 

Generally, with respect to employees, we are required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation and any tax withholding condition, we generally will be entitled to a business expense deduction equal to the taxable ordinary income realized by the recipient. Upon disposition of stock, the recipient will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock, if any, plus any amount recognized as ordinary income upon acquisition (or vesting) of the stock. Such gain or loss will be long- or short-term depending on whether the stock was held for more than one year from the date ordinary income is measured.

 

Restricted Stock Units

 

The recipient of an award of restricted stock units generally will not be taxed upon the grant or vesting of the award, but rather will recognize ordinary income in an amount equal to the amount paid to him or her in respect of such award at the time such award is paid. In either case, the Corporation will be entitled to a deduction at the time when, and in the amount that, the recipient recognizes ordinary income.

 

Executive Compensation

 

Qpagos Corporation became our wholly owned subsidiary as a result of the consummation of the Merger on May 12, 2016. The following table summarizes all compensation earned in each of QPAGOS, Qpagos Corporation and its subsidiaries during its last two fiscal years ended December 31, 2017 and 2016 by: (i) its principal executive officer; and (ii) its most highly compensated executive officer other than the principal executive officer who was serving as an executive officer of QPAGOS as of the end of the last completed fiscal year. The tables below reflect the compensation for the QPAGOS Corporation executive officers who are also named executive officers of the combined company.

 

Name and
principal
position
  Year     Salary     Bonus   Stock
awards
  Option
awards
    All
other
comp.
    Total  
                                         
Gaston Pereira/     2017     $ 240,000           $           $ 3,796 (a)   $ 243,796  
Chief Executive Officer (1)     2016     $ 240,000           $           $ 23,168 (b)   $ 263,168  
                                                         
Andrey Novikov/     2017     $ 180,000           $           $ $6,582 (c)   $ 186,582  
Chief Operating Officer (2)     2016     $ 180,000           $             $ 31,700 (d)   $ 211,700  
                                                         
Mark Korb/
Former Chief Financial Officer (3)
    2017     $ 90,000                             $ 90,000  
      2016     $ 90,000                               90,000  

 

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  (a) Consists of home leave expenses of $3,796.
  (b) Consists of an annual housing allowance of $20,908 and home leave expenses of $2,260.
  (c) Consists of home leave expenses of $6,582.
  (d) Consists of a housing allowance of $26,700 and home leave expenses of $5,000.

 

  (1) Mr. Pereira has served as the President, Chief Executive Officer and Treasurer and a director of Qpagos Corporation and has served in the same capacity for each of Qpagos, S.A.P.I. de C.V. and Redpag Electronicos S.A.P.I. de C.V. since their incorporation in Mexico in November 2013.
  (2) Mr. Novikov has served as our Chief Operating Officer and a director of Qpagos Corporation and has served in the same capacity for each of Qpagos, S.A.P.I. de C.V. and Redpag Electronicos S.A.P.I. de C.V. since their incorporation in Mexico in April 2014.
  (3) Mr. Korb has served as Chief Financial Officer of Qpagos Corporation from June 2015 until April 17, 2018. Qpagos Corporation pays Mr. Korb’s employer, First South Africa Management a fee of $7,500 per month.

 

Agreements with Named Executive Officers

 

On May 18, 2015, Qpagos Corporation entered into a three-year employment agreement with Gaston Pereira to serve as its Chief Executive Officer, President and Treasurer, which term was extended on April 30, 2018 for an additional one year. During the term of the employment agreement, Mr. Pereira receives an annual base salary of not less than $240,000 and is entitled to an annual performance cash bonus targeted at up to 50% of his base salary, in the discretion of the Board of Directors. Mr. Pereira was issued 1,440,000 shares of Qpagos Corporation common stock that vest on the one-year anniversary of the date of issuance which were exchanged in the Merger for 2,880,000 shares of our common stock. Mr. Pereira is generally entitled to receive all other benefits provided to other employees, including health and disability insurance. He also receives a housing allowance of $1,800 a month. The agreement also provides for a one-time payment of moving expenses up to $25,000 and $10,000 of reimbursement of fees of a tax attorney for professional services regarding legal advice in connection with the employment agreement.

 

On May 18, 2015, Qpagos Corporation entered into a three-year employment agreement with Andrey Novikov to serve as its Chief Operating Officer and Secretary, which term was extended on April 30, 2018 for an additional one year. During the term of the employment agreement, Mr. Novikov receives an annual base salary of not less than $180,000 and is entitled to an annual performance cash bonus targeted at up to 50% of his base salary, in the discretion of the Board of Directors. Mr. Novikov was issued 720,000 shares of Qpagos Corporation common stock that vest on the one year anniversary of the date of issuance which were exchanged in the Merger for 1,440,000 shares of our common stock. Mr. Novikov is generally entitled to receive all other benefits provided to other employees, including health and disability insurance. He also receives a housing allowance of approximately $2,000 a month. The agreement also provides for a one-time payment of moving expenses up to $15,000.

 

The employment agreement with each of Mr. Pereira and Mr. Novikov (the “Employment Agreements”) also include confidentiality obligations and inventions assignments by each of Mr. Pereira and Mr. Novikov (the “Executives”) and non-solicitation and non-competition provisions.

 

The Employment Agreements have a stated term of three years but may be terminated earlier pursuant to their terms. If the Executive’s employment is terminated for any reason, he or his estate as the case may be, will be entitled to receive the accrued base salary, vacation pay, expense reimbursement and any other entitlements accrued by him to the extent not previously paid (the “Accrued Obligations”); provided , however , that if his employment is terminated (i) by us without Cause or by the Executive for Good Reason (as each is defined below) then in addition to paying the Accrued Obligations, (x) we will continue to pay his then current base salary and continue to provide benefits at least equal to those which were provided at the time of termination for a period of 12 months and (y) he shall have the right to exercise any vested equity awards until the earlier of six months after termination or the remaining term of the awards, or (ii) by reason of his death or Disability (as defined in the Employment Agreements), then in addition to paying the Accrued Obligations, he would have the right to exercise any vested options until the earlier of six months after termination or the remaining term of the awards. In such event, if the Executive commenced employment with another employer and becomes eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits to be provided by us as described herein will terminate.

 

The Employment Agreements provide that upon the closing of a “Change in Control” (as defined below), all unvested options shall immediately vest and the time period that the Executive will have to exercise all vested stock options and other awards that the Executive may have will be equal to the shorter of: (i) six months after termination, or (ii) the remaining term of the award(s). If within one year after the occurrence of a Change in Control, the Executive terminates his employment for “Good Reason” or we terminate his employment for any reason other than death, disability or Cause, the Executive will be entitled to receive: (i) the portion of his base salary for periods prior to the effective date of termination accrued but unpaid (if any); (ii) all unreimbursed expenses (if any); (iii) an aggregate amount (the “Change in Control Severance Amount”) equal to two times the sum of the base salary plus an amount equal to the bonus that would be payable if the “target” level performance were achieved under our annual bonus plan (if any) in respect of the fiscal year during which the termination occurs (or the prior fiscal year if bonus levels have not yet been established for the year of termination); and (iv) the payment or provision of any other benefits.

 

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For the purposes of the Employment Agreement “Change in Control” is defined as: (i) any person or entity becoming the beneficial owner, directly or indirectly, of our securities representing 50% of the total voting power of all its then outstanding voting securities; (ii) a Merger or consolidation of our company in which its voting securities immediately prior to the Merger or consolidation do not represent, or are not converted into securities that represent, a majority of the voting power of all voting securities of the surviving entity immediately after the Merger or consolidation; or (iii) a sale of substantially all of our assets or our liquidation or dissolution.

 

For purpose of the Employment Agreement, “Good Reason” is defined as the occurrence of any of the following events without Executive’s consent: (i) a material reduction in the Executive’s base salary (other than an across-the-board decrease in base salary applicable to all of our executive officers; (ii) a material breach of the employment agreement by us; (iii) a material reduction in the Executive’s duties, authority and responsibilities relative to the Executive’s duties, authority, and responsibilities in effect immediately prior to such reduction; or (iv) the relocation of the Executive’s principal place of employment, without Executive’s consent, in a manner that lengthens his one-way commute distance by 50 or more miles from his then-current principal place of employment immediately prior to such relocation.

 

For purposes of the Employment Agreements, “Cause” is defined as (i) Executive’s conviction (which, through lapse of time or otherwise, is not subject to appeal) of any crime or offense involving money or other property of our company or its subsidiaries or which constitutes a felony in the jurisdiction involved; (ii) Executive’s performance of any act or his failure to act, for which if he were prosecuted and convicted, a crime or offense involving money or property of our company or its subsidiaries, or which would constitute a felony in the jurisdiction involved would have occurred; (iii) Executive’s breach of any of the representations, warranties or covenants set forth in the Employment Agreement; or (iv) Executive’s continuing, repeated, willful failure or refusal to perform his duties required by the Employment Agreement, provided that Executive shall have first received written notice from us stating with specificity the nature of such failure and refusal and affording Executive an opportunity, as soon as practicable, to correct the acts or omissions complained of.

 

EQUITY COMPENSATION PLAN INFORMATION

 

New Plan Benefits Under the 2018 Stock Incentive Plan

 

At this time, we have not determined any grants that are to be made under the Plan other than a grant of 110,000 shares of restricted stock to James Fuller for compensation for services as a director, such grant to be effective on the 20th calendar day following the date that this Information Statement is mailed to our stockholders.

 

Vote Required

 

The Board of Directors of QPAGOS has adopted, ratified and approved the proposal to authorize the Plan and stockholders of QPAGOS holding in excess of a majority of the voting power on the record date have approved the Plan.

 

Outstanding Equity Awards at Fiscal Year End

 

The following table lists the outstanding equity awards held by QPAGOS named executive officers at December 31, 2017:

 

              OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END              
      OPTION AWARDS (1)        STOCK AWARDS   
Name     Number of
Securities
Underlying
Unexercised
Options Exercisable
      Number of
Securities
Underlying
Unexercised
Options Unexercisable
      Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options
      Option
Exercisable Price
      Option
Expiration Date
      Number of
Shares or
Units of
Stock that
have Not Vested
      Market
Value of
Shares or
Units of
Stock that
have not Vested
      Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that have
Not Vested
      Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
 Shares,
Units or Other
Rights that have Not Vested
 
                                                                         
Gaston Pereira                                       $              
                                                                         
Andrey Novikov                                       $              
                                                                         
Mark Korb                                                      

 

 9 

 

 

Director Compensation

 

Neither QPAGOS nor Qpagos Corporation paid any fees to any of our directors for their service as directors; however, each of Messrs. Pereira and Novikov received compensation for service as officers of QPAGOS and Qpagos Corporation and QPAGOS.

 

BOARD OF DIRECTORS’ RECOMMENDATION AND STOCKHOLDER APPROVAL

 

On April 16, 2018, our Board of Directors voted to authorize and seek approval of our stockholders of the Plan. In the absence of a meeting, the affirmative consent of holders of a majority of the vote represented by our outstanding shares of stock was required to approve the Plan. Because the holders of approximately 50.62% of our voting power signed a written consent in favor of the Plan, the Plan has been approved. No action will be taken under the Plan until the 20th day following the mailing of this Information Statement to stockholders.

 

The information contained in this information statement constitutes the only notice we will be providing stockholders.

 

QUESTIONS AND ANSWERS REGARDING THE PROPOSED PLAN.

 

Q. WHY HAS THE PROPOSAL BEEN MADE TO ADOPT THE PLAN?

 

A. Our Board of Directors believes that adoption of a new plan will allow us to compensate officer, directors, employees and consultants and take advantage of future business opportunities. Accordingly, our Board of Directors believes that it is in our best interests to authorize the Plan. Adopting the Plan is recommended by the Board in order to provide a sufficient reserve of such shares under the Plan to fulfill such obligations and for our future growth and needs.

 

Q. HAS THE BOARD OF DIRECTORS APPROVED THE PROPOSAL TO APPROVE THE PLAN?

 

A. All members of the Board of Directors have approved the Plan as in our best interest and the best interest of our current stockholders.

 

Q. WHAT VOTE OF THE STOCKHOLDERS WILL RESULT IN THE PROPOSALS BEING PASSED?

 

A. To approve the proposal, the affirmative vote of a majority of the voting rights of the common stock and other shares holding voting rights is required. A consent in favor of the proposal has already been received from stockholders holding 41,794,506 shares of common stock (approximately 50.62% of the voting securities) of QPAGOS.

 

Q. WHO IS PAYING FOR THIS INFORMATION STATEMENT?

 

A. The Corporation will pay for the delivery of this information statement.

 

Q. WHOM SHOULD I CONTACT IF I HAVE ADDITIONAL QUESTIONS?

 

A: Gaston Pereira, Chief Executive Officer of QPAGOS, telephone: +52 (55)-110-110

 

DISSENTER'S RIGHTS OF APPRAISAL

 

Nevada Law does not provide for dissenter's rights in connection with the proposed adoption of the Plan.

 

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

 

The Board fixed the close of business on April 16, 2018 as the record date for the determination of the common stockholders entitled to notice of the action by written consent.

 

At the record date, QPAGOS had: (i) 500,000,000 shares of common stock authorized with a stated par value of $0.001, of which 82,519,575 shares were issued and outstanding and (ii) 25,000,000 shares of preferred stock authorized with a stated par value of $0.001, none outstanding. The holders of shares of Common stock are entitled to one vote per share on matters to be voted upon by stockholders. The holders of shares of common stock are entitled to receive pro rata dividends, when and if declared by the board in its discretion, out of funds legally available therefore, but only if dividends on preferred stock have been paid in accordance with the terms of the outstanding preferred stock.

 

 10 

 

 

Dividends on the common stock are declared by the Board of Directors. Payment of dividends on the Common stock in the future, if any, will be subordinate to the preferred stock, must comply with the provisions of the Nevada Law and will be determined by the Board. In addition, the payment of any such dividends will depend on the Company's financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.

 

Stockholders and the holders of a controlling interest equaling in excess of a majority of the voting power of QPAGOS, as of the record date, have consented to adopt the Plan. This consent was sufficient, without any further action, to provide the necessary shareholder approval of the action.

 

 11 

 

 

SECURITY OWNERSHIP OF EXECUTIVE OFFICERS, DIRECTORS AND FIVE PERCENT STOCKHOLDERS

 

The following table sets forth information, as of April 27, 2018, or as otherwise set forth below, with respect to the beneficial ownership of our common stock and: (i) all persons known to us to be the beneficial owners of more than 5% of the outstanding shares of our common stock and; (ii) each of our directors and our executive officers; and (iii) all of our directors and our executive officer as a group. The address of each beneficial owner is Paseo del la Reforma 404 Piso 15 PH, Juarez, Del. Cuauhtémoc, Mexico, D.F. C.P. 06600.

 

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 27, 2018 for:

 

  each of our directors and nominees for director;

 

  each of our named executive officers;

 

  all of our current directors and executive officers as a group; and

 

  each person, entity or group, who beneficially owned more than 5% of each of our classes of securities.

 

We have based our calculations of the percentage of beneficial ownership on 82,519,575 shares of our common stock. We have deemed shares of our common stock subject to warrants that are currently exercisable within 60 days of April 27, 2018 to be outstanding and to be beneficially owned by the person holding the warrant or restricted stock unit for the purpose of computing the percentage ownership of that person. We did not deem these, however, for the purpose of computing the percentage ownership of any other person. We have deemed shares of our common stock subject to redemption of convertible notes, where the conversion price is fixed, and any accrued interest thereon as of April 27, 2018 to be outstanding and beneficially owned by the person holding the convertible note for the purpose of computing the percentage ownership of only that person and not for any other person.

 

We have not deemed shares of common stock to be outstanding for variable priced convertible notes for the purposes of calculating beneficial ownership.

 

The information provided in the table is based on our records, information filed with the SEC, and information provided to us, except where otherwise noted.

 

Name and Address of
Beneficial Owner
  Amount and
Nature of
Beneficial
Ownership
Common Stock
Included*
    Percentage of
Common Stock
Beneficially
Owned
 
             
Gaston Pereira (Chief Executive Officer)     2,880,000 (1)     3.7 %
                 
Andrey Novikov (Chief Operating Officer)     1,440,000 (2)     1.9 %
                 
James Fuller (Director)     30,000 (3)       **
                 
Mark Korb (Former Chief Financial Officer)     25,000 (4)       **
                 
Vladimir Skigin     11,780,094 (5)     15.1 %
                 
Gibbs International, Inc. and Jimmy Gibbs     4,816,794 (6)     6.1 %
                 
Delinvest Commercial Ltd.     4,667,493 (7)     6.0 %
                 
Beverly Pacific Holdings     4,120,929 (8)     4.99 %
                 
Olga Akhmetova     3,889,448 (9)     5.0 %
                 
Strategic IR, Inc.     4,954,333       6.0 %
                 
All officers and directors as a group (4 persons)     4,345,000       5.6 %

 

 12 

 

 

*  Excludes any shares deemed to be outstanding on variable priced convertible securities. 

* *Less than 1%

 

(1) Consists of 2,880,000 shares of common stock.
(2) Consists of 1,440,000 shares of common stock.
(3) Consists of 30,000 shares of common stock
(4) Consists of 25,000 shares of common stock.
(5) Consists of 7,463,869 shares of common stock, a further, 3,209,000 shares of common stock registered to Mr. Skigin, and 584,238 shares of common stock related to convertibles notes with a fixed conversion price and accrued interest thereon, held by Cobbolo Limited. Mr. Skigin is the principal of Cobbolo Limited and the address is P.O. Box 146, Road Town, Tortola, British Virgin Islands, also consists of warrants exercisable over 531,981 shares of common stock registered to Cobbolo Limited.
(6) Consists of 2,320,000 shares of common stock, 960,000 shares of common stock issuable upon exercise of warrants owed by Gibbs International, Inc and a further 289,326 shares of common stock related to convertibles notes with a fixed conversion price and accrued interest thereon, held by Gibbs International limited. Jimmy Gibbs is the principal of Gibbs International, Inc. Also includes 1,065,000 shares of common stock owned by Gibbs Investment Holdings, LLC of which Jimmy Gibbs is an equity holder and as such shares the power to vote and dispose of the shares of common stock owned by Gibbs Investment Holdings, LLC. The address of Gibbs International, Inc. and Gibbs Investment Holdings, LLC is 9855 Warren H. Abernathy Highway, Spartanburg, South Carolina 29301. Certain of the information was obtained from a Schedule 13G/A filed on July 22, 2016 with the SEC on behalf of Gibbs International, Inc. and Jimmy Gibbs.
(7) Consists of 3,889,448 shares of common stock, warrants exercisable over 370,616 shares of common stock and 407,429 shares of common stock related to convertibles notes with a fixed conversion price and accrued interest thereon, held by Delinvest Limited. The principal of Delinvest Commercial Ltd. is Alex Motorin and the address is Drake Chambers, P.O. Box 3321 Road Town, Tortola, British Virgin Islands.
(8) Consists of 4,120,929 shares of common stock. The principal of Beverly Pacific Holdings is Aleksandr Blyumkin and ids address is 4370 Tujunga Avenue, Suite 320, Studio City, CA 91604.
(9) Consists of 3,889,448 shares of common stock. The address for Olga Akhmetova is 9 Gzhatskaya Street, Apt. 100, Saint Petersburg, Russia 195220.

 

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

 

No director, executive officer, nominee for election as a director, associate of any director, executive officer or nominee or any other person has any substantial interest, direct or indirect, by security holdings or otherwise, in the adoption of the Plan or in any action covered by the related resolutions adopted by the Board, which is not shared by all other stockholders.

 

Anti-Takeover Effects of Certain Provisions of Nevada Law

 

Effect of Nevada Anti-takeover Statute. We are subject to Section 78.438 of the Nevada Revised Statutes, an anti-takeover law. In general, Section 78.438 prohibits a Nevada corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless prior to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder. Section 78.439 provides that business combinations after the three year period following the date that the stockholder becomes an interested stockholder may also be prohibited unless approved by the corporation’s directors or other stockholders or unless the price and terms of the transaction meet the criteria set forth in the statute.

 

FORWARD-LOOKING STATEMENTS

 

This information statement may contain certain “forward-looking” statements (as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations and releases) representing our expectations or beliefs regarding our company. These forward-looking statements include, but are not limited to, statements concerning our operations, economic performance, financial condition, and prospects and opportunities. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “might,” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors, including factors discussed in this and other of our filings with the SEC.

 

 13 

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance with the Securities Exchange Act, we file periodic reports, documents, and other information with the SEC relating to our business, financial statements, and other matters. These reports and other information may be inspected and are available for copying at the offices of the SEC, 100 F Street, N.E., Washington, DC 20549. Our SEC filings are also available to the public on the SEC’s website at http://www.sec.gov.

 

You may request a copy of our annual report on Form 10-K for period ending December 31, 2017 at no cost, by writing or telephoning us at the following address:

 

QPAGOS Inc.

Paseo del la Reforma 404 Piso 15 PH

Juarez, Del. Cuauhtemoc, Mexico, D.F. C.P. 06600

+52 (55) 55-110-110

 

As we obtained the requisite stockholder vote for the Plan described in this information statement upon delivery of written consents from the holders of a majority of our outstanding shares of common stock, WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. This information statement is for informational purposes only. Please read this information statement carefully.

 

Dated: May 14, 2018   By Order of the Board of Directors
     
    /s/ Gaston Pereira
    Gaston Pereira, Chief Executive Officer

 

 14 

 

 

ANNEXES TO INFORMATION STATEMENT

 

Exhibit   Description
A   Statement of Action By Written Consent of the Majority of the Stockholders of QPAGOS
     
B   QPAGOS 2018 Stock Incentive Plan

 

 15 

 

 

Exhibit A

 

STATEMENT OF ACTION
BY WRITTEN CONSENT
OF THE MAJORITY OF
THE STOCKHOLDERS OF
QPAGOS

 

The undersigned, constituting the holders of a majority of the outstanding shares of common stock of QPAGOS, a Nevada corporation (the “Corporation”), and acting hereunder without the convening of a formal meeting pursuant to Section 78.320 of the Nevada Revised Statutes, do hereby consent in writing to and adopt the following resolutions:

 

WHEREAS, the Board of Directors of the Corporation has determined that it is in the best interests of the Corporation to adopt the Corporation’s 2018 Stock Incentive Plan (the “Plan”).

 

RESOLVED, that the Plan in the form attached hereto as Exhibit A be, and hereby is, approved; and

 

RESOLVED FURTHER, that the officers of the Corporation be, and hereby are, authorized, empowered and directed to file an Information Statement on Schedule 14C, in the form annexed hereto, with the Securities and Exchange Commission and to effectuate the mailing of such Information Statement on Schedule 14C to the holders of record of the shares of the Corporation’s common stock as set forth in the Schedule 14C; and

 

RESOLVED FURTHER, that April 27, 2018 or such later date as may be selected by the appropriate officers of the Corporation be, and hereby is, approved and ratified as the record date for shareholders entitled to vote and receive the 14C.

 

This Unanimous Written Consent may be executed in any number of counterparts, each of which together shall be deemed to be an original and all of which together shall constitute one and the same consent. This consent is being signed as of April 27, 2018.

 

    /s/ Gaston Pereira
   

Gaston Pereira

2,880,000 (3.49%)

     
    /s/ Andrey Novikov
   

Andrey Novikov

1,440,000 (1.75%)

     
    /s/ Olga Akhmetova
   

Olga Akhmetova

3,889,448 (4.71%)

     
    /s/ Sergey Rumyantsev
   

Sergey Rumyantsev

2,010,984 (2.44%)

     
    /s/ Evgeny Simonov
   

Evgeny Simonov

2,200,000 (2.67%)

     
    /s/ Vladimir Skiguine
   

Vladimir Skiguine

7,463,869 (9.04%)

     
    /s/ Viktoriia Akhmetova
   

Viktoriia Akhmetova

3,750,805 (4.55%)

 

 16 

 

 

  /s/ Joshua Lushtak
 

Joshua Lushtak

1,667,150 (2.02%)

 

  PANATRADE BUSINESS LIMITED
   
  By: /s/ Victor Amirov
  Name: Victor Amirov
  Title: Power of Attorney
  3,507,540 (4.25%)

 

  DELINVEST COMMERCIAL LIMITED
   
  By: /s/ Alex Motorin
  Name: Alex Motorin
Title: President
3,889,448 (4.71%)

 

  STRATEGIC IR, INC.
   
  By: /s/ Anna Mosk
  Name: Anna Mosk
Title: President
4,954,333 (6.00%)

 

  BEVERLY PACIFIC HOLDING INC.
   
  By: /s/Oksana Borzina
  Name: Oksana Borzina
Title: President
4,120,929 (4.99%)

 

 17 

 

 

Exhibit B

 

QPAGOS

 

2018 Stock Incentive Plan 

 

  1. Establishment and Purpose.

 

The purpose of the QPAGOS 2018 Stock Incentive Plan (the “Plan”) is to promote the interests of the Company and the stockholders of the Company by providing directors, officers, employees and consultants of the Company with appropriate incentives and rewards to encourage them to enter into and continue in the employ or service of the Company, to acquire a proprietary interest in the long-term success of the Company and to reward the performance of individuals in fulfilling long-term corporate objectives.

 

  2. Administration of the Plan.

 

The Plan shall be administered by the Board of Directors or a Committee appointed by the Board of Directors (the “Plan Administrator”). The Plan Administrator shall have the authority, in its sole discretion, subject to and not inconsistent with the express terms and provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to grant Awards; to determine the persons to whom and the time or times at which Awards shall be granted; to determine the type and number of Awards to be granted (including whether an Option granted is an Incentive Stock Option or a Nonqualified Stock Option); to determine the number of shares of stock to which an Award may relate and the terms, conditions, restrictions and performance criteria, if any, relating to any Award; to determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged or surrendered; to make adjustments in the performance goals that may be required for any award in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company (to the extent not inconsistent with Section 162(m) of the Code, if applicable), or in response to changes in applicable laws, regulations, or accounting principles; to construe and interpret the Plan and any Award; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of Agreements; and to make all other determinations deemed necessary or advisable for the administration of the Plan.

 

The Plan Administrator may, in its absolute discretion, without amendment to the Plan, (a) accelerate the date on which any Option granted under the Plan becomes exercisable, waive or amend the operation of Plan provisions respecting exercise after termination of employment or otherwise adjust any of the terms of such Option, and (b) accelerate the vesting date, or waive any condition imposed hereunder, with respect to any share of Restricted Stock, or other Award or otherwise adjust any of the terms applicable to any such Award. Notwithstanding the foregoing, and subject to Sections 4(c) and 4(d), neither the Board of Directors, the Plan Administrator nor their respective delegates shall have the authority to re-price (or cancel and/or re-grant) any Option, Stock Appreciation Right or, if applicable, other Award at a lower exercise, base or purchase price without first obtaining the approval of our stockholders.

 

Subject to Section 162(m) of the Code and except as required by Rule 16b-3 with respect to grants of Awards to individuals who are subject to Section 16 of the Exchange Act, or as otherwise required for compliance with Rule 16b-3 or other applicable law, the Plan Administrator may delegate all or any part of its authority under the Plan to an employee, employees or committee of employees.

 

Subject to Section 162(m) of the Code and Section 16 of the Exchange Act, to the extent the Plan Administrator deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purpose of the Plan, the Plan Administrator may, without amending this Plan, establish special rules applicable to Awards granted to Participants who are foreign nationals, are employed outside the United States, or both, including rules that differ from those set forth in the Plan, and grant Awards to such Participants in accordance with those rules.

 

All decisions, determinations and interpretations of the Plan Administrator (or the Board of Directors if the Plan Administrator is a Committee of the Board) shall be final and binding on all persons with any interest in an Award, including the Company and the Participant (or any person claiming any rights under the Plan from or through any Participant). No member of the Plan Administrator or the Board of Directors shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award.

 

Notwithstanding anything to the contrary set forth hereinabove, the full extent of the rights and powers of the Plan Administrator shall be set forth herein or if the Plan Administrator is a Committee of the Board, shall be exclusively determined by the Charter established by the Board of Directors for such Committee. As such, to the extent the Charter may require the Committee to seek the approval of the Board of Directors related to any Awards granted hereunder, the Committee shall seek such Board of Directors approval as a condition for any actions to be taken by it.

 

 18 

 

 

 

  3. Definitions.

 

  (a) “Agreement” shall mean the written agreement between the Company and a Participant evidencing an Award.

 

  (b) “Annual Incentive Award” shall mean an Award described in Section 6(g) hereof that is based upon a period of one year or less.

 

  (c) “Award” shall mean any Option, Restricted Stock, Restricted Stock Unit, Stock Bonus award, Stock Appreciation Right, Performance Award, Other Stock-Based Award or Other Cash-Based Award granted pursuant to the terms of the Plan.

 

  (d) “Board of Directors” shall mean the Board of Directors of the Company.

 

  (e) “Cause” shall mean a termination of a Participant’s employment by the Company or any of its Subsidiaries due to (i) the continued failure, after written notice, by such Participant substantially to perform his or her duties with the Company or any of its Subsidiaries (other than any such failure resulting from incapacity due to reasonably documented physical illness or injury or mental illness), (ii) the engagement by such Participant in serious misconduct that causes, or in the good faith judgment of the Board of Directors may cause, harm (financial or otherwise) to the Company or any of its Subsidiaries including, without limitation, the disclosure of material secret or confidential information of the Company or any of its Subsidiaries, or (iii) the material breach by the Participant of any agreement between such Participant, on the one hand, and the Company, on the other hand. Notwithstanding the above, with respect to any Participant who is a party to an employment agreement with the Company, Cause shall have the meaning set forth in such employment agreement.

 

  (f) A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

 

(i)               any Person is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company) representing 30% or more of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (A) of paragraph (iii) below; or

 

(ii)              the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date, constitute the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least a two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

 

(iii)             there is consummated a merger or consolidation of the Company with any other corporation other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a re-capitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company) representing 30% or more of the combined voting power of the Company’s then outstanding securities; or

 

(iv)             the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

  (g) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. References in the Plan to specific sections of the Code shall be deemed to include any successor provisions thereto.

 

 19 

 

 

  (h) “Committee” shall mean, at the discretion of the Board of Directors, a Committee of the Board of Directors, which shall consist of two or more persons, each of whom, unless otherwise determined by the Board of Directors, is an “outside director” within the meaning of Section 162(m) of the Code and a “nonemployee director” within the meaning of Rule 16b-3.

 

  (i) “Company” shall mean QPAGOS, a Delaware corporation, and, where appropriate, each of its Subsidiaries.

 

  (j) “Company Stock” shall mean the common stock of the Company, par value $0.001 per share.

 

  (k) “Disability” shall mean permanent disability as determined pursuant to the Company’s long-term disability plan or policy, in effect at the time of such disability.

 

  (l) “Effective Date” shall mean the date as of which this Plan is adopted by the Board of Directors.

 

  (m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

  (n) The “Fair Market Value” of a share of Company Stock, as of a date of determination, shall mean (1) the closing sales price per share of Company Stock on the national securities exchange on which such stock is principally traded on the date of the grant of such Award, or (2) if the shares of Company Stock are not listed or admitted to trading on any such exchange and if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Plan Administrator deems reliable, or (3) if the shares of Company Stock are not then listed on a national securities exchange or traded in an over-the-counter market or the value of such shares is not otherwise determinable, such value as determined by the Plan Administrator in good faith upon the advice of a qualified valuation expert. In no event shall the fair market value of any share of Company Stock, the Option exercise price of any Option, the appreciation base per share of Company Stock under any Stock Appreciation Right, or the amount payable per share of Company Stock under any other Award, be less than the par value per share of Company Stock.

 

  (o) “Incentive Stock Option” shall mean an Option that is an “incentive stock option” within the meaning of Section 422 of the Code, or any successor provision, and that is designated by the Plan Administrator as an Incentive Stock Option.

 

  (p) “Long Term Incentive Award” shall mean an Award described in Section 6(g) hereof that is based upon a period in excess of one year.

 

  (q) “Nonemployee Director” shall mean a member of the Board of Directors who is not an employee of the Company.

 

  (r) “Nonqualified Stock Option” shall mean an Option other than an Incentive Stock Option.

 

  (s) “Option” shall mean an option to purchase shares of Company Stock granted pursuant to Section 6(b).

 

  (t) “Other Cash-Based Award” shall mean a right or other interest granted to a Participant pursuant to Section 6(g) hereof other than an Other Stock-Based Award.

 

  (u)

“Other Stock-Based Award” shall mean a right or other interest granted to a Participant, valued in whole or in part by reference to, or otherwise based on, or related to, Company Stock pursuant to Section 6(g) hereof, including but not limited to (i) unrestricted Company Stock awarded as a bonus or upon the attainment of performance goals or otherwise as permitted under the Plan, and (ii) a right granted to a Participant to acquire Company Stock from the Company containing terms and conditions prescribed by the Plan Administrator. 

 

  (v) “Participant” shall mean an employee, consultant or director of the Company to whom an Award is granted pursuant to the Plan, and, upon the death of the employee, consultant or director, his or her successors, heirs, executors and administrators, as the case may be.

 

  (w) “Performance Award” shall mean an Award granted to a Participant pursuant to Section 6(f) hereof.

 

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  (x) “Person” shall have the meaning set forth in Section 3(a)(9) of the Exchange Act, except that such term shall not include (1) the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, or (4) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

  (y) “Restricted Stock” shall mean a share of Company Stock which is granted pursuant to the terms of Section 6(e) hereof.

 

  (z) “Retirement” shall mean, in the case of employees, the termination of employment with the Company (other than for Cause) during or after the calendar year in which a Participant has or will reach (i) age 55 with ten years of service with the Company, or (ii) age 60 with five years of service with the Company. “Retirement” shall mean, in the case of directors, the termination of service with the Company (other than for Cause) during or after the calendar year in which a Participant has or will reach age 75 with five years of service with the Company.

 

  (aa) “Rule 16b-3” shall mean the Rule 16b-3 promulgated under the Exchange Act, as amended from time to time.

 

  (bb) “Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

 

  (cc) “Stock Appreciation Right” shall mean the right, granted to a Participant under Section 6(d), to be paid an amount measured by the appreciation in the Fair Market Value of a share of Company Stock from the date of grant to the date of exercise of the right, with payment to be made in cash and/or a share of Company Stock, as specified in the Award or determined by the Plan Administrator.

 

  (dd) “Stock Bonus” shall mean a bonus payable in shares of Company Stock granted pursuant to Section 6(e) hereof.

 

  (ee) “Subsidiary” shall mean a “subsidiary corporation” within the meaning of Section 424(f) of the Code.

 

4.                 Stock Subject to the Plan.

 

(a)                Shares Available for Awards. The maximum number of shares of Company Stock reserved for issuance under the Plan (all of which may be granted as Incentive Stock Options) shall be Eight Million (8,000,000) shares. Shares reserved under the Plan may be authorized but unissued Company Stock or authorized and issued Company Stock held in the Company’s treasury. The Plan Administrator may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares pursuant to the Plan.

 

(b)                Individual Limitation. To the extent required by Section 162(m) of the Code, the total number of shares of Company Stock subject to Awards awarded to any one Participant during any tax year of the Company, shall not exceed One Million (1,000,000) shares (subject to adjustment as provided herein).

 

(c)                Adjustment for Change in Capitalization. In the event that the Plan Administrator shall determine that any dividend or other distribution (whether in the form of cash, Company Stock, or other property), recapitalization, Company Stock split, reverse Company Stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, makes an adjustment appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Plan Administrator shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all of (1) the number and kind of shares of Company Stock which may thereafter be issued in connection with Awards, (2) the number and kind of shares of Company Stock, securities or other property (including cash) issued or issuable in respect of outstanding Awards, (3) the exercise price, grant price or purchase price relating to any Award, and (4) the maximum number of shares subject to Awards which may be awarded to any employee during any tax year of the Company; provided that, with respect to Incentive Stock Options, any such adjustment shall be made in accordance with Section 424 of the Code; and provided further that, no such adjustment shall cause any Award hereunder which is or could be subject to Section 409A of the Code to fail to comply with the requirements of such section.

 

(d)                Reuse of Shares. Except as set forth below, if any shares subject to an Award are forfeited, cancelled, exchanged or surrendered, or if an Award terminates or expires without a distribution of shares to the Participant, the shares of stock with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, withholding, termination or expiration, again be available for Awards under the Plan. Notwithstanding the foregoing, upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of shares of Company Stock as to which the Award is exercised and such number of shares shall no longer be available for Awards under the Plan. In addition, notwithstanding the forgoing, the shares of stock surrendered or withheld as payment of either the exercise price of an Option (including shares of stock otherwise underlying an Award of a Stock Appreciation Right that are retained by the Company to account for the appreciation base of such Stock Appreciation Right) and/or withholding taxes in respect of an Award shall no longer be available for Awards under the Plan.

 

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5.                 Eligibility.

 

The persons who shall be eligible to receive Awards pursuant to the Plan shall be the individuals the Plan Administrator shall select from time to time, who are employees (including officers of the Company and its Subsidiaries, whether or not they are directors of the Company or its Subsidiaries), Nonemployee Directors, and consultants of the Company and its Subsidiaries; provided, that Incentive Stock Options shall be granted only to employees (including officers and directors who are also employees) of the Company or its Subsidiaries.

 

6.                 Awards Under the Plan.

 

(a)                Agreement. The Plan Administrator may grant Awards in such amounts and with such terms and conditions as the Plan Administrator shall determine in its sole discretion, subject to the terms and provisions of the Plan. Each Award granted under the Plan (except an unconditional Stock Bonus) shall be evidenced by an Agreement as the Plan Administrator may in its sole discretion deem necessary or desirable and unless the Plan Administrator determines otherwise, such Agreement must be signed, acknowledged and returned by the Participant to the Company. Unless the Plan Administrator determines otherwise, any failure by the Participant to sign and return the Agreement within such period of time following the granting of the Award as the Plan Administrator shall prescribe shall cause such Award to the Participant to be null and void. By accepting an Award or other benefits under the Plan (including participation in the Plan), each Participant, shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, all provisions of the Plan and the Agreement.

 

(b)                Stock Options.

 

(i)                Grant of Stock Options. The Plan Administrator may grant Options under the Plan to purchase shares of Company Stock in such amounts and subject to such terms and conditions as the Plan Administrator shall from time to time determine in its sole discretion, subject to the terms and provisions of the Plan. The exercise price of the share purchasable under an Option shall be determined by the Plan Administrator, but in no event shall the exercise price be less than the Fair Market Value per share on the grant date of such Option. The date as of which the Plan Administrator adopts a resolution granting an Option shall be considered the day on which such Option is granted unless such resolution specifies a later date.

 

(ii)               Identification. Each Option shall be clearly identified in the applicable Agreement as either an Incentive Stock Option or a Nonqualified Stock Option and shall state the number of shares of Company Stock to which the Option (and/or each type of Option) relates.

 

(c)                Special Requirements for Incentive Stock Options.

 

(i)                To the extent that the aggregate Fair Market Value of shares of Company Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of the Company shall exceed $100,000, such Options shall be treated as Nonqualified Stock Options. Such Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted.

 

(ii)                No Incentive Stock Option may be granted to an individual if, at the time of the proposed grant, such individual owns (or is deemed to own under the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company unless (A) the exercise price of such Incentive Stock Option is at least 110% of the Fair Market Value of a share of Company Stock at the time such Incentive Stock Option is granted and (B) such Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted.

 

(d)                Stock Appreciation Rights.

 

(i)                The Plan Administrator may grant a related Stock Appreciation Right in connection with all or any part of an Option granted under the Plan, either at the time such Option is granted or at any time thereafter prior to the exercise, termination or cancellation of such Option, and subject to such terms and conditions as the Plan Administrator shall from time to time determine in its sole discretion, consistent with the terms and provisions of the Plan, provided, however, that in no event shall the appreciation base of the shares of Company Stock subject to the Stock Appreciation Right be less than the Fair Market Value per share on the grant date of such Stock Appreciation Right. The holder of a related Stock Appreciation Right shall, subject to the terms and conditions of the Plan and the applicable Agreement, have the right by exercise thereof to surrender to the Company for cancellation all or a portion of such related Stock Appreciation Right, but only to the extent that the related Option is then exercisable, and to be paid therefor an amount equal to the excess (if any) of (i) the aggregate Fair Market Value of the shares of Company Stock subject to the related Stock Appreciation Right or portion thereof surrendered (determined as of the exercise date), over (ii) the aggregate appreciation base of the shares of Company Stock subject to the Stock Appreciation Right or portion thereof surrendered. Upon any exercise of a related Stock Appreciation Right or any portion thereof, the number of shares of Company Stock subject to the related Option shall be reduced by the number of shares of Company Stock in respect of which such Stock Appreciation Right shall have been exercised.

 

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(ii)                The Plan Administrator may grant unrelated Stock Appreciation Rights in such amount and subject to such terms and conditions, as the Plan Administrator shall from time to time determine in its sole discretion, subject to the terms and provisions of the Plan, provided, however, that in no event shall the appreciation base of the shares of Company Stock subject to the Stock Appreciation Right be less than the Fair Market Value per share on the grant date of such Stock Appreciation Right. The holder of an unrelated Stock Appreciation Right shall, subject to the terms and conditions of the Plan and the applicable Agreement, have the right to surrender to the Company for cancellation all or a portion of such Stock Appreciation Right, but only to the extent that such Stock Appreciation Right is then exercisable, and to be paid therefor an amount equal to the excess (if any) of (x) the aggregate Fair Market Value of the shares of Company Stock subject to the Stock Appreciation Right or portion thereof surrendered (determined as of the exercise date), over (y) the aggregate appreciation base of the shares of Company Stock subject to the Stock Appreciation Right or portion thereof surrendered.

 

(iii)                The grant or exercisability of any Stock Appreciation Right shall be subject to such conditions as the Plan Administrator, in its sole discretion, shall determine.

 

(e)                Restricted Stock and Stock Bonus.

 

(i)                The Plan Administrator may grant Restricted Stock awards, alone or in tandem with other Awards under the Plan, subject to such restrictions, terms and conditions, as the Plan Administrator shall determine in its sole discretion and as shall be evidenced by the applicable Agreements. The vesting of a Restricted Stock award granted under the Plan may be conditioned upon the completion of a specified period of employment or service with the Company or any Subsidiary, upon the attainment of specified performance goals, and/or upon such other criteria as the Plan Administrator may determine in its sole discretion.

 

(ii)                Each Agreement with respect to a Restricted Stock award shall set forth the amount (if any) to be paid by the Participant with respect to such Award and when and under what circumstances such payment is required to be made.

 

(iii)                The Plan Administrator may, upon such terms and conditions as the Plan Administrator determines in its sole discretion, provide that a certificate or certificates representing the shares underlying a Restricted Stock award shall be registered in the Participant’s name and bear an appropriate legend specifying that such shares are not transferable and are subject to the provisions of the Plan and the restrictions, terms and conditions set forth in the applicable Agreement, or that such certificate or certificates shall be held in escrow by the Company on behalf of the Participant until such shares become vested or are forfeited. Except as provided in the applicable Agreement, no shares underlying a Restricted Stock award may be assigned, transferred, or otherwise encumbered or disposed of by the Participant until such shares have vested in accordance with the terms of such Award.

 

(iv)                If and to the extent that the applicable Agreement may so provide, a Participant shall have the right to vote and receive dividends on the shares underlying a Restricted Stock award granted under the Plan. Unless otherwise provided in the applicable Agreement, any stock received as a dividend on or in connection with a stock split of the shares underlying a Restricted Stock award shall be subject to the same restrictions as the shares underlying such Restricted Stock award.

 

(v)                The Plan Administrator may grant Stock Bonus awards, alone or in tandem with other Awards under the Plan, subject to such terms and conditions as the Plan Administrator shall determine in its sole discretion and as may be evidenced by the applicable Agreement.

 

(f)                Performance Awards.

 

(i)                The Plan Administrator may grant Performance Awards, alone or in tandem with other Awards under the Plan, to acquire shares of Company Stock in such amounts and subject to such terms and conditions as the Plan Administrator shall from time to time in its sole discretion determine, subject to the terms of the Plan. To the extent necessary to satisfy the short-term deferral exception to Section 409A of the Code, unless the Plan Administrator shall determine otherwise, the Performance Awards shall provide that payment shall be made within 2 1/2 months after the end of the year in which the Participant has a legally binding vested right to such award.

 

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(ii)                In the event that the Plan Administrator grants a Performance Award or other Award (other than Nonqualified Stock Option or Incentive Stock Option or a Stock Appreciation Right) that is intended to constitute qualified performance-based compensation within the meaning Section 162(m) of the Code, the following rules shall apply (as such rules may be modified by the Plan Administrator to conform with Section 162(m) of the Code and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions thereto): (a) payments under the Performance Award shall be made solely on account of the attainment of one or more objective performance goals established in writing by the Plan Administrator not later than 90 days after the commencement of the period of service to which the Performance Award relates (but in no event after 25% of the period of service has elapsed); (b) the performance goal(s) to which the Performance Award relates shall be based on one or more of the following business criteria applied to the Participant and/or a business unit or the Company and/or a Subsidiary: (1) business development progress, (2) sales, (3) sales growth, (4) earnings growth, (5) cash flow or cash position, (6) gross margins, (7) stock price, (8) financings (issuance of debt or equity), (9) market share, (10) total stockholder return, (11) net revenues, (12) earnings per share of Company Stock; (13) net income (before or after taxes), (14) return on assets, (15) return on sales, (16) equity or investment, (17) improvement of financial ratings, (18) achievement of balance sheet or income statement objectives, (19) total stockholder return, (20) earnings from continuing operations; levels of expense, cost or liability, (21) earnings before all or any interest, taxes, depreciation and/or amortization (“EBIT”, “EBITA” or “EBITDA”), (22) cost reduction goals, (23) business development goals (including without limitation product launches and other business development-related opportunities), (24) identification or consummation of investment opportunities or completion of specified projects in accordance with corporate business plans, including strategic mergers, acquisitions or divestitures, (25) meeting specified market penetration or value added goals, (26) any combination of, or a specified increase or decrease of one or more of the foregoing over a specified period, and (27) such other criteria as the stockholders of the Company may approve; in each case as applicable, as determined in accordance with generally accepted accounting principles; and (c) once granted, the Plan Administrator may not have discretion to increase the amount payable under such Award, provided, however, that whether or not an Award is intended to constitute qualified performance-based compensation within the meaning of Section 162(m) of the Code, the Plan Administrator, to the extent provided by the Plan Administrator at the time the Award is granted or as otherwise permitted under Section 162(m) of the Code, shall have the authority to make appropriate adjustments in performance goals under an Award to reflect the impact of extraordinary items not reflected in such goals. For purposes of the Plan, extraordinary items shall be defined as (1) any profit or loss attributable to acquisitions or dispositions of stock or assets, (2) any changes in accounting standards that may be required or permitted by the Financial Accounting Standards Board or adopted by the Company after the goal is established, (3) all items of gain, loss or expense for the year related to restructuring charges for the Company, (4) all items of gain, loss or expense for the year determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business, (5) all items of gain, loss or expense for the year related to discontinued operations that do not qualify as a segment of a business as defined in APB Opinion No. 30, and (6) such other items as may be prescribed by Section 162(m) of the Code and the Treasury Regulations thereunder as may be in effect from time to time, and any amendments, revisions or successor provisions and any changes thereto. The Plan Administrator shall, prior to making payment under any award under this Section 6(f), certify in writing that all applicable performance goals have been attained. Notwithstanding anything to the contrary contained in the Plan or in any applicable Agreement, no dividends or dividend equivalents will be paid with respect to unvested Performance Awards.

 

  (g) Other Stock-Based Award; Cash-Based Award; Restricted Stock Units.

 

(i)Other Stock-Based Awards; Cash-Based Awards. The Plan Administrator is authorized to grant Awards to Participants in the form of Other Stock-Based Awards or Other Cash-Based Awards, as deemed by the Plan Administrator to be consistent with the purposes of the Plan. To the extent necessary to satisfy the short-term deferral exception to Section 409A of the Code, unless the Plan Administrator shall determine otherwise, the awards shall provide that payment shall be made within 2½ months after the end of the year in which the Participant has a legally binding vested right to such award. With respect to Other Cash-Based Awards intended to qualify as performance based compensation under Section 162(m) of the Code, (i) the maximum value of the aggregate payment that any Participant may receive with respect to any such Other Cash-Based Award shall be in such amounts and subject to such terms and conditions as the Board of Directors or the Plan Administrator shall determine; (ii) the maximum value of the aggregate payment that any Participant may receive with respect to any such Other Cash-Based Award that is a Long-Term Incentive Award is the highest amount paid pursuant to clause (i) above multiplied by a fraction, the numerator of which is the number of months in the performance period and the denominator of which is twelve, and (iii) such additional rules set forth in Section 6(f) applicable to Awards intended to qualify as performance-based compensation under Section 162(m) shall apply. The Plan Administrator may establish such other rules applicable to the Other Stock-Based Awards or Cash-Based Awards to the extent not inconsistent with Section 162(m) of the Code.

 

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(ii) Grant of Restricted Stock Units. A restricted stock unit (“Restricted Stock Unit”) represents the right to receive from the Company on the respective scheduled vesting or payment date for such Restricted Stock Unit, one share of Common Stock, or in the Plan Administrator’s discretion, the payment of cash for each unit in an amount equal to the price of one share of Common Stock. An Award of a Restricted Stock Unit may be subject to the attainment of specified performance goals or targets, forfeitability provisions and such other terms and conditions as the Plan Administrator may determine, subject to the provisions of this Plan. At the time an Award of Restricted Stock Units is made, the Plan Administrator shall establish a period of time during which the restricted stock units shall vest and the timing for settlement of the Restricted Stock Unit, which shall be set forth in the applicable Restricted Stock Unit award agreement.

 

(iii) Dividend Equivalent Accounts–Restricted Stock Units. Subject to the terms and conditions of this Plan and the applicable Restricted Stock Unit award agreement, as well as any procedures established by the Plan Administrator, prior to the expiration of the applicable vesting period of an Restricted Stock Unit, the Plan Administrator may determine to pay dividend equivalent rights with respect to Restricted Stock Units, in which case, the Company shall establish an account for the participant and reflect in that account any securities, cash or other property comprising any dividend or property distribution with respect to the shares of Common Stock underlying each Restricted Stock Unit. Each amount or other property credited to any such account shall be subject to the same vesting conditions as the Restricted Stock Unit to which it relates. The participant shall have the right to be paid the amounts or other property credited to such account upon vesting of the subject Restricted Stock Unit.

 

(iv) Rights as a Stockholder–Restricted Stock Units. Subject to the restrictions imposed under the terms and conditions of this Plan and the applicable Restricted Stock Unit award agreement, each participant receiving Restricted Stock Units shall have no rights as a stockholder with respect to such Restricted Stock Units until such time as shares of Common Stock are issued to the participant. 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. Except as otherwise provided in the applicable award agreement, shares of Common Stock issuable under an Restricted Stock Unit shall be treated as issued on the first date that the holder of the Restricted Stock Unit is no longer subject to a substantial risk of forfeiture as determined for purposes of Section 409A of the Code, and the holder shall be the owner of such shares of Common Stock on such date. An award agreement may provide that issuance of shares of Common Stock under an Restricted Stock Unit may be deferred beyond the first date that the Restricted Stock Unit is no longer subject to a substantial risk of forfeiture, provided that such deferral is structured in a manner that is intended to comply with the requirements of Section 409A of the Code. 

 

(h)                Exercisability of Awards; Cancellation of Awards in Certain Cases.

 

(i)                Except as hereinafter provided, each Agreement with respect to an Option or Stock Appreciation Right shall set forth the period during which and the conditions subject to which the Option or Stock Appreciation Right evidenced thereby shall be exercisable, and each Agreement with respect to a Restricted Stock award, Stock Bonus award, Performance Award or other Award shall set forth the period after which and the conditions subject to which amounts underlying such Award shall vest or be deliverable, all such periods and conditions to be determined by the Plan Administrator in its sole discretion.

 

(ii)              Except as provided in Section 7(d) hereof, no Option or Stock Appreciation Right may be exercised and no shares of Company Stock underlying any other Award under the Plan may vest or become deliverable more than ten years after the date of grant (the “Stated Expiration Date”).

 

(iii)              Except as provided in Section 7 hereof, no Option or Stock Appreciation Right may be exercised and no shares of common stock underlying any other Award under the Plan may vest or become deliverable unless the Participant is at such time in the employ (for Participants who are employees) or service (for Participants who are Nonemployee Directors or consultants) of the Company or a Subsidiary (or a company, or a parent or subsidiary company of such company, issuing or assuming the relevant right or award in a Change in Control) and has remained continuously so employed or in service since the relevant date of grant of the Award.

 

(iv)             An Option or Stock Appreciation Right shall be exercisable by the filing of a written notice of exercise or a notice of exercise in such other manner with the Company, on such form and in such manner as the Plan Administrator shall in its sole discretion prescribe, and by payment in accordance with Section 6(i) hereof.

 

(v)              Unless the applicable Agreement provides otherwise, the “Option exercise date” and the “Stock Appreciation Right exercise date” shall be the date that the written notice of exercise, together with payment, are received by the Company.

 

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(i)                Payment of Award Price.

 

(i)                Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion otherwise determines, any written notice of exercise of an Option or Stock Appreciation Right must be accompanied by payment of the full Option or Stock Appreciation Right exercise price.

 

(ii)                Payment of the Option exercise price and of any other payment required by the Agreement to be made pursuant to any other Award shall be made in any combination of the following: (a) by certified or official bank check payable to the Company (or the equivalent thereof acceptable to the Plan Administrator), (b) with the consent of the Plan Administrator in its sole discretion, by personal check (subject to collection) which may in the Plan Administrator’s discretion be deemed conditional, (c) unless otherwise provided in the applicable Agreement, and as permitted by the Plan Administrator, by delivery of previously-acquired shares of common stock owned by the Participant having a Fair Market Value (determined as of the Option exercise date, in the case of Options, or other relevant payment date as determined by the Plan Administrator, in the case of other Awards) equal to the portion of the exercise price being paid thereby; and/or (d) unless otherwise provided in applicable agreement, and as permitted by the Plan Administrator, on a net-settlement basis with the Company withholding the amount of common stock sufficient to cover the exercise price and tax withholding obligation. Payment in accordance with clause (a) of this Section 6(i)(ii) may be deemed to be satisfied, if and to the extent that the applicable Agreement so provides or the Plan Administrator permits, by delivery to the Company of an assignment of a sufficient amount of the proceeds from the sale of Company Stock to be acquired pursuant to the Award to pay for all of the Company Stock to be acquired pursuant to the Award and an authorization to the broker or selling agent to pay that amount to the Company and to effect such sale at the time of exercise or other delivery of shares of Company Stock.

 

7.                Termination of Employment.

 

(a)                Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion determines otherwise, upon termination of a Participant’s employment or service with the Company and its Subsidiaries by the Company or its Subsidiary for Cause (or in the case of a Nonemployee Director upon such Nonemployee Director’s failure to be renominated as Nonemployee Director of the Company), the portions of outstanding Options and Stock Appreciation Rights granted to such Participant that are exercisable as of the date of such termination of employment or service shall remain exercisable, and any payment or notice provided for under the terms of any other outstanding Award as respects the portion thereof that is vested as of the date of such termination of employment or service, may be given, for a period of thirty (30) days from and including the date of termination of employment or service (and shall thereafter terminate). All portions of outstanding Options or Stock Appreciation Rights granted to such Participant which are not exercisable as of the date of such termination of employment or service, and any other outstanding Award which is not vested as of the date of such termination of employment or service shall terminate upon the date of such termination of employment or service.

 

(b)                Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion determines otherwise, upon termination of the Participant’s employment or service with the Company and its Subsidiaries for any reason other than as described in subsection (a), (c), (d) or (e) hereof, the portions of outstanding Options and Stock Appreciation Rights granted to such Participant that are exercisable as of the date of such termination of employment or service shall remain exercisable for a period of ninety (90) days (and shall terminate thereafter), and any payment or notice provided for under the terms of any other outstanding Award as respects the portion thereof vested as of the date of termination of employment or service may be given, for a period of ninety (90) days from and including the date of termination of employment or service (and shall terminate thereafter). All additional portions of outstanding Options or Stock Appreciation Rights granted to such Participant which are not exercisable as of the date of such termination of employment or service, and any other outstanding Award which is not vested as of the date of such termination of employment or service shall terminate upon the date of such termination of employment or service.

 

(c)                Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion determines otherwise, if the Participant voluntarily Retires with the consent of the Company or the Participant’s employment or service terminates due to Disability, all outstanding Options, Stock Appreciation Rights and all other outstanding Awards (except, in the event a Participant voluntarily Retires, with respect to Awards (other than Options and Stock Appreciation Rights) intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code) granted to such Participant shall continue to vest in accordance with the terms of the applicable Agreements. The Participant shall be entitled to exercise each such Option or Stock Appreciation Right and to make any payment, give any notice or to satisfy other condition under each such other Award, in each case, for a period of six months from and including the later of (i) date such entire Award becomes vested or exercisable in accordance with the terms of such Award and (ii) the date of Retirement, and thereafter such Awards or parts thereof shall be canceled. Notwithstanding the foregoing, the Plan Administrator may in its sole discretion provide for a longer or shorter period for exercise of an Option or Stock Appreciation Right or may permit a Participant to continue vesting under an Option, Stock Appreciation Right or Restricted Stock award or to make any payment, give any notice or to satisfy other condition under any other Award. The Plan Administrator may in its sole discretion, and in accordance with Section 409A of the Code, determine (i) for purposes of the Plan, whether any termination of employment or service is a voluntary Retirement with the Company’s consent or is due to Disability for purposes of the Plan, (ii) whether any leave of absence (including any short-term or long-term Disability or medical leave) constitutes a termination of employment or service, or a failure to have remained continuously employed or in service, for purposes of the Plan (regardless of whether such leave or status would constitute such a termination or failure for purposes of employment law), (iii) the applicable date of any such termination of employment or service, and (iv) the impact, if any, of any of the foregoing on Awards under the Plan.

 

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(d)                Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion determines otherwise, if the Participant’s employment or service terminates by reason of death, or if the Participant’s employment or service terminates under circumstances providing for continued rights under subsection (b), (c) or (e) of this Section 7 and during the period of continued rights described in subsection (b), (c) or (e) the Participant dies, all outstanding Options, Restricted Stock and Stock Appreciation Rights granted to such Participant shall vest and become fully exercisable, and any payment or notice provided for under the terms of any other outstanding Award may be immediately paid or given and any condition may be satisfied, by the person to whom such rights have passed under the Participant’s will (or if applicable, pursuant to the laws of descent and distribution) for a period of one year from and including the date of the Participant’s death and thereafter all such Awards or parts thereof shall be canceled.

 

(e)                Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion determines otherwise, upon termination of a Participant’s employment or service with the Company and its Subsidiaries (i) by the Company or its Subsidiaries without Cause (including, in case of a Nonemployee Director, the failure to be elected as a Nonemployee Director) or (ii) by the Participant for “good reason” or any like term as defined under any employment agreement with the Company or a Subsidiary to which a Participant may be a party to, the portions of outstanding Options and Stock Appreciation Rights granted to such Participant which are exercisable as of the date of termination of employment or service of such Participant shall remain exercisable, and any payment or notice provided for under the terms of any other outstanding Award as respects the portion thereof vested as of the date of termination of employment or service may be given, for a period of three (3) months from and including the date of termination of employment or service and shall terminate thereafter. Unless the applicable Agreement provides otherwise or the Plan Administrator in its sole discretion determines otherwise, any other outstanding Award shall terminate as of the date of such termination of employment or service.

 

(f)                Notwithstanding anything in this Section 7 to the contrary, no Option or Stock Appreciation Right may be exercised and no shares of Company Stock underlying any other Award under the Plan may vest or become deliverable past the Stated Expiration Date.

 

8.                Effect of Change in Control.

 

Unless otherwise determined in an Award Agreement, in the event of a Change in Control:

 

(a)                With respect to each outstanding Award that is assumed or substituted in connection with a Change in Control, in the event of a termination of a Participant’s employment or service by the Company without Cause during the 24-month period following such Change in Control, on the date of such termination (i) such Award shall become fully vested and, if applicable, exercisable, (ii) the restrictions, payment conditions, and forfeiture conditions applicable to any such Award granted shall lapse, and (iii) any performance conditions imposed with respect to Awards shall be deemed to be fully achieved at target levels.

 

(b)                With respect to each outstanding Award that is not assumed or substituted in connection with a Change in Control, immediately upon the occurrence of the Change in Control, (i) such Award shall become fully vested and, if applicable, exercisable, (ii) the restrictions, payment conditions, and forfeiture conditions applicable to any such Award granted shall lapse, and (iii) any performance conditions imposed with respect to Awards shall be deemed to be fully achieved at target levels.

 

(c)                For purposes of this Section 8, an Award shall be considered assumed or substituted for if, following the Change in Control, the Award remains subject to the same terms and conditions that were applicable to the Award immediately prior to the Change in Control except that, if the Award related to Shares, the Award instead confers the right to receive common stock of the acquiring entity.

 

(d)                Notwithstanding any other provision of the Plan: (i) in the event of a Change in Control, except as would otherwise result in adverse tax consequences under Section 409A of the Code, the Board may, in its sole discretion, provide that each Award shall, immediately upon the occurrence of a Change in Control, be cancelled in exchange for a payment in cash or securities in an amount equal to (x) the excess of the consideration paid per Share in the Change in Control over the exercise or purchase price (if any) per Share subject to the Award multiplied by (y) the number of Shares granted under the Award and (ii) with respect to any Award that constitutes a deferral of compensation subject to Section 409A of the Code, in the event of a Change in Control that does not constitute a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company under Section 409A(a)(2)(A)(v) of the Code and regulations thereunder, such Award shall be settled in accordance with its original terms or at such earlier time as permitted by Section 409A of the Code.

 

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9.                 Miscellaneous.

 

(a)                Agreements evidencing Awards under the Plan shall contain such other terms and conditions, not inconsistent with the Plan, as the Plan Administrator may determine in its sole discretion, including penalties for the commission of competitive acts or other actions detrimental to the Company. Notwithstanding any other provision hereof, the Plan Administrator shall have the right at any time to deny or delay a Participant’s exercise of Options if such Participant is reasonably believed by the Plan Administrator (i) to be engaged in material conduct adversely affecting the Company or (ii) to be contemplating such conduct, unless and until the Plan Administrator shall have received reasonable assurance that the Participant is not engaged in, and is not contemplating, such material conduct adverse to the interests of the Company.

 

(b)                participants are and at all times shall remain subject to the trading window policies adopted by the Company from time to time throughout the period of time during which they may exercise Options, Stock Appreciation Rights or sell shares of Company Stock acquired pursuant to the Plan.

 

10.                No Special Employment Rights, No Right to Award.

 

(a)                Nothing contained in the Plan or any Agreement shall confer upon any Participant any right with respect to the continuation of employment or service by the Company or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or service or to increase or decrease the compensation of the Participant.

 

(b)                No person shall have any claim or right to receive an Award hereunder. The Plan Administrator’s granting of an Award to a Participant at any time shall neither require the Plan Administrator to grant any other Award to such Participant or other person at any time or preclude the Plan Administrator from making subsequent grants to such Participant or any other person.

 

11.                Securities Matters.

 

(a)                The Company shall be under no obligation to effect the registration pursuant to the Securities Act of any interests in the Plan or any shares of Company Stock to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing shares of Company Stock pursuant to the Plan unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Company Stock are traded. The Plan Administrator may require, as a condition of the issuance and delivery of certificates evidencing shares of Company Stock pursuant to the terms hereof, that the recipient of such shares make such agreements and representations, and that such certificates bear such legends, as the Plan Administrator, in its sole discretion, deems necessary or desirable.

 

(b)                The transfer of any shares of Company Stock hereunder shall be effective only at such time as counsel to the Company shall have determined that the issuance and delivery of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Company Stock are traded. The Plan Administrator may, in its sole discretion, defer the effectiveness of any transfer of shares of Company Stock hereunder in order to allow the issuance of such shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Plan Administrator shall inform the Participant in writing of its decision to defer the effectiveness of a transfer. During the period of such deferral in connection with the exercise of an Award, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.

 

12.                Withholding Taxes.

 

(a)                Whenever cash is to be paid pursuant to an Award, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto.

 

(b)                Whenever shares of Company Stock are to be delivered pursuant to an Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. With the approval of the Plan Administrator, a Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery shares of Company Stock having a value equal to the minimum amount of tax required to be withheld. Such shares shall be valued at their Fair Market Value on the date of which the amount of tax to be withheld is determined. Fractional share amounts shall be settled in cash. Such a withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award.

 

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13.                Non-Competition and Confidentiality.

 

By accepting Awards and as a condition to the exercise of Awards and the enjoyment of any benefits of the Plan, including participation therein, each Participant agrees to be bound by and subject to non-competition, confidentiality and invention ownership agreements acceptable to the Plan Administrator or any officer or director to whom the Plan Administrator elects to delegate such authority.

 

14.                Notification of Election Under Section 83(b) of the Code.

 

If any Participant shall, in connection with the acquisition of shares of Company Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service.

 

15.                Amendment or Termination of the Plan.

 

The Board of Directors or the Plan Administrator may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever; provided, however, that the requisite stockholder approval shall be required if and to the extent the Board of Directors or Plan Administrator determines that such approval is appropriate or necessary for purposes of satisfying Sections 162(m) or 422 of the Code or Rule 16b-3 or other applicable law. Awards may be granted under the Plan prior to the receipt of such stockholder approval of the Plan but each such grant shall be subject in its entirety to such approval and no Award may be exercised, vested or otherwise satisfied prior to the receipt of such approval. No amendment or termination of the Plan may, without the consent of a Participant, adversely affect the Participant’s rights under any outstanding Award.

 

16.                Transfers Upon Death; Nonassignability.

 

(a)                A Participant may file with the Plan Administrator a written designation of a beneficiary on such form as may be prescribed by the Plan Administrator and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, upon the death of a Participant, outstanding Awards granted to such Participant may be exercised only by the executor or administrator of the Participant’s estate or by a person who shall have acquired the right to such exercise by will or by the laws of descent and distribution. No transfer of an Award by will or the laws of descent and distribution shall be effective to bind the Company unless the Plan Administrator shall have been furnished with written notice thereof and with a copy of the will and/or such evidence as the Plan Administrator may deem necessary to establish the validity of the transfer and an agreement by the transferee to comply with all the terms and conditions of the Award that are or would have been applicable to the Participant and to be bound by the acknowledgments made by the Participant in connection with the grant of the Award.

 

(b)                During a Participant’s lifetime, the Plan Administrator may, in its discretion, pursuant to the provisions set forth in this clause (b), permit the transfer, assignment or other encumbrance of an outstanding Option unless such Option is an Incentive Stock Option and the Plan Administrator and the Participant intends that it shall retain such status. Subject to the approval of the Plan Administrator and to any conditions that the Plan Administrator may prescribe, a Participant may, upon providing written notice to the General Counsel of the Company, elect to transfer any or all Options granted to such Participant pursuant to the Plan to members of his or her immediate family, including, but not limited to, children, grandchildren and spouse or to trusts for the benefit of such immediate family members or to partnerships in which such family members are the only partners; provided, however, that no such transfer by any Participant may be made in exchange for consideration. Any such transferee must agree, in writing, to be bound by all provisions of the Plan.

 

17.                Effective Date and Term of Plan.

 

The Plan shall become effective on the Effective Date, but the Plan shall be subject to the requisite approval of the stockholders of the Company at the Company’s next Annual Meeting of its stockholders. In the absence of such approval, such Awards shall be null and void. Unless earlier terminated by the Board of Directors, the right to grant Awards under the Plan shall terminate on the tenth anniversary of the Effective Date. Awards outstanding at Plan termination shall remain in effect according to their terms and the provisions of the Plan.

 

18.                Applicable Law.

 

Except to the extent preempted by any applicable federal law, the Plan shall be construed and administered in accordance with the laws of the State of Delaware, without reference to its principles of conflicts of law.

 

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19.                Participant Rights.

 

(a)                No Participant shall have any claim to be granted any award under the Plan, and there is no obligation for uniformity of treatment for Participants. Except as provided specifically herein, a Participant or a transferee of an Award shall have no rights as a stockholder with respect to any shares covered by any award until the date of the issuance of a Company Stock certificate to him or her for such shares.

 

(b)                Determinations by the Plan Administrator under the Plan relating to the form, amount and terms and conditions of grants and Awards need not be uniform, and may be made selectively among persons who receive or are eligible to receive grants and awards under the Plan, whether or not such persons are similarly situated.

 

20.                Unfunded Status of Awards.

 

The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company.

 

21.                No Fractional Shares.

 

No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan. The Plan Administrator shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

22.                 Interpretation.

 

The Plan is designed and intended to the extent applicable, to comply with Section 162(m) of the Code, and to provide for grants and other transactions which are exempt under Rule 16b-3, and all provisions hereof shall be construed in a manner to so comply. Awards under the Plan are intended to comply with Code Section 409A to the extent subject thereto and the Plan and all Awards shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of the Plan. Notwithstanding any provision in the Plan to the contrary, no payment or distribution under this Plan that constitutes an item of deferred compensation under Code Section 409A and becomes payable by reason of a Participant’s termination of employment or service with the Company will be made to such Participant until such Participant’s termination of employment or service constitutes a “separation from service” (as defined in Code Section 409A). For purposes of this Plan, each amount to be paid or benefit to be provided shall be construed as a separate identified payment for purposes of Code Section 409A. If a participant is a “specified employee” (as defined in Code Section 409A), then to the extent necessary to avoid the imposition of taxes under Code Section 409A, such Participant shall not be entitled to any payments upon a termination of his or her employment or service until the earlier of: (i) the expiration of the six (6)-month period measured from the date of such Participant’s “separation from service” or (ii) the date of such Participant’s death. Upon the expiration of the applicable waiting period set forth in the preceding sentence, all payments and benefits deferred pursuant to this Section 22 (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such deferral) shall be paid to such Participant in a lump sum as soon as practicable, but in no event later than sixty (60) calendar days, following such expired period, and any remaining payments due under this Plan will be paid in accordance with the normal payment dates specified for them herein.

 

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Approved and adopted by the Board of Directors this 16th day of April, 2018.

 

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